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    Related Practices / Industries

    Carbon Sequestration – Climate Changes & Sustainability


    What are the legal issues surrounding carbon sequestration?

    There will be many responses to carbon emission reduction regulations or incentives: increased use of renewable energy sources, a greater focus on demand reduction, and innovative technologies to enhance the efficiency of energy generation. But one unavoidable fact is that hydrocarbon and carbon fuel sources will remain part of the energy picture for years to come.

    Carbon sequestration refers to mechanisms used to reduce the total atmospheric concentration of carbon dioxide or other greenhouse gases. Sequestration takes several forms, ranging from afforestation (increasing CO2 consumption), to storage of CO2 in ocean depths, to using CO2 in industrial applications.

    An emerging sequestration method with considerable promise is geological carbon capture and storage (CCS). In CCS, the CO2 is captured at the point the carbon fuel is used—either after combustion (in the exhaust stack) or before combustion (when fuels are gasified, separating CO2 from hydrogen or other fuels or feedstocks). The captured CO2 is transported and injected to deep geological voids—depleted oil and gas reservoirs, coalbed methane reservoirs, saline water formations or the like. Considerable experience with injection of CO2 for enhanced oil recovery and with natural gas storage confirms the utility of this approach.

    Studies suggest that if reservoirs are managed properly, 99% of the injected CO2 will remain stored for over 1,000 years (“IPCC Special Report on Carbon Dioxide Capture and Storage,” (2005), p. 246). An MIT report titled “The Future of Coal” states that “CO2 capture and sequestration is the critical enabling technology that would reduce CO2 emissions significantly while also allowing coal to meet the world’s pressing energy needs.” The EPA recently concluded that if CCS were not commercially available, the adverse economic impact of a particular emissions reduction bill on Gross Domestic Product would double.

    Achieving these benefits will require technological breakthroughs and some forms of tax, investment or related government support, as the costs of capture of CO2 from existing power plants currently remain quite high.

    Success will also require dealing with several types of legal challenges:

    Will a ton of CO2 that is sequestered count as much as a ton of CO2 that is foregone by demand reduction or renewable generation?
    This question will be resolved as part of the international treaties and national laws regarding carbon emission reduction mandates and credits.

    Which agencies will have regulatory jurisdiction over CCS projects?
    Within a state, the traditional oil and gas regulator has interests, but so do environmental agencies and federal, state and local entities acting in their commercial capacity. Interstate projects and projects making use of interstate commerce will encounter federal and sister-state issues.

    What standards will apply to the injection of CO2?
    In this context, is CO2 a “waste” or a “commodity” having value? The existing EPA regulations intended to protect underground drinking water sources are being re-evaluated to determine what changes are appropriate for CCS. State regulators are also examining the subject.

    How can CO2 producers or injectors acquire rights to the property required for transport and storage?
    Will eminent domain powers be available for these purposes? Can existing oil and gas exploration and production rights be extended to cover CCS projects of unlimited duration? From which landowners will consent be needed—the owners of the surface rights, or the (often different) owners of the rights to the mineral or water associated with the reservoirs where the CO2 is to be stored?

    What liabilities could result from CCS operations, and who will bear them?

    Governments may step in to cover certain risks, while industry participants and project owners will shoulder others, under regulatory frameworks yet to be drafted.

    Representative Matters
    • Represent Clean Energy Systems Inc. (CES) in permit and contract advice for the company’s 50MW zero-emissions plant. CES focuses on aerospace technology to produce power while eliminating atmospheric emissions by using hydrocarbon fuels and other renewables thus providing the firm the opportunity to develop a range of sequestration experience. 
    • Advise an international power company with coal-fired generation assets on legal issues (including long-term liability issues unique to sequestration projects) in connection with potential participation in both a pilot capture technology project and a future post-combustion sequestration project.

    Pillsbury attorneys and a number of our clients—trade associations, generators, emission credits trading firms, and oil and gas field operators—are actively at work on these and other challenges. The potential environmental and economic benefits of geological carbon capture and storage are large enough to make our efforts worthwhile.

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