[Senate Report 112-32]
[From the U.S. Government Publishing Office]
Calendar No. 99
112th Congress Report
SENATE
1st Session 112-32
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DEPARTMENT OF ENERGY CARBON CAPTURE AND SEQUESTRATION PROGRAM
AMENDMENTS ACT
_______
July 11, 2011.--Ordered to be printed
_______
Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 699]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 699) to authorize the Secretary of Energy
to carry out a program to demonstrate the commercial
application of integrated systems for long-term geological
storage of carbon dioxide, and for other purposes, having
considered the same, reports favorably thereon with amendments
and recommends that the bill, as amended, do pass.
The amendments are as follows:
1. On page 3, line 7, insert ``large-scale'' after ``10''.
2. Beginning on page 4, line 24, through page 5, line 1,
strike ``a certification by the appropriate regulatory
authority that the project will comply with''.
3. On page 6, line 3, insert ``the requirements of'' after
``with''.
4. On page 6, line 21, insert ``requirements'' after
``following''.
5. On page 15, lines 12 and 13, strike ``for each of fiscal
years 2010 through 2020''.
6. On page 15, after line 13, add the following:
(c) Offset.--Section 708 of the Energy Independence and
Security Act of 2007 (42 U.S.C. 17256) is repealed.
7. At the end, add the following:
SEC. . ANNUAL DEPARTMENT OF ENERGY ASSESSMENT.
(a) In General.--
(1) Department of energy report.--Not later than 1
year after the date of enactment of this Act and
annually thereafter until the Secretary of Energy
(referred to in this section as the ``Secretary'')
determines that technology preventing the emission of,
capturing, transporting, permanently storing or
sequestering, or putting to beneficial use carbon
dioxide is available to the commercial marketplace, the
Secretary shall conduct an assessment in accordance
with subsection (b) of the existing Federal programs
supporting such technology and submit to the
appropriate authorizing and appropriating committees of
Congress a report on the results of the assessment.
(2) Government accountability office review.--Not
later than 1 year after the first report is provided to
the appropriate authorizing and appropriating
committees of Congress under paragraph (1) and
subsequently as needed until technology preventing the
emission of, capturing, transporting, permanently
storing or sequestering, and putting to beneficial use
carbon dioxide is available to the commercial
marketplace, the Comptroller General of the United
States shall conduct a review of the report described
in paragraph (1) in accordance with subsection (c).
(b) Department of Energy Report Requirements.--The
Secretary shall include in the report required under subsection
(a)(1)--
(1) a detailed description of the existing programs,
including each major program area, that conduct or
support research, development, demonstration, and
deployment of technology--
(A) to prevent the emission of carbon dioxide
or capture of carbon dioxide from sources,
including fossil fuel-based power plants;
(B) to transport carbon dioxide;
(C) to store or sequester captured carbon
dioxide permanently; or
(D) to put captured carbon dioxide to
beneficial use;
(2) an assessment, based on Federal Government
laboratory research experience, available industry
research experience, and such other data and
information as the Secretary considers useful and
appropriate, to determine whether each major program
area and principal projects within the areas described
in paragraph (1) are designed to, and will, advance
fundamental knowledge or achieve significant technical
advancement and materially improve the technology base
to effectively address the prevention of carbon dioxide
emissions or capture of carbon dioxide or the
transport, permanent storage, or beneficial use of
captured carbon dioxide;
(3) an assessment of the estimated time frame and
costs of the Secretary necessary to reasonably conclude
that technology will be available to the commercial
marketplace; and
(4) an assessment of the barriers and solutions,
including policy recommendations, to financing large
carbon capture and storage demonstration projects with
a focus on overcoming the impacts of oil price
volatility on enhanced oil recovery contracts for
carbon dioxide.
(c) Government Accountability Office Review Requirements.--
The Comptroller General of the United States shall include in
the review required under subsection (a)(2)--
(1) an analysis of the estimated time frames and
costs of the Secretary, as reported pursuant to
subsection (b)(3);
(2) any recommendations that the Comptroller General
considers appropriate and useful to improve the
likelihood of achieving technological advancements to
mitigate carbon dioxide emissions or to expedite the
availability of carbon capture and sequestration
technology for the commercial marketplace;
(3) an assessment of any legal or regulatory
impediment by any Federal agency or department that has
arisen in relation to the deployment of carbon capture
and storage technology, including any delays in the
permitting of the technology or the construction or
operation of any the facility; and
(4) any other analyses the Comptroller General
considers necessary or appropriate.
(d) Budget Request Report.--In the case of the budget
request for fiscal year 2013, the President shall include in
the budget request of the Secretary for the Fossil Energy
Program a report that--
(1) assesses the progress of the Secretary in
implementing the recommendations of the Comptroller
General of the United States and compares the estimated
costs of completing implementation of those
recommendations to the requested budget levels; and
(2) an assessment of the progress made for the
preceding fiscal year toward achieving the goals of the
program for which funding is requested.
Purpose of the Measure
The purpose of S. 699 is to authorize the Secretary of
Energy to carry out a program to demonstrate the commercial
application of integrated systems for long-term geological
storage of carbon dioxide, by providing a Federal indemnity to
early adopters of these systems, by providing training programs
for State and Tribal organizations, and by assessing the
commercial readiness of carbon capture and storage
technologies.
Background and Need
Carbon capture and storage (CCS), often called carbon
sequestration, is poised to be a meaningful part of a portfolio
of options for addressing global climate change. While
scientific and technological challenges remain, CCS holds
particular promise for reducing the large amounts of carbon
dioxide emitted from the use of fossil fuels in electricity
generation and other facilities. Widespread deployment of CCS
faces a series of challenges including commercialization of
capture technologies, geologic storage scale-up concerns, and
uncertainty about the policy, infrastructure, and economic
factors associated with large-scale deployment.
While a number of small-scale CO2 injection
tests have either taken place or are underway, large-scale
(greater than 1,000,000 tons CO2 annually)
injections are only now going through the selection and
permitting process. More than 25 small injection tests are
currently sponsored by the Department of Energy (DOE) Regional
Carbon Sequestration Partnership program but increasingly,
states and private companies are also undertaking these tests
to assist in regional site characterization and to build
expertise. The DOE Regional Carbon Sequestration Partnership
program has recently entered a third phase that will involve
seven larger projects, whose total projected volume of
CO2 to be injected will average about 1,000,000 tons
over the life of the project.
The first statutory language to create a CCS research and
development program was enacted as part of the Energy Policy
Act of 2005. It provided the basic framework for the DOE
program where the Regional Carbon Sequestration Partnership
program resides. It was amended by the Energy Independence and
Security Act of 2007 (EISA). The 2007 law expanded upon the
existing 2005 program by creating a third phase of larger CCS
demonstration scaled projects that include fully integrated
capture, transportation, and sequestration components.
Additionally, basic CCS research and development was
authorized, including beneficial use and reuse of
CO2 (e.g., CO2 use for growing algae for
biofuels and sequestration in cement, baking soda, or other
products).
Since the passage of the EISA, the Department of the
Interior has completed several of the EISA mandates within its
jurisdiction by beginning a national carbon dioxide geological
storage assessment that is being conducted by the US Geological
Survey and by completing a study of the issues related to CCS
project implementation on federal lands. In addition, DOE's CCS
programs have received substantial funding that has helped to
implement many of the programs outlined in the EISA, including
advanced geologic site characterization, industrial carbon
capture and sequestration work, a third round of Clean Coal
Power Initiative solicitations, and workforce training and
development.
Many stakeholders believe that large-scale CCS
demonstration projects will not move forward without liability
protection, in addition to adequate project financing. At
present, many industry stakeholders cite major concerns with
the existing petroleum production regulations, as they may or
may not apply to geological carbon sequestration, as well as a
lack of a clear framework for closing down a CCS site. The
provision of liability protections is one way to increase the
willingness of project developers to participate in both
privately and federally-funded CCS demonstration projects.
As CCS projects grow in both scale and number, there will
be an increasing need to train qualified regulators to oversee
the permitting, operation, and closure of geologic
sequestration sites as well. Therefore it is necessary to
create a grant program to assist in the training of State and
Tribal agency personnel who oversee the regulatory aspects of
CCS.
S. 699 is needed to support research, development and
demonstration efforts being conducted by the Department of
Energy and the private sector, and to ensure substantial
progress in demonstrating full commercial deployment of CCS
technologies.
Legislative History
S. 699 was introduced by Senator Bingaman on March 31,
2011. Senators Barrasso, Rockefeller, and Murkowski are
original cosponsors, and Senators Tester, Udall, and Hoeven
have been added as cosponsors. The Committee on Energy and
Natural Resources held a hearing on the bill on Thursday, May
12, 2011. The Committee considered the bill at its business
meeting on Thursday, May 26, 2011. The Committee adopted seven
amendments to the bill and ordered the bill, as amended,
favorably reported.
Similar legislation, S. 1013, was introduced by Senator
Bingaman during the 111th Congress, and the Committee held a
hearing on it on May 14, 2009. S. Hrg. 111-50.
Committee Recommendation
The Senate Committee on Energy and Natural Resources, in
open business session on May 26, 2011, by voice vote of a
quorum present, recommends that the Senate pass S. 699, if
amended as described herein. Mr. Lee, Mr. Paul (by proxy), and
Mr. Heller asked that they be recorded as voting no.
Committee Amendments
The Committee adopted seven amendments during its
consideration of S. 699. The first four clarify the text. The
fifth reduces the authorization of appropriations from $10
million annually for each of fiscal years 2010 through 2020 to
a total of $10 million. The sixth repeals section 708 of the
Energy Independence and Security Act of 2007, 42 U.S.C. 17256,
which authorized appropriation of $10 million for university-
based research and development grants to study carbon capture
and sequestration using various types of coal. The seventh
amendment adds a new section 4 to the bill, which requires the
Department of Energy to conduct an annual assessment of
existing federal programs supporting CCS technologies; requires
the Government Accountability Office to review the Department's
annual reports, recommend improvements, and assess legal or
regulatory impediments; and requires the President to assess
the Department's progress in implementing the GAO
recommendations and its progress in achieving the program's
goals.
Section-by-Section Analysis
Section 1 provides a short title.
Section 2(a) adds a new section 963A to the Energy Policy
Act of 2005 to provide for financial and technical assistance
for up to 10 large-scale carbon dioxide geologic storage
demonstration projects.
New section 963A(a) defines key terms used in the section.
Section 963A(b) directs the Secretary of Energy to carry
out a program, in addition to the program already authorized
under section 963 of the Energy Policy Act of 2005, to
demonstrate the commercial application of long-term geologic
storage of carbon dioxide from industrial sources.
Section 963A(c) authorizes the Secretary to enter into
cooperative agreements for up to 10 large-scale demonstration
projects.
Sections 963A(d) and (e) specify selection criteria, terms,
and conditions for demonstration projects receiving assistance
under section 963A, to ensure that certain requirements have
been met and that the project will be conducted in a manner
that minimizes the potential liability exposure of the Federal
government under any indemnity provided pursuant to section
963A(g). The Secretary of Energy will provide the certificate
of closure since the Department of Energy will be providing
indemnity for rigorously monitored, compliant sites.
Section 963A(f) lays out the requirement for closure of
demonstration project sites. Only after these requirements are
met can title for the site, and responsibility for its long-
term stewardship, transfer to the Federal government. The
criteria are science based, and must be met for a period of 10
years, beginning after the carbon dioxide plume has come into
near equilibrium conditions with the geological formation
(mainly, the velocity of the plume as it moves in the
subsurface begins to decelerate and/or formation pressures stop
increasing, but instead hold steady or decrease, for example).
Thus, for example, if it takes 25 years for such equilibration
to take place, then the earliest the land could move into post-
closure would be 35 years after injection activities cease.
Section 963A(g) authorizes the Secretary of Energy to
indemnify large-scale demonstration projects from liability for
personal, property, and environmental damages in excess of
their insurance coverage or other financial protection that
they may be required to maintain. Liability resulting from the
project operator's intentional misconduct or gross negligence
is expressly excluded. The Secretary is required to charge a
fee for providing indemnification, in an amount that reflects
the net present value of the payments that the Government may
have to make, taking into account the likelihood of an incident
requiring the Government to make indemnification payments. In
addition, subsection (g) permits the Secretary to enter into
indemnification agreements in advance of appropriations and
authorizes the Attorney General to defend or settle claims
against project operators if it is determined that the
Government may have to make payments under the indemnity
agreement. The Secretary is required to make a determination on
project selection within one year of receiving each
application. There is a limitation on the amount of
indemnification for each demonstration project of
$10,000,000,000 (adjusted every five years for inflation).
Section 963A(h) allows projects under this section to be
sited on Federal land, subject to relevant conditions by the
Secretary of Agriculture or the Secretary of the Interior (with
respect to lands under their jurisdiction).
Section 963A(i) allows the Secretary of Energy to take
title (or administrative transfer) of lands containing closed
geological storage sites from the projects under this section,
for long-term stewardship. It also includes mandatory spending
to cover the costs associated with maintaining these sites for
purposes of public health and safety protection, in perpetuity.
Section 2(b) makes technical and conforming changes to
section 963 of the Energy Policy Act of 2005 and sections 703
and 704 of the Energy Independence and Security Act of 2007.
Section 3 authorizes a grant program to provide State and
tribal agencies involved in carbon storage projects to help
train personnel in the regulatory and site managerial aspects
of carbon storage.
Section 4 authorizes an annual assessment of existing
Federal programs supporting carbon capture and storage
technologies. This assessment will consider the success of
supporting programs in advancing technologies, identify any
barriers for commercial deployment, and provide time and cost
estimates required for commercial deployment of carbon capture
and storage technologies. Each annual assessment must be
reviewed annually by the GAO, who is tasked with providing
recommendations to the President.
Cost and Budgetary Considerations
S. 699--Department of Energy Carbon Capture and Sequestration Program
Amendments of 2011
Summary: S. 699 would authorize the creation of a new
program at the Department of Energy (DOE) to demonstrate
systems for storing carbon dioxide produced by industrial
sources, including measures that would indemnify recipients for
certain liabilities and allow DOE to take title to the sites
for long-term stewardship. The bill also would create and
repeal authorizations of appropriations for certain grants
related to carbon sequestration projects.
CBO estimates that implementing this bill would increase
net discretionary spending by $68 million over the 2012-2016
period, assuming appropriation of the necessary amounts. Pay-
as-you-go procedures apply because enacting the legislation
would affect net direct spending. However, CBO estimates that
such spending would be negligible over the 2012-2021 period.
Enacting this bill would not affect revenues.
S. 699 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA).
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 699 is shown in the following table. The
costs of this legislation fall within budget function 270
(energy).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
------------------------------------------------------------------------------------------------------------
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012-2016 2012-2021
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level.............. 10 10 10 10 50 51 52 54 55 56 90 358
Estimated Outlays.......................... 8 12 12 8 28 46 52 53 54 56 68 329
CHANGES IN DIRECT SPENDING
Estimated Budget Authority\a\.............. 0 0 0 10,700 10,900 11,200 11,400 11,700 12,000 12,200 21,600 80,100
Estimated Outlays.......................... 0 0 * * * * * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: *=net outlays between -$500,000 and $500,000.
\a\The budget authority for the indemnifications authorized by the bill would be recorded in the year that DOE enters into a cooperative agreement. The
estimated budget authority shown in this table represents the maximum amount authorized by the bill for each project, including adjustments for
inflation. The actual amount of such potential liabilities could be much smaller than the authorized levels.
Basis of estimate: For this estimate, CBO assumes that S.
699 will be enacted near the end of fiscal year 2011, that the
necessary amounts for implementing the bill will be
appropriated for each fiscal year, and that outlays will occur
at the historical rates for similar activities.
Spending subject to appropriation
CBO estimates that implementing S. 699 would increase net
discretionary spending by $68 million over the 2012-2016 period
and $329 million over the 2012-2021 period. That estimate
includes the net effects of provisions that would increase
spending for carbon sequestration projects, authorize grants to
state and tribal governments involved in regulating such
projects, and repeal an existing authorization for grants to
universities to perform research related to carbon capture and
storage.
Increased Spending for Carbon Sequestration Projects. The
cooperative agreements authorized by S. 699 would supplement
other forms of federal assistance for carbon sequestration
projects. For example, section 963 of the Energy Policy Act of
2005 authorized appropriations for a research, development, and
demonstration program on carbon sequestration through 2015. CBO
anticipates that projects that have received funding under
DOE's existing programs would be eligible for the types of
assistance authorized by this bill, assuming they meet the
eligibility criteria in the bill. Therefore, S. 699 would
effectively extend the existing authorization of appropriations
to support carbon sequestration projects beyond the scheduled
expiration in 2015.
By authorizing DOE to continue a carbon sequestration
program beyond 2015, S. 699 would effectively authorize
appropriations for those activities in 2016 and later years.
Based on information from DOE about recent levels of funding
for carbon sequestration projects and related administrative
activities, CBO estimates that fully funding those activities
in 2016 would require appropriations totaling $40 million. That
estimate assumes that funding for carbon sequestration
projects, including monitoring and other administrative costs,
remains in line with funding provided in recent years.
In addition, CBO expects that implementing S. 699 would
expand DOE's administrative workload to manage existing carbon
sequestration projects whose sponsors would choose to enter
into cooperative agreements for indemnification under the bill.
Based on the status of such projects, CBO anticipates that DOE
would approve seven indemnification agreements by 2021, some of
which would occur during the 2012-2016 period covered by this
estimate. We also expect that those projects would qualify for
additional technical and financial assistance under the bill.
Thus, we estimate that fully funding S. 699 would require
additional appropriations of about $10 million annually over
the 2012-2016 period. That estimate is based on historical
trends in spending for reviewing other technically complex
applications and assumes that some of the sponsors of DOE's
existing carbon sequestration projects would enter into
cooperative agreements under S. 699 and receive modest
increases in technical and financial assistance under the bill.
In total, assuming appropriation of the necessary amounts,
CBO estimates that implementing S. 699 would increase
discretionary spending related to carbon sequestration by $68
million over the 2012-2016 period. That estimate is based on
historical spending patterns for existing activities.
Grants to State, Local, and Tribal Governments. S. 699
would authorize the appropriation of $10 million for grants to
local governments to establish programs to train workers
involved with regulating carbon sequestration projects and
other related projects, such as transportation systems. Based
on historical spending patterns for similar activities, CBO
estimates that fully funding the proposed grant program would
cost $10 million over the 2012-2016 period.
Repeal Authorization for Grants to Universities. S. 699
would repeal a provision of law that authorizes the
appropriation of $10 million for grants to universities to
carry out research related to carbon capture and storage.
According to DOE, that program, which was originally authorized
under the Energy Independence and Security Act of 2007, has
received no funding to date. CBO estimates that the proposed
repeal would reduce authorized spending by $10 million over the
2012-2016 period, assuming appropriations are reduced
consistent with S. 699.
Direct spending
Injecting carbon dioxide into geologic formations is being
studied as a way of removing greenhouse gas from the
atmosphere. DOE, the Environmental Protection Agency (EPA), and
other agencies are in the process of examining the use of such
technologies on a commercial scale. S. 699 would authorize DOE
to enter into as many as 10 cooperative agreements to provide
financial and technical assistance to large-scale demonstration
projects that would provide for the long-term geologic storage
of carbon dioxide produced by industrial sources.
Under the proposed cooperative agreements, DOE would be
authorized to indemnify the recipients for damages resulting
from the demonstration projects, subject to certain conditions.
Project sponsors would be required to comply with certain
performance standards and provide financial assurances at
levels specified by EPA and other federal agencies. Except in
cases of gross negligence, the government would indemnify the
recipients for liabilities that exceed the value of those
financial assurances, subject to a limit of $10 billion per
project, or a total of $100 billion (plus adjustments for
inflation). The bill also would require project developers to
pay a fee equal to the estimated net present value of
indemnification payments. Once DOE certifies that a project
meets all of the closure requirements, the department also
could take ownership of the site.
Enacting the federal indemnification and stewardship
provisions in S. 699 would affect direct spending. S. 699 would
waive the Anti-Deficiency Act to allow DOE to sign
indemnification agreements in advance of appropriation acts and
would provide a permanent, indefinite appropriation for any
costs incurred by DOE to indemnify sponsors and remediate sites
that come under government ownership. The proceeds from
indemnification fees would be deposited in the Treasury as
miscellaneous receipts, which are a credit against direct
spending.
Indemnification Costs. Unintended releases of carbon
dioxide from geologic storage systems could pose risks to human
health, property, and natural resources, including drinking
water. Because the demonstration projects would be designed to
store carbon dioxide permanently, the liability for such events
would span several decades. Project sponsors would be required
by the bill and existing EPA regulations to demonstrate their
ability to cover costs that may arise in developing, operating,
and plugging wells as well as closing sites, responding to
emergencies, and performing remedial actions. Thus, CBO
estimates that the indemnification authority would be used
primarily to cover costs resulting from events that may occur
after a site has been closed, which probably would occur well
after 2021.
While most outlays for indemnification costs probably would
occur after 2021, the government's obligation to make such
payments would be incurred at the time the cooperative
agreement is signed. As a result, CBO's estimate includes the
amount of budget authority authorized by the bill for
indemnification payments. The amounts ultimately paid under
such agreements may be much smaller than the amounts authorized
by S. 699, however. DOE and other analysts expect that the
risks posed by the 10 projects would be relatively small
because they would be located in geologic formations that are
well understood, and, as demonstration projects, would be
subject to extensive monitoring and oversight. The 2006 report
of the International Panel on Climate Change, for example, said
that well-engineered, well-managed projects might effectively
sequester 99 percent of the carbon dioxide over periods of 100
years or more.
Income from Indemnification Fees. For this estimate, CBO
assumes that DOE would require firms to pay indemnification
fees over the operating life of the facility, based on the
volume of carbon dioxide injected each year. Setting a price
for such fees would be difficult because agencies and industry
lack experience with large-scale geologic storage systems.
EPA's regulations, for example, rely on pilot projects,
modeling efforts, and experience with other underground
injection activities such as enhanced oil and gas recovery.
According to some analysts, the value of the financial risks
through the operational and post-injection period may be
equivalent to less than 20 cents per ton of carbon dioxide.\1\
CB0 estimates that DOE initially would set rates below that
level because most of those estimated risks are associated with
operational activities, not long-term storage. Similarly, firms
might not seek federal indemnification if they considered the
fee to be disproportionate to the projected risks.
---------------------------------------------------------------------------
\1\Michael Donlan and Chiara Trabucchi, ``Valuation of Consequences
Arising from CO2 Mitigation at Candidate CCS Sites in the
U.S.'' Energy Procedia, 4(2011), p. 2228.
---------------------------------------------------------------------------
Net Effect on Direct Spending. Based on DOE's 2010 plan for
carbon storage and sequestration projects, CBO anticipates that
DOE would finalize seven indemnification agreements by 2021,
that most of those facilities would begin injections after
2015, and that the initial injections would involve relatively
low volumes of carbon dioxide. Under those volume, price, and
cost assumptions, CBO estimates that implementing the
indemnification provisions in S. 699 would have no significant
net effect on outlays over the 2012-2021 period. The net
budgetary impact of the indemnification regime in subsequent
years would depend on the balance between the amounts spent and
the amounts collected from fees: it could reduce net direct
spending if income from the fees exceeds the nominal value of
any payments but would increase net outlays if the costs exceed
the amounts paid by recipients of this assistance.
Finally, CBO estimates that enacting this bill would
increase future direct spending for DOE's stewardship and
regulatory activities. Such costs probably would be incurred
well beyond the 2012-2021 period and would depend on the
characteristics of the sites acquired by DOE. While routine
monitoring and management expenses probably would average less
than $5 million a year per site (in 2011 dollars), the cost of
any remediation activities is unknown.
Pay-As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. Enacting S. 699 would affect net direct spending but
CBO estimates that those effects would be negligible in each of
the fiscal years 2012 through 2021.
Intergovernmental and private-sector impact: S. 699
contains no intergovernmental or private-sector mandates as
defined in UMRA. The bill would authorize grants to state and
tribal agencies for training employees involved in carbon
capture, transportation, and storage projects. Any costs those
entities incur to meet grant requirements would result from
complying with conditions of federal assistance.
Estimate prepared by: Federal costs: Megan Carroll and
Kathleen Gramp; Impact on state, local, and tribal governments:
Ryan Miller; Impact on the private sector: Amy Petz.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Evaluation
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out the Department of Energy Carbon Capture and
Sequestration Program Amendments Act of 2011.
The bill establishes a cooperative assistance program that
establishes several statutory and regulatory standards as a
condition of receiving Government assistance and
indemnification.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 699.
Congressionally Directed Spending
The bill, as reported, does not contain any congressionally
directed spending items, limited tax benefits, or limited
tariff benefits as defined in rule XLIV of the Standing Rules
of the Senate.
Executive Communications
The testimony provided by the Department of Energy at the
Committee's May 12, 2011, hearing on S. 757 follows:
Statement of Scott Klara, Deputy Laboratory Director, National Energy
Technology Laboratory, Department of Energy
Thank you Chairman Bingaman, Ranking Member Barrasso, and
Members of the Committee; I appreciate the opportunity to
discuss the Department of Energy's activities to promote the
development of carbon capture and storage (CCS) technologies.
My testimony will provide an overview of the Department of
Energy's (DOE) research efforts in developing CCS technologies.
The Administration is still reviewing S. 699 and S. 757 and
does not have a position on either bill at this time.
interagency task force on carbon capture and storage
Before I discuss the Department's Clean Coal Research
Program, I will briefly review the conclusions from the
Interagency Task Force on CCS. In August 2010, the final report
from the Task Force was issued summarizing the Administration's
efforts to develop and deploy CCS technologies, and proposed a
plan to overcome the barriers to the widespread, cost-effective
deployment of CCS within ten years, with a goal of bringing
five to ten commercial demonstration projects online by 2016.
This report is the collective work of 14 executive departments
and federal agencies, which were tasked with developing a
comprehensive and coordinated Federal strategy to speed the
commercial development and deployment of clean coal
technologies. The task force concluded that while there are no
insurmountable technological, legal, institutional, regulatory
or other barriers that prevent CCS from playing a role in
reducing GHG emissions, early CCS projects face economic
challenges related to climate policy uncertainty, first-of-a-
kind technology risks, and the current high cost of CCS
relative to other technologies.
clean coal research program
DOE continues to play a leadership role in the development
of clean coal technologies with a focus on CCS. The Clean Coal
Research Program administered by DOE's Office of Fossil
Energy and implemented by the National Energy Technology
Laboratory is designed to enhance our energy security and
reduce environmental concerns over the future use of coal by
developing a portfolio of revolutionary clean coal
technologies. The Program is well positioned to help overcome
the technical challenges associated with the development of
clean coal technologies.
The Clean Coal Program, in partnership with the private
sector, is focused on maximizing efficiency and environmental
performance, while minimizing the costs of these new
technologies. In recent years, the Program has been
restructured to focus on clean coal technologies with CCS. The
Program pursues the following two major strategies:
(1) capturing and storing greenhouse gases; and
(2) improving the efficiency of fossil energy
systems.
The first strategy aims to eliminate concerns over
emissions of greenhouse gases from fossil fueled energy
systems. The second strategy seeks to improve the fuel-to-
energy efficiencies of these systems, thus reducing pollutant
emissions, water usage, and carbon emissions on a per unit of
energy basis. Collectively, these two strategies comprise the
Clean Coal Program's approach to ensure that current and future
fossil energy plants will have options to meet all emerging
requirements for a safe and secure energy future.
core research and development activities
The Clean Coal Program is addressing the key technical
challenges that confront the development and deployment of
clean coal technologies through research on cost-effective
capture technologies; monitoring, verification, and accounting
technologies to ensure permanent storage; permitting issues;
and development of advanced energy systems. The Program is also
actively engaged in interagency efforts to address liability
issues, public outreach, and infrastructure needs. As an
example, today's commercially available CCS technologies would
add around 80 percent to the cost of electricity for a new
pulverized coal plant, and around 35 percent to the cost of
electricity for a new integrated gasification combined cycle
plant. The Program is aggressively pursuing developments to
reduce these costs to less than a 35 percent increase in the
cost of electricity for pulverized coal energy plants and less
than a 10 percent increase in the cost of electricity for new
gasification-based energy plants.
Research is focused on developing technology options that
dramatically lower the cost of capturing carbon dioxide
(CO2) from fossil fueled energy plants. This
research can be categorized into three technical pathways:
post-combustion, pre-combustion, and oxycombustion. Post-
combustion refers to capturing CO2 from the stack
gas after a fuel has been combusted in air. Pre-combustion
refers to a process where a hydrocarbon fuel is gasified to
form a mixture of hydrogen and carbon dioxide, and
CO2 is captured from the synthesis gas before it is
combusted. Oxy-combustion is an approach where a hydrocarbon
fuel is combusted in pure or nearly pure oxygen rather than
air, which produces a mixture of CO2 and water that
can easily be separated to produce pure CO2.
Collectively, research in each of these technical pathways is
exploring a wide range of approaches such as membranes; oxy-
combustion concepts; solid sorbents; CO2 hydrates;
and advanced gas/liquid scrubbing technologies. These efforts
cover not only improvements to state-of-the-art technologies
but also development of several revolutionary concepts, such as
metal organic frameworks, ionic liquids, and enzyme based
systems. Coupling these developments with other advances in
efficiency improvements and cost reduction from developments in
gasification, turbines, and fuel cells, will help provide a
technology base for commercial deployment of fossil energy
systems integrated with CCS.
The Department is the primary supporter of the National
Carbon Capture Center (NCCC), which is a joint partnership
between DOE and industry. The NCCC is a one of a kind, world
class facility which offers an opportunity to validate capture
technologies on actual gas from a coal fired power plant or
gasification facility. Because of the ability to operate under
a wide range of process conditions, research at the NCCC can
effectively evaluate technologies at various levels of maturity
for many different applications.
regional carbon sequestration partnerships
The Regional Carbon Sequestration Partnerships were created
by the DOE in 2003 through a competitive solicitation. The
Partnerships were designed to address a range of issues
associated with geologic storage of CO2. The Clean
Coal Program has been performing CCS field tests focused on
injection, monitoring, verification, accounting and other
aspects of geologic storage for many years, and the seven
Regional Carbon Sequestration Partnerships are critical to this
effort. These Partnerships are comprised of state agencies,
universities, and private companies. They represent more than
400 unique organizations in 43 States, and four Canadian
Provinces. Geographic differences in fossil fuel use and
potential storage sites across the United States dictate the
use of regional approaches in addressing CCS, so each
Partnership is focused on a specific region of the United
States and Canada that hold similar characteristics relating to
CCS opportunities.
Together, the Partnerships form a network of capability,
knowledge, and infrastructure that will help enable geologic
storage technology to play a role in the clean energy economy.
They represent regions encompassing 97 percent of coal-fired
CO2 emissions, 97 percent of industrial
CO2 emissions, 96 percent of the total land mass,
and essentially all the geologic storage sites that can
potentially be available for geologic carbon storage. Regional
Partnerships are drilling wells and injecting small quantities
of CO2 to validate the potential of key storage
locations throughout the country. To date, the Regional
Partnerships have injected over 1 million tons of
CO2 at 18 small scale injection projects throughout
the United States and Canada. These tests have helped to
validate storage at a small scale and understand the fate of
CO2 in different depositional systems containing
saline water, oil, and natural gas. Several large scale
projects are also underway that will inject several million
tons of CO2 over the life of the projects. One of
these projects has safely and securely injected over 2 million
metric tons of CO2. Several more large-scale field
tests will begin later this year.
Over the course of these initiatives, DOE and the
Partnerships are addressing key infrastructure issues related
to permitting, pore space ownership, site access, liability,
public outreach, and education. We are also jointly developing
Best Practice Manuals on topics such as site characterization,
site construction, operations, monitoring, mitigation, closure,
and long-term stewardship. These manuals will serve as
guidelines for a future geologic sequestration industry in
their regions, and help transfer the lessons learned from DOE's
Program to all regional stakeholders.
Finally, DOE and the Partnerships continue to work closely
with the Environmental Protection Agency (EPA) and other
federal and state agencies in developing CCS regulatory
strategies, which will provide additional certainty for future
CCS deployments.
demonstrations at commercial-scale
The success of the Clean Coal Program will ultimately be
judged by the extent to which emerging technologies get
deployed in domestic and international marketplaces. Both
technical and financial challenges associated with the
deployment of new ``high risk'' coal technologies must be
overcome in order to be capable of achieving success in the
marketplace. Commercial scale demonstrations help the industry
understand and overcome start-up issues, address component
integration issues, and gain the early learning commercial
experience necessary to reduce risk and secure private
financing and investment for future plants.
The Department is implementing large-scale projects through
the Regional Partnerships, the Clean Coal Power Initiative
(CCPI), and FutureGen. Phase III of the Partnerships is focused
on large-scale field tests of geologic carbon sequestration on
the order of 1 million metric tons of CO2 per year,
and are addressing the liability, regulatory, permitting, and
infrastructure needs of these projects. As described previously
in this statement, the Partnerships have brought an enormous
amount of capability and experience together to work on the
challenges of these large projects.
The CCPI is a cost-shared partnership between the
government and industry to develop and demonstrate advanced
coal-based power generation technologies at the commercial
scale. CCPI demonstrations address the reliability and
affordability of the Nation's electricity supply from coal-
based generation. By enabling advanced technologies to overcome
technical risks involved with scale-up and bringing them to the
point of commercial readiness, CCPI accelerates the development
of both advanced coal generation technologies and the
integration of CCS with both new and existing generation
technologies. The CCPI also facilitates the movement of
technologies into the market place that are emerging from the
core research and development activities. The CCPI program
received an additional $800 million from the 2009 American
Recovery and Reinvestment Act (Recovery Act) which, in
combination with base funding, was used to fund four active
CCPI projects, two pre-combustion and two post-combustion
projects.
In addition, a CCPI round II project has been modified to
demonstrate CCS at a new integrated gasification combined cycle
power plant. We are working closely with the project developers
to comply with NEPA, air and water regulatory requirements, and
complete initial Front End Engineering & Design (FEED) studies
for the facilities. All five of these projects are on track to
be operational between 2013 and 2015.
The FutureGen Project intends to conduct novel large-scale
testing to accelerate the deployment of a set of advanced oxy-
combustion power production technologies integrated with CCS.
This project will be the first advanced repowering oxy-
combustion project to store CO2 in a deep saline
geologic formation. On August 5, 2010, Secretary of Energy
Steven Chu announced an award of $1 billion in Recovery Act
funding to the FutureGen Alliance, Ameren Energy Resources,
Babcock & Wilcox, and Air Liquide Process and Construction,
Inc., to build FutureGen 2.0, a clean coal repowering program
and carbon dioxide storage network. On February 28, 2011, the
FutureGen Alliance selected Morgan County, Illinois, as the
preferred location for the FutureGen 2.0 CO2 storage
site, visitor center, research, and training facilities.
In addition to the CCPI and FutureGen 2.0 projects, the
Recovery Act has also helped fund more than 80 additional
projects which includes three large scale Industrial CCS
demonstrations, ten geologic site characterizations, forty-
three university research training projects, seven CCS research
training centers, six Industrial CCS projects focused
CO2 reuse, and 14 projects focused on accelerated
component development in the core research program.
conclusion
CCS and related clean coal technologies can play a critical
role in mitigating CO2 emissions under many
potential future carbon stabilization scenarios. Nevertheless,
challenges remain to achieving cost-effective commercial
deployment of CCS. The Department's research programs are a
vital step to advancing the readiness of clean coal
technologies for future commercial deployment. I thank this
Committee and its members for allowing me the opportunity to
provide an overview of DOE's research efforts in developing CCS
technologies and I look forward to your questions. The
Administration is still reviewing S. 699 and S. 757 and does
not have a position on either bill at this time.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
the bill, as ordered reported, are shown as follows (existing
law proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
ENERGY POLICY ACT OF 2005
Public Law 109-58, as Amended
* * * * * * *
TITLE IX--RESEARCH AND DEVELOPMENT
* * * * * * *
Subtitle F--Fossil Energy
* * * * * * *
SEC. 963. CARBON CAPTURE AND SEQUESTRATION RESEARCH, DEVELOPMENT, AND
DEMONSTRATION PROGRAM.
(a) Definitions.--In this section:
(1) Industrial source.--The term ``industrial
source'' means any source of carbon dioxide that is not
naturally occurring.
(2) Large-scale.--The term ``large-scale'' means the
injection of over 1,000,000 tons of carbon dioxide from
industrial sources over the lifetime of the project.
[(a)] (b) [In general] Program.--The Secretary shall carry
out a 10-year carbon capture and sequestration research,
development, and demonstration program to develop carbon
dioxide capture and sequestration technologies related to
industrial sources of carbon dioxide for use--
(1) in new coal utilization facilities; and
(2) on the fleet of coal-based units in existence on
August 8, 2005.
[(b)] (c) Objectives.--The objectives of the program under
[subsection (a)] (subsection (b)) shall be--
(1) to develop carbon dioxide capture technologies,
including adsorption and absorption techniques and
chemical processes, to remove the carbon dioxide from
gas streams containing carbon dioxide potentially
amenable to sequestration;
(2) to develop technologies that would directly
produce concentrated streams of carbon dioxide
potentially amenable to sequestration;
(3) to increase the efficiency of the overall system
to reduce the quantity of carbon dioxide emissions
released from the system per megawatt generated;
(4) in accordance with the carbon dioxide capture
program, to promote a robust carbon sequestration
program and continue the work of the Department, in
conjunction with the private sector, through regional
carbon sequestration partnerships; and
(5) to expedite and carry out large-scale testing of
carbon sequestration systems in a range of geologic
formations that will provide information on the cost
and feasibility of deployment of sequestration
technologies.
[(c)] (d) Programmatic Activities.--
(1) Fundamental science and engineering research and
development and demonstration supporting carbon capture
and sequestration technologies and carbon use
activities--
(A) In general.--The Secretary shall carry
out fundamental science and engineering
research (including laboratory-scale
experiments, numeric modeling, and simulations)
to develop and document the performance of new
approaches to capture and sequester, or use
carbon dioxide to lead to an overall reduction
of carbon dioxide emissions.
(B) Program integration.--The Secretary shall
ensure that fundamental research carried out
under this paragraph is appropriately applied
to energy technology development activities,
the field testing of carbon sequestration, and
carbon use activities, including--
(i) development of new or advanced
technologies for the capture and
sequestration of carbon dioxide;
(ii) development of new or advanced
technologies that reduce the cost and
increase the efficacy of advanced
compression of carbon dioxide required
for the sequestration of carbon
dioxide;
(iii) modeling and simulation of
geologic sequestration field
demonstrations;
(iv) quantitative assessment of risks
relating to specific field sites for
testing of sequestration technologies;
(v) research and development of new
and advanced technologies for carbon
use, including recycling and reuse of
carbon dioxide; and
(vi) research and development of new
and advanced technologies for the
separation of oxygen from air.
(2) Field validation testing activities.--
(A) In general.--The Secretary shall promote,
to the maximum extent practicable, regional
carbon sequestration partnerships to conduct
geologic sequestration tests involving carbon
dioxide injection and monitoring, mitigation,
and verification operations in a variety of
candidate geologic settings, including--
(i) operating oil and gas fields;
(ii) depleted oil and gas fields;
(iii) unmineable coal seams;
(iv) deep saline formations;
(v) deep geologic systems that may be
used as engineered reservoirs to
extract economical quantities of heat
from geothermal resources of low
permeability or porosity; and
(vi) deep geologic systems containing
basalt formations.
(B) Objectives.--The objectives of tests
conducted under this paragraph shall be--
(i) to develop and validate
geophysical tools, analysis, and
modeling to monitor, predict, and
verify carbon dioxide containment;
(ii) to validate modeling of geologic
formations;
(iii) to refine sequestration
capacity estimated for particular
geologic formations;
(iv) to determine the fate of carbon
dioxide concurrent with and following
injection into geologic formations;
(v) to develop and implement best
practices for operations relating to,
and monitoring of, carbon dioxide
injection and sequestration in geologic
formations;
(vi) to assess and ensure the safety
of operations related to geologic
sequestration of carbon dioxide;
(vii) to allow the Secretary to
promulgate policies, procedures,
requirements, and guidance to ensure
that the objectives of this
subparagraph are met in large-scale
testing and deployment activities for
carbon capture and sequestration that
are funded by the Department of Energy;
and
(viii) to provide information to
States, the Environmental Protection
Agency, and other appropriate entities
to support development of a regulatory
framework for commercial-scale
sequestration operations that ensure
the protection of human health and the
environment.
(3) Large-scale carbon dioxide sequestration
testing.--
(A) In general.--The Secretary shall conduct
not less than 7 initial large-scale
sequestration tests, not including the
FutureGen project, for geologic containment of
carbon dioxide to collect and validate
information on the cost and feasibility of
commercial deployment of technologies for
geologic containment of carbon dioxide. These 7
tests may include any Regional Partnership
projects awarded as of December 19, 2007.
(B) Diversity of formations to be studied.--
In selecting formations for study under this
paragraph, the Secretary shall consider a
variety of geologic formations across the
United States, and require characterization and
modeling of candidate formations, as determined
by the Secretary.
(C) Source of carbon dioxide for large-scale
sequestration tests.--In the process of any
acquisition of carbon dioxide for sequestration
tests under subparagraph (A), the Secretary
shall give preference to sources of carbon
dioxide from industrial sources. To the extent
feasible, the Secretary shall prefer tests that
would facilitate the creation of an integrated
system of capture, transportation and
sequestration of carbon dioxide. The preference
provided for under this subparagraph shall not
delay the implementation of the large-scale
sequestration tests under this paragraph.
[(D) Definition.--For purposes of this
paragraph, the term ``large-scale'' means the
injection of more than 1,000,000 tons of carbon
dioxide from industrial sources annually or a
scale that demonstrates the ability to inject
and sequester several million metric tons of
industrial source carbon dioxide for a large
number of years.]
(4) Preference in project selection for meritorious
proposals.--In making competitive awards under this
subsection, subject to the requirements of section
16353 of this title, the Secretary shall--
(A) give preference to proposals from
partnerships among industrial, academic, and
government entities; and
(B) require recipients to provide assurances
that all laborers and mechanics employed by
contractors and subcontractors in the
construction, repair, or alteration of new or
existing facilities performed in order to carry
out a demonstration or commercial application
activity authorized under this subsection shall
be paid wages at rates not less than those
prevailing on similar construction in the
locality, as determined by the Secretary of
Labor in accordance with subchapter IV of
chapter 31 of title 40, and the Secretary of
Labor shall, with respect to the labor
standards in this paragraph, have the authority
and functions set forth in Reorganization Plan
Numbered 14 of 1950 (15 Fed. Reg. 3176; 5
U.S.C. Appendix) and section 3145 of title 40.
(5) Cost sharing.--Activities under this subsection
shall be considered research and development activities
that are subject to the cost sharing requirements of
section 16352(b) of this title.
(6) Program review and report.--During fiscal year
2011, the Secretary shall--
(A) conduct a review of programmatic
activities carried out under this subsection;
and
(B) make recommendations with respect to
continuation of the activities.
[(d)] (e) Authorization of Appropriations.--There are
authorized to be appropriated to carry out this section--
(1) $240,000,000 for fiscal year 2008;
(2) $240,000,000 for fiscal year 2009;
(3) $240,000,000 for fiscal year 2010;
(4) $240,000,000 for fiscal year 2011; and
(5) $240,000,000 for fiscal year 2012.
SEC. 963A. LARGE-SCALE CARBON STORAGE PROGRAM.
(a) Definitions.--In this section:
(1) Industrial source.--The term ``industrial
source'' means any source of carbon dioxide that is not
naturally occurring.
(2) Large-scale.--The term ``large-scale'' means the
injection of over 1,000,000 tons of carbon dioxide each
year from industrial sources into a geological
formation.
(3) Secretary concerned.--The term ``Secretary
concerned'' means--
(A) the Secretary of Agriculture (acting
through the Chief of the Forest Service), with
respect to National Forest System land; and
(B) the Secretary of the Interior, with
respect to land managed by the Bureau of Land
Management (including land held for the benefit
of an Indian tribe).
(b) Program.--In addition to the research, development, and
demonstration program authorized by section 963, the Secretary
shall carry out a program to demonstrate the commercial
application of integrated systems for the capture, injection,
monitoring, and long-term geological storage of carbon dioxide
from industrial sources.
(c) Authorized Assistance.--In carrying out the program,
the Secretary may enter into cooperative agreements to provide
financial and technical assistance to up to 10 large-scale
demonstration projects.
(d) Project Selection.--The Secretary shall competitively
select recipients of cooperative agreements under this section
from among applicants that--
(1) provide the Secretary with sufficient geological
site information (including hydrogeological and
geophysical information) to establish that the proposed
geological storage unit is capable of long-term storage
of the injected carbon dioxide, including--
(A) the location, extent, and storage
capacity of the geological storage unit at the
site into which the carbon dioxide will be
injected;
(B) the principal potential modes of
geomechanical failure in the geological storage
unit;
(C) the ability of the geological storage
unit to retain injected carbon dioxide; and
(D) the measurement, monitoring, and
verification requirements necessary to ensure
adequate information on the operation of the
geological storage unit during and after the
injection of carbon dioxide;
(2) possess the land or interests in land necessary
for--
(A) the injection and storage of the carbon
dioxide at the proposed geological storage
unit; and
(B) the closure, monitoring, and long-term
stewardship of the geological storage unit;
(3) possess or have a reasonable expectation of
obtaining all necessary permits and authorizations
under applicable Federal and State laws (including
regulations); and
(4) agree to comply with each requirement of
subsection (e).
(e) Terms and Conditions.--The Secretary shall condition
receipt of financial assistance pursuant to a cooperative
agreement under this section on the recipient agreeing to--
(1) comply with all applicable Federal and State laws
(including regulations), including a certification by
the appropriate regulatory authority that the project
will comply with Federal and State requirements to
protect drinking water supplies;
(2) in the case of industrial sources subject to the
Clean Air Act (42 U.S.C. 7401 et seq.), inject only
carbon dioxide captured from industrial sources in
compliance with that Act;
(3) comply with all applicable construction and
operating requirements for deep injection wells;
(4) measure, monitor, and test to verify that carbon
dioxide injected into the injection zone is not--
(A) escaping from or migrating beyond the
confinement zone; or
(B) endangering an underground source of
drinking water;
(5) comply with applicable well-plugging, post-
injection site care, and site closure requirements,
including--
(A)(i) maintaining financial assurances
during the post-injection closure and
monitoring phase until a certificate of closure
is issued by the Secretary; and
(ii) promptly undertaking remediation
activities for any leak from the geological
storage unit that would endanger public health
or safety or natural resources; and
(B) complying with the requirements of
subsection (f);
(6) comply with applicable long-term care
requirements;
(7) maintain financial protection in a form and in an
amount acceptable to--
(A) the Secretary;
(B) the Secretary with jurisdiction over the
land; and
(C) the Administrator of the Environmental
Protection Agency; and
(8) provide the assurances described in section
963(c)(4)(B).
(f) Post Injection Closure and Monitoring Elements.--In
assessing whether a project complies with site closure
requirements under subsection (e)(5), the Secretary, in
consultation with the Administrator of the Environmental
Protection Agency, shall determine whether the recipient of
financial assistance has demonstrated continuous compliance
with each of the following requirements over a period of not
less than 10 consecutive years after the plume of carbon
dioxide has stabilized within the geologic formation that
comprises the geologic storage unit following the cessation of
injection activities:
(1) The estimated location and extent of the project
footprint (including the detectable plume of carbon
dioxide and the area of elevated pressure resulting
from the project) has not substantially changed and is
contained within the geologic storage unit.
(2) The injection zone formation pressure has ceased
to increase following cessation of carbon dioxide
injection into the geologic storage unit.
(3) There is no leakage of either carbon dioxide or
displaced formation fluid from the geologic storage
unit that is endangering public health and safety,
including underground sources of drinking water and
natural resources.
(4) The injected or displaced formation fluids are
not expected to migrate in the future in a manner that
encounters a potential leakage pathway.
(5) The injection wells at the site completed into or
through the injection zone or confining zone are
plugged and abandoned in accordance with the applicable
requirements of Federal or State law governing the
wells.
(g) Indemnification Agreements.--
(1) Definition of liability.--In this subsection, the
term `liability' means any legal liability for--
(A) bodily injury, sickness, disease, or
death;
(B) loss of or damage to property, or loss of
use of property; or
(C) injury to or destruction or loss of
natural resources, including fish, wildlife,
and drinking water supplies.
(2) Agreements.--Not later than 1 year after the date
of the receipt by the Secretary of a completed
application for a demonstration project, the Secretary
may agree to indemnify and hold harmless the recipient
of a cooperative agreement under this section from
liability arising out of or resulting from a
demonstration project in excess of the amount of
liability covered by financial protection maintained by
the recipient under subsection (e)(7).
(3) Exception for gross negligence and intentional
misconduct.--Notwithstanding paragraph (1), the
Secretary may not indemnify the recipient of a
cooperative agreement under this section from liability
arising out of conduct of a recipient that is grossly
negligent or that constitutes intentional misconduct.
(4) Collection of fees.--
(A) In general.--The Secretary shall collect
a fee from any person with whom an agreement
for indemnification is executed under this
subsection in an amount that is equal to the
net present value of payments made by the
United States to cover liability under the
indemnification agreement.
(B) Amount.--The Secretary shall establish,
by regulation, criteria for determining the
amount of the fee, taking into account--
(i) the likelihood of an incident
resulting in liability to the United
States under the indemnification
agreement; and
(ii) other factors pertaining to the
hazard of the indemnified project.
(C) Use of fees.--Fees collected under this
paragraph shall be deposited in the Treasury
and credited to miscellaneous receipts.
(5) Contracts in advance of appropriations.--
(A) In general.--Subject to subparagraph (B),
the Secretary may enter into agreements of
indemnification under this subsection in
advance of appropriations and incur obligations
without regard to section 1341 of title 31,
United States Code (commonly known as the
``Anti-Deficiency Act''), or section 11 of
title 41, United States Code (commonly known as
the ``Adequacy of Appropriations Act'').
(B) Limitation.--The amount of
indemnification under this subsection shall not
exceed $10,000,000,000 (adjusted not less than
once during each 5-year period following the
date of enactment of this section, in
accordance with the aggregate percentage change
in the Consumer Price Index since the previous
adjustment under this subparagraph), in the
aggregate, for all persons indemnified in
connection with an agreement and for each
project, including such legal costs as are
approved by the Secretary.
(6) Conditions of agreements of indemnification.--
(A) In general.--An agreement of
indemnification under this subsection may
contain such terms as the Secretary considers
appropriate to carry out the purposes of this
section.
(B) Administration.--The agreement shall
provide that, if the Secretary makes a
determination the United States will probably
be required to make indemnity payments under
the agreement, the Attorney General--
(i) shall collaborate with the
recipient of an award under this
subsection; and
(ii) may--
(I) approve the payment of
any claim under the agreement
of indemnification;
(II) appear on behalf of the
recipient;
(III) take charge of an
action; and
(IV) settle or defend an
action.
(C) Settlement of claims.--
(i) In general.--The Attorney General
shall have final authority on behalf of
the United States to settle or approve
the settlement of any claim under this
subsection on a fair and reasonable
basis with due regard for the purposes
of this subsection.
(ii) Expenses.--The settlement shall
not include expenses in connection with
the claim incurred by the recipient.
(h) Federal Land.--
(1) In general.--The Secretary concerned may
authorize the siting of a project on Federal land under
the jurisdiction of the Secretary concerned in a manner
consistent with applicable laws and land management
plans and subject to such terms and conditions as the
Secretary concerned determines to be necessary.
(2) Framework for geological carbon sequestration on
public land.--In determining whether to authorize a
project on Federal land, the Secretary concerned shall
take into account the framework for geological carbon
sequestration on public land prepared in accordance
with section 714 of the Energy Independence and
Security Act of 2007 (Public Law 110-140; 121 Stat.
1715).
(i) Acceptance of Title and Long-Term Monitoring.--
(1) In general.--As a condition of a cooperative
agreement under this section, the Secretary may accept
title to, or transfer of administrative jurisdiction
from another Federal agency over, any land or interest
in land necessary for the monitoring, remediation, or
long-term stewardship of a project site.
(2) Long-term monitoring activities.--After accepting
title to, or transfer of, a site closed in accordance
with this section, the Secretary shall monitor the site
and conduct any remediation activities to ensure the
geological integrity of the site and prevent any
endangerment of public health or safety.
(3) Funding.--There is appropriated to the Secretary,
out of funds of the Treasury not otherwise
appropriated, such sums as are necessary to carry out
paragraph (2).''.
* * * * * * *
ENERGY INDEPENDENCE AND SECURITY ACT OF 2007
Public Law 110-140
* * * * * * *
TITLE VII--CARBON CAPTURE AND SEQUESTRATION
Subtitle A--Carbon Capture and Sequestration Research, Development, and
Demonstration
SEC. 701. SHORT TITLE.
This subtitle may be cited as the ``Department of Energy
Carbon Capture and Sequestration Research, Development, and
Demonstration Act of 2007''.
* * * * * * *
SEC. 703. CARBON CAPTURE.
(a) Program Establishment.--
* * * * * * *
(3) Preferences for award.--To ensure reduced carbon
dioxide emissions, the Secretary shall take necessary
actions to provide for the integration of the program
under this paragraph with the large-scale carbon
dioxide sequestration tests described in [[section
963(c)(3) of the Energy Policy Act of 2005 (42 U.S.C.
16293(c)(3))] (section 963(d)(3) of the Energy Policy
Act of 2005 (42 U.S.C. 16293(d)(3))), as added by
section 702 of this subtitle. These actions should not
delay implementation of these tests. The Secretary
shall give priority consideration to projects with the
following characteristics:
(A) Capacity.--Projects that will capture a
high percentage of the carbon dioxide in the
treated stream and large volumes of carbon
dioxide as determined by the Secretary.
(B) Sequestration.--Projects that capture
carbon dioxide from industrial sources that are
near suitable geological reservoirs and could
continue sequestration including--
(i) a field testing validation
activity under section 963 of the
Energy Policy Act of 2005 (42 U.S.C.
16293), as amended by this Act; or
(ii) other geologic sequestration
projects approved by the Secretary.
* * * * * * *
SEC. 704. REVIEW OF LARGE-SCALE PROGRAMS.
The Secretary shall enter into an arrangement with National
Academy of Sciences for an independent review and oversight,
beginning in 2011, of the programs under [section 963(c)(3) of
the Energy Policy Act of 2005 (42 U.S.C. 16293(c)(3))] (section
963(d)(3) of the Energy Policy Act of 2005 (42 U.S.C.
16293(d)(3))), as added by section 702 of this subtitle, and
under section 703 of this subtitle to ensure that the benefits
of such programs are maximized. Not later than January 1, 2012,
the Secretary shall transmit to the Congress a report on the
results of such review and oversight.
* * * * * * *