BILL ANALYSIS �
SB 1139
Page 1
Date of Hearing: July 2, 2012
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
SB 1139 (Rubio) - As Amended: June 25, 2012
SENATE VOTE : 35-1
SUBJECT : Greenhouse gas: carbon capture and storage
SUMMARY : Enacts the Carbon Capture and Storage (CCS) Act of
2012. Requires the Air Resources Board (ARB) to adopt a final
quantification methodology for CCS projects for AB 32 and
related greenhouse gas (GHG) compliance purposes by January 1,
2016. Clarifies the Division of Oil, Gas, and Geothermal
Resources' (DOGGR) authority to regulate carbon dioxide (CO2)
injection for enhanced oil recovery (EOR) projects, the State
Fire Marshal's (SFM) authority to regulate CO2 intrastate
pipelines, and that free space includes pore space that can be
possessed and used for the storage of GHG.
EXISTING LAW :
1)The California Global Warming Solutions Act (AB 32) requires
ARB to adopt a statewide GHG emissions limit equivalent to
1990 levels by 2020 and adopt regulations to achieve maximum
technologically feasible and cost-effective GHG emission
reductions. (AB 32 (Nunez), Chapter 488, Statutes of 2006)
2)Prohibits "load-serving entities" (public or private electric
utilities and other providers of electric service) from
building or contracting base-load generation unless the
generation meets a GHG emission performance standard (EPS)
which does not exceed the GHG emissions of a combined-cycle
natural gas power plant. (SB 1368 (Perata), Chapter 598,
Statutes of 2006)
3)Requires the California Energy Commission (CEC) to submit a
report and recommendations to the Legislature by November 1,
2007, regarding geologic sequestration strategies for the
long-term management of industrial carbon dioxide (CO2). (AB
1925 (Blakeslee), Chapter 471, Statutes of 2006)
4)Requires DOGGR to supervise activities related to oil and gas
wells, tanks, and facilities so as to prevent damage to life,
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health, property, natural resources, and underground and
surface waters suitable for irrigation or domestic purposes by
the infiltration of, or the addition of, detrimental
substances. The federal Safe Drinking Water Act establishes,
pursuant to regulations, that the underground injection
control program for Class II wells in the state of California
is the program administered by DOGGR.
5)Defines land as material of the earth regardless of
composition, and includes free or occupied space for an
indefinite distance upwards and downwards.
6)Under the Elder California Pipeline Safety Act establishes the
SFM as the designee for carrying out the federal Hazardous
Liquid Pipeline Safety Act for intrastate hazardous liquid
pipelines.
THIS BILL :
1)Requires ARB to develop by January 1, 2016 a quantification
methodology for CCS projects which can be used for compliance
obligations under AB 32. ARB must consult with the PUC and
the CEC on the development of the methodology and its
incorporation into the EPS. The methodology must include
methods for EOR projects seeking to demonstrate simultaneous
sequestration of injected CO2 subject to specified conditions.
2)Requires DOGGR, upon the adoption by the ARB of a final
methodology for CCS projects seeking to demonstrate geologic
sequestration of GHGs, to regulate CO2 EOR projects that seek
to demonstrate carbon sequestration under various laws
providing for the reduction of GHG emissions.
3)Defines ownership of the underground pore space which may be
used for the GHG storage.
4)Specifies that pipelines used for the transportation of CO2
are within the jurisdiction of the SFM.
5)Establishes related findings.
FISCAL EFFECT : According to the Senate Appropriations
Committee, onetime costs of $1.1 million annually from the Air
Pollution Control Fund (special fund) in 2012-13 and 2013-14 for
the development of a quantification methodology and
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incorporation into the Cap and Trade regulations. Ongoing costs
of $1.3 million annually from the Air Pollution Control Fund
(special fund) beginning in 2014-15 for ARB's technical
evaluation, approval, and monitoring of CCS projects. Unknown,
but at least in the hundreds of thousands of dollars, from the
Oil, Gas, and Geothermal Administrative Fund (special fund) for
DOGGR to provide monitoring and oversight of CCS projects.
COMMENTS :
1)Background. "Sequestration" refers to removing CO2 from the
atmosphere and storing it. A variety of means of artificially
capturing and storing CO2, as well as of enhancing natural
sequestration processes, are being explored to reduce the
climate impacts of CO2 in the atmosphere. Geologic
sequestration involves injecting CO2 directly into underground
geological formations. Declining oil fields, saline aquifers
and coal seams have been suggested as storage sites. Caverns
and old mines, commonly used to store natural gas, are not
considered, because of a lack of storage safety.
CO2 has been injected into declining oil fields for more than
30 years to increase oil recovery. This option is attractive
because the storage costs are offset by the sale of additional
oil that is recovered. Further benefits are the existing
infrastructure, and the geophysical and geological information
about the oil field that is available from oil exploration
activities.
While many are looking to sequestration as a tool to reduce
atmospheric CO2 and mitigate climate change impacts, there are
no protocols, standards, or regulations governing the
operation of sequestration sites.
2)Purpose of the bill. According to the author:
Currently, there are gaps in the regulatory process for the
permitting of CCS projects within the state which has
caused great uncertainty regarding the permitting of these
projects. Also, the current regulatory framework for
California's climate change management program creates a
disincentive for capturing and permanently sequestering
carbon emissions. These conditions, and the lack of
certainty they create, have delayed or prevented large
investments in CCS projects.
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SB 1139 addresses four current gaps in the regulatory
process for permitting and operation of projects seeking to
permanently sequester carbon dioxide. First, it directs
ARB to establish a quantification methodology (QM) for
sequestration of carbon dioxide. The establishment of an
ARB-approved QM is essential for compliance with AB 32 and
the regulations established pursuant to the Global Warming
Solutions Act. Secondly, SB 1139 clarifies that DOGGR is
the regulator of the subsurface when it comes to CCS
projects and gives DOGGR specific requirements in carrying
out that authority. Thirdly, the bill establishes the
State Fire Marshall as the regulator of CO2 pipelines and,
finally, clarifies common law on pore space ownership. All
of these provisions are essential for providing the
regulatory certainty to drive investment in CCS projects
and deliver the large scale CO2 emission reductions that
are necessary to meet California's aggressive GHG reduction
goals.
3)Suggested amendment. To assure that ARB's CCS quantification
methodology is consistent with prevailing requirements for GHG
reductions under AB 32, the author and the committee may wish
to consider inserting the following amendment on page 10,
after line 6:
(1) Assure that greenhouse gas emission reductions achieved
pursuant to the methodology are real, permanent,
quantifiable, verifiable, and enforceable by the state
board.
(renumber subsequent paragraphs accordingly)
REGISTERED SUPPORT / OPPOSITION :
Support
California Black Chamber of Commerce
California CCS Coalition
California Chamber of Commerce
California Independent Petroleum Association
California Manufacturers & Technology Association
California State Council of Laborers
California State Pipe Trades Council
California Taxpayers Association
Environmental Defense Fund
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Fullerton Chamber of Commerce
National Federation of Independent Business
Natural Resources Defense Council
South Bay Latino Chamber of Commerce
Western State Petroleum Association
Opposition
None on file
Analysis Prepared by : Lawrence Lingbloom / NAT. RES. / (916)
319-2092