You can tell the Republican Gov. Jeff Landry Administration has taken with the issue of carbon capture and sequestration is sensible because profiteering special interests are squawking about it.
Starting Aug. 1, the (renamed for the second time in fewer than two years) Department of Conservation and Energy launched an initiative culminating in an executive order earlier this month by Landry that has the effect of creating a chokepoint for entities that wish to engage in the CCS practice. It all began in the opening days of Landry’s term when the federal government awarded the state the ability to regulate the practice, in lieu of the federal government.
A law regulating it had been passed several years ago and another couple this year addressing the process, and DCE has issued a few regulations since outlining and facilitating the process. But the guidance has become much more explicit since Aug. 1, which with its updates set in motion several things. First, it stated it would give precedence to one project at the permit issuance stage followed by five others (there are over three dozen in various stages of the permitting process; this half-dozen is the farthest along). Second, it imposed additional requirements such as public engagement (translation: it must record citizen and local government reactions and whether they approve of a request) and adhering to pipeline regulations both current and future when issued by the federal government. Third, if any extant project made all but the most cosmetic change to its application, it would go to the back of the queue.
While the guidance language over three separate documents indicated its contents weren’t compulsory, that all changed when a couple of days after the last issuance Landry pumped out an executive order that made it all so and slapped a moratorium on approval of any new projects past the original six citing the need to vet carefully. This led to moaning and complaining by lobbyists for the energy industry and their calls for swift lifting of the moratorium.
At first glance, the strong reaction may seem like overreaction. Keeping approvals from going forward would cost the businesses involved from making money in the duration, but the visceral and alarmist statements coming from these special interests appear overblown for the policy’s actual impact.
Key to explaining this comes from three understandings. First, almost all captured carbon dioxide is performed by fossil fuel-extracting companies to extract more fossil fuels, through a process called enhanced oil recovery. It has very few other uses currently because it is uneconomical for these, although research continually goes on promising to find expanded economical uses. Thus, most of whatever doesn’t get used for EOR almost certainly ends up stored. Second, government tax schemes subsidize the storage process. In the U.S., this occurs mainly through the Section 45Q tax credit and internationally in carbon trading markets, in which U.S. corporations can participate. Thus, even if without tax impacts it’s a money-loser, factoring those in can make the sequestration process profitable. Third, it makes for great propaganda by allowing fossil fuel concerns to claim they are fighting a mythical catastrophic anthropogenic global warming menace while accepting the premise that more carbon dioxide burned equals disaster, because they say they capture it (using taxpayer dollars, of course, and at that only a fraction, and then almost all of it for getting at more carbon dioxide).
What really concerns these concerns is that the longer a moratorium goes on, the more legal changes can spoil their party. While the recent budget reconciliation hardly touched the 45Q regime, other things going on within the GOP Pres. Donald Trump Administration threaten to tear their playhouse down. A combination of stricter rules on aspects such as transportation and a relaxation of rules that decreases the imperative of having to do carbon capture, thus needing to sequester a good chunk of it, from the Trump Administration could make the economics worse than ever.
That’s the real fear about the moratorium: it will delay things at the state level while at the federal level the regulatory and tax environments deteriorate that raises costs and lowers potential profits to choke closed more and more the money hose. That’s how we know Landry’s order is good, in that it not only reduces the money drain from taxpayers but it also dampens a useless exercise of blowing carbon into the ground possibly over the objections of those nearby. The only thing worse than suffering an externality (much less one about which unknowns still exist) is suffering one for no good reason while others reap monetary gains. Landry made the right call.
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