Carbon Dioxide (CO2) Pipelines for Carbon Sequestration: Emerging Policy Issues
Prepared for Members and Committees of Congress
Congress is examining potential approaches to reducing manmade contributions to global
warming from U.S. sources. One approach is carbon capture and sequestration (CCS)—capturing
CO2 at its source (e.g., a power plant) and storing it indefinitely (e.g., underground) to avoid its
release to the atmosphere. A common requirement among the various techniques for CCS is a
dedicated pipeline network for transporting CO2 from capture sites to storage sites.
In the 110th Congress, there has been considerable debate on the capture and sequestration aspects
of carbon sequestration, while there has been relatively less focus on transportation. Nonetheless,
there is increasing understanding in Congress that a national CCS program could require the
construction of a substantial network of interstate CO2 pipelines. S. 2144 and S. 2191 would
require the Secretary of Energy to study the feasibility of constructing and operating such a
network of pipelines. S. 2323 would require carbon sequestration projects to evaluate the most
cost-efficient ways to integrate CO2 sequestration, capture, and transportation. S. 2149 would
allow seven-year accelerated depreciation for qualifying CO2 pipelines. P.L. 110-140, signed by
President Bush on December 19, 2007, requires the Secretary of the Interior to recommend
legislation to clarify the issuance of CO2 pipeline rights-of-way on public land.
That CCS and related legislation have been more focused on the capture and storage of CO2 than
on its transportation, reflects a perception that transporting CO2 via pipelines does not present a
significant barrier to implementing large-scale CCS. Notwithstanding this perception, and even
though regional CO2 pipeline networks already operate in the United States for enhanced oil
recovery (EOR), developing a more expansive national CO2 pipeline network for CCS could pose
numerous new regulatory and economic challenges. There are important unanswered questions
about pipeline network requirements, economic regulation, utility cost recovery, regulatory
classification of CO2 itself, and pipeline safety. Furthermore, because CO2 pipelines for EOR are
already in use today, policy decisions affecting CO2 pipelines take on an urgency that is, perhaps,
unrecognized by many. Federal classification of CO2 as both a commodity (by the Bureau of
Land Management) and as a pollutant (by the Environmental Protection Agency) could
potentially create an immediate conflict which may need to be addressed not only for the sake of
future CCS implementation, but also to ensure consistency of future CCS with CO2 pipeline
In addition to these issues, Congress may examine how CO2 pipelines fit into the nation’s overall
strategies for energy supply and environmental protection. If policy makers encourage continued
consumption of fossil fuels under CCS, then the need to foster the other energy options may be
diminished—and vice versa. Thus decisions about CO2 pipeline infrastructure could have
consequences for a broader array of energy and environmental policies.
Introduc tion ..................................................................................................................................... 1
Backgr ound ..................................................................................................................................... 2
Carbon Capture and Sequestration............................................................................................2
Capture ........................................................................................................................ ........ 3
Tr ansportation ..................................................................................................................... 3
Sequestration in Geological Formations.............................................................................4
Existing U.S. CO2 Pipelines......................................................................................................4
Key Issues for Congress..................................................................................................................5
CO2 Pipeline Requirements for CCS........................................................................................5
Federal Jurisdiction over CO2 Pipelines.............................................................................7
Potential Issues Related to ICC Jurisdiction.......................................................................8
Policy Implications for Rate Regulation.............................................................................8
Commodity vs. Pollutant Classification..................................................................................10
CO2 Pipeline Incentives....................................................................................................13
Cost Implications for Network Development...................................................................14
CO2 Pipeline Safety.................................................................................................................15
Criminal and Civil Liability..............................................................................................16
Conclusion ..................................................................................................................................... 17
Figure 1. Major CO2 Pipelines in the United States........................................................................5
Figure 2. U.S. Prices for Large Diameter Steel Pipe.....................................................................12
Author Contact Information..........................................................................................................17
Congress has long been concerned about the impact of global climate change that may be caused 1
by manmade emissions of carbon dioxide (CO2) and other greenhouse gases. Congress is also
debating policies related to global warming and is examining a range of potential initiatives to 2
reduce manmade contributions to global warming from U.S. sources. One approach to mitigating
manmade greenhouse gas emissions is direct sequestration: capturing CO2 at its source, 3
transporting it via pipelines, and storing it indefinitely to avoid its release to the atmosphere. This
paper explores one component of direct sequestration—transporting CO2 in pipelines.
Carbon capture and storage (CCS) is of great interest because potentially large amounts of CO2
emitted from the industrial burning of fossil fuels in the United States could be suitable for
sequestration. Carbon capture technologies can potentially remove 80%-95% of CO2 emitted
from an electric power plant or other industrial source. Power plants are the most likely initial
candidates for CCS because they are predominantly large, single-point sources, and they
contribute approximately one-third of U.S. CO2 emissions from fossil fuels.
There are many technological approaches to CCS. However, one common requirement for nearly
all large-scale CCS schemes is a system for transporting CO2 from capture sites (e.g., power
plants) to storage sites (e.g., underground reservoirs). Transporting captured CO2 in relatively
limited quantities is possible by truck, rail, and ship, but moving the enormous quantities of CO2
implied by a widespread implementation of CCS technologies would likely require a dedicated
interstate pipeline network.
In the 110th Congress, there has been considerable debate on the capture and sequestration aspects
of carbon sequestration, while there has been relatively less focus on transportation. Nonetheless,
there is increasing understanding in Congress that a national CCS program could require the
construction of a substantial network of interstate CO2 pipelines. The Carbon Dioxide Pipeline
Study Act of 2007 (S. 2144), introduced by Senator Coleman and nine cosponsors on October 4,
2007, would require the Secretary of Energy to study the feasibility of constructing and operating
such a network of CO2 pipelines. The America’s Climate Security Act of 2007 (S. 2191),
introduced by Senator Lieberman and nine cosponsors on October 18, 2007, and reported out of
the Senate Environment and Public Works Committee in amended form on December 5, 2007,
contains similar provisions (Sec. 8003). The Carbon Capture and Storage Technology Act of 2007
(S. 2323), introduced by Senator Kerry and one cosponsor on November 7, 2007, would require
carbon sequestration projects authorized by the act to evaluate the most cost-efficient ways to
integrate CO2 sequestration, capture, and transportation (Sec. 3(b)(5)). The Coal Fuels and
Industrial Gasification Demonstration and Development Act of 2007 (S. 2149 introduced by
Senator Dorgan on October 4, 2007, would allow accelerated depreciation for certain new CO2
1 This report does not explore the underlying science of climate change, nor the question of whether action is justified.
See CRS Report RL33849, Climate Change: Science and Policy Implications, by Jane A. Leggett.
2 For more information on congressional activities related to global warming, see CRS Report RL31931, Climate
Change: Federal Laws and Policies Related to Greenhouse Gas Reductions, by Brent D. Yacobucci and Larry Parker; th
and CRS Report RL34067, Climate Change Legislation in the 110 Congress, by Jonathan L. Ramseur and Brent D.
3 This report does not address indirect sequestration, wherein CO2 is stored in soils, oceans, or plants through natural
processes. For information on the latter, see CRS Report RL31432, Carbon Sequestration in Forests, by Ross W.
pipelines. The Energy Independence and Security Act of 2007 (P.L. 110-140) signed by President
Bush, as amended, on December 19, 2007, requires the Secretary of the Interior to recommend
legislation to clarify the appropriate framework for issuing CO2 pipeline rights-of-way on public
land (Sec. 714(7)).
Legislative focus on the capture and storage components of direct carbon sequestration reflects a
perception that transporting CO2 via pipelines does not present a significant barrier to
implementing large-scale CCS. Even though regional CO2 pipeline networks already operate in
the United States for enhanced oil recovery (EOR), developing a more expansive national CO2
pipeline network for CCS could pose numerous new regulatory and economic challenges. As one
analyst has remarked,
Each of the individual technologies involved in the transport portion of the CCS process is
mature, but integrating and deploying them on a massive scale will be a complex task. “The 4
question is, how would the necessary pipeline network be established and evolve?”
A thorough consideration of potential CCS approaches necessarily involves an assessment of their
overall requirements for CO2 transportation by pipeline, including the possible federal role in
establishing an interstate CO2 pipeline network.
This report introduces key policy issues related to CO2 pipelines which may require congressional
attention. It summarizes the technological requirements for CO2 pipeline transportation under a
comprehensive CCS strategy. It characterizes these requirements relative to the existing CO2
pipeline infrastructure in the United States used for EOR. The report summarizes policy issues
related to CO2 pipeline development, including uncertainty about pipeline network requirements,
economic regulation, utility cost recovery, regulatory classification of CO2 itself, and pipeline
safety. The report concludes with perspectives on CO2 pipelines in the context of the nation’s
overall energy and infrastructure requirements.
Carbon sequestration policies are inextricably tied to the function and availability of the
necessary technologies. Consequently, discussion of CCS policy alternatives benefits from a basic
understanding of the physical processes involved, and relevant experience with existing
infrastructure. This section provides a basic overview of carbon sequestration processes overall, 5
as well as specific U.S. experience with CO2 pipelines.
Carbon capture and sequestration is essentially a three-part process involving a CO2 source
facility, a long-term CO2 storage site, and an intermediate mode of CO2 transportation.
4 John Douglas, “Expanding Options for CO2 Storage,” EPRI Journal, Electric Power Research Institute (Spring 2007):
5 More detailed information is available in CRS Report RL33801, Carbon Capture and Sequestration (CCS), by Peter
The first step in direct sequestration is to produce a concentrated stream of CO2 for transport and
storage. Currently, three main approaches are available to capture CO2 from large-scale industrial
facilities or power plants:
• pre-combustion, which separates CO2 from fuels by combining them with air
and/or steam to produce hydrogen for combustion and CO2 for storage,
• post-combustion, which extracts CO2 from flue gases following combustion of
fossil fuels or biomass, and
• oxyfuel combustion, which uses oxygen instead of air for combustion,
producing flue gases that consist mostly of CO2 and water from which the CO2 is 6
These approaches vary in terms of process technology and maturity, but all yield a stream of
extracted CO2 which may then be compressed to increase its density and make it easier (and
cheaper) to transport. Although technologies to separate and compress CO2 are commercially
available, they have not been applied to large-scale CO2 capture from power plants for the 7
purpose of long-term storage.
Pipelines are the most common method for transporting large quantities of CO2 over long
distances. CO2 pipelines are operated at ambient temperature and high pressure, with primary
compressor stations located where the CO2 is injected and booster compressors located as needed 8
further along the pipeline. In overall construction, CO2 pipelines are similar to natural gas
pipelines, requiring the same attention to design, monitoring for leaks, and protection against 9
overpressure, especially in populated areas. Many analysts consider CO2 pipeline technology to 10
be mature, stemming from its use since the 1970s for EOR and in other industries. Marine
transportation may also be feasible when CO2 needs to be transported over long distances or
overseas; however, many manmade CO2 sources are located far from navigable waterways, so
such a scheme would still likely require pipeline construction between CO2 sources and port
terminals. Rail cars and trucks can also transport CO2, but these modes would be logistically
impractical for large-scale CCS operations.
6 Intergovernmental Panel on Climate Change, Special Report: Carbon Dioxide Capture and Storage, 2005 (2005): 22-
23. (Hereafter referred to as IPCC 2005.)
7 H. J. Herzog and D. Golumb, “Carbon Capture and Storage from Fossil Fuel Use,” in C.J. Cleveland (ed.),
Encyclopedia of Energy (New York, NY: Elsevier Science, Inc., 2004): 277-287.
8 IPCC 2005: 26.
9 IPCC 2005: 181.
10 CO2 used in EOR enhances oil production by re-pressurizing geological formations and reducing oil viscosity,
thereby increasing oil movement to the surface. CO2 is used industrially as a chemical feedstock, to carbonate
beverages, for refrigeration and food processing, to treat water, and for other uses.
In most CCS approaches, CO2 would be transported by pipeline to a porous rock formation that
holds (or previously held) fluids where the CO2 would be injected underground. When CO2 is
injected over 800 meters deep in a typical storage formation, atmospheric pressure induces the
CO2 to become relatively dense and less likely to migrate out of the formation. Injecting CO2 into
such formations uses existing technologies developed primarily for oil and natural gas production
which potentially could be adapted for long-term storage and monitoring of CO2. Other
underground injection applications in practice today, such as natural gas storage, deep injection of
liquid wastes, and subsurface disposal of oil-field brines, also provide potential technologies and 11
experience for sequestering CO2. Three main types of geological formations are being
considered for carbon sequestration: (1) oil and gas reservoirs, (2) deep saline reservoirs, and (3)
unmineable coal seams. The overall capacity for CO2 storage in such formations is potentially 12
huge if all the sedimentary basins in the world are considered. The suitability of any particular
site, however, depends on many factors, including proximity to CO2 sources and other reservoir-
specific qualities like porosity, permeability, and potential for leakage.
The oldest long-distance CO2 pipeline in the United States is the 225 kilometer Canyon Reef 13
Carriers Pipeline (in Texas), which began service in 1972 for EOR in regional oil fields. Other
large CO2 pipelines constructed since then, mostly in the Western United States, have expanded
the CO2 pipeline network for EOR. These pipelines carry CO2 from naturally occurring
underground reservoirs, natural gas processing facilities, ammonia manufacturing plants, and a
large coal gasification project to oil fields. Additional pipelines may carry CO2 from other
manmade sources to supply a range of industrial applications. Altogether, approximately 5,800 14
kilometers (3,600 miles) of CO2 pipeline operate today in the United States.
11 IPCC 2005: 31.
12 Sedimentary basins are large depressions in the Earth’s surface filled with sediments and fluids.
13 Kinder Morgan CO2 Company, “Canyon Reef Carriers Pipeline (CRC),” web page (2007).
14 U.S. Dept. of Transportation, National Pipeline Mapping System database (June 2005).
Figure 1. Major CO2 Pipelines in the United States
Sources: Denbury Resources Inc., “EOR: The Economic Alternative for CCS,” Slide presentation (October
2007). http://www.gasification.org/Docs/2007_Papers/25EVAN.pdf; U.S. Dept. of Transportation, National
Pipeline Mapping System, Official use only. (June 2005). https://www.npms.phmsa.dot.gov
The locations of the major U.S. CO2 pipelines are shown in Figure 1. By comparison, nearly
crisscross the United States.
Congressional consideration of potential CCS policies is still evolving, but so far initiatives have
focused more on developing capture and sequestration technologies than on transportation. th
Specific legislative proposals in the 110 Congress reflect the current perception that CO2 capture
probably represents the largest technological hurdle to implementing widespread CCS, and that
CO2 transportation by pipelines does not present as significant a barrier. While these perceptions
may be accurate, industry and regulatory analysts have begun to identify important policy issues
related specifically to CO2 pipelines which may require congressional attention.
Although any widespread CCS scheme in the United States would likely require dedicated CO2
pipelines, there is considerable uncertainty about the size and configuration of the pipeline
network required. This uncertainty stems, in part, from uncertainty about the suitability of
geological formations to sequester captured CO2 and the proximity of suitable formations to
specific sources. One recent analysis concludes that 77% of the total annual CO2 captured from
the major North American sources may be stored in reservoirs directly underlying these sources, 16
and that an additional 18% may be stored within 100 miles of additional sources. If this were
15 Bureau of Transportation Statistics (BTS), National Transportation Statistics 2005 (Dec. 2005), Table 1-10. In this
report oil includes petroleum and other hazardous liquids such as gasoline, jet fuel, diesel fuel, and propane, unless
16 R.T. Dahowski, J.J. Dooley, C.L. Davidson, S. Bachu, N. Gupta, and J. Gale, “A North American CO2 Storage
the case, the need for new CO2 pipelines would be limited to onsite transportation and a relatively
small number of long-distance pipelines (only a subset of which might need to be interstate
Other analysts suggest that captured CO2 may need to be sequestered, at least initially, in more 17
centralized reservoirs to reduce potential risks associated with CO2 leaks. They suggest that,
given current uncertainty about the suitability of various on-site geological formations for long-
term CO2 storage, certain specific types of formations (e.g., salt caverns) may be preferred as CO2
repositories because they have adequate capacity and are most likely to retain sequestered CO2
indefinitely. As geologic formations are characterized in more detail and suitable repositories
identified, CO2 sources can be mapped against storage sites with increasing certainty. The current
uncertainty over proximity of sources to storage sites, however, implies a wide range of possible
pipeline configurations and a wide range of possible costs.
Whether CCS policies ultimately lead to centralized or decentralized storage configurations
remains to be seen; however, pipeline requirements and storage configurations are closely related.
A 2007 study at the Massachusetts Institute of Technology (MIT) concluded that “the majority of
coal-fired power plants are situated in regions where there are high expectations of having CO2 18
sequestration sites nearby.” In these cases, the MIT study estimated the cost of CO2 transport
and injection to be less than 20% of total CCS costs. However, the study also stated that the costs
of CO2 pipelines are highly non-linear with respect to the quantity transported, and highly 19
variable due to “physical ... and political considerations.” Another 2007 study, at Duke
University, concluded that “geologic sequestration is not economically or technically feasible
within North Carolina,” but “may be viable if the captured CO2 is piped out of North Carolina 20
and stored elsewhere.” There are also significant scale economies for large, integrated CO2
pipeline networks that link many sources together rather than single, dedicated pipelines between 21
individual sources and storage reservoirs. As Congress considers CCS policies, it may examine
the relationship between CO2 reservoir sites and pipeline requirements.
Economic regulation of interstate pipelines by the federal government is generally intended to
ensure pipelines fulfill common carrier obligations by charging reasonable rates; providing rates
and services to all upon reasonable request; not unfairly discriminating among shippers;
Supply Curve: Key Findings and Implications for the Cost of CCS Deployment,” Proceedings of the Fourth Annual
Conference on Carbon Capture and Sequestration ( Alexandria, VA: May 2-5, 2005). The study addresses CO2 capture
at 2,082 North American facilities including power plants, natural gas processing plants, refineries, cement kilns, and
other industrial plants.
17 Jennie C. Stevens and Bob Van Der Zwaan, “The Case for Carbon Capture and Storage,” Issues in Science and
Technology, vol. XXII, no. 1 (Fall 2005): 69-76. (See page 15 of this report for a discussion of safety issues.)
18 John Deutch, Ernest J. Moniz, et al., The Future of Coal. (Cambridge, MA: Massachusetts Institute of Technology:
2007): 58. (Hereafter referred to as MIT 2007.)
19 MIT 2007: 58.
20 Eric Williams, Nora Greenglass, and Rebecca Ryals, “Carbon Capture, Pipeline and Storage: A Viable Option for
North Carolina Utilities?” Working paper prepared by the Nicholas Institute for Environmental Policy Solutions and
The Center on Global Change, Duke University (Durham, NC: March 8, 2007): 4.
21 MIT 2007: 58.
establishing reasonable classifications, rules, and practices; and interchanging traffic with other 22
pipelines or transportation modes. If interstate CO2 pipelines for carbon sequestration are
ultimately to be developed, it will raise important regulatory questions in this context because
federal jurisdiction over hypothetical interstate CO2 pipeline siting and rate decisions is not clear.
Based on their current regulatory roles, two of the more likely candidates for jurisdiction over
interstate pipelines transporting CO2 for purposes of CCS are the Federal Energy Regulatory 23
Commission (FERC) and the Surface Transportation Board (STB). However, both agencies
have at some point expressed a position that interstate CO2 pipelines are not within their purview, 24
as summarized below.
The Natural Gas Act of 1938 (NGA) vests in FERC the authority to issue “certificates of public
convenience and necessity” for the construction and operation of interstate natural gas pipeline 25
facilities. FERC is also charged with extensive regulatory authority over the siting of natural gas
import and export facilities, as well as rates for transportation of natural gas and other elements of
transportation service. FERC also has jurisdiction over regulation of oil pipelines pursuant to the 26
Interstate Commerce Act (ICA). Although FERC is not involved in the oil pipeline siting
process, as with natural gas, FERC does regulate transportation rates and capacity allocation for 27
oil pipelines. Jurisdiction over rate regulation for pipelines “other” than “water, gas or oil”
pipelines resides with the STB, a decisionally independent regulatory agency affiliated with the 28
Department of Transportation. The STB acts as a forum for resolution of disputes related to
pipelines within its jurisdiction. Parties who wish to challenge a rate or another aspect of a
pipeline’s common carrier service must petition the STB for a hearing, however; there is no
ongoing regulatory oversight.
Although CO2 pipelines are not explicitly excluded from FERC jurisdiction by statute, FERC
ruled in 1979 that they are not subject to the Commission’s jurisdiction because they do not 29
transport natural gas for heating purposes. Likewise, the ICC in 1980 concluded that Congress
intended to exclude all types of gas, including CO2, from ICC regulation. After making the initial
decision that it likely did not have jurisdiction over CO2 pipelines, the ICC did conclude that the
issue was “important enough to institute a proceeding and accept comments on the petition and 30
our view on it.” After the comment period the ICC confirmed its view that CO2 pipelines were
22 General Accounting Office (now Government Accountability Office), Surface Transportation: Issues Associated
With Pipeline Regulation by the Surface Transportation Board, RCED-98-99 (Washington, DC: April 21, 1998):3; and
49 U.S.C. § 155.
23 The STB is the successor agency to the Interstate Commerce Commission (ICC) under the Interstate Commerce
Commission Termination Act of 1995 (P.L. 104-88).
24 For a more comprehensive discussion of CO2 pipeline regulatory jurisdiction, see CRS Report RL34307, Regulation
of Carbon Dioxide (CO2) Sequestration Pipelines: Jurisdictional Issues, by Adam Vann and Paul W. Parfomak.
25 15 U.S.C. 717f(c).
26 49 App. U.S.C.§1.
27 Section 1801 of the Energy Policy Act of 1992 directed FERC to “promulgate regulations establishing a simplified
and generally applicable ratemaking methodology” for oil pipeline transportation.
28 49 U.S.C. § 1-501(a)(1)(c).
29 Cortez Pipeline Company, 7 FERC ¶ 61,024 (1979).
excluded from the ICC’s (and, therefore, the STB’s) jurisdiction.31 Thus, the two federal
regulatory agencies that, generally speaking, have jurisdiction over interstate pipeline rate and
capacity allocation matters appear to have rejected explicitly jurisdiction over CO2 siting and
rates, and there is no legislative or judicial history to suggest that their rejections were improper
at the time. Absent federal authority, CO2 pipelines are regulated to varying degrees by the states.
Notwithstanding the ICC’s 1980 disclaimer of jurisdiction over CO2 pipelines, other evidence
indirectly suggests the possibility that interstate CO2 pipelines could still be considered subject to 32
STB jurisdiction. For example, an April 1998 report by the General Accounting Office (GAO)
stated that interstate CO2 pipelines, as well as pipelines transporting other gases are subject to the
board’s oversight authority. The STB reviewed the GAO’s analysis and, apparently, did not object 33
to this jurisdictional classification. Furthermore, although the STB is the successor to the now-
defunct ICC, the STB conceivably could determine that its jurisdiction is not governed by the
ICC’s decision in the CO2 matter. Indeed, the Supreme Court has ruled that federal agencies are
not precluded from changing their positions on the issue of regulatory jurisdiction. According to
the Court, “an initial agency interpretation is not instantly carved in stone. On the contrary, the
agency, to engage in informed rulemaking, must consider varying interpretations and the wisdom 34
of its policy on a continuing basis.” Accordingly, regulation of CO2 pipelines for CCS purposes
by the STB (or by FERC, for that matter) under existing statutes remains a possibility.
If CCS technology develops to the point where interstate CO2 pipelines become more common,
and if FERC and the STB continue to disclaim jurisdiction over CO2 pipelines, then the absence
of federal regulation described above may pose policy challenges. In particular, with many more
pipeline users and interconnections than exist today, complex common carrier issues might 35
arise. One potential concern, for example, is whether rates should be set separately for existing
pipelines carrying CO2 as a valuable commercial commodity (e.g., for EOR), versus new
pipelines carrying CO2 as industrial pollution for disposal. Furthermore, if rates are not reviewed
prior to pipeline construction, it might be difficult for regulators to ensure the reasonableness of
CO2 pipeline rates until after the pipelines were already in service. If CO2 pipeline connections
become mandatory under future regulations, such arrangements might expose pipeline users to
31 Cortez Pipeline Company—Petition for Declaratory Order—Commission Jurisdiction Over Transportation of Carbon
Dioxide by Pipeline, 46 Fed. Reg. 18805 (March 26, 1981).
32 Now known as the Government Accountability Office.
33 Surface Transportation Board (STB), Personal communication, (December 2007). The STB Office of Governmental
and Public Affairs informed CRS that the board recognizes the conflict between this GAO report and the ICC decision
(as well as the wording of 49 C.F.R. § 15301 governing STB jurisdiction over pipelines other than those transporting
“water, gas or oil”). However the office did not want to state an opinion as to the current extent of STB jurisdiction
over CO2 pipelines and suggested that the STB would likely not act to resolve this conflict unless a CO2 pipeline
dispute comes before it.
34 Chevron U.S.A. v. Nat. Res. Def. Council, 467 U.S. 837, at 863-64 (1984).
35 Beard Company 2000 annual report (10-k) filed with the U.S. Securities and Exchange Commission states that the
company (with other plaintiffs) filed a lawsuit in 1996 against CO2 pipeline owner Shell Oil Company and other
defendants alleging, among other things, that the defendants “controlled and depressed the price of CO2” from a field
partially owned by Beard and “reduc[ed] the delivered price of CO2 while ... simultaneously inflating the cost of
abuses of potential market power in CO2 pipeline services, at least until rate cases could be heard.
Presiding over a large number of CO2 rate cases of varying complexity in a relatively short time
frame might also be administratively overwhelming for state agencies, which may have limited
resources available for pipeline regulatory activities.
A company seeking to construct a CO2 pipeline must secure siting approval from the relevant
regulatory authorities and must subsequently secure rights of way from landowners along the
pipeline right by purchasing easements or by eminent domain. However, since federal agencies
claim no regulatory authority with respect to CO2 pipeline construction, potential builders of new
CO2 pipelines do not require, and could not obtain, federal approval to construct new pipelines.
Likewise, federal regulators claim no eminent domain authority for pipeline construction, and so
cannot ensure that pipeline companies can secure rights of way to construct new pipelines. By
contrast, companies seeking to build interstate natural gas pipelines must first obtain certificates
of public convenience and necessity from FERC under the Natural Gas Act (15 U.S.C. §§ 717, et
seq.). Such certification may include safety and security provisions with respect to pipeline 36
routing, safety standards and other factors. A certificate of public convenience and necessity
granted by FERC (15 U.S.C. § 717f(h)) confers eminent domain authority.
The state-by-state siting approval process for CO2 pipelines may be complex and protracted, and
may face public opposition, especially in populated or environmentally sensitive areas. As the 37
National Commission on Energy Policy (NCEP) states in its 2006 report:
Recent developments notwithstanding, most new energy projects are still regulated primarily
at the state level and public opposition remains inextricably intertwined with local concerns,
including environmental and ecosystem impacts as well as, in some cases, complex issues of
property rights and competing land uses.... In some cases, upstream or downstream
infrastructure requirements—such as the need for ... underground carbon sequestration sites
... may generate as much if not more opposition than the energy facilities they support. At the
same time—and despite recent moves toward consolidated oversight by FERC or other
regulatory authorities—fragmented permitting processes, nonstandard permitting
requirements, and interagency redundancy often still compound siting challenges.
Securing rights of way along existing easements for other infrastructure (e.g., natural gas
pipelines, electric transmission lines) may be one way to facilitate the siting of new CO2
pipelines. However, existing easements may be ambiguous as to the right of the easement holder
to install and operate CO2 pipelines. Questions may also arise as to compensation for landowners
or easement holders for use of such easements, and as to whether existing easements can be sold 38
or leased to CO2 pipeline companies. A related issue is whether state condemnation laws, which
are often used to secure sites for infrastructure deemed to be in the public interest, allow for CO2
pipelines to be treated as public utilities or common carriers. This issue also arises on federal
lands managed by the Bureau of Land Management (BLM). New CO2 pipelines through BLM
lands potentially may be sited under right of way provisions in either the Federal Land Policy and
36 18 C.F.R. § 157.
37 National Commission on Energy Policy, Siting Critical Energy Infrastructure: An Overview of Needs and
Challenges. (Washington, DC: June 2006): 9. (Hereafter referred to as NCEP 2006.)
38 Partha S. Chaudhuri, Michael Murphy, and Robert E. Burns, “Commissioner Primer: Carbon Dioxide Capture and
Storage” (National Regulatory Research Institute, Ohio State Univ., Columbus, OH: Mar. 2006): 17.
Management Act (FLPMA; 43 U.S.C. § 35) or the Mineral Leasing Act (MLA; 30 U.S.C. § 185).
However, the MLA imposes a common carrier requirement while the FLPMA does not. Although 39
the agency currently permits CO2 pipelines for EOR under the MLA, CO2 pipeline companies
seeking to avoid common carrier requirements under CCS schemes may litigate to secure rights 40
of way under FLPMA. Provisions in P.L. 110-140 require the Secretary of the Interior to
recommend legislation to clarify the appropriate framework for issuing CO2 pipeline rights-of-
way on federal land (Sec. 714(7)).
Another complicating factor in the siting of CO2 pipelines for CCS is the types of locations of
existing CO2 sources. Although a network of long-distance CO2 pipelines exists in the United
States today for EOR, these pipelines are sited mostly in remote areas accustomed to the presence
of large energy infrastructure. However, many potential sources of CO2, such as power plants, are
located in populated regions, many with a history of public resistance to the siting of energy
infrastructure. If a widespread CO2 pipeline network is required to support CCS, the ability to site
pipelines to serve such facilities may become an issue requiring congressional attention. As the
NCEP concluded, “In sum, it seems probable that the siting of critical infrastructure will continue 41
to present a major challenge for policymakers.”
Under a comprehensive CCS policy, captured CO2 arguably could be classified as either a
commodity or as a pollutant. CO2 used in EOR is considered to be a commodity, and is regulated
as such by the states. Because captured CO2 may be sold as a valuable commodity for EOR, and
may have further economic potential for enhanced recovery of coal bed methane (ECBM), some 42
argue that all CO2 under a CCS scheme should be classified as a commodity. However, it is
unlikely that the quantities of CO2 captured under a widely implemented CCS policy could all be
absorbed in EOR or ECBM applications. In the long run, significant quantities of captured CO2 43
will have to be disposed as industrial pollution, with negative economic value. Furthermore, on
April 2, 2007, the U.S. Supreme Court held that the Clean Air Act gives the U.S. Environmental
Protection Agency (EPA) the authority to regulate greenhouse gas emissions, including CO2, from 44
new motor vehicles. The court also held that EPA cannot interpose policy considerations to
refuse to exercise this authority. While the specifics of EPA regulation under this ruling might be
subject to agency discretion, it has implications for the regulation of CO2 emissions from
stationary sources, such as power plants.
Separately, EPA has also concluded that geologic sequestration of captured CO2 through well
injection meets the definition of “underground injection” in § 1421(d)(1) of the Safe Drinking
39 U.S. Dept. of the Interior, Bureau of Land Management, Environmental Assessment for Anadarko E&P Company
L.P. Monell CO2 Pipeline Project, EA #WY-040-03-035 (Feb. 2003): 71.
40 Chaudhuri et al: 17.
41 NCEP 2006: 9.
42 IOGCC 2005: 41.
43 S.M. Frailey, R.J. Finlay, and T.S. Hickman, “CO2 Sequestration: Storage Capacity Guideline Needed,” Oil & Gas
Journal (Aug. 14, 2006): 44.
44 Massachusetts v. EPA; at http://www.supremecourtus.gov/opinions/06pdf/05-1120.pdf. For further information see
CRS Report RL33776, Clean Air Issues in the 110th Congress: Climate Change, Air Quality Standards, and Oversight,
by James E. McCarthy.
Water Act (SDWA).45 EPA anticipates protecting underground sources of drinking water, through
its authority under the SDWA, from “potential endangerment” as a result of underground
injection of CO2 in anticipated CCS pilot projects. EPA’s assertion of authority under SDWA for
underground injection of CO2 during CCS pilot studies may contribute to uncertainty over future
classification of CO2 as a commodity or a pollutant.
Conflicting classification of captured CO2 as either a commodity or pollutant has important
implications for CO2 pipeline development. For example, classifying all CO2 as a pollutant not
only would contradict current state and BLM treatment of CO2 for EOR, but might also
undermine an interstate commerce rationale for FERC regulation of CO2 pipelines. On the other
hand, classifying all CO2 as a commodity would create other policy contradictions, for example,
in regions like New England where EOR may be impracticable. Under either scenario, legislative
and regulatory ambiguities would arise—especially for an integrated, interstate CO2 pipeline
network carrying a mixture of “commodity” CO2 and “pollutant” CO2. Resolving these
ambiguities to establish a consistent and workable CCS policy could likely be an issue for
If an extensive network of pipelines is required for CO2 transportation, pipeline costs may be a
major consideration in CCS policy. MIT estimated overall annualized pipeline transportation (and 46
storage) costs of approximately $5 per metric ton of CO2. If CO2 sequestration rates in the
United States were on the order of 1 billion metric tons per year at mid-century, as some analysts
propose, annualized pipeline costs would run into the billions of dollars. Furthermore, because
most pipeline costs are initial capital costs, up-front capital outlays for a new CO2 pipeline
network would be enormous. The 2007 Duke study, for example, estimated it would cost
approximately $5 billion to construct a CO2 trunk line along existing pipeline rights of way to
transport captured CO2 from North Carolina to potential sequestration sites in the Gulf states and 47
Appalachia. Within the context of overall CO2 pipeline costs, several specific cost-related issues
may warrant further examination by Congress.
Analysts commonly develop cost estimates for CO2 pipelines based on comparable construction
costs for natural gas pipelines, and to a lesser extent, petroleum product pipelines. In most cases,
these comparisons appear appropriate since CO2 pipelines are similar in design and operation to
other pipelines, especially natural gas pipelines. A University of California (UC) study analyzing
the costs of U.S. transmission pipelines constructed between 1991 and 2003 found that, on
average, labor accounted for approximately 45% of the total construction costs. Materials, rights 48
of way, and miscellaneous costs accounted for 26%, 22%, and 7% of total costs, respectively.
45 U.S. Environmental Protection Agency, memorandum (July 5, 2006). Available at http://www.epa.gov/OGWDW/
46 MIT 2007: xi.
47 Eric Williams et al. (2007): 20.
48 N. Parker, “Using Natural Gas Transmission Pipeline Costs to Estimate Hydrogen Pipeline Costs,” UCD-ITS-RR-
04-35, Inst. of Transportation Studies, Univ. of California (Davis, CA: 2004): 1. http://hydrogen.its.ucdavis.edu/people/
ncparker/papers/pipelines; see, also, G. Heddle, H. Herzog, and M. Klett, “The Economics of CO2 Storage,” MIT
LFEE 2003-003 RP (Laboratory for Energy and the Environment, MIT, Cambridge, MA: Aug. 2003).
Materials cost was most closely dependent upon pipeline size, accounting for an increasing
fraction of the total cost with increasing pipeline size, from 15% to 35% of total costs. The MIT
study estimated that transportation of captured CO2 from a 1 gigawatt coal-fired power plant 49
would require a pipe diameter of 16 inches. According to the UC analysis, total construction
costs for such a pipe between 1991 and 2003 averaged around $800,000 per mile (in 2002
dollars), although the study stated that costs for any individual pipeline could vary by a factor of 50
five depending its location.
Figure 2. U.S. Prices for Large Diameter Steel Pipe
Source: Preston Pipe & Tube Report. Pipe prices represent average transaction price (by weighted average value)
for double-submerged arc-welded pipe > 24” diameter, combining domestic and import shipments. Prices are
reported through October 2007.
Since pipeline materials make up a significant portion of CO2 pipeline construction costs, analysts
have called attention to rising pipeline materials costs, especially steel costs, as a concern for 51
policymakers. Following a period of low steel prices and company bankruptcies earlier in the
decade, the North American steel industry has returned to profitability and enjoys strong domestic 52
and global demand. Now, higher prices resulting from both strong demand and increased
production costs for carbon steel plate, used in making large-diameter pipe, may alter the basic
economics of CO2 pipeline projects and CCS schemes overall. As Figure 2 shows, the price of
large-diameter pipe was generally around $600 per ton in late 2001 and early 2002. By late 2007,
the price of pipe was approaching $1,400 per ton. Analysts forecast carbon steel prices to decline
over the next two years, but only gradually, and to a level still more than double the price early in 53
49 MIT 2007: 58.
50 N. Parker (2004): Fig. 23.
51 IPCC 2005: 27.
52 See CRS Report RL32333, Steel: Price and Policy Issues, by Stephen Cooney.
53 Michael Cowden, “A Profusion of New Pipeline Projects and Profits... for Now,” American Metal Market (January
2008): 18; Global Insight, Steel Industry Review (2nd Qtr. 2006), tabs. 1.11-1.12; and American Metal Market, “West
Sees More Steel Plate But Prices Holding Ground” (Aug. 31, 2006).
If some form of CCS is effectively mandated in the future, a surge in demand for new CO2 pipe,
in competition with demand for natural gas and oil pipelines, may exacerbate the trend of rising
prices for pipeline materials, and could even lead to shortages of pipe steel from North American
sources. As a consequence, the availability and cost of pipeline steel to build such a CO2 pipeline
network for CCS may be a limiting factor for widespread CCS implementation.
In states where traditional rate regulation exists, construction and operation of CO2 pipelines for
CCS could raise questions about cost recovery for electric utilities under state utility regulation.
If, for example, a CO2 pipeline is constructed for the exclusive use of a single power plant for on-
site (or nearby) CO2 sequestration, and is owned by the power plant owners, it logically could be
considered an extension of the plant itself. In such cases, the CO2 pipelines could be eligible for
regulated returns on the invested capital and their costs could be recovered by utilities in
electricity rates. Alternatively such a CO2 pipeline could be owned by third parties and considered
a non-plant asset providing a transportation service for a fee. In the latter case, the costs could
still be recovered by the utility in its rates as an operating cost.
Two complications arise with respect to pipeline cost recovery. First, because utility regulation
varies from state to state (e.g., some states allow for competition in electricity generation, others 54
do not), differences among states in the economic regulation of CO2 pipelines could create
economic inefficiencies and affect the attractiveness of CO2 pipelines for capital investment.
Second, if CO2 transportation infrastructure is intended to evolve from shorter, stand-alone,
intrastate pipelines into a network of interconnected interstate pipelines, pipeline operators
wishing to link CO2 pipelines across state lines may face a regulatory environment of daunting
complexity. Without a coherent system of economic regulation for CO2 pipelines, whether as a
commodity, pollutant, or some other classification, developers of interstate CO2 pipelines may
need to negotiate or litigate repeatedly issues such as siting, pipeline access, terms of service, and
rate “pancaking” (the accumulation of transportation charges assessed by contiguous pipeline
operators along a particular transportation route). It is just these kinds of issues which have
complicated and impeded the integration of individual utility electric transmission systems into 55
larger regional transmission networks.
Oil industry representatives frequently point to EOR as offering a market-based model for
profitable CO2 transportation via pipeline. It should be noted, however, that much of the existing
CO2 pipeline network in the United States for EOR has been established with the benefit of
federal tax incentives. Although current federal tax law provides no special or targeted tax
benefits specifically to CO2 pipelines, investments in CO2 pipelines do benefit from tax
provisions targeted for EOR. They also benefit from accelerated depreciation rules, which apply
generally to any capital investment including petroleum and natural gas (non-CO2) pipelines. For
example, the Internal Revenue Code provides for a 15% income tax credit for the costs of
recovering domestic oil by one of nine qualified EOR methods, including CO2 injection (I.R.C. §
54 In market-based states, cost recovery may affect electricity markets.
55 For further information of electric transmission regulation, see CRS Report RL33875, Electric Transmission:
Approaches for Energizing a Sagging Industry, by Amy Abel.
43).56 Also, extraction of naturally occurring CO2 may qualify for percentage depletion allowance
under I.R.C. § 613(b)(7). Prior federal law, both tax and nontax, also provided various types of
incentives for EOR which stimulated investment in CO2 pipelines. In particular, oil produced
from EOR projects was exempt from oil price controls in the 1970s. Development of CO2
pipeline infrastructure in the 1980s benefitted from tax advantages to EOR oil under the crude oil
windfall profits tax law, which was in effect from March 1980 to August 1988.
Although there were never incentives explicitly for CO2 pipelines under federal tax and price
control regulation in the 1970s and 1980s, it is clear that CO2 pipeline infrastructure development
benefitted from these regulations. In a CCS environment where some captured CO2 is a valuable
commodity, but the remainder is not, establishing similar regulatory incentives for CO2 pipelines
becomes complex. One initial proposal in S. 2149 would allow seven-year accelerated
depreciation for qualifying CO2 pipelines constructed after enactment (Sec. 4). As debate
continues about the economics of CO2 capture and sequestration generally, and how the federal
government can encourage CCS infrastructure investment, Congress may seek to understand the
implications of CCS incentives specifically on CO2 pipeline development.
In light of the overall costs associated with CO2 pipelines, including the uncertainty about future
materials costs and cost recovery, some analysts anticipate that a CO2 network for CCS will begin
with shorter pipelines from CO2 sources located close to sequestration sites. Larger CO2 trunk
lines are expected to emerge to capture substantial scale economies in long-distance pipeline
transportation. According to the 2007 MIT report, “it is anticipated that the first CCS projects will
involve plants that are very close to a sequestration site or an existing CO2 pipeline. As the 57
number of projects grow, regional pipeline networks will likely evolve.” It is debatable,
however, whether piecemeal growth of a CO2 pipeline network in this way, presumably by
individual facility operators seeking to minimize their own costs, would ultimately yield an
economically efficient and publically acceptable CO2 pipeline network for CCS. Weaknesses and
failures in the North American electric power transmission grid, which was developed in this
manner, may be one example of how piecemeal, uncoordinated network development may fail to
satisfy key economic and operating objectives.
As an alternative to piecemeal CO2 pipeline development, some analysts suggest that it may be
more cost effective in the long run to build large trunk pipelines when the first sites with CO2
capture come on line with the expectation that subsequent users could fill the spare capacity in the
trunk line. In addition to lower per-unit transport costs for CO2, such an arrangement would
smooth out potentially intermittent CO2 flows from individual capture sites (especially
discontinuously operated power plants), provide a greater buffer for overall CO2 supply 58
fluctuations, and generally allow for more operational flexibility in the system. Planning and
financing such a CO2 trunk line system would present its own challenges, however. As another
analysis points out, “implementation of a ‘backbone’ transport structure may facilitate access to
large remote storage reservoirs, but infrastructure of this kind will require large initial upfront
56 Unfortunately for EOR investors, while this tax credit is part of current federal tax law, its phaseout provisions mean
that presently it is not available—the credit is zero—due to high crude oil prices.
57 Ibid., MIT. (2007): 59.
58 John Gale and John Davidson, “Transmission of CO2—Safety and Economic Considerations,” Energy, Vol. 29, Nos.
9-10 (July-August 2004): 1326.
investment decisions.”59 How a CO2 network for CCS would be configured, and who would 60
configure it, may be issues for Congress.
CO2 occurs naturally in the atmosphere, and is produced by the human body during ordinary
respiration, so it is commonly perceived by the general public to be a relatively harmless gas.
However, at concentrations above 10% by volume, CO2 may cause adverse health effects and at
concentrations above 25% poses a significant asphyxiation hazard. Because CO2 is colorless,
odorless, and heavier than air, an uncontrolled release may accumulate and remain undetected
near the ground in low-lying outdoor areas, and in confined spaces such as caverns, tunnels, and 61
basements. Exposure to CO2 gas, as for other asphyxiates, may cause rapid “circulatory 62
insufficiency,” coma, and death. Such an event occurred in 1986 in Cameroon, when a cloud of
naturally-occurring CO2 spontaneously released from Lake Nyos killed 1,800 people in nearby 63
The Secretary of Transportation has primary authority to regulate interstate CO2 pipeline safety
under the Hazardous Liquid Pipeline Act of 1979 as amended (49 U.S.C. § 601). Under the act,
the Department of Transportation (DOT) regulates the design, construction, operation and
maintenance, and spill response planning for CO2 pipelines (49 C.F.R. § 190, 195-199). The DOT
administers pipeline regulations through the Office of Pipeline Safety (OPS) within the Pipelines 64
and Hazardous Materials Safety Administration (PHMSA). Although CO2 is listed as a Class 2.2
(non-flammable gas) hazardous material under DOT regulations (49 C.F.R. § 172.101), the
agency applies nearly the same safety requirements to CO2 pipelines as it does to pipelines
carrying hazardous liquids such as crude oil, gasoline, and anhydrous ammonia (49 C.F.R. § 195).
To date, CO2 pipelines in the United States have experienced few serious accidents. According to
OPS statistics, there were 12 leaks from CO2 pipelines reported from 1986 through 2006—none
resulting in injuries to people. By contrast, there were 5,610 accidents causing 107 fatalities and
same period. It is difficult to draw firm conclusions from these accident data, because CO2
pipelines account for less than 1% of total natural gas and hazardous liquids pipelines, and CO2
pipelines currently run primarily through remote areas. Based on the limited sample of CO2
incidents, analysts conclude that, mile-for-mile, CO2 pipelines appear to be safer than the other
59 IPCC 2005: 190.
60 For further discussion see CRS Report RL34316, Pipelines for Carbon Dioxide (CO2) Control: Network Needs and
Cost Uncertainties, by Paul W. Parfomak and Peter Folger.
61 J. Barrie, K. Brown, P.R. Hatcher, and H.U. Schellhase, “Carbon Dioxide Pipelines: A Preliminary Review of
Design and Risks,” Proceedings of the 7th International Conference on Greenhouse Gas Control Technologies
(Vancouver, Canada: Sept. 5-9, 2004): 2.
62 Airco, Inc., “Carbon Dioxide Gas,” Material Safety Data Sheet (Aug. 4, 1989). http://www2.siri.org/msds/f2/byd/
63 Kevin Krajick, “Defusing Africa’s Killer Lakes,” Smithsonian, v. 34, n. 6. (2003): 46—55.
64 PHMSA succeeds the Research and Special Programs Administration (RSPA), reorganized under P.L. 108-246,
which was signed by the President on Nov. 30, 2004.
65 Office of Pipeline Safety (OPS), “Distribution, Transmission, and Liquid Accident and Incident Data,” (2007). OPS
has not yet released 2007 incident statistics. Data files available at http://ops.dot.gov/stats/IA98.htm.
types of pipeline regulated by OPS.66 Additional measures, such as adding gas odorants to CO2 to
aid in leak detection, may further mitigate CO2 pipeline hazards. Nonetheless, as the number of
CO2 pipelines expands, analysts suggest that “statistically, the number of incidents involving CO2 67
should be similar to those for natural gas transmission.” If the nation’s CO2 pipeline network
expands significantly to support CCS, and if this expansion includes more pipelines near 68
populated areas, more CO2 pipeline accidents are likely in the future.
There are no special provisions in U.S. law protecting the CO2 pipeline industry from criminal or
civil liability. In January 2003, the Justice Department announced over $100 million in civil and
criminal penalties against Olympic Pipeline and Shell Pipeline resolving claims from a fatal 69
gasoline pipeline fire in Bellingham, WA, in 1999. In March 2003, emphasizing the
environmental aspects of homeland security, Attorney General John Ashcroft reportedly
announced a crackdown on companies failing to protect against possible terrorist attacks on 70
storage tanks, transportation networks, industrial plants, and pipelines.
Even if no federal or state regulations are violated, CO2 pipeline operators could still face civil
liability for personal injury or wrongful death in the event of an accident. In the Bellingham
accident, the pipeline owner and associated defendants reportedly agreed to pay a $75 million 71
settlement to the families of two children killed in the accident. In 2002, El Paso Corporation
settled wrongful death and personal injury lawsuits stemming from a natural gas pipeline 72
explosion near Carlsbad, NM, which killed 12 campers. Although the terms of those settlements 73
were not disclosed, two additional lawsuits sought a total of $171 million in damages. The MIT
study concluded that operational liability for CO2 pipelines, as part of an integrated CCS
infrastructure, “can be managed within the framework that has been successfully used for decades 74
by the oil and gas industries.” Nonetheless, as CCS policy evolves, Congress may seek to
ensure that liability provisions for CO2 pipelines are adequate and consistent with liability
provisions in place for other CO2 infrastructure.
In addition to the issues discussed above, additional policy issues related to CO2 pipelines may
arise as CCS policy evolves. These may include addressing technical transportation problems
66 John Gale and John Davidson. (2004): 1322.
67 Barrie et al. (2004): 2.
68 Gale and Davidson (2004): 1321.
69 “Shell, Olympic Socked for Pipeline Accident,” Energy Daily (Jan. 22, 2003).
70 John Heilprin, “Ashcroft Promises Increased Enforcement of Environmental Laws for Homeland Security,”
Associated Press, Washington dateline (Mar. 11, 2003).
71 Business Editors, “Olympic Pipe Line, Others Pay Out Record $75 Million in Pipeline Explosion Wrongful Death
Settlement,” Business Wire (April 10, 2002).
72 National Transportation Safety Board, Pipeline Accident Report, PAR-03-01. (Feb. 11, 2003).
73 El Paso Corp., Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, Form 10-Q,
Period ending June 30, 2002. (Houston, TX: 2002). The impact of these lawsuits on the company’s business is unclear,
however; the report states that “our costs and legal exposure ... will be fully covered by insurance.”
74 MIT 2007: 58.
related to the presence of other pollutants, such as sulfuric and carbonic acid, in CO2 pipelines.
Some have also suggested the use or conversion of existing non-CO2 pipelines, such as natural 75
gas pipelines, to transport CO2. Coordination of U.S. CO2 pipeline policies with Canada, with
whom the United States shares its existing pipeline infrastructure, may also become a
consideration. Finally, the potential impacts of CO2 pipeline development overseas on the global
availability of construction skills and materials may arise as a key factor in CCS economics and
Policy debate about the mitigation of climate change through some scheme of carbon capture and
sequestration is expanding quickly. To date, debate among legislators has been focused mostly on
CO2 sources and storage sites, but CO2 pipelines are a vital connection between the two. Although
CO2 transportation by pipeline is in some respects a mature technology, there are many important
unanswered questions about the socially optimal configuration, regulation, and costs of a CO2
pipeline network for CCS. Furthermore, because CO2 pipelines for EOR are already in use today,
policy decisions affecting CO2 pipelines take on an urgency that is, perhaps, unrecognized by
many. It appears, for example, that federal classification of CO2 as both a commodity (by the
BLM) and as a pollutant (by the EPA) potentially could create an immediate conflict which may
need to be addressed not only for the sake of future CCS implementation, but also to ensure
consistency between future CCS and today’s CO2 pipeline operations.
In addition to these issues, Congress may examine how CO2 pipelines fit into the nation’s overall
strategies for energy supply and environmental protection. The need for CO2 pipelines ultimately
derives from the nation’s consumption of fossil fuels. Policies affecting the latter, such as energy
conservation, and the development of new renewable, nuclear, or hydrogen energy resources,
could substantially affect the need for and configuration of CO2 pipelines. If policy makers
encourage continued consumption of fossil fuels under CCS, then the need to foster the other
energy options may be diminished—and vice versa. Thus decisions about CO2 pipeline
infrastructure could have consequences for a broader array of energy and environmental policies.
Paul W. Parfomak Peter Folger
Specialist in Energy and Infrastructure Policy Specialist in Energy and Natural Resources Policy
firstname.lastname@example.org, 7-0030 email@example.com, 7-1517
75 An example is the Gwinville, MS-Lake St. John, LA natural gas pipeline purchased by Denbury Resources, Inc. in
2006 and converted to CO2 transportation for EOR in 2007.