Legislature Eyes Carbon Capture, Storage Proposals to Drive Investment in Growing Industry

The following article was written by Brad Johnson and was originally published by the The Texan on March 22, 2023:

Carbon capture, the process by which man-produced carbon dioxide is pulled from the air or caught before it’s released, is en vogue at the moment, and various proposals at the Texas Legislature would give it a financial push.

Industrial processes produce all kinds of emissions including carbon dioxide, the emission amount of which has decreased substantially since 2007. But carbon capture is increasingly viewed as a way to further reduce those emissions without stunting oil and gas production — exactly the reason it is opposed by certain corners of the environmentalist left.

“[Carbon capture technologies] are meant to give cover for extremely damaging activities, i.e., the continual and increasing extraction and usage of fossil fuels,” the Lone Star Chapter of the Sierra Club wrote in 2021.

For on-site carbon capture systems, the gas is collected, turned into a liquid, and then transported to another location for storage, usually pushed deep into bedrock formations. Other opponents are concerned the injections may cause an uptick in seismic activity, something about which studies have very mixed conclusions.

It’s an energy-intensive process and thus costs a pretty penny.

As of 2020, it was estimated carbon capture and storage can cost between $50 and $100 per metric ton, leading many to look to the government for funding or tax credits.

The Biden administration is all for carbon capture, a middling option included in their goal by 2030 to reduce U.S. emissions 40 percent below 2005 levels — a target to which the country is already halfway without implementing any sweeping policy changes.

The U.S. government offered up $3.7 billion to construct four regional “Direct Air Capture” facilities and expanded tax credits for carbon capture in the Inflation Reduction Act of 2022.

Congressman Dan Crenshaw (R-TX-02) is also a big proponent of the technology, authoring and passing two bills on the subject signed into law in 2020.

But at the state level, there is less already on the table.

Texas has a 50 percent tax cut for using captured carbon, intended to incentivize the carbon capture technology on the back end.

But this slate of proposals would add to that, with new policies such as:

  • Creating credits for carbon sequestration on Texas Parks and Wildlife-controlled land
  • Establishing a tax exemption for property used for carbon capture
  • Adding carbon capture to the “clean energy project” franchise tax credit
  • Exempting carbon capture from the tangible personal property tax
  • Prohibiting the application of “public nuisance” lawsuits to carbon capture projects

Overall, the bills are intended to provide enough financial incentive, through tax reductions, for the Texas energy industry to jumpstart development of carbon capture in the state.

That last bill is an effort to prevent legal arrows from being slung carbon capture’s way. Environmental groups and activists have sued oil and gas operations on “public nuisance” grounds with the intention of stopping their operations. Their argument is that these operations, which use fossil fuels to generate fossil fuels, are harmful to the environment and thus cause harm to the public at large.

A separate bill by Rep. Cody Harris (R-Palestine) would prohibit public nuisance lawsuits from being used in this way, but the proposal by Rep. Drew Darby (R-San Angelo) in this package would specifically ban them for carbon capture.

“In a time of high inflation and increasing hostility towards specific industries by the federal government, it is important that Texas once again provide businesses with regulatory certainty,” Darby told The Texan in a statement. “If Texas is going to lead in the expansion of carbon capture, liability protections are crucial.”

“The state’s abundant geologic storage capacity and world-renowned expertise in oil and gas, position us to be at the forefront of carbon capture development. These projects will help maintain and expand these vital industries and preserve jobs while simultaneously protecting the environment.”

Carbon capture technology is already used across the state by the industry. Petra Nova, the world’s largest carbon capture facility, is located in Houston and is back up and running after temporarily shutting down during the 2020 collapse of oil futures prices.

Rice University’s Baker Institute for Public Policy tracks the facilities using carbon capture in Texas, as of April 2021.

Susan Combs, chair of the Carbon Neutral Coalition’s (CNC) Advisory Board, told The Texan, “The Biden administration and climate extremists seem hell bent on leading our country down the same path as Europe and eliminating fossil fuels which will only lead to soaring energy prices and scarcity.”

CNC was created by Corbin Robertson, head of a Houston private equity firm focused on energy, to place “Texas on a path to becoming carbon neutral by the year 2050… [through] establish[ing] the infrastructure that will incentivize the energy industry to cut their carbon emissions by utilizing Carbon Capture.”

Combs added, “That is why CNC is working to pass legislation that encourages further investment in carbon capture technology to preserve and grow Texas’ energy industry while keeping our state the energy capital of the nation.”

Todd Staples, president of the Texas Oil and Gas Association (TXOGA), told The Texan, “Twelve other states have already passed legislation related to carbon capture, and Texas has lagged other states in the development of this emerging industry. But this industry is Texas’ to lose because of our wealth of expertise, ideal geology, and diverse industrial base. We urge the Legislature to pass these bills to help attract jobs and investment to the Lone Star State and ensure a brighter future for all Texans.”

“TXOGA is supportive of SB 2107 by Senator Robert Nichols and HB 4484 by Representative Greg Bonnen, which will promote carbon storage in Texas law and policy.”

Those bills from Nichols and Bonnen would create a regulatory apparatus for the land acquisition and use necessary to expand carbon capture storage operations.

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November 30, 2023

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