Are California’s Climate Goals in Jeopardy?

Photo by Quinten de Graaf on Unsplash

In the most recent California Air Resources Board (“CARB”) scoping plan, the Agency has outlined a significant role of the use of Carbon Capture, Utilization, and Storage (“CCUS”) to meet its climate goals which include being carbon neutral by no later than 2045.

In particular, in their 2022 Scoping Plan, the CARB writes:

The plan outlines how carbon neutrality can be achieved by taking bold steps to reduce GHGs to meet the anthropogenic emissions target and by expanding actions to capture and store carbon through the state’s natural and working lands and using a variety of mechanical approaches.

The basic premise of CCUS is to capture CO2 emitted from where it is emitted and store it for use later. However, a key piece to making CCUS work is the development of CO2 pipelines that can transport CO2 from the point of capture to the point of storage.

While transporting CO2 pipelines is not new, there is growing interest in expanding the current network of CO2 pipelines due to the increased reliance on CCUS as a climate mitigation pathway.

Currently, the US has nearly 5,000 miles of CO2 pipeline, and much of these lines are in rural areas used for enhanced oil recovery. As the interest for CCUS increases to meet climate targets, this creates the need for a wider network of CO2 pipelines, which may not be within rural areas, but rather in more densely populated areas.

This is where the potential problem starts for CCUS and California's climate goals.

On February 22, 2020, there was a pipeline rupture of a CO2 pipeline in Satartia, Mississippi, which resulted in the shutdown of a nearby highway, the evacuation of nearly 200 people, and the provision of medical attention to almost 45 people. As a result of this incident, on May 22, 2022, the Pipeline and Hazardous Materials Safety Administration (“PHMSA”) proposed to undertake a rulemaking to increase the safety standards of CO2 pipelines.

While embarking on a rulemaking to increase the safety standards of CO2 pipelines is not the issue. Rather, the issue is with the time to complete a PHMSA rulemaking (as will be discussed shortly) and the timelines to achieve net zero established by California’s policies. For example, in California, AB1279 establishes the policy that requires California to “… archive net zero greenhouse gas emissions as soon as possible, but no later than 2045 […]”.

A 2020 report from the National Academies points out that to limit the impacts of climate change by 2050, and the US needs to spend the 2020s developing the necessary infrastructure to achieve decarbonization by the mid-century.

Therefore, if there is something we should be doing now, it is building out the infrastructure needed to support decarbonization, which includes using CO2 pipelines, among other types of assets. In line with this, the Infrastructure Investment and Jobs Act (“IIJA”) provides incentives for the build-out of CO2 pipelines under the 45Q tax credit.

Here are three reasons why time-based climate goals and PHMSA's rulemaking are complicated by a few factors, all of which can jeopardize California's climate goals.

The last major PHMSA rulemaking that increased gas pipeline safety took nearly 11 years to complete.

In response to the 2010 explosion in San Bruno, PHMSA undertook a significant effort, starting on August 25, 2011, with an advance notice of proposed rulemaking (“ANOPR”) to increase the safety standards for the construction and operation of onshore gas pipelines. The initial rule was split up into three separate rules (collectively referred to as the "Mega Rule"), which were finalized on October 1, 2019 (Part 1), August 24, 2022 (Part 2), and November 15, 2021 (Part 3). The trio of rules took 11 years to be completed across three presidential administrations and required countless stakeholder meetings. As it relates to CO2 pipelines, the current rulemaking (announced on May 26, 2022) has many of the same origins as the 2010 San Bruno incident in that it is in response to an accident, and it seeks to increase the level of safety associated with the operation of gas transmission pipelines.

For California, the ability to deploy the supporting infrastructure, like CO2 pipelines, is on hold until PHMSA completes its rulemaking.

In 2022, SB905 was signed into law, which, among other things, seeks to streamline the permitting for CCUS projects within the State, adopt financial responsibility requirements for a storage operator, and prohibit the use of CO2 pipelines to carry CO2 from CCUS projects until PHMSA has completed their rulemaking. For California, SB905 poses a significant hurdle in developing CO2 pipelines, given the time that PHMSA has taken to complete past rulemakings like the Mega Rule.

If the development of CO2 pipelines can happen at a different pace than the pace needed to meet California's climate goals, then there can be pressures or other constraints imposed on different parts of the energy system that must be addressed.

Indeed, given the significant role that CCUS is expected to play in meeting California's climate goals and the fact that SB905 effectively links the development of CCUS in California to PHMSA's timeline, there arguably be pressures on other parts of California's energy system to meet decarbonization goals. For example, in the absence of CCUS in the near term, other decarbonization technologies (like an expanded use of hydrogen or the use of energy storage technologies to integrate more renewables into the system) may need to be deployed to meet AB1271.

So, is using CCUS to meet California's climate goals in jeopardy?

Possibly.

The energy system is a system, a complex at that. Any change to one part of the system, in this case, the lack of CCUS, will likely impact other parts of the system, like the need to increase the production and transportation of hydrogen or the need to deploy more energy storage. Further, decisions about energy infrastructure are complicated because these assets require significant capital costs and have long lifetimes, which means that decisions contemplated today can impact generations to come and affect the trajectory of a given path toward decarbonization.

To address this challenge, consider two possible ideas.

First, consider existing regulations as a framework for strengthening CO2 pipeline safety standards so that PHMSA is not "reinventing the wheel." While it is hoped that the rulemaking process for the upcoming CO2 pipeline safety standards can be streamlined, the reliance on CCUS/CO2 pipelines, the associated safety issues from the incident, and those raised by the industry may create a variety of complexities that may take significant time to resolve. Further, it may be constructive to understand how the gaps in the current suite of CO2 pipeline regulations outlined by stakeholders can be addressed using the framework in PHMSA's gas pipeline safety regulations. For example, since pipeline safety advocates call for more coordination between local emergency response agencies in response to pipeline ruptures, it is possible to use the existing framework established by the recent PHMSA rule on requirements for valve installation and rupture detection standards finalized on April 8, 2022 (“Valve Rule”).

Second, in the absence of CCUS, it can be helpful to understand how California's carbon neutrality trajectory will look over the next five to ten years.

Given the interconnectedness of all the various types of decarbonization technologies, the trajectory that California is on for neutrality may shift so that it can become hard to reach the goals of AB1279. To better understand the change that has been imparted on California's progress on climate change, it can be helpful to use macro-energy system models.

Briefly, macro-energy system models are rich in technological detail and allow researchers and policy developers to understand what mix of technologies is needed to balance the supply and demand for energy across a given region, like California. In this case, these models can help better understand the various decarbonization technologies needed to meet California's energy demand without using CCUS.

Since SB905 arguably links the deployment of CCUS with the timelines of PHMSA, the trajectory toward meeting California's climate goals could be in jeopardy unless alternatives are generated that do not rely on CCUS.

Time will tell how much of a barrier SB905 is to the State, and that is precisely the risk given the time-based goals associated with AB1279.

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