In the case of carbon capture, the utility and oil sectors are trying to do just that – though with limited success to date.

The utility sector has a super abundance of waste CO₂ it hopes to dispose of constructively. What’s more, it can benefit from deep-pocketed offtakers to help fund development of carbon capture systems.

Meanwhile, vast regions of the US oil industry are nearly desperate for fresh sources of CO₂. to help drive oil out of ageing wells in a process known as enhanced oil recovery (EOR). Their current sources of CO₂, mostly geologic CO₂ reservoirs, are maxed out.

Yet so far, the two big industries haven’t been able to join forces on a large scale. This market mismatch may soon find a solution if a coalition led by the Center for Climate and Energy Solutions in Washington, DC can push through the National Enhanced Oil Recovery Initiative.

NEORI brings together key industry players from the oil and utility sectors and proposes a set of revenue-positive federal and state incentives that will help spur the construction of a first generation of carbon capture infrastructure on power plants and other industrial emitters, to feed the CO₂ to the oil industry. As important, perhaps the effort has attracted bipartisan support in an era of near-paralysis on many political fronts.

To learn more the promise, mechanics and timing of NEORI, I connected with Eileen Claussen, President of C2ES, and Judi Greenwald, Vice President for Technology and Innovation at C2ES. The second half of our conversation follows. The first part was published last week..

What’s the potential impact of this approach on domestic oil supplies?

Eileen Claussen: NEORI estimates that our proposed new federal tax credit for captured CO₂ capture will quadruple the amount of domestic oil currently produced annually through enhanced oil recovery –to 400 million barrels a year in the outyears – while cutting CO₂ emissions by a total of 4 billion tons over the next 40 years. In addition, we will be generating new tax revenue for states and for the federal government, as I said, these incentives will more than pay for themselves. And we will be gaining vital experience and creating valuable infrastructure supporting broader deployment of carbon capture and sequestration in the future.

CO₂ captured from varying sources – whether coal fired power plants, or industrial factories, or other – will come at different costs, yet we need to develop capture solutions for all of them. How does NEORI work to encourage development of CO₂ capture from a range of potential sources?

Judi Greenwald: The cost of carbon capture at power plants and industrial facilities varies considerably. Also, CO₂ capture technologies are in different stages of development, and as with any emerging technology, costs will fall over time after repeated demonstrations. This is why NEORI recommends establishing tranches and sub-tranches for different technologies under a competitive bidding process. The three main tranches would be a pioneer tranche, an electric power tranche, and an industrial tranche. The pioneer tranche would be for commercial-scale, ‘first-mover’ projects that would only move forward with sufficient government support to offset the technical and financial risk of CCS in both the electric power and industrial sectors. The other two tranches would be for projects using more advanced CCS technology in the electric power and industrial sectors. The industrial tranche would include sub-tranches for both lower-cost and higher-cost CCS technologies. Overall, the goal is to ensure that sufficient credits are allocated across all applications for CCS. This approach would take advantage of lower-cost carbon capture sources to pay for the incentives for higher-cost carbon capture sources. It would drive costs down in the tranches with the highest current capture costs, but take advantage of the sources with the greatest CO₂ supply potential.

As proposed, NEORI promises to gain bipartisan support. This is remarkable in particular for a climate technology, and all the more so in an era of intense partisanship. How do the politics line up on this issue?

Eileen Claussen: At a time of economic struggle, fiscal crisis and political gridlock, we at C2ES believe the NEORI proposal is an encouraging example of how we can and must make progress on the climate and energy challenges we face. As much as we would like to see comprehensive solutions to our climate and energy challenges, those solutions are not on the immediate horizon. But if we come at these issues one by one, look for opportunities where interests converge, and are open to compromise, we can arrive at practical solutions benefiting our economy, our security and the environment.

At the Capitol Hill event where NEORI announced our recommendations in February, a bipartisan group of members of Congress were on hand to express their support. Given the political gridlock in Washington in this election year, it was reassuring to see lawmakers from both political parties step up and say they agree that this is important work. Senator Kent Conrad (D-ND) and Congressman Mike Conaway (R-TX) welcomed the NEORI’s recommendations at the Capitol Hill event. Senators Max Baucus (D-MT), Kent Conrad (D-ND), John Hoeven (R-ND), Richard Lugar (R-IN), and Congressmen Mike Conaway (R-TX) and Rick Berg (R-ND) released written statements of support.

Where are we on the timeline for NEORI? What next?

Eileen Claussen: Will we see comprehensive legislation on this issue pass the Congress this year? That’s unlikely. But we do think we have a shot at Section 45Q reform this year. Still, the NEORI recommendations have started the conversation and we feel optimistic that we can see progress on this issue in the not-too-distant future no matter who controls the Presidency and the Congress next year.

Rarely in the current political climate do Republican and Democratic lawmakers in Washington rally together in support of anything. So we need to make the most of this opportunity. Everyone who supports CO₂-EOR has an obligation to educate their representatives in Washington and in state capitals around the country about the benefits this can deliver for our economy, our national security and the environment.

Scaling up CO_2-EOR means bringing together vastly different business cultures – the oil industry and the utility sector – along with environmental groups. How do you bridge these gaps?

Eileen Claussen: The idea behind this initiative was to bring together a diverse group of stakeholders and try to come to agreement about what needs to happen to realize CO₂-EOR’s potential. This is why the NEORI coalition includes industry, environmental advocacy groups, labor, and state officials who can work on both sides of the aisle and at both the state and federal level to stimulate the expansion of CO₂-EOR.

Were these conversations easy? In a word, no. The diversity of the group meant we had some very tough discussions.

But in the spirit of the saying ‘nothing that is worthwhile is easy’, the final participants in this project stuck with it, and they reached consensus recommendations.

The petroleum industry regards CO₂ from EOR as permanently stored. But for experts, policy makers, and regulators from the CCS world, this question is open. What do we know about the permanence of CO₂-EOR?

Judi Greenwald: CO₂ injection in EOR wells is regulated under existing policies and regulations. CO₂ is contained by a series of physical and chemical trapping mechanisms over time. Experience from commercial-scale CO₂-EOR projects, some of which have been in operation for decades, shows that CO₂-EOR can be performed in a manner that is safe for both human health and the environment. The University of Texas Bureau of Economic Geology’s Gulf Coast Carbon Center has found no evidence of CO₂ leakage from the SACROC oil field, where CO₂ has been injected for EOR since 1972 (NEORI: CO2-EOR Safety).

Has there been any modeling on the net CO₂ impact of this approach, given that units of anthropogenic CO₂ are pushed into the ground to liberate units of petroleum CO₂?

Judi Greenwald: To get at the net impact, the key question is: what would have happened otherwise? NEORI’s view is that CO₂-EOR displaces other oil production that also would have resulted in CO₂emissions, so any emissions benefit from the CO₂ capture is a net benefit. Also, using captured CO₂ clearly has net CO₂ benefits compared to using naturally-occurring CO₂.

With that said, there are a range of estimates as to how large the net emissions benefit is. For example, one study estimates that the Weyburn CO₂-EOR project produces oil that is ’40 pe rcent carbon-free’ compared to conventional oil production due to stored CO₂ emissions that offset tailpipe CO₂ emissions (see Taglia, Enhanced Oil Recovery, July 2010, page 14).

We think more work is necessary in this area. It is necessary to better quantify the emissions benefit of CO₂-EOR because it will help make the case for CO₂-EOR.

See the original story here: http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2012/07/10/neori%E2%80%99s-promise-pairing-utilities-big-oil-revitalize