Pipelines for Carbon Dioxide (CO2) Control: Network Needs and Cost Uncertainties
Prepared for Members and Committees of Congress
Congress is considering policies promoting the capture and sequestration of carbon dioxide (CO2)
from sources such as electric power plants. Carbon capture and sequestration (CCS) is a process
involving a CO2 source facility, a long-term CO2 sequestration site, and CO2 pipelines. There is
an increasing perception in Congress that a national CCS program could require the construction
of a substantial network of interstate CO2 pipelines. However, divergent views on CO2 pipeline
requirements introduce significant uncertainty into overall CCS cost estimates and may
complicate the federal role, if any, in CO2 pipeline development. 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. 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.
The cost of CO2 transportation is a function of pipeline length and other factors. This report
examines key uncertainties in CO2 pipeline requirements for CCS by contrasting hypothetical
pipeline scenarios for 11 major coal-fired power plants in the Midwest Regional Carbon
Sequestration Partnership region. The scenarios illustrate how different assumptions about
sequestration site viability can lead to a 20-fold difference in CO2 pipeline lengths, and, therefore,
similarly large differences in capital costs. From the perspective of individual power plants, or
other CO2 sources, variable costs for CO2 pipelines may have significant ramifications. If CO2
pipeline costs for specific regions reach tens, or even hundreds, of millions of dollars per plant,
then power companies may have difficulty securing the capital financing or regulatory approval
needed to construct or retrofit fossil fuel-powered plants in these regions. High CO2
transportation costs also could increase electricity prices in “sequestration-poor” regions relative
to regions able to sequester CO2 more locally.
As CO2 pipelines get longer, the state-by-state siting approval process may become complex and
protracted, and may face public opposition. Because CO2 pipeline requirements in a CCS scheme
are driven by the relative locations of CO2 sources and sequestration sites, identification and
validation of such sites must explicitly account for CO2 pipeline costs if the economics of those
sites are to be fully understood. Since transporting CO2 to distant locations can impose significant
additional costs to a facility’s carbon control infrastructure, facility owners may seek regulatory
approval for as many sequestration sites as possible and near to as many facilities as possible. If
CCS moves to widespread implementation, government agencies and private companies may face
challenges in identifying, permitting, developing, and monitoring the large number of localized
sequestration reservoirs that may be proposed. However, even as viable sequestration reservoirs
are being identified, it is unclear which CO2 source facilities will have access to them, under what
time frame, and under what conditions. Given the potential size of a national CO2 pipelines
network, many billions of dollars of capital investment may be affected by policy decisions made
Introduc tion ..................................................................................................................................... 1
Scenarios for CO2 Pipeline Development.................................................................................2
Hypothetical CO2 Pipelines in the Midwest....................................................................................3
Sequestration in the Rose Run Formation.................................................................................3
Potential Barriers to Rose Run Sequestration.....................................................................5
Alternatives to CO2 Sequestration in Rose Run........................................................................6
Unmineable Coal Beds.......................................................................................................6
Oil and Natural Gas Fields..................................................................................................7
Mt. Simon Formation..........................................................................................................7
Variability of CO2 Pipeline Costs..............................................................................................9
CO2 Pipeline Siting Challenges...............................................................................................10
Pipeline and Sequestration Site Relationships.........................................................................11
Advantaged and Disadvantaged Regions.................................................................................11
Conclusion ..................................................................................................................................... 12
Figure 1. Major Power Plants and the Rose Run Formation...........................................................4
Figure 2. Hypothetical CO2 Pipelines to the Rose Run Formation.................................................5
Figure 3. Hypothetical CO2 Pipelines to the Mt. Simon Formation................................................8
Author Contact Information..........................................................................................................12
Congress is considering policies to reduce U.S. emissions of greenhouse gases. Prominent among
these policies are those promoting the capture and direct sequestration of carbon dioxide (CO2)
from manmade sources such as electric power plants and manufacturing facilities. Carbon capture
and sequestration is of great interest because potentially large amounts of CO2 produced by the
industrial burning of fossil fuels could be sequestered. Although they are still under development,
carbon capture technologies may be able to remove up to 95% of CO2 emitted from an electric
power plant or other industrial source.
Carbon capture and sequestration (CCS) is a three-part process involving a CO2 source facility, a
long-term CO2 sequestration site, and an intermediate mode of CO2 transportation—typically
pipelines. Some studies have been optimistic about pipeline requirements for CO2 sequestration.
They conclude that the pipeline technology is mature, and that most major CO2 sources in the
United States are, or will be, located near likely sequestration sites, so that large investments in 1
CO2 pipeline infrastructure will probably not be needed. Other studies express greater 2
uncertainty about the required size and configuration of CCS pipeline networks. A handful of
regionally-focused studies have concluded that CO2 pipeline requirements for CO2 sources could
be substantial, and thus present a greater challenge for CCS than is commonly presumed, at least 3
in parts of the United States.
Divergent views on CO2 pipeline requirements introduce significant uncertainty into overall CCS
cost estimates and may complicate the federal role, if any, in CO2 pipeline regulation. They are
also a concern because uncertainty about CO2 pipeline requirements may impede near-term
capital investment in electricity generation, with important implications for power plant owners
seeking to reduce their CO2 emissions.
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 an increasing perception 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 Norm 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 Joseph 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 John 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 Energy Independence and Security Act of 2007 (P.L. 110-140), signed by President
1 See, for example: 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.)
2 Intergovernmental Panel on Climate Change, Special Report: Carbon Dioxide Capture and Storage, 2005 (2005):
190. (Hereafter referred to as IPCC 2005.)
3 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.
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)).
This report examines key uncertainties in CO2 pipeline requirements for CCS by contrasting
hypothetical pipeline scenarios in one region of the United States. The report summarizes the key
factors influencing CO2 pipeline configuration for major power plants in the region, and
illustrates how the viability of different sequestration sites may lead to enormous differences in
pipeline costs. Power plants, particularly coal-fired 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. The report discusses the
implications of uncertain CO2 pipeline requirements for CCS as they relate to evolving federal
policies for carbon control.
Under a national CCS policy, a key question is how to establish a CO2 pipeline network at the
lowest social and economic cost given the current locations of existing CO2 source facilities and
the locations of future sequestration sites. On its face, this may appear to be a straightforward
analytic problem of the type regularly addressed in other network industries. The oil and gas
industry, among others, employs myriad analytic techniques to identify and optimize potential 4
routes for new fuel pipelines. In the context of CCS, however, predicting pipeline routes is more
challenging because there is considerable uncertainty about the suitability of geological
formations to sequester captured CO2 and the proximity of suitable formations to specific sources
of CO2. One recent analysis, for example, concluded that 77% of the total annual CO2 captured
from the major North American sources could be stored in reservoirs directly underlying these 5
sources, and that an additional 18% could be stored within 100 miles of the original sources.
Other analysts suggest that captured CO2 may need to be sequestered, at least initially, in more 6
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 sequestration, certain specific types of formations (e.g., saline aquifers) may be
preferred as CO2 repositories because they have adequate capacity and are most likely to retain
sequestered CO2 indefinitely.
The Department of Energy estimates that the United States has enough capacity to store CO2 for 7
tens to hundreds of years. However, the large-scale CO2 experiments needed to acquire detailed
data about potential sequestration reservoirs have only just begun. Given current uncertainty
about potential sequestration sites, policy discussions about CCS envision various possible
4 See, for example: BP, “Right on the Route,” Frontiers, Issue 19 (August, 2007). http://www.bp.com/
5 R.T. Dahowski, J.J. Dooley, C.L. Davidson, S. Bachu, N. Gupta, and J. Gale, “A North American CO2 Storage
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.
6 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.)
7 U.S. Dept. of Energy, Office of Fossil Energy, Carbon Sequestration Atlas of the United States and Canada, (2007).
scenarios for the development of a CO2 pipeline network. If CO2 can be sequestered near where it
is produced then CO2 pipelines might evolve in a decentralized way, with individual facilities
developing direct pipeline connections to nearby sequestration sites largely independent of other
companies’ pipelines. The resulting network might then consist of many relatively short and
unconnected pipelines with a small number of longer pipelines for facilities with no sequestration
sites nearby. Alternatively, if only very large, centralized sequestration sites are permitted, the
result might be a network of interconnected long distance pipelines, perhaps including high-
capacity trunk lines serving a multitude of feeder pipelines from individual facilities. A third
scenario envisions CO2 sequestration, at least initially, at active oil fields where injection of CO2
may be profitably employed for enhanced oil recovery (EOR). Indeed, a CO2 pipeline network
already exists for EOR purposes in the southwestern United States, although it is limited in
geographic reach. Whether CCS policies ultimately lead to one or more of these scenarios
remains to be seen; however, the configuration of the resulting CO2 pipeline network, and its
associated costs, may have a significant bearing on which CCS policies best serve the public
Infrastructure requirements and policy implications related to CO2 pipelines become clearer when
considering what actual pipeline projects might look like. This section outlines contrasting
scenarios for hypothetical CO2 pipeline development in the region covered by the Midwest
Regional Carbon Sequestration Partnership (MRCSP). The MRCSP is one of seven regional
partnerships of state agencies, universities, private companies, and non-governmental
organizations established by the Department of Energy to assess CCS approaches. The MRCSP
serves as a good illustration of CO2 pipeline issues because it has a varied mix of CO2 sources
and potential geologic sequestration sites, and because geologists have completed a number of
focused studies relevant to CCS in this region.
The MRCSP has identified key CO2 sources and geologic formations potentially suitable for
carbon sequestration within its seven-state region encompassing northeast Indiana, Kentucky,
Maryland, Michigan, Ohio, Pennsylvania, and West Virginia. Figure 1 shows the locations of 11
of the largest CO2 sources located in the MRSCP region—all coal-fired electric power plants 8
emitting over 9 million metric tons of CO2 annually. There are numerous other CO2 sources in
this region, including many other power plants and large industrial facilities, but the 11 power
plants in this analysis include the very largest in terms of annual CO2 emissions.
8 National Energy Technology Laboratory, “NatCarb” online database, March 29, 2007. http://drysdale.kgs.ku.edu/
Figure 1. Major Power Plants and the Rose Run Formation
Source: MRCSP. Geologic data for NY are not provided by the MRCSP.
Figure 1 also shows the locations of the Rose Run sandstone, a deep saline formation identified 9
by the MRCSP as a potential carbon sequestration site. As the figure shows, the plants all lie
above or near to this formation, so suitable CO2 injection sites presumably could be located very
near to each of these plants. If the Rose Run formation proves to be viable for large-scale CO2
sequestration, then some plants may be able to inject CO2 directly below their facilities, and CCS
pipeline requirements for some of the other 11 power plants could be small. If this were the case,
then the CCS CO2 pipeline network for the 11 plants might appear as shown in Figure 2.
9 For most of the area shown in Figure 1, the Rose Run sandstone lies at depths greater than 2,500 feet—deep enough
to make the formation potentially suitable for CO2 sequestration.
Figure 2. Hypothetical CO2 Pipelines to the Rose Run Formation
Source: MRCSP, CRS. Geologic data for NY are not provided by the MRCSP
The hypothetical pipeline layout in Figure 2 assumes that a 25-mile diameter, non-overlapping
reserve area is needed for each plant’s sequestration site and that any location within the Rose
Run formation is viable for sequestration. Figure 2 also assumes that each power plant is either
located at or is connected to the center of its respective sequestration field by a large trunk
pipeline built along existing rights of way and capable of carrying its peak CO2 output. Smaller
pipelines branching from the centrally-located plant or from the trunk line distribute the CO2 to
multiple injection wells in the sequestration site. These smaller pipelines are not considered in
detail in this report.
Figure 2 shows that the longest trunk pipeline for CO2 transportation is 32 miles long, and the
average pipeline is approximately 11 miles long. According to models developed at Carnegie
Mellon University (CMU), the capital costs to construct an 11-mile pipeline in the Midwestern
United States with a capacity of 10 million tons of CO2 annually would be approximately $6
million. The levelized cost would be approximately $0.10 per ton of transported CO2, including 10
costs for operation (e.g., compression) and maintenance.
Although the Rose Run formation is identified by the MRCSP as a major potential sequestration
site, it has characteristics which may ultimately limit its viability for large-scale CO2
sequestration. The most important of these is overall sequestration capacity. Because the Rose
Run formation has low to moderate permeability and thickness, geologic models show that it is
unlikely all of the CO2 emitted in the Rose Run region can be efficiently sequestered in the Rose
10 Model found in: Sean T. McCoy and Edward S. Rubin, “An Engineering-Economic Model of Pipeline Transport of
CO2 with Application to Carbon Capture and Storage,” International Journal of Greenhouse Gas Control, In press
(November 19, 2007). Cost estimates were provided by Sean McCoy at the request of CRS.
Run formation.11 The Rose Run formation is also relatively fractured.12 Geologists have
concluded that injecting pressurized CO2 into the Rose Run formation potentially could induce
minor earthquakes along certain preexisting (but undetected) faults in otherwise seismically 13
stable areas. Faults and fractures can, in some cases, provide additional sequestration capacity
and be beneficial for sequestration. But faults or fractures can also be permeable conduits for 14
leakage and “can be a significant pathway for the loss of sequestered CO2.” While studies are
not yet available to establish the validity of any of these concerns, future research may conclude
that significant parts of the Rose Run formation would be unsuitable for large scale, permanent 15
The CO2 sequestration capacity of the Rose Run formation may turn out to be too limited because
of its of overall size or integrity. If the policy goal is to sequester CO2 from all major sources in
the region, then at least some of the largest power plants in the MRCSP will need to sequester
their carbon emissions elsewhere. The alternative sites for potential CO2 sequestration nearest to
Rose Run are unmineable coal beds, oil and natural gas fields, and another large saline
formation—the Mount Simon sandstone.
The MRCSP region contains unmineable coal beds underlying the same general geographic
footprint as the Rose Run formation, but located at different depths underground. Studies suggest
that such coal beds may be suitable for sequestration. In some cases injected CO2 could replace
methane trapped in the coal seam, increasing natural gas available for extraction wells in a
process similar to EOR known as enhanced coal-bed methane recovery. However, the potential
capacity for storing CO2 in regional coal beds is only about 5% compared to the Rose Run 16
sandstone, and the practicability of storing CO2 in coal seams is virtually untested. In addition,
removing groundwater from coal seams prior to CO2 injection may create environmental
problems related to water disposal, and some studies indicate that coal swelling associated with
11 M.D. Zoback, H. Ross, and A. Lucier, “Geomechanics and CO2 Sequestration,” GCEP Technical Report 2006,
Stanford Univ., Global Climate and Energy Project (2006):11. http://gcep.stanford.edu/pdfs/
12 U.S. Dept of Energy, Office of Fossil Energy, Carbon Sequestration Atlas of the United States and Canada,
13 Amie Lucier, Mark Zoback, Neeraj Gupta, and T. S. Ramakrishnan, “Geomechanical Aspects of CO2 Sequestration
in a Deep Saline Reservoir in the Ohio River Valley Region,” Environmental Geosciences (June 2006), 13(2):85-103.
14 S. Julio Friedmann, Site Characterization and Selection Guidelines for Geological Carbon Sequestration, Lawrence
Livermore National Laboratory, UCRL-TR-234408 (September 7, 2007); K. Prasad Saripalli, B. Peter McGrail, and
Mark D. White, “Modeling the Sequestration of CO2 in Deep Geological Formations,” Proceedings of the First
National Conference on Carbon Sequestration, National Energy Technology Laboratory (May 14-17, 2001):11.
15 For an example of such research, see: L. Chiaramonte, M. Zoback, M., S.J. Friedmann, and V. Stamp, “Seal Integrity
and Feasibility of CO2 Sequestration in the Teapot Dome EOR Pilot: Geomechanical Site Characterization,”
Environmental Geoscience, v. 53 (2007).
16 According to the DOE Carbon Sequestration Atlas (pp. 38-39), there are one billion metric tons of total potential
capacity for CO2 in coal seams versus nearly 20 billion metric tons for the Rose Run sandstone.
CO2 injection may curtail the permeability of the coal seam, limiting its overall capacity to store 17
The MRCSP region includes a number of oil and natural gas fields which may offer opportunities
for CO2 sequestration. The region also includes a number of natural gas storage reservoirs, both
natural and manmade, which suggest that CO2 could be similarly stored. However, according to
the MRCSP, the ten largest oil and gas fields in the region have an average CO2 sequestration 18
potential of only 251 million tons. By comparison, the 30-year CO2 output of the 11 plants in
this analysis would range from 270 to 491 million tons at current emission levels. The oil and gas
fields in the MRCSP region, therefore, even if they could achieve their stated sequestration
potential, may not individually have sufficient capacity to sequester CO2 from one of the 11
power plants in this analysis operating with current emissions over a 30-year period. Multiple
fields possibly could be used by individual power plants to achieve adequate long-term
sequestration, but this would require multiple pipeline networks and, consequently, could increase
CO2 transportation costs and complexity.
Oil and gas production fields also present CO2 sequestration challenges due to numerous
boreholes from historical well-drilling activity. Geologists are concerned that old oil and gas 19
wells may be inadequately sealed and that their locations may be uncertain. Increased leakage
risks from old wells, as well as associated mitigation and monitoring costs, may reduce the
economic CCS sequestration potential in oil or gas fields. Although revenues from CO2 sales for
EOR projects could offset CO2 transportation and sequestration costs for some source facilities,
long-term CO2 emissions in the MRCSP region would far exceed CO2 requirements for EOR. It is
possible, therefore, that because of their limited sequestration capacity and wellbore leakage
concerns, oil and natural gas fields in the MRCSP region may not be viable sequestration sites for
the largest CO2 sources either.
If neither the Rose Run formation nor regional coal, oil, or gas fields can provide adequate CO2
sequestration for the major power plants in the MRCSP region, the next best potential CO2
sequestration site is the Mt. Simon formation. This formation is a deep saline aquifer like the
Rose Run formation, but it is over four times larger in terms of sequestration capacity and is less 20
17 Cui, X., R. M. Bustin, and L. Chikatamarla, “Adsorption-induced Coal Swelling and Stress: Implications for
Methane Production and Acid Gas Sequestration into Coal Seams,” Journal of Geophysical Research, vol. 112,
18 U.S. Dept of Energy (2007):36.
19 IPCC 2005:215; Charles W. Zuppann, “Too Much Fun?—Tales of ‘Field Checking’ at the Indiana Geological
Survey,” The PGI Geology Standard, No. 48 (April 2007): 6-9. http://www.indiana.edu/~pgi/docs/Standard%20Issues/
20 U.S. Dept of Energy, (2007):38.
Figure 3. Hypothetical CO2 Pipelines to the Mt. Simon Formation
Source: MRCSP, CRS. Geologic data for western Indiana are not provided by the MRCSP.
Figure 3 shows hypothetical CO2 pipelines which might be required if any of the major power
plants in this analysis were required to transport CO2 to the Mount Simon formation. As in the
Rose Run case, Figure 3 assumes pipelines use existing rights of way and that a 25-mile
diameter, non-overlapping reserve area is needed for each plant’s sequestration site. However,
consistent with the Rose Run limitations, the Mt. Simon scenario assumes that the thinnest parts
of the formation (the easternmost contours on the contour map) are unsuitable sequestration sites.
As the figure shows, the pipelines required in such a scenario could be substantial, ranging in
length from 130 to 294 miles, and averaging 234 miles. According to estimates from CMU, the
approximate capital costs for these pipelines would range from $70 million to $180 million, and
would average $150 million. The average levelized cost would be approximately $2.00 per ton of 21
Although Figure 3 shows a pipeline route for all the 11 power plants in question, how many of
these pipelines might be needed depends upon which plants may be able to sequester their CO2
emissions closer to home. Furthermore, there are potential scale economies for large, integrated
CO2 pipeline networks that link many sources together rather than single, dedicated pipelines 22
between individual sources and sequestration reservoirs. The individual pipelines required in
Figure 3 may be so large on their own that combining multiple CO2 flows from multiple plants 23
through shared trunk lines may be limited.
While the Mt. Simon scenario in Figure 3 is far less favorable in terms of cost and siting
requirements than the Rose Run scenario in Figure 2, it is not necessarily the “worst” case in
21 Sean T. McCoy and Edward S. Rubin (November 19, 2007). Cost estimates were provided by Sean McCoy at the
request of CRS.
22 MIT 2007: 58.
23 Gemma Heddle, Howard Herzog, and Michael Klett, “The Economics of CO2 Storage,” MIT Laboratory for Energy
and the Environment, Working Paper MIT LFEE 2003-003 RP (August 2003): 23.
terms of overall pipeline requirements. Future work on sequestration capacity may conclude that
the Mt. Simon sequestration sites should be located in thicker parts of the formation (in central
Indiana and Michigan) to absorb the tremendous volumes of CO2 generated by these power
plants. Such a westward shift would require even longer pipelines than those illustrated here.
The MRCSP pipeline scenarios, while only illustrative, nonetheless highlight several important
policy considerations which may warrant congressional attention. These include concerns about
CO2 pipeline costs, siting challenges, pipeline and sequestration site relationships, and differences
in sequestration potential among regions.
The cost of CO2 transportation is a function of pipeline length (among other factors), which in
turn is determined by the location of sequestration sites relative to CO2 sources. The scenarios in
this report illustrate how different assumptions about sequestration site viability in the MRCSP
region can lead to a 20-fold difference in CO2 pipeline lengths and, therefore, similarly large
differences in capital costs. (In this regard, CO2 pipeline costs may present the cost component in
integrated CCS schemes with the greatest potential variability.) At the international and national
policy levels, some studies have recognized this potential variability. For example, an MIT
analysis states that the costs of CO2 pipelines are highly variable due to “physical ... and political 24
considerations.” The IPCC report likewise estimates total costs of CO2 mitigation of $31- $71
per ton of CO2 avoided for a new pulverized coal power plant, assuming CO2 pipeline 25
transportation costs, including operations and maintenance costs, of $0 to $5 per ton. Recent
increases in the global price of steel used to make line pipe could push CO2 pipeline costs above 26
this range. At $5 per ton of transported CO2, pipeline costs account for a modest share of
aggregate carbon control costs—between 7% and 16% based on the IPCC estimates. Nonetheless,
if CCS technology were deployed on a national scale, overall CO2 pipeline costs could be in the
billions of dollars. Minimizing these costs while achieving environmental objectives may
therefore be an important public policy objective.
From the perspective of individual power plants, or other CO2 sources, highly variable costs for
CO2 pipelines may have more immediate ramifications. If CO2 pipeline costs for specific regions
reach hundreds, or even tens, of millions of dollars per plant, then power companies may have
difficulty securing the capital financing or regulatory approval needed to construct or retrofit
fossil fuel-powered plants in these regions. For example, in August 2007, the Minnesota Public
Utilities Commission rejected a developer’s proposal to construct a new coal-fired power plant in
the state, in large part because the associated costs of a 450-mile CO2 pipeline to an EOR site in 27
Alberta, over $635 million, were not viewed to be in the public interest. To the extent that other,
24 MIT 2007: 58.
25 IPCC report: 347.
26 For further information about steel prices, see CRS Report RL32333, Steel: Price and Policy Issues, by Stephen
27 Minnesota Public Utilities Commission, Order Resolving Procedural Issues, Disapproving Power Purchase
Agreement, Requiring Further Negotiations, and Resolving to Explore the Potential for a Statewide Market for Project
Power under Minn. Stat. § 216b.1694, Subd. 5, Docket No. E-6472/M-05-1993 (August 30, 2007):15; Minnesota
lower-cost power plant options are available, the failure of a costly project like the Minnesota
plant may not be a problem. However, if other generation sources are constrained (e.g., nuclear,
renewable), then the inability to construct a new fossil-fueled power plant may negatively impact
the regional balance of electricity supply and demand. Higher electricity prices or reliability
concerns might ensue.
Some analysts believe that CO2 pipeline costs will be moderated in the future because generating
companies will construct new power plants geographically near sequestration sites. Recent
network cost models suggest otherwise. On a mile-for-mile basis, these models show that
electricity transmission costs (including capital, operations, maintenance, and electric line losses)
generally outweigh CO2 pipeline costs in new construction. Accordingly, the least costly site for a
new power plant tends to be nearer the electricity consumers (cities) rather than nearer the 28
sequestration sites if the two are geographically separated. Analysts have therefore concluded
that “a power system with significant amounts of CCS requires a very large CO2 pipeline 29
Any 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. There is no
federal authority over CO2 pipeline siting, so it is regulated to varying degrees by the states (as is
the case for oil pipelines). The state-by-state siting approval process for CO2 pipelines may be
complex and protracted, and may face public opposition, especially in populated or 30
environmentally sensitive areas. Securing rights of way along existing easements for other
infrastructure (e.g., gas pipelines), as the scenarios in this report assume, may be one way to
facilitate the siting of new CO2 pipelines. However, questions arise as to the right of easement
holders to install CO2 pipelines, compensation for use of such easements, and whether existing 31
easements can be sold or leased to CO2 pipeline companies. Although these siting issues may
arise for any CO2 pipeline, they become more challenging as pipeline systems become larger and
more interconnected, and cross state lines. If a widespread, interstate CO2 pipeline network is
required to support CCS, the ability to site these pipelines may become an issue requiring new 32
Public Utilities Commission, Staff Briefing Papers—Appendix I, Docket No. E-6472/M-05-1993 (July 31, 2007):78.
Cost estimate in 2011 U.S. dollars.
28 Jeffrey M. Bielicki and Daniel P. Schrag, “On the Influence of Carbon Capture and Storage on the Location of
Electric Power Generation,” Harvard University, Belfer Center for Science and International Affairs, Working paper
29 Adam Newcomer and Jay Apt, “Implications of Generator Siting for CO2 Pipeline Infrastructure,” Carnegie Mellon
Electricity Industry Center, Working Paper CEIC-07-11 (2007).
30 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.)
31 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: March 2006): 17.
32 For further discussion, see CRS Report RL34307, Regulation of Carbon Dioxide (CO2) Sequestration Pipelines:
Jurisdictional Issues, by Adam Vann and Paul W. Parfomak.
Due to potential CO2 transportation costs, individual generating plants have a strong interest in
the selection of specific sequestration sites under future CCS policies. Since transporting CO2 to
distant locations can impose significant additional costs to a facility’s carbon control
infrastructure, facility owners may seek regulatory approval for as many sequestration sites as
possible and near to as many facilities as possible. Furthermore, capacity limitations at favorably
located sequestration sites (like the Rose Run formation) may lead to competition among large
CO2 source facilities seeking to secure the best local sequestration sites before others do. How the
development of sequestration sites will be prioritized and how competition for such sites may
evolve have yet to be explored, but they may create new and significant economic differences
Because CO2 pipeline requirements in a CCS scheme are driven by the relative locations of CO2
sources and sequestration sites, identification and validation of such sites must explicitly account
for CO2 pipeline costs if the economics of those sites are to be fully understood. Proposals such as
S. 2323, which would require an integrated evaluation of CO2 capture, sequestration, and
transportation (Sec. 3(b)(5)), appear to promote such an approach, although the details of future
sequestration site selection have yet to be established. If CCS moves from pilot projects to
widespread implementation, government agencies and private companies may face challenges in
identifying, permitting, developing, and monitoring the large number of localized sequestration
reservoirs that may be proposed.
Geologists have long recognized that some regions in the United States have high potential for
carbon sequestration and others do not. For example, a 2007 study at Duke University concluded
that “geologic sequestration is not economically or technically feasible within North Carolina,” 33
but “may be viable if the captured CO2 is piped out of North Carolina and stored elsewhere.”
Likewise, states in the Northeast, Minnesota, Wisconsin, and possibly parts of other states appear
to lack geological formations with potential for large-scale sequestration of the volumes of CO2
they produce. If national CCS policies are implemented, power plants and other CO2-producing
facilities in these states may face more extensive, and more costly, pipeline requirements than
other states if they are to sequester their CO2. States such as North Carolina, with limited
sequestration potential and a relatively high proportion of coal or natural gas in their electric
generation fuel mix, may face particular challenges in this regard. The Duke study, for example,
estimated it would cost $5 billion to construct an interstate pipeline network for transporting CO2 34
from North Carolina’s electric utilities to sequestration sites in other states.
One particular concern among some stakeholders is that high CO2 transportation costs could
increase electricity prices in “sequestration-poor” regions relative to regions able to sequester
CO2 more locally. For states like Massachusetts, for example, which has some of the highest
electricity prices in the country and may have little sequestration potential, CO2 transportation
costs could raise electricity prices even higher above the national average. Moving beyond this
illustrative example to evaluate comprehensively the distribution of CO2 transportation costs
33 Williams, et al., (2007): 4.
34 Williams, et al., (2007): 20.
across the United States is beyond the scope of this report. Nonetheless, these kinds of regional
price impacts, and their implications for regional economies, may become an issue for Congress.
The socially and economically efficient development of the nation’s public infrastructure is an
important consideration for policymakers. In the context of a national program for CCS, CO2
pipelines may be a major addition to this infrastructure. Yet there are many uncertainties about the
cost and configuration of CO2 pipelines that would be needed to meet environmental goals within
an emerging regulatory framework. Exactly who will pay for CO2 pipelines, and how, is beyond
the scope of this report, but understanding ways to minimize the cost and environmental impact
of this infrastructure may be of benefit to all.
In addition to specific questions about CO2 pipeline requirements, the scenarios in this report
raise larger questions about the ultimate development and allocation of sequestration capacity
under a national CCS policy. How much individual companies may have to spend to transport
their CO2 depends upon where it has to go. However, even as viable sequestration reservoirs are
being identified, it is unclear which CO2 source facilities will have access to them, under what
time frame, and under what conditions. While Congress is beginning to turn its attention to these
questions, it will likely require sustained attention and the input of many stakeholders to refine
and address them. Given the potential size of a national CO2 pipeline network, many billions of
dollars of capital investment may be affected by policy decisions made today.
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