New CEQ Guidance Promotes “Responsible Deployment” of Carbon Capture, Utilization and Sequestration

Hot on the heels of a new Biden administration initiative to cut industrial sector emissions via carbon capture, utilization and sequestration (CCUS) and other methods, the Council on Environmental Quality (CEQ) issued new interim guidance to federal agencies for “responsible deployment” of CCUS technologies. The administration views CCUS as crucial to achieving its goal of net-zero emissions economywide by 2050. CEQ’s guidance is a critical step in accelerating the broad scale deployment of CCUS as an emissions reduction strategy across industrial sectors. The guidance also complements efforts at the state level to streamline permitting and accelerate projects, including in Colorado and Wyoming.

CEQ’s interim guidance builds on the comprehensive report it prepared for Congress in June 2021. The guidance provides instructions to federal agencies to review, approve and deploy CCUS projects via the labyrinth of existing statutes and regulations. Because multiple federal agencies will have a hand in permitting, approving or overseeing CCUS projects, effective coordination is necessary for success.

Environmental Reviews: CEQ recommends federal agencies streamline National Environmental Policy Act and Endangered Species Act reviews by developing programmatic reviews and biological opinions. The Obama administration employed this strategy to assess the high-level impacts of utility-scale solar projects in 2012.

Technology Impacts: Recognizing many CCUS technologies are in early stages of development, CEQ directs agencies to study and quantify the potential direct, indirect and cumulative impacts of CCUS projects. These include air and water quality impacts, such as emissions from retrofitting facilities to capture CO₂ and from manufacturing and installing CCUS infrastructure. To increase public confidence and transparency, agencies should share their results with the public and establish procurement standards.

Transportation and Storage: Nationwide CO₂ pipeline and permanent sequestration networks will be the foundation of successful CCUS deployment. Federal agencies should consider how to streamline pipeline permitting and update their regulations to address CCUS deployment. CEQ also directs agencies to assess and consider climate change impacts in design, construction and maintenance of CO₂ pipelines. The Department of Transportation should update its geohazard and emergency planning criteria to account for CCUS. To build public confidence in the technology, secure, safe and transparent disposal of CO₂ is needed. CEQ recommends that EPA modify its Greenhouse Gas Reporting Program to increase reporting obligations for CCUS facilities. The Department of Energy, Department of the Interior and National Oceanic and Atmospheric Administration should consider launching a national program to monitor sequestered CO₂.

Community and Tribal Participation: Although many environmental and community groups recognize CCUS is necessary, some are skeptical. CEQ seeks to dispel concerns by urging agencies to engage early and often with communities and Tribes regarding proposed CCUS projects. It also prompts agencies to develop and apply environmental justice best practices for CCUS projects. Agencies should identify overburdened and underserved communities and tailor mitigation and avoidance accordingly.

CEQ’s interim guidance underscores the undeniable importance widespread CCUS must play in meeting the United States’ ambitious climate goals. It also highlights the hurdles in doing so, including the need for speed but current lack of scale, complicated federal permitting regimes, need for transparency and verifiability, and important community and environmental justice considerations. CEQ’s guidance is part of a broad federal effort to accelerate CCUS, including congressional initiatives to incentivize CCUS through increased funding, and RDD&D via the 2021 omnibus spending bill and the Infrastructure Investment and Jobs Act, and increases to the Section 45Q tax credit.

Comments on the interim guidance are due by March 18, 2022, and can be submitted at www.regulations.gov (Docket No. CEQ-2022-0001). Our attorneys and policy advisors have substantial CCUS expertise at both the federal and state levels and would be happy to answer any questions your company may have about a CCUS project or assist with drafting comments on the interim guidance.