The US Bipartisan Infrastructure Law and the Inflation Reduction Act aimed to allocate billions of dollars to clean energy projects this year, but there is not sign of disbursement of these funds yet as permitting delays frustrate potential users.
State primacy over wells intended for the permanent geologic storage of carbon dioxide — known as Class VI wells — could accelerate this timeline, but even those applications could take years to be approved.
“There’s not a conversation..we have with clients on carbon capture, that doesn’t overlap with the permitting [of Class VI wells],” Brittany Bolen, senior policy advisor at Sidley Austin law firm and former head of the Office of Policy at the Environmental Protection Agency (EPA), told Upstream.
Companies are concerned that a recent influx of Class VI applications to the EPA will merely result in a permitting backlog in an already long process to apply for government funding.
In an interview with Upstream, Mark McKoy, general physical scientist recalls how one process involving food giant ADM’s application for facilities in Decatur, Illinois, took about three years between the EPA receiving the application and granting the permits.
"North Dakota, the first state to actually get primacy, has already issued a permit to Red Trail. And it was five or six months after receiving the permit application,” he said.
McKoy added that the EPA is trying to get the permit application process down to between 18 and 24 months after funding was allocated to the permitting process, but this is still at least three times as long as North Dakota’s permit approval.
North Dakota and Wyoming are so far the only two states with primacy over Class VI wells, but Louisiana is seeking primacy approval as well, and Texas is preparing an application.
The process to gain primacy over Class VI wells can also be a lengthy one, so there may be limited scope for this factor to speed up the funding and permitting processes significantly any time soon.
“[In order to be granted primacy,] it does require these states to have laws and regulations in place to demonstrate that they are as protective as the EPA standards. And so, it takes time,” Bolen said.
Federal funding at also triggers the National Environmental Policy Act (NEPA), which requires federal agencies to evaluate their funding’s impact on the environment, as well as social and economic effects.
Slow government funding
The Bipartisan Infrastructure Act was signed into law almost a year ago and allocated $12 billion to carbon management projects and $8 billion to four regional hydrogen hubs, but has resulted in little change in the targeted CCS and hydrogen industries.
Some $2.5 billion of this funding is directed to validation and testing in the Carbon Storage Assurance Facility Enterprise (CarbonSAFE) initiative, which helps project development from pre-feasibility testing through construction phases.
McKoy said the initiative is now at the stage where it is switching the focus onto launching commercial-scale projects and infrastructure, rather than pilot projects and research and development.
“Phase one is really for approving preliminary feasibility studies. We don’t think we’ll be funding anymore phase one projects any time soon,” McKoy said.
He said the first examples of funding maturing into projects will likely be seen in the late US spring of next year.
“The initial delay is of course related to planning and how we’ll distribute the funding. The second round of delay, which we’ve been now working through, is just preparing the funding opportunity, really for the Bipartisan Infrastructure Act funding,” McKoy told Upstream.
Even initial notice of funding adds to the delay experienced in application and selection.
The initial funding opportunity announcement is open for a minimum of 45 days, McKoy said, but is usually held open for at least 60 days, prior to review.
“Really for larger projects we need to give them 90 days or more to prepare their proposals because their proposals are very long and complex,” he said.