By Kay R. Bonza and Craig B. Simonsen

Private jet plane in the blue skySynopsis: EPA’s recent finding paves the way for the Agency to develop standards regulating greenhouse gas emissions from aircraft. Businesses in the commercial jet manufacturing and aviation transportation industry should watch this rulemaking closely, as it will affect environmental compliance costs and may have an impact on the cost of capital purchases and daily operations.

On July 25, 2016, the U.S. Environmental Protection Agency (EPA) issued a final determination under the Clean Air Act, finding that greenhouse gas (GHG) emissions from certain types of aircraft engines contribute to air pollution that causes climate change and endangers public health and the environment.

The EPA determination applies specifically to the six well-mixed GHGs in the atmosphere: carbon dioxide (CO2), methane, nitrous oxide, hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Two of these six gases, CO2 and nitrous oxide, are emitted by aircraft engines.  The EPA’s determination triggers its duty under Section 231 of the Clean Air Act to promulgate aircraft engine emission standards.

Approximately 89% of U.S. aircraft GHG emissions are included in the determination, from smaller jet aircraft, to the largest commercial jet aircraft on the market. The determination does not cover some small jet aircraft, including piston-engine aircraft, helicopters, and military aircraft.  According to Janet McCabe, EPA’s Acting Assistant Administrator for the Office of Air and Radiation, “aircraft are the third largest contributor to GHG emissions in the U.S. transportation sector, and these emissions are expected to increase in the future.”

The EPA is not yet issuing proposed emission standards, nor are they commenting on what those standards will be. The International Civil Aviation Organization (ICAO), which works with member states and industry groups to develop international civil aviation standards and policies, anticipates releasing its international aircraft CO2 standards in March 2017.  The EPA will look to the ICAO standards as a starting point in drafting domestic aircraft engine standards.  ICAO member states, including the U.S., will be required to adopt standards that are at least as stringent as the ICAO standards.

According to the EPA, its determination supports the goals of President Obama’s Climate Action Plan to reduce carbon pollution from large sources.  Approximately 12% of the U.S. transportation sector’s GHG emissions come from U.S. aircraft, and U.S. aircraft account for 29% of global aircraft emissions.  Once the EPA promulgates aircraft emission standards, Section 232 of the Clean Air Act requires the Federal Aviation Administration to prescribe regulations that ensure compliance with these standards.  Any standards that EPA sets “must not cause a significant increase in noise or adversely affect safety.”

Future GHG standards for aircraft could significantly increase the costs of environmental compliance, capital purchases, and daily operations for the aircraft engine manufacturing industry. Businesses in this industrial sector may wish to keep an eye on the EPA rulemaking, participate in public meetings, and provide comments to EPA as appropriate.

For more information on this or any related topic please contact the authors, your Seyfarth attorney, or any member of the Environmental Compliance, Enforcement & Permitting Team.

By Robert S. Winner, Andrew L. Berg, and Ashley M. Hymel

Energy sources conseptSeyfarth Synopsis: In this edition of Seyfarth Shaw’s Energy Insights Newsletter, our Energy and Clean Technologies team covers important developments in Q1 2016 for the energy industry including 1) the fate of the Clean Power Plan and potential impact on U.S. compliance with the Paris Agreement, 2) the increased pressure by the DOL to wage and hour practices in the oil and gas industry, and 3) growing interest and use of EB-5 financing for renewable energy projects and proposed changes to the program.

Clean Power Plan Awaits Decision

In June 2014, Environmental Protection Agency (EPA) issued its proposed Clean Power Plan (CPP) to regulate CO2 emissions from existing power plants under section 111(d) of the Clean Air Act (CAA), which proposes to limit carbon emissions from existing fossil fuel-fired electric generating units, including steam generating, integrated gasification combined cycle, or stationary combustion turbines (in either simple cycle or combined cycle configuration) operating or under construction by January 8, 2014.  Specifically, the CPP requires states to reduce carbon dioxide emissions from existing power plants by 32 percent below 2005 levels by 2030.  States are required to submit compliance plans to reduce their emissions by 2022, with full compliance not required until 2030.  The Department of Energy (DoE) believes implementing the CPP will forestall hundreds of millions of tons of greenhouse-gas emissions from human activities, a key driver of climate change.

However, immediately following the release of these proposed regulations, two dozen states and numerous interested corporations and industry groups sued the administration claiming the EPA overstepped its constitutional authority and statutory authority under the CAA.  And on February 9, 2016, the U.S. Supreme Court granted a stay preventing the implementation of the CPP pending further review. Oral arguments are scheduled for June 2nd and even though it could take up to a year for a final ruling to be released, some experts believe the three judge panel will seek to render a decision by the end of summer 2016 since the judges’ clerks change at the end of August, a potential delay.

Many have argued that the stay could, and if the CPP is struck down entirely, would, impact the U.S.’s ability to meet the United Nations Framework Convention on Climate Change (UNFCCC) Paris Agreement goals of (1) reducing emissions “in the range” of 17 percent below 2005 levels by 2020 and (2) a “further emission reduction” up to 26-28 percent of total reductions below 2005 levels by 2025.

Interestingly, voting in favor of the stay was Justice Scalia’s last decision before passing away suddenly. A 4-4 decision would have upheld the lower court’s reversal and thus implementation of the CPP.

The Oil and Gas Industry’s Wage and Hour Practices Remain A High Priority for the Department of Labor

In 2012, the Department of Labor’s Wage and Hour Division (WHD) began an initiative to improve oil and gas industry compliance with the Fair Labor Standards Act (FLSA) and in particular, the federal law that requires overtime compensation for hours worked over 40 in a workweek. According to the WHD, this ongoing initiative was meant to “focus resources where data shows that violations are common and business models lend themselves to violations.”

Through 2015, the WHD has obtained several high-dollar settlements from oil and gas companies. Notable recent settlements include a $4.5 million settlement with an oil and gas exploration and production company for failure to compensate employees for pre-shift meetings and an $18.3 million settlement with an oilfield services company for misclassification of employees in 28 job positions.  These investigations, and their subsequent settlement, demonstrate both the depth and the breadth of the WHD’s expending reach.  Already in the first quarter of 2016, the WHD has touted settlements with six oil and gas companies for a total of almost $2 Million under similar wage hour theories. These companies’ services range from drilling to engineering to selling oil and gas equipment.  The WHD recently expressed its hope that industry executives will take the lead and serve as models for industry-wide compliance.

And, while the “industry” on the radar used to include only oil and gas exploration and production, or oilfield services, companies, the WHD has expanded its pursuit to include related businesses, such as water and stone haulers, trucking, lodging, water, and staffing companies.  One prime example of this expansion lies with a supply chain management company that settled with the WHD to the tune of over $146,000 in August of 2014 for failure to pay overtime at time and a half for hours worked over 40 in a week.

After four years, 1,100 investigations, and $40 million in settlements, the WHD is still on the hunt and it shows no signs of slowing down.  As the WHD stated in a recent press release, “employers must know and comply with the law.”  Employers in the oil and gas industry should continue to review their current wage and hour practices to ensure compliance.

Foreign Investors Going Green in Pursuit of Green Cards

For those who have heard of or read about “EB-5” financing, they may have only thought it was for certain categories of assets such as resorts, casinos, hotels, multi-family and mixed use office properties, which make up more than half the EB-5 funding distributed.  However, a smaller (3-5%), but growing segment of financing obtained from foreign investors participating in the employment-based, fifth-preference visa category (EB-5) has been within the renewable energy industry, and has significantly contributed toward the development of large-scale energy projects across the United States.  Not only has the percentage of EB-5 financing in the alternative energy space grown, so has the number and size of projects in the areas of utility scale solar power, alternative fuel production and lithium battery production, especially in California. As the nation’s preference for clean energy over traditional fossil fuels has gained momentum and states increasingly seek to implement aggressive renewable portfolio standards, marketing EB-5 projects to foreign investors has become much more common since it positively correlates with increased job creation.

By way of background, under the United States Citizenship and Immigration Services’ (USCIS) EB-5 Immigrant Investor Pilot Program (Program), foreign individuals who invest $1,000,000 (or $500,000 in targeted employment areas (TEA) in a new commercial enterprise are able to pursue permanent residency in the United States if they can prove that their investment created a minimum of ten full-time jobs.  The permitted $500,000 investment amount for projects located in areas of high unemployment or rural tracts of land is ideal for the alternative energy industry since the power plants, solar panel farms, and other energy-generating equipment installations require large amounts of land.

The Program was initially due to expire on September 30, 2015 and received a one-year extension. However, in connection with a potential further extension, some bad press and bad apples has caused lawmakers to draft new bills to provide additional protections for investors in EB-5 projects. For example, the Integrity Act, introduced by Senators Schumer, Flake and Cornyn on December 17, 2015, seeks to strengthen the Program by requiring greater government oversight of regional centers (entities that sponsor the EB-5 projects), including authority to assess fines for noncompliance, and requiring registration of all affiliated parties of regional centers. Other bills include increasing the required minimum investment amount in a TEA from $500,000 to $800,000, and from $1 million to $1.2 million for non-TEA investments. Further, the SEC has been carefully watching EB-5 financings and their compliance with securities laws. However, despite the new oversight, developers continue to move full-steam ahead and raise hundreds of millions of dollars in EB-5 funding to create jobs, including those in the renewable industry.

By Andrew H. Perellis and Craig B. Simonsen

shutterstock_71039011President Obama this week has announced various steps and actions in order to build on his “Climate Action Plan” intended to reduce the “dangerous levels” of carbon pollution that are allegedly contributing to climate change. His intention is to prepare communities for the impacts “that cannot be avoided,” and to lead internationally on climate change.

Citing the Health Impacts of Climate Change on Americans report from June 2014, the White House announced that “in the past three decades, the percentage of Americans with asthma has more than doubled, and climate change is putting these individuals and many other vulnerable populations at greater risk of landing in the hospital.” In addition, this week a draft report, The Impacts of Climate Change on Human Health in the United States: A Scientific Assessment, was released. The draft was developed by the Interagency Group on Climate Change and Human Health as part of the National Climate Assessment under the President’s Climate Action Plan.

Based in-part on these reports and assessments, the President has worked to bring about significant new rules that will impact a wide range of commercial and industrial interests — not to mention the resulting additional costs that will seemingly flow on to consumers. Specific regulatory areas that are targeted under this scheme, as iterated in the White House Fact Sheet, include:

  • Clean Power Plan:The U.S. Environmental Protection Agency intends to finalize its rules to reduce carbon pollution from existing power plants by this summer.  The proposed standards, issued in June 2014, would reduce carbon pollution from existing power plants 30% below 2005 levels by 2030, while promising to deliver $55-93 billion in annual net benefits from reducing carbon pollution and other harmful pollutants, and “preventing 150,000 asthma attacks and up to 6,600 premature deaths and 180,000 missed school days.”
  • Standards for Heavy-Duty Engines and Vehicles:In February 2014, President Obama directed EPA and the U.S. Department of Transportation to issue the next phase of fuel efficiency and greenhouse gas standards for medium- and heavy-duty vehicles by March 2016.
  • Energy Efficiency Standards:The Department of Energy has set a goal of reducing carbon pollution by 3 billion metric tons cumulatively by 2030 through energy conservation standards issued during the Obama Administration. The DOE has already finalized energy conservation standards for twenty-nine categories of appliances and equipment, and has developed a “building code determination for commercial buildings.” The Administration estimates that these measures will cut consumers’ annual electricity bills by billions of dollars.
  • Economy-Wide Measures to Reduce other Greenhouse Gases:“EPA and other agencies are taking actions to cut methane emissions from oil and gas systems, landfills, coal mining, and agriculture, through cost-effective voluntary actions and common-sense standards.  At the same time, the State Department is working to slash global emissions of potent industrial greenhouse gases, called HFCs, through an amendment to the Montreal Protocol; EPA is cutting domestic HFC emissions through its Significant New Alternatives Policy (SNAP) program; and, the private sector has stepped up with commitments to cut global HFC emissions equivalent to 700 million metric tons through 2025.”

The Fact Sheet, as noted above, promises great saving for consumers. This though, seems disingenuous, once these regulatory programs are put into place.

Public comments on the draft assessment report are due by June 8, 2015.

By Andrew H. Perellis, Patrick D. Joyce, and Craig B. Simonsen

In anticipation of its proposed rule to reduce carbon emissions of existing electric power plants, expected to be released Monday, June 2, EPA just released its report Climate Change Indicators in the United States, 2014, Third Edition (Report), showing some stunning data about climate change and industry’s responsibilities.

The Report details the science behind climate change and is a tool to educate the public about the causes and effects of climate change and what can potentially be done to reduce the effects of global warming.

We had blogged previously about President Obama’s “Plan to Cut Carbon Pollution and Address Climate Change” – the Climate Action Plan. In making his case for the Plan, in June, 2013, the President said “while no single step can reverse the effects of climate change, we have a moral obligation to future generations to leave them a planet that is not polluted and damaged. Through steady, responsible action to cut carbon pollution, we can protect our children’s health and begin to slow the effects of climate change so that we leave behind a cleaner, more stable environment.” P. 4.

The EPA Report represents the next step in the President’s Climate Action Plan. The Report pulls together “observed data on key measures” of our environment, also known as “indicators.” These indicators include: U.S. and global temperature and precipitation, ocean heat and ocean acidity, sea level, and the length of the growing season, among others. With thirty indicators suggesting “long-term trends,” the Report asserts climate change is already affecting our society and says the “indicators present compelling evidence that climate change is happening now in the United States and around the world.”

Janet McCabe, Acting Assistant Administrator for EPA’s Office of Air and Radiation, suggested that these indicators “make it clear that climate change is a serious problem and is happening now here in the U.S. and around the world.” While all of the indicators relate to the causes or effects of climate change, they also show that humans can have different levels of influence on different indicators.

The Report is consistent with the recently released National Climate Assessment in suggesting this data “presents clear evidence that the impacts of climate change are already occurring across the United States.”

Some important indicators in the Report that show a trend toward a changing climate include:

  • Temperature: Average temperatures have risen across the contiguous 48 states since 1901, with an increased rate of warming over the past 30 years. Seven of the top 10 warmest years on record have occurred since 1998. Every part of the Southwest experienced higher average temperatures between 2000 and 2013 than the long-term average dating back to 1895. Some areas were nearly 2°F warmer than average.
  • Violent storms: Tropical storm activity in the Atlantic Ocean, the Caribbean, and the Gulf of Mexico has increased during the past 20 years.
  • Rising sea level: Along the U.S. coastline, sea level has risen the most along the Mid-Atlantic coast and parts of the Gulf Coast, where some stations registered increases of more than 8 inches between 1960 and 2013.
  • Ice loss: Glaciers have been melting at an accelerated rate over the past decade. The resulting loss of ice has contributed to the observed rise in sea level.
  • Increased frequency and size of wildfires: Since 1983, the United States has had an average of 72,000 recorded wildfires per year. Of the 10 years with the largest acreage burned, nine have occurred since 2000, with many of the largest increases occurring in western states.
  • Drought: Water levels in the Great Lakes have declined steadily over the last few decades.
  • Heat-related deaths: Over the past three decades, nearly 8,000 Americans were reported to have died as a direct result of heat-related illnesses such as heat stroke. The annual death rate is higher when accounting for other deaths in which heat was reported as a contributing factor.

The Report purports to represent the state of the science as collected and digested by the EPA. The analysis goes a long way toward supporting and moving forward the President’s Climate Action Plan and his insistence that now is the time to act.

Assessing the Impact of Proposed New Carbon Regulations in the United States

Also in preparation Monday’s proposed power plant rules release, The U.S. Chamber of Commerce’s (Chamber) Institute for 21st Century Energy (Energy Institute) commissioned IHS Energy and IHS Economics to examine and quantify the expected impacts of the proposed power plant rules on the electricity sector and the economy as a whole, based on policy scenarios provided by the Energy Institute.

The Energy Institute’s analysis focuses on the economic impacts of EPA’s proposed rules on CO2 emissions from fossil fuel-fired electricity generating plants under the Clean Air Act. According to the Chamber’s analysis, the rules threaten to suppress average annual U.S. Gross Domestic Product by $51 billion and will lead to an average of 224,000 fewer U.S. jobs every year through 2030, relative to baseline economic forecasts. The proposed power plant rules are a central part of the President’s Climate Action Plan.

When discussing changes that can be made to address climate change, Acting Assistant Administrator McCabe says “everything we do to reduce greenhouse gas emissions and prepare for the changes that are already underway will help us safeguard our children’s future.”  Maybe it is time for Smokey the Bear to change his tune and tell the public “Only You Can Prevent Climate Change.”

By Jeryl L. Olson and Craig B. Simonsen

The U.S. Environmental Protection Agency (EPA) today proposed to amend the recordkeeping and reporting requirements of the Greenhouse Gas (GHG) reporting rule, for certain categories of reporters. 78 Fed. Reg. 55994 (September 11, 2013). The amendment is necessary to address issues surrounding use of confidential business information (CBI) as data inputs in GHG calculations.

Under the Clean Air Act, section 114(c), “emission data” cannot be classified as CBI. Recognizing the CAA limitation on CBI, on July 7, 2010, EPA proposed (75 Fed. Reg. 39094) that emissions equations used as inputs in GHG reporting must meet the definition of “emission data” and could not be protected as CBI. In response EPA received public comments that raised concerns about the public availability of information commonly considered by industry as CBI, such as raw materials used, or production volume, as inputs to emissions equations. In reply, EPA deferred the reporting requirements until 2013 for some data, and 2015 for others, to allow EPA to fully evaluate the issues regarding the release of data that facilities may want to protect from the public as CBI.

Under today’s proposed rule, EPA has suggested that in lieu of reporting confidential information such as production and raw material data, facilities could use an EPA-developed electronic inputs verification tool, and would be subject to enhanced recordkeeping and reporting requirements. The Agency believes that the proposed changes would maintain the EPA’s ability to verify emissions and ensure compliance with the program, without publishing business confidential information.

Entities affected by this proposal are facilities that are direct emitters of GHGs and tend to be in the heavy manufacturing and chemical manufacturing industries. EPA has proposed that facilities subject to this proposed rule that use potentially confidential business information to calculate reported GHGs, use an electronic inputs verification tool being developed by the EPA, which would calculate and verify GHG emissions. The Agency has provided an Internet link to a “pilot” for its inputs verification tool. The pilot “demonstrates how the tool would work within the EPA’s Electronic Greenhouse Gas Reporting Tool (e-GGRT).”

Businesses that will seek use of the Agency’s proposed electronic inputs verification tool are encouraged to evaluate it closely and to provide the EPA with public comments as to its form, function, and usability. Also, review the proposed rule for mandates that may be unresponsive to the previous public comments and concerns about protecting CBI. Public comments on the proposal (Docket ID No. EPA–HQ–OAR–2010–0929) are due on November 12, 2013.

By Andrew H. Perellis and Craig B. Simonsen

President Obama last week announced his “Plan to Cut Carbon Pollution and Address Climate Change,” which summarized the President’s Climate Action Plan.

The President’s case for action is that “while no single step can reverse the effects of climate change, we have a moral obligation to future generations to leave them a planet that is not polluted and damaged. Through steady, responsible action to cut carbon pollution, we can protect our children’s health and begin to slow the effects of climate change so that we leave behind a cleaner, more stable environment.”

Reviewing the substance of the Climate Action Plan, EPA Region 5 Administrator Susan Hedman, at the Annual Air and Waste Management Convention in Chicago, lauded the President’s action. Hedman said that the Plan doubles the goals set by Obama’s 2009 Executive Order to federal agencies, Federal Leadership in Environmental, Energy, and Economic Performance, Executive Order 13514, October 5, 2009.

An interesting EPA graphic provides a summary of the greenhouse gas pollutants and the major sources that it attributes to climate change:

 

 

 

 

 

 

 

 

 

 

 EPA Infographic.

In summary, the Plan calls for EPA to work closely with the states, industry, and other stakeholders to establish carbon pollution standards for both new and existing power plants by 2016. It calls for new goals to increase investment by thirty percent in a range of clean energy technologies. It would double wind and solar energy by 2020. It would double energy production by 2030, relative to 2010 levels. It would develop and implement a comprehensive interagency methane strategy. It would more than double by requiring twenty percent of the federal government’s electricity to come from renewable sources by 2020.

By Craig B. Simonsen

We had previously blogged about the U.S. Environmental Protection Agency’s  (EPA’s) Greenhouse Gas (GHG) “tailoring rules” for Prevention of Significant Deterioration (PSD) and Title V permitting, and about its GHG “Endangerment Finding“. Yesterday the D.C. Circuit Court of Appeals has ruled concerning both of these rulemakings. Coalition for Responsible Regulation, Et al. v. EPA, — F.3d —-, 2012 WL 2381955 (D.C. Cir., June 26, 2012).

In that case, the Petitioners were various states and industry groups, who argued that the rules were based on improper constructions of the Clean Air Act (CAA) and were otherwise arbitrary and capricious. The Court concluded that the Endangerment Finding was neither arbitrary nor capricious; that the EPA’s interpretation of the governing CAA provisions was unambiguously correct; and that no petitioner had standing to challenge the tailoring rules. All of the petitions for review of the tailoring rules were dismissed for lack of jurisdiction, and the remainder of the petitions were denied. “We decline Industry Petitioners’ invitation to rule on the merits of cases which are properly before different panels.”

The Court concluded by noting that “Industry Petitioners were regulated and State Petitioners required to issue permits not because of anything EPA did in the Timing and Tailoring Rules, but by automatic operation of the statute. Given this, neither the Timing nor Tailoring Rules caused the injury Petitioners allege: having to comply with PSD and Title V for greenhouse gases.” As the Court pointed out, the tailoring rules may have actually mitigated the Petitioners’ alleged injuries. Without the tailoring rule, an even larger number of industry and state-owned sources would potentially have been subject to PSD and Title V permitting, and state authorities might have correspondingly been overwhelmed with millions of additional permit applications.

Among other impacts, this ruling is expected to limit the construction of new coal plants as energy providers move toward cleaner fuels, such as natural gas.

By Jeryl L. Olson

This is a supplement to our June 12, 2011 post on the Seyfarth Environmental and Safety Law Update advising that U.S. Environmental Protection Agency (EPA) has determined that certain information submitted under the Greenhouse Gas Reporting Rules will not be treated as confidential business information. On February 22, 2012 EPA published a proposed rule with respect to greenhouse gas emissions reporting from electronics manufacturers which clarifies that information on a company’s processes, production rates, and raw material use would be classified as and treated as confidential business information, while the amount of greenhouse gas emissions, and calculation methods will be considered public information.  The proposed rule with respect to electronic manufacturers does not affect the approximate 27 other industrial categories of greenhouse gas admissions.

By Craig B. Simonsen

The U.S. Environmental Protection Agency (EPA) has adopted a six month extension on Greenhouse Gas (GHG) reporting and other amendments that affect owners or operators of certain industrial gas suppliers, direct emitters of GHGs, and facilities that geologically sequester or otherwise inject carbon dioxide (CO2) underground. Mandatory Reporting of Greenhouse Gases, 76 FR 73886 (November 29, 2011). The original 2009 final GHG reporting rule was published in October 2009, 74 FR 56260 (October 30, 2009).

The amendments allow a limited, one-time six month extension of the 2012 reporting deadline for facilities and suppliers that contain one or more source categories for which data collection began in 2011. Articles about the EPA’s original GHG reporting rulemaking may be found in our previous newsletters here and here and here. The source categories, as defined in 40 CFR part 98,  cover approximately 85-90 percent of U.S. GHG emissions through reporting by direct emitters, suppliers of certain products that would result in GHG emissions when released, used, or oxidized, and those that geologically sequester or otherwise inject carbon dioxide (CO2) underground. The amendments also include additional information to clarify compliance obligations and to correct data reporting elements so that they more closely conform to the information used to perform calculations.

EPA has determined the amendments are effective for the calculation of GHG emissions and quantities for the 2011 reporting year and has adopted this one-time extension of the 2012 reporting deadline to enable testing of its electronic-GHG Reporting Tool (e-GGRT), which incorporates the changes presented in the amendments.

The final rule amendments are effective on December 29, 2011.  Technical information and implementation materials on the Greenhouse Gas Reporting Program are found on the Agency’s Internet site at www.epa.gov/climatechange/emissions/ghgrulemaking.html.

By Jeryl L. Olson and Eric E. Boyd

The Department of Energy announced on November 16 that the Midwest Regional Carbon Sequestration Partnership (MRCSP), one of seven public/private carbon sequestration partnerships throughout the country, had completed an analysis of the capacity of the region to permanently store carbon dioxide (CO2) emissions.  DOE Announcement  The analysis indicates that the region (which comprises Indiana, Kentucky, Maryland, Michigan, New Jersey, New York, Ohio, Pennsylvania, and West Virginia) has a total CO2 storage capacity of 245.5 billion metric tons.  Currently, large stationary sources of CO2 emissions in the region, such as power and industrial plants, account for 700 million metric tons of CO2 emissions annually, or roughly half of all CO2 emissions in the region.  The new report demonstrates, therefore, that capacity exists to permanently store CO2 emissions from these sources for hundreds of years.

The MRCSP report was the second part of a multi-phase analysis.  Phase I consisted of identifying large CO2 emitters and characterizing CO2 storage options.  Phase II consisted of seven field validation tests:  three geologic injection tests, one in each of the three major geologic formations in the region (the Michigan Basin, the Appalachian Basin, and the Cincinnati Arch), and four terrestrial field tests (croplands, reclaimed minelands, reclaimed marshlands, and forested wetlands).  Significantly, the Phase II report concluded that using CO2 for enhanced oil and gas production and enhanced coalbed methane recovery could generate significant revenue to help offset the cost of deploying CO2 capture and sequestration technologies.  The goals of Phase III, yet to be completed, include conducting a larger volume CO2 injection and monitoring test into a geologic reservoir and continuing to assess CO2 storage and utilization opportunities in the region.

With these developments, CO2 capture and sequestration moves a step closer to being another option to manage CO2 emissions associated with climate change.  The DOE press release announcing the MRCSP report explained, “Establishing the safe, permanent and environmentally sound storage of CO2 is a key element in moving toward the commercial deployment of carbon capture, utilization and storage (CCUS) technology, which many experts view as a crucial option in helping meet the climate change challenge.”  As the Environmental Protection Agency moves forward with proposals for developing New Source Performance Standards and PSD Best Available Control Technology (BACT) guidance for major sources emitting CO2 and other green house gases, developments in CCUS capacity and technology are clearly something to watch.

These developments are particularly important for the Midwest, the home of significant coal deposits and coal-fired electric utilities.  Although many Midwest states, including Illinois, have developed renewable portfolio standards ( Illinois RMP ), which require utilities to increase the use of renewable energy sources such as wind and solar, coal will continue to play a large role in energy production in the Midwest for years to come.  In addition to the MRCSP, the Midwest Geologic Sequestration Consortium (MGSC), another regional sequestration partnership comprising portions of Illinois, Indiana and Kentucky, is conducting its own ongoing CO2 geologic sequestration project.