The Intergovernmental Panel on Climate Change identified that technologies that capture, transport and store carbon dioxide (CO2) are essential for achieving net-zero emissions targets. SB 905 (Caballero; Skinner) establishes a comprehensive framework to deploy carbon capture and storage in California.

In this blog post, we review SB 905 and describe how capturing CO2 from industrial and bioenergy point sources as well as directly from the air can help California achieve its climate goals. We summarize the key provisions, which address a range of issues including surface rights, pore-space ownership, liability, permitting and enhanced oil recovery. We then consider policies to build on SB 905, including the importance of ramping-up investments in geologic storage, as well as California’s prime opportunity to be one of the Department of Energy’s four Regional Direct Air Capture Hubs.

Overall, the regulatory clarifications and new programs established under SB 905 provide an important foundation to advance large-scale carbon capture and storage deployment in California.

This blog post is the final instalment of our three-part review of California’s 2022 legislative session on climate and clean energy. In part one, we summarized the state’s historic $39 billion climate budget. In part two, we reviewed the major clean energy permitting reforms in AB 205. We hope the analyses have been helpful. For more information or questions, please contact Sam Uden (sam@csgcalifornia.com).

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California’s path to net-zero emissions is daunting. Central to it is the need to more rapidly deploy renewables, batteries and zero-emission vehicles to eliminate dependence on fossil fuels. However, there are some emissions-intensive activities that cannot be addressed with renewables, such as cement manufacturing. In addition, a certain amount of residual emissions remaining in the economy at 2045 will need to be counterbalanced with a drawdown of carbon dioxide (CO2) from the atmosphere (i.e., putting the ‘net’ in net-zero).

To address these two challenges, technologies that physically capture, transport, use and store CO2 are needed. In the 2022 Draft Scoping Plan, the California Air Resources Board (CARB) estimates that both point source and direct air carbon capture and storage (CCS) will be needed to address about 25% of the state’s current emissions – or 100 million tons of CO2 per year (Fig. 1). This is an enormous share, requiring numerous new pipelines, storage sites, and many carbon capture projects. It will also require a significant workforce with the skills and know-how to drill wells, move liquids and refine fuels. As California currently manages almost no CO2, it begs the question: how do we get from here to there?

New foundation for CCS

SB 905 (Caballero; Skinner) marks California’s commitment to CCS by clarifying uncertainties and establishing a regulatory foundation for large-scale technology deployment. The bill addresses a range of key issues, including surface rights, pore-space ownership, liability and permitting, in many cases tasking state agencies with responsibilities and setting in motion new regulatory proceedings. In Table 1, we summarize the main elements of the law. A more detailed and takeaway summary can be found here.

Future policy opportunities

SB 905 provides an important foundation to support CCS deployment in California. However, the state will need to take many more significant steps forward to get on a trajectory consistent with capturing, transporting and storing underground on the order of 100 million tons of CO2 each year by 2045. We provide two key recommendations to focus California’s next efforts on CCS.

Prioritizing investments in storage, transport

Allocating a major share of near-term investments in CCS towards CO2 storage characterization (i.e., technical work that facilitates high-quality, development-ready storage sites) and core pipeline development is perhaps the most important action the state can take on CCS. This is because prospective CO2 capture entities will not execute projects without high confidence in their ability to offtake their CO2 for transport and storage – thereby qualifying for needed state Low Carbon Fuel Standard and federal 45Q incentives.

SB 905’s establishment of the Geologic Carbon Sequestration Group and intent for a state framework and standards for CO­2 pipelines provide a moderate start. However, far more robust investments and policy support for storage assessment and characterization, routing studies, right-of-way acquisition, etc., and ultimately the development of 1-2 large-scale storage sites and core pipelines, are needed.

For more information on the importance of prioritizing near-term investments in CO2 storage and transport, see this op-ed in The Hill and associated publication in Energy and Environmental Science.

Regional Direct Air Capture Hub opportunity

The newer class of CCS technologies that also provide carbon dioxide removal (CDR) (i.e., biomass and direct air capture – see Fig. 1b, 1c) are considered crucial to bring to scale to avert the worst impacts of climate change. In the Infrastructure Investment and Jobs Act, the Department of Energy was awarded $3.5 billion to support demonstration of various CDR technologies via four Regional Hubs. California should aggressively pursue the chance to be one of the nation’s Regional Hubs for three reasons:

• First, California has prime attributes to demonstrate sustainable and safe CDR, with tens of millions of tons of waste biomass produced annually that are mostly landfilled, open burned or left to decay, as well as abundant geothermal reserves to pioneer renewable-direct air capture.

• Second, outside of the Central Valley there appears to be no other region west of the Rocky Mountains that can support large-scale CO2 storage – meaning California must have ready and operational CO2 storage to enable both state and national net-zero emissions goals (Fig. 2).

• Third, a Regional Hub could serve as an organizing principle to support a fair transition for oil and gas workers currently at-risk of losing their jobs, as well as provide air quality improvements in communities currently exposed to agricultural field burning or diesel combustion at ports.

Based on the DOE’s Notice of Intent, California should be targeting initial feasibility study funding from late 2022, with a goal of priming ourselves as a candidate for substantial funding in the following years.

For a description of a possible Southern California Hub, see this stakeholder submission to CARB. Note that, despite the program name (“DAC Hubs”), eligible CDR methods include biomass, DAC, and others.

Conclusion

Carbon capture and storage can fulfill a specific role in California’s net-zero portfolio by addressing two key decarbonization challenges: (i) hard-to-abate emissions sources (e.g., cement, other industrial sources);  and (ii) the need for carbon dioxide removal to counterbalance any residual emissions that may remain in the economy at 2045 (e.g., animal agriculture, planes, ships, some trucking, wildfire, etc.).

CARB estimates that these strategies are needed to address about 25% of the state’s current emissions, or 100 million tons of CO2 per year. This is a significant amount. SB 905 is therefore timely and lays an important foundation for CCS deployment in California. However, it is just a start. Much more substantive policy support and investments focused on CO2 storage, pipelines, and DAC Hubs are needed.

For more information, please contact Sam Uden (sam@csgcalifornia.com) or Amanda DeMarco (amanda@csgcalifornia.com).

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A note on natural gas with CCS

It is possible that CCS could be retrofitted to some natural gas power plants as a way to provide clean firm power, reduce land-use and other environmental impacts, and reduce total electricity system cost. This has been identified by research teams at Environmental Defense Fund and Clean Air Task Force, The Nature Conservancy, and their co-authors. This could increase the amount of CCS needed to deliver net-zero emissions by 2045. In any case, the recommendations made in this blog post would be unchanged if we were to assume some portion of the state’s natural gas fleet were retrofitted with CCS.

A note on Natural and Working Lands

It is possible that nature-based solutions could also provide CDR to compensate for any residual emissions that may remain in the economy at 2045. However, detailed analysis from CARB anticipates that, even under favorable assumptions, California’s NWLs sector will be an annual net-source of CO2 emissions at 2045. Significant investments in NWLs are still needed – to minimize the near-term loss of CO2 and assure their long-term drawdown potential, protect communities, protect biodiversity, and improve water run-off and quality. Geologic storage methods are also viewed as presenting a lower risk of CDR reversal.