1ac the United States Federal Government should provide financial incentives for the construction of carbon capture and storage pipelines




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1AC

Contention Three: Solvency

Financial incentives are a pre-requisite for the development of CCS pipelines.


Apt et. al, 10/9/2007 (Jay – Professor of Technology at the Tepper School of Business and Engineering and Public Policy, Director of the Carnegie Mellon Electricity Industry Center, Lee Gresham, M. Granger Morgan – Lord Chair Professor in Engineering, Professor and Department Head of the Engineering and Public Policy, and Adam Newcomer – Exelon Power Team, Incentives for Near-Term Carbon Dioxide Geological Sequestration, A White Paper prepared for The Gasification Carbon Management Working Group, Carnegie Mellon Electricity Industry Center, p. 4-5)

Financial incentives are necessary to begin commercial scale CCS at gasification facilities, since transport and sequestration costs are estimated at $5-$15 per ton of CO2 ($20-$60 million per year per commercial plant). Although such costs can be recovered in some locations by selling the CO2 for use in enhanced oil recovery (see section 2 below), many gasification facilities may be sited far from EOR locations, and incentives for sequestering CO2 are required to allow the operator to consider alternatives to emitting the CO2 into the air. Progressive firms that are in the engineering and financing stage of deploying coal facilities with carbon dioxide capture and sequestration would like to proceed to gain experience with CCS at commercial scales prior to the implementation of mandatory greenhouse gas control. While commercial scale sequestration projects are generally not profitable at the moment, there are efficient incentives that have the potential to make geologic sequestration economically feasible while also ensuring that the required experience with transport and storage can be gathered quickly. These incentives fall into three categories: federal, state/local, and private. We recommend that Congress consider the following incentives to increase U.S. energy independence through use of its abundant coal resources in an environmentally clean manner: • Continue the 15% enhanced oil recovery federal tax credit. • Enact a federal CO2 sequestration tax credit. • Enact a federal investment tax credit for CO2 pipelines. • Add low-carbon emission coal facilities to the facilities eligible for the production tax credit. • Enable tax-exempt financing for CO2 sequestration infrastructure investments (compression, pipelines, pumping, and injection/sequestration facilities) by amending the IRS code to identify CO2 sequestration investments as “Qualified Private Activity Bonds” or by creating a separate allocation of Private Activity Bond authority for CO2 sequestration investments. A national cap on the amount available (say $20 billion) would be established and bonding authorities from states with potential projects could apply for volume cap distributions under the program. • Create a larger version of the Department of Energy Regional Sequestration Partnership program to rapidly advance commercial scale CCS at the level of 3-5 Mt per year per site for ten sites. • Require the Executive Branch to implement without further delay the federal loan guarantee provisions of the Energy Policy Act of 2005. The three applications for gasification loan guarantees selected on October 8, 2007 should be expeditiously processed and similar loan guarantees implemented for additional projects.

Financial investment is key to signal the economic viability of CCS technology.


Jacobs et. al, 2009 (Wendy – Director of the Harvard Environmental Law and Policy Clinic, Leah Cohen – law student at Harvard, Lara Kostakidis-Lionas – law student at Harvard, and Sara Rundell – law student at Harvard, Proposed Roadmap for Overcoming Legal and Financial Obstacles to Carbon Capture and Sequestration, Harvard Kennedy School Discussion Paper, p. 9)

A. Financial incentives Carbon capture and geological sequestration projects are projected to cost hundreds of millions—or even billions—of dollars. 23 In the absence of national restrictions on CO2 emissions, making CCGS demonstration projects economically viable will require cost sharing between industry and government, with significant investment from both. 24 While a number of small pilot projects have been funded, moving to large scale demonstration projects requires much larger investments. The recent commitment in the American Recovery and Reinvestment Act of 2009 (ARRA) of $3.4 billion for fossil energy research provides some new funding. It is not clear yet how much of those funds will be available for CCGS. Regardless of the precise allocation of these funds, however, more investment will likely be needed. 25

Federal pipeline investment spills over to the development of CCS technology. Investment will only begin if the plan is certain and nationwide.


Zarraby, April 2012 (Cyrus – J.D. at George Washington University Law School, Note: Regulating Carbon Capture and Sequestration: A Federal Regulatory Regime to Promote the Construction of a National Carbon Dioxide Pipeline Network, The George Washington Law Review, p. Lexis)

D. Deploying Carbon Capture and Sequestration Nationwide - the Need for a CO<2> Pipeline Regulation As stated above, the technologies for CCS have been developed and are proven to be effective at reducing the amount of greenhouse gases emitted from power plants. Should the United State pass significant greenhouse gas emissions regulations, it would become necessary to develop policies that allow for the immediate deployment of CCS infrastructure. A major aspect of this deployment involves transportation pipelines for CO<2>. n76 Because the location of power plants and storage formation can be hundreds, if not thousands of miles apart, a network of CO<2> pipelines must be built to support the development of CCS. n77 For example, NETL estimates that Louisiana, Montana, Wyoming, and Texas have the four largest capacities for CO<2> storage. n78 However, in December 2010, the states with the four highest coal-fired electricity consumption were Texas, Indiana, Pennsylvania, and Ohio. n79 Transporting CO<2> from a power plant in Akron, Ohio, to a storage reservoir in Shreveport, Louisiana, requires the construction of a 1000-mile pipeline. Storing eighty percent of current CO<2> emissions from electric power production requires the transportation of approximately 1800 [*962] million tons ("Mt") of CO<2> per year. n80 By comparison, the 300,000 miles of natural gas pipelines currently in existence transport the equivalent of only 450 Mt of CO<2> per year. n81 Although the exact size is difficult to determine, n82 even low-end estimates predict the need to construct approximately 20,000 miles of CO<2> pipelines. n83 Materials, labor, and property costs associated with constructing the pipeline system would require a capital investment of approximately seventy-billion dollars. n84 To ensure private capital investments in CO<2> pipelines, Congress must develop a regulatory framework that promotes the building of CO<2> pipelines. Indeed, CCSReg, a collaborative effort led by Carnegie Mellon University that examines regulations for CCS, n85 stated, "Large-scale, commercial implementation of CCS will ... require ... further delineation of a CO<2> pipeline transportation regulatory regime... to provide increased regulatory certainty for CO<2> pipeline infrastructure developers that will be necessary for widespread deployment of CCS." n86 Specifically, CCSReg notes that certainty in the regulatory regime would help facilitate project financing because project developers will be able to evaluate the regulatory risks. n87 As discussed below, the absence of federal regulation of CO<2> pipelines creates the very uncertainty that would limit private investment. n88

Only a comprehensive federal approach facilitates the growth of the CCS industry by providing uniformity and certainty.


Horne 2010 (Jennifer, J.D. at S.J. Quinney College of Law at the University of Utah, Getting from here to there: Devising an Optimal Regulatory Model for CO<2> Transport in a New Carbon Capture and Sequestration Industry, Journal of Land, Resources & Environmental Law, p. Lexis)

B. The Case for a Comprehensive Federal Approach The challenge of transitioning to a commercial-scale CCS industry calls for a well-coordinated, comprehensive approach to regulation. A national market will require a high degree of uniformity and certainty. The surest and most expedient [*376] path to a market with those features is comprehensive federal regulation - for CCS generally, and transport specifically. Like natural gas and oil pipelines - both complex, enormous systems with national reach n128 - CCS will benefit from the sort of consistent regulation from one state to the next that a federal approach can provide, and that a piecemeal state-based approach cannot. n129 This is especially true if CCS is to become a national industry that helps to solve the climate change dilemma. As Delissa Hayano has argued: The costs and logistics of compressing, transporting, and sequestering CO<2> on the scale necessary to address [climate change] concerns requires a national interest parallel to that motivating the construction of equivalent-scale national infrastructure projects such as the interstate road system. n130 While state-based regulation can be effective for certain types of markets, it would be a less-than-ideal fit for CCS transport. State-based regulation would create too much inconsistency and complexity. n131 In another context, Professor Lincoln Davies has described a state-based approach to promoting renewable energy development as risking "crazy-quilt" regulation. n132 Specifically, the sheer variety of state-based Renewal Portfolio Standard (RPS) models that have sprung up in recent years have yielded widely varying standards from one state to the next. n133 The result is a fragmenting of renewable energy into multiple markets, not the creation of a single uniform national one. While the differentiation possible from state regulation long has been lauded as promoting innovations through laboratories of democracy, n134 to promote an industry that necessarily will be interstate in nature, such as CCS transport, federal models often are invoked. n135 The rationales typically offered for federal regulation include: (1) that uniform regulation is needed to ensure a well-functioning [*377] market; n136 (2) that federal regulation is necessary to avoid state "races to the bottom;" n137 and (3) that such regulation is essential to avoid fragmentation across borders in creating a network system national or regional in scope. n138 As the Supreme Court has observed in the dormant Commerce Clause context, "This principle that our economic unit is the Nation ... has as its corollary that the states are not separable economic units." n139 For each of the different CCS transport regulatory design elements, these rationales apply, albeit to somewhat varying extents. Pipeline safety is regulated at the federal level, rather than state-by-state, for good reason. The PHMSA regulates design, construction, and on-going operations and testing for interstate pipelines in various industries. n140 A consistent set of standards provides consistent protection for the public and the environment no matter where the pipeline's location. Effects from an accident may be localized, n141 but the possible effects on global warming from CO<2> leakage reach far and wide. n142 Indeed, the need for uniform regulation often is invoked for industries where standards of performance or operation are more efficient if standardized. n143 They clearly apply for safety regulation in a network industry like CCS transport, where the need for safe operation does not change from one jurisdiction to the next and the risk of different safety requirements could unnecessarily increase construction costs, or worse, result in incompatible subsystems. For rate and access regulation, federal regulation may be somewhat less important than it is for safety or siting, but it will still facilitate consistency and avoid confusion in the transport market, particularly when it comes to access. Nondiscriminatory access requirements can come in different forms. For example, in natural gas, pipelines must offer nondiscriminatory access but operate as contract carriers. n144 That means that the pipeline owner contracts in advance with a customer to provide access to a set amount of its capacity. n145 In oil, pipelines operate under a system of prorationing. In this system, even when the pipeline capacity is fully utilized, if another customer requires transport service, the pipeline is obliged to accommodate the new customer and adjust the capacity available to other customers accordingly. n146 In CCS, if a pipeline runs through multiple states, and each state uses a different nondiscriminatory access model, [*378] confusion and inefficiency would result. In such circumstances, a uniform set of requirements for access will be far more workable.
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