Powering tomorrow Navigating the energy transition landscape 2024 - Flipbook - Page 19
• Permitting issues abound: The
Environmental Protection Agency (EPA) has
been slow to approve the mounting backlog of
permits for Class IV wells, which are necessary
for permanent carbon sequestration. This delay
has pushed legislators into action. Earlier this
year, for instance, U.S. Senator Joe Manchin
introduced the Building American Energy
Security Act—legislation aimed at speeding up
energy project permits, which recently received
support from the White House. Should this bill,
or others like it, get the green light from Congress,
it would spur the development of dozens of
CCUS projects over the next decade.
• Long-term liability: Companies are
responsible for injection wells during the life
of a CCUS project, which can last up to 50
years—and sometimes longer. But the regulatory
patchwork between various U.S. states means
it’s often unclear who assumes liability after the
company’s lease expires. If state governments
aren’t willing to assume responsibility for carbon
storage projects once operations wind down, then
investors could be on the hook for maintaining
those wells for decades.
Considerations for United Kingdom (UK)
and European Union (EU) stakeholders
• Stymied cooperation between countries:
Sequestered carbon has been largely stored
beneath the European seabed, often in the North
and Adriatic seas, to take advantage of natural
processes that redistribute CO2 across the deep
ocean. But restrictions laid out by the London
Protocol have made it di昀케cult for landlocked EU
countries to export their carbon for storage. A
2009 amendment allowing for the transborder
export of carbon has only been rati昀椀ed by 10
nations—36 approvals are needed for it to
become legally binding. Energy leaders should
look to capitalize on other bilateral agreements
that allow for the export of CO2, such as the
trailblazing pact between Belgium and Denmark
that enables permanent o昀昀shore carbon storage.
• Government support and regulation in
the UK: The country’s Department for Energy
Security and Net Zero has selected eight CCUS
projects, across a mix of technologies, to negotiate
for government assistance in Phase 2 of its
Track-1 initiative. These projects will connect
into the existing Track-1 clusters (comprising a
T&S storage network and initial carbon capture
projects), awarded in Phase 1. Selection enables
projects to access initial capital grant funding
and long-term price support, either under an
economic license model (for T&S Networks) or
(otherwise) government-backed Contracts-forDi昀昀erence. The UK Government is still consulting
on the legislative and regulatory framework
that will underpin these business models, and
acceleration of that process from here will be key
to realising the UK Government’s ambition to
capture 20-30 Mt CO2 per year by 2030.
A solution in lockstep with clean fuel
and renewables
CCUS is most successful when deployed by
companies with existing infrastructure for
energy production and industrial processing.
Its contribution to the clean energy transition will
be historic, especially as the production of lowcarbon fuels and renewables heats up, and research
into the alternative uses of carbon advances.
Take a renewable natural gas project, for example.
By converting methane from agricultural use or
feedstock into less potent CO2, and storing it as
an injectable, some companies are now achieving
negative emissions. CCUS is also playing a key role
in blue hydrogen production, which uses natural
gas to split hydrocarbons, generating carbon
emissions that are later stored. This pairing could
prove crucial to meeting the EU’s production target
of 10 million tons of clean fuels by 2030.
Though investing in CCUS can require signi昀椀cant
upfront capital and time investment, it will
undoubtedly play a vital role in clean energy
production in the next decade and beyond.
• EU regulatory framework: The CCSDirective of the European Union, which was
optional to be implemented by the Member
States, has not been implemented in a number
of countries, including, for example, Germany.
However, this is necessary to establish the
required legal framework.
Hogan Lovells | Powering tomorrow: Navigating the energy transition landscape
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