The US state of Texas could become a global leader in carbon capture, utilisation and storage (CCUS), but legislative initiatives are needed if any plans are to come to fruition, according to a new report.
Oil and gas producer Texas is by far the largest creator of industrial and power-generated carbon dioxide in the US, the report from the Baker Institute at Rice University of Houston noted.
Nearly 25% of all industrial CO2 and more than 12% of CO2 created from power generation comes from the Lone Star State, the report claimed.
Authors Ken Medlock and Keily Miller said that, with its size and varying geography, Texas has a multitude of opportunities to move to the forefront of the carbon capture market.
“Texas has a unique opportunity to expand deployment of carbon capture technologies owing to its comparative advantages in industrial scale, geologic endowment, and human capital footprint,” the authors said, noting opportunities for carbon capture in both the core shale patch of the Permian basin and along the Texas Gulf Coast.
Such a process, however, will not be easy. The authors said there will have to be motivation for private industries to increase their efforts in carbon capture — an area where the state’s legislators could step in.
“Commitment from state regulators and policymakers to resolve legal and regulatory uncertainties and provide supportive commercial frameworks — both now and in the future — will underpin the pace and scale of the full CCUS value chain in Texas,” the report stated.
Texas government agencies and the legislature have been historically “hands-off”, allowing for a great deal of flexibility for private companies in the state.
While Medlock and Miller did not advocate for a major shift in that approach, they suggested regulators and state elected officials could clarify existing regulation and make carbon capture more enticing.
“As consumers and investors increasingly reveal preferences for lower CO2 emissions, market agents are shifting their investment and marketing strategies.
"This provides an opportunity for regulators and policymakers to reduce uncertainties that can impeded investment, and explore fiscal measures that provide value to legacy industries and create pathways for growth in new industries,” they said.
“But, if various legal and regulatory uncertainties persist, the CCUS value chain will face significant hurdles.”
The authors urged the legislature to provide the Railroad Commission of Texas, the state’s oil, gas and mining regulator, with clarity on the regulation of CO2 injection wells “immediately”.
They also suggested the state follow the trend they set with wind generation and provide tax credits for companies taking part in CCUS operations.
“Similar tax and finance mechanisms would conceivably work for CCUS. Of course, in this case, the tax credit would be calculated based on the amount of CO2 sequestered, thereby providing an incentive for the CCUS industry to maximise net carbon reductions,” they said.
Should the state address the legal and regulatory hurdles that currently exist for carbon capture, the Rice report said, Texas could find economic benefit as a result.
“Longer term, CCUS ‘market-making’ innovations can drive a paradigm shift in the way hydrocarbons are used,” the authors said.