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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Efforts in the U.S. to geologically sequester carbon-dioxide emissions could be delayed or derailed unless state and federal governments find a way to address property rights issues, lawyers at Stoel Rives LLP (Portland, Oregon) told Industrial Info. Utilities, oil and gas producers, pipeline companies and equipment suppliers have been running flat-out to test and deploy technologies that capture, transport and sequester carbon-dioxide emissions from power plants and industrial facilities. The Waxman-Markey energy bill, currently being considered by the U.S. Senate, awards bonus carbon-dioxide allowances to utilities that deploy carbon capture and sequestration (CCS) technologies at coal-fired power plants by 2015.
The 2015 deadline could be missed, however, unless a consistent legal framework for geologic carbon sequestration develops in the very near future. "At this point, there are few consistent statutes, regulations or conventions for geologic storage of carbon dioxide aside from enhanced oil recovery [EOR] projects, and EOR projects are historically meant to inject and cycle, but not permanently sequester, carbon dioxide," said Stoel Rives partner Jerry Fish. Property rights are the primary legal challenge that could block efforts to sequester carbon dioxide underground, either in an EOR project or injected into a saline aquifer as part of a CCS project, he added.
Property rights are critical to geologic carbon sequestration, because the underground areas needed to store carbon dioxide are extremely large and could cross state borders, said Fish. The potential interstate nature of carbon sequestration projects means that the federal government could take a leading role in creating a consistent legal framework for acquiring the property rights for these projects, as it does for natural-gas-pipeline and storage projects.
Typically, states have granted property owners rights that extend to the center of the earth and reach into the atmosphere. Under existing law, companies wanting to sequester carbon dioxide underground will likely need to purchase the right to do so from those who own the land where the gas will be sequestered. Uncertainty lingers, however, because no state court has had to deal with this issue. In most states, purchasing or leasing the right to store natural gas underground is necessary.
To illustrate the magnitude of the sequestration challenge, a 1,000-megawatt coal-fired power plant emits between 5 million and 8 million metric tons of carbon dioxide per year, according to Stoel Rives. Capturing and sequestering the emissions from a single coal-fired plant for a 50-year period could require obtaining underground property rights for between 100 and 1,000 square miles of land, depending on the nature of the underground rock layers. The law firm estimates that capturing all of the carbon-dioxide emissions from U.S. coal-fired power plants could require up to 600 sequestration projects of up to 1,000 square miles each, an area roughly the size of Alaska. However, Fish says that the industry is likely to search out underground sites with multiple rock layers suitable for storage, to greatly reduce the area required.
"The industry may not fully appreciate this yet, but property rights issues are as expensive and complex to solve as the technology issues," said Bill Holmes, a member of Stoel Rives, in regard to CCS.
The use of the condemnation process to obtain large-scale property rights to sequester carbon dioxide is not a viable option everywhere, said Fish and Holmes. The condemnation process can be "excruciatingly slow," very expensive, and politically unpalatable, said Holmes, with Fish adding that some recent pipeline condemnation cases have lingered for several years on appeal.
On a national basis, obtaining underground property rights for CCS via condemnation "could involve hundreds or even thousands of litigants, depending on the size of the project and the population density in the area. Even if people were in a good mood, that's very complex and expensive," Holmes told Industrial Info.
"Ultimately, comprehensive federal and state legislation will be needed," said Fish. "One approach would be to have Congress amend the Natural Gas Act to include the right to acquire property rights for carbon-dioxide pipelines and sequestration facilities."
The Natural Gas Act of 1938 allows companies to acquire land for natural gas pipelines and storage facilities using the federal power of eminent domain. But the amount of property acquired for natural gas storage covers only a few square miles. Since the areas required for carbon sequestration may be much larger, there may be political resistance to the use of eminent domain. "Legislators and citizens will have to decide whether the imminent threat of global warming justifies such an accommodation by the nation's property owners," Fish concluded.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.
The 2015 deadline could be missed, however, unless a consistent legal framework for geologic carbon sequestration develops in the very near future. "At this point, there are few consistent statutes, regulations or conventions for geologic storage of carbon dioxide aside from enhanced oil recovery [EOR] projects, and EOR projects are historically meant to inject and cycle, but not permanently sequester, carbon dioxide," said Stoel Rives partner Jerry Fish. Property rights are the primary legal challenge that could block efforts to sequester carbon dioxide underground, either in an EOR project or injected into a saline aquifer as part of a CCS project, he added.
Property rights are critical to geologic carbon sequestration, because the underground areas needed to store carbon dioxide are extremely large and could cross state borders, said Fish. The potential interstate nature of carbon sequestration projects means that the federal government could take a leading role in creating a consistent legal framework for acquiring the property rights for these projects, as it does for natural-gas-pipeline and storage projects.
Typically, states have granted property owners rights that extend to the center of the earth and reach into the atmosphere. Under existing law, companies wanting to sequester carbon dioxide underground will likely need to purchase the right to do so from those who own the land where the gas will be sequestered. Uncertainty lingers, however, because no state court has had to deal with this issue. In most states, purchasing or leasing the right to store natural gas underground is necessary.
To illustrate the magnitude of the sequestration challenge, a 1,000-megawatt coal-fired power plant emits between 5 million and 8 million metric tons of carbon dioxide per year, according to Stoel Rives. Capturing and sequestering the emissions from a single coal-fired plant for a 50-year period could require obtaining underground property rights for between 100 and 1,000 square miles of land, depending on the nature of the underground rock layers. The law firm estimates that capturing all of the carbon-dioxide emissions from U.S. coal-fired power plants could require up to 600 sequestration projects of up to 1,000 square miles each, an area roughly the size of Alaska. However, Fish says that the industry is likely to search out underground sites with multiple rock layers suitable for storage, to greatly reduce the area required.
"The industry may not fully appreciate this yet, but property rights issues are as expensive and complex to solve as the technology issues," said Bill Holmes, a member of Stoel Rives, in regard to CCS.
The use of the condemnation process to obtain large-scale property rights to sequester carbon dioxide is not a viable option everywhere, said Fish and Holmes. The condemnation process can be "excruciatingly slow," very expensive, and politically unpalatable, said Holmes, with Fish adding that some recent pipeline condemnation cases have lingered for several years on appeal.
On a national basis, obtaining underground property rights for CCS via condemnation "could involve hundreds or even thousands of litigants, depending on the size of the project and the population density in the area. Even if people were in a good mood, that's very complex and expensive," Holmes told Industrial Info.
"Ultimately, comprehensive federal and state legislation will be needed," said Fish. "One approach would be to have Congress amend the Natural Gas Act to include the right to acquire property rights for carbon-dioxide pipelines and sequestration facilities."
The Natural Gas Act of 1938 allows companies to acquire land for natural gas pipelines and storage facilities using the federal power of eminent domain. But the amount of property acquired for natural gas storage covers only a few square miles. Since the areas required for carbon sequestration may be much larger, there may be political resistance to the use of eminent domain. "Legislators and citizens will have to decide whether the imminent threat of global warming justifies such an accommodation by the nation's property owners," Fish concluded.
Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.
