The U.S. Environmental Protection Agency (EPA) is calling on states to develop their own regulatory systems for carbon sequestration, following intense scrutiny over the agency’s limited permit approvals. In a congressional hearing, an EPA official expressed strong support for states to take the lead in regulating Class VI wells, which are used for underground carbon injection. These wells play a crucial role in carbon capture and storage (CCS) efforts, which aim to reduce carbon dioxide emissions and combat climate change.
Class VI wells are used to inject carbon dioxide (CO2) into deep rock formations, a process known as geologic sequestration (GS). This long-term storage of carbon underground has the potential to significantly reduce CO2 emissions. Sources of CO2 for geologic sequestration can include industrial facilities, power plants, and even direct capture from the atmosphere. The potential for these wells to safely store captured carbon is enormous, with the Colorado Geological Survey estimating that the state’s deep underground formations could hold up to 720 billion tons of CO2.
However, the development of CCS projects has been slow due to challenges in obtaining permits for Class VI wells. Despite receiving over 150 permit applications from more than 50 carbon sequestration projects, the EPA has only granted approval for two wells in Illinois so far. A third project in Indiana is currently pending approval, which would be the first permit issued under the current administration.
To accelerate carbon capture efforts, recent legislation has allocated significant funds for CCS initiatives. The 2021 Infrastructure Investment and Jobs Act allocated $5 million per year until 2026 for EPA permit approvals for Class VI wells, as well as an additional $50 million for states with their own permitting systems. The law also provided $2.25 billion for large-scale carbon sequestration projects and associated pipeline infrastructure. The 2022 Inflation Reduction Act made changes to the Section 45Q tax credit scheme, increasing the baseline credit for captured and stored CO2 and introducing a new credit for direct air capture (DAC) and carbon sequestration.
Under the Clean Air Act, the EPA has the authority to require power plants to implement carbon capture technology to comply with emissions regulations. Bruno Pigott, principal deputy assistant administrator at the EPA’s Office of Water, emphasized the importance of the Class VI well application process in the success of these projects during the congressional hearing. The EPA has also initiated the application process for $48 million in grants funded by the infrastructure law, aimed at expediting the deployment of technologies reliant on Class VI wells.
While there is optimism about the potential to reduce costs associated with DAC, concerns remain about the need for a robust and efficient infrastructure. Burns, the executive director of Carbon180, highlighted the importance of a well-functioning Class VI permitting process, stating that billions of tons of CO2 need to be stored.
The EPA has already granted primacy for Class VI wells to North Dakota and Wyoming, with Louisiana’s final approval still pending. Meanwhile, West Virginia, Arizona, and Texas have applications currently under consideration. Lawmakers have expressed frustration with the EPA’s lengthy review process for states’ primacy applications, citing Wyoming’s nearly three-year-long process. During the hearing, Pigott was questioned about the delays in the permitting process, with Louisiana being seen as a model for efficient application submission and approval.
Over half of the carbon sequestration projects awaiting permits for Class VI wells are in the Gulf Coast region, including Chevron’s Bayou Bend project, which covers a 40,000-acre area. The EPA acknowledged the concern and stated that the agency is currently reviewing thousands of comments on the proposal to grant primacy to Louisiana. States must meet the EPA’s minimum standards and establish necessary administrative and enforcement programs to qualify for Class VI well primacy.
The EPA’s encouragement for states to establish their own regulatory frameworks for carbon sequestration reflects a concerted effort to expedite the deployment of Class VI wells. While recent legislation has provided significant funding for carbon capture initiatives, the challenges in the permitting process highlight the need for a streamlined approach to support carbon sequestration projects nationwide.
