Carbon Storage: Another Elitist Grifting Scheme from Another Scranton Politician
Alaska Governor Mike Dunleavy, a supposed Republican, is from Scranton and, just like its other famous pol, he's mostly interested in passing out political favors but this one is double-trouble.
Guest Post by Kassie Andrews of Master Resource.
Governor Mike Dunleavy’s “Carbon Management and Monetization Bill Package” is double trouble for Alaska. HB 50/SB 49 – Carbon Storage, introduced by Dunleavy at the beginning of the 33rd session (2023–2024), is coupled with a carbon offset bill, HB 49/SB 48. “The package consists of two pieces of legislation focusing on a carbon offset program; and carbon capture, utilization, and storage (CCUS) program”
The carbon offset legislation (“tree bill”) passed last session despite unanimous public testimony in opposition. The public process leaves much to be desired as the Senate Finance Committee (see this video) decided there were better things to do than listen to what citizens had to say last year.
Globalist Scheme
Capture, storing, and sequestering carbon dioxide (CO2), the gas of life, is a nefarious scheme by a global elite to control processes to manage raw materials, transportation, manufacturing, and agriculture. The claim is that these sectors need to be decarbonized if we are to achieve net-zero emissions goals created for us by 2050.
According to Roberto Bocca – Head, Centre for Energy and Materials with the World Economic Forum (WEF) on the Net-Zero Industry Tracker Report in 2023:
“It is imperative that action is taken soon to both decarbonize and improve energy efficiency; otherwise, unabated fossil-fuel demand in the key industry sectors, which have grown 8% on average the past three years, will increase very significantly by 2050,” said Bocca. “But industrial leaders can respond through new collaborative ways of working and innovating, for example within industrial clusters and by fostering best practices, sharing infrastructure in important areas like clean hydrogen and CCUS and building demand for lower-emissions products.” “Decarbonizing these industrial and transport sectors, which emit 40% of global greenhouse gas emissions today, is essential to achieving net zero, especially as demand for industrial products and transport services will continue to be strong,”
Referring to the Net Zero Industry Tracker, the WEF goes on:
According to the report, the $13.5 trillion in investments is derived from average clean power generation costs: solar, off-shore and on-shore wind, nuclear and geothermal, electrolyzer costs for clean hydrogen and carbon transport, as well as storage costs”. Also: “carbon pricing, tax subsidies, public procurement and development of strong business cases can support in mobilizing necessary investments. However, raising capital for high-risk projects with unproven technologies could be challenging in the current macroeconomic environment. Institutional investors and multilateral banks, therefore, can play an important role by providing access to low-cost capital linked to emissions targets; equally vital is adapting financial models to the needs of various industries and regions.”
Far-left environmentalists see CCUS as a scam by Big Oil to “delay the phase out of fossil fuels” – they call this greenwashing. Big Oil at the behest of their owners (not the real stakeholders) have subscribed to the net-zero nonsense to help normalize the notion that we are in a climate crisis, and that something must be done with CO2. After all, they are going to get paid either way.
Unfortunately, citizens are left out of conversations related to carbon control policy as shown during the public process. These decisions and laws are made at the very top in boardrooms by outside corporate interests who in some cases are not even American-owned companies.
45Q Woes
Enacted in 2008, the Energy Improvement and Extension Act of 2008 (Division B of P.L. 110-343) introduced the 45Q tax credit for every metric ton of CO2 that is captured for utilization, permanently sequestered, or used in enhanced oil recovery (EOR). The original intent of the credit was to incentivize technology for emissions from coal-fired power plants. The tax credit was expanded again in 2018 and, more recently, expanded in the federal Inflation Reduction Act in 2022. The latest expansion extended the credit and added an enhanced credit for direct air capture (DAC).
It is all fun and games until someone gets hurt, and taxpayers and consumers are hurting over this no-good inflationary tax credit. Through 2019, taxpayers have been defrauded by nearly one billion dollars due to the 45Q tax credit. The Treasury Inspector General for Tax Administration (TIGTA) reported that out of the $1 billion in credits claimed between 2010 to 2019, nearly 90% did not comply with EPA reporting requirements.
Taxpayers for Common Sense reports:
“Cost estimates for 45Q have risen over the life of the tax credit. The issue brief documents that the Joint Committee on Taxation (JCT) adjusted its 10-year cost projection from roughly $1.8 billion in 2018 to $3.2 billion in 2022. A different cost estimate from the U.S. Treasure Department in 2021 put the price tag for 45Q at $20.1 billion from FY2021-FY2031, but that changed last year when the Treasury Department’s 45Q 10-year cost estimate jumped from $20.1 billion to $30.6 billion.”
Others report ten-year subsidy estimates to be in the range of $50-$100 billion and will likely be significantly higher as estimates from two provided include only the electrical power sector. With no transparency to date, and a 90% demonstrated fraud rate, The Great State of Alaska has jumped into this mess with both feet and no sign of looking back.
Long-term Geologic Storage of CO2?
Long-term geologic storage of CO2 is unproven. The claim from the state is that Alaska’s older oil and gas basins, particularly in Cook Inlet “have the right geology to sequester carbon underground.” Per Governor Dunleavy’s press release on the carbon management bills – “Cook Inlet has been identified as one of the top spots on earth with the ability to sequester carbon underground — with at least 50 gigatons of capacity.” This area just so happens to be where we are having purported gas supply issues; oddly, the DNR hasn’t forecast drilling past 2030.
An Institute for Energy Economics & Financial Analysis (IEEFA) study looked at two large scale carbon capture and storage projects out of Norway: Sleipner in the North Sea, and Snøhvit in the Barents Sea.
The report notes:
In Norway, a substantial carbon tax was the economic impetus for CCS. The primary driver of CCS for both projects was avoidance of the Norwegian Carbon Tax (1991). The price point of the tax is such that oil and gas producers, even with extensive development costs and ongoing operating costs for the CCS system, saved money by undertaking the investment. That savings margin has only grown since. Unless that fundamental cost element exists in a given market – and persists – that economic drive will be missing. It is unclear whether subsidies alone will create an equivalent result.
One could be left wondering – Are we setting up the bank for a substantial carbon tax?
These projects separate CO2 from produced gas and compress and transport the CO2 for permanent reinjection within the seafloor. Despite both locations being among the most studied geological fields in oil and gas as well as CO2 storage globally, the fields are in an unpredictable state. From the report:
In 1999, three years into Sleipner’s storage operations, CO2 had already risen from its lower-level injection point to the top extent of the storage formation and into a previously unidentified shallow layer. Injected CO2 began to accumulate in this top layer in unexpectedly large quantities. Had this unknown layer not been fortunate enough to be geologically bounded, stored CO2 might have escaped.
At Snøhvit, problems surfaced merely 18 months into injection operations despite detailed pre-operational field assessment and engineering. The targeted storage site demonstrated acute signs of rejecting the CO2. An geological structure thought to have 18 years’ worth of CO2 storage capacity was indicating less than six months of further usage potential. This unexpected turn of events baffled scientists and engineers while at the same time jeopardizing the viability of more than US$7 billion of investment in field development and natural gas liquefaction infrastructure. Emergency remedial actions and permanent long-term alternatives needed to be, and were, identified on short notice and at great cost.
The report continues
“In one situation, the CO2 deposited moved rapidly and unexpectedly to a previously unidentified area. In another, CO2 storage space meant for years of sequestering turned out to be insufficient. Such developments raise questions about whether two data sources the size of Sleipner or Snøhvit are sufficient to form a reliable basis for secure storage of greenhouse gases on a scale hundreds of times their size, and do so permanently.”
They highlight that CO2 storage has not behaved as geologists initially expected for either project.
In summary, the IEEFA report states for Norway:
What is unknown is the long-term viability of any subsurface storage formation. Will the gas migrate over time? Will the formations fault or deform in ways that allow the gas to escape? Are the formation’s boundaries sealed, or faulted such that the CO2 has a path to move?
The truth is that no engineer or scientist, let alone corporate executive or politician, can answer the question definitively. That is because, even using the best technology and techniques available today, the hard science is limited to statistically based expectations derived from costly and resource-intensive samples of subsurface data that are, by their nature, conjectures of what is going on underground. Subsurface assessment technologies are improving, but they likely will never provide a complete and foolproof picture of what nuances, exceptions, deviations, inclusions, or limits are above and within subsurface structures.
Here in the United States, Louisiana faces the risk of CO2 storage projects leaking through abandoned wells, noting “the depth of nearly half (46.5 percent) of abandoned wells in Louisiana is a mystery, according to the reports. Of those remaining 53.5 percent of wells with depth records, about 1,200 penetrate potential CO2 storage formations, and 896 of those wells have perforations that would allow CO2 from the formation to get inside the well. Also, 297 of those wells are unplugged, with another 15 plugged before modern standards.”
Their concerns go on:
I know there’s a lot of pressure to approve these permits as rapidly as possible, but along with that pressure comes a concern that there won’t be a robust review on the part of regulators,” said Dominic DiGiulio, a former EPA official who helped write the agency’s rules on CO2 sequestration underground. And “Aside from the effects on the climate, residents and safety advocates are concerned about what happens when a CO2 well or pipeline leaks without being detected. The gas can displace air and cause people to suffocate, as happened in 2020 in Satartia, Mississippi, after a CO2 pipeline rupture sent dozens of people to the hospital. The gas is colorless and odorless, and vehicles cannot start in a CO2-saturated environment, making it difficult for people to escape if there is a rupture.
Another stunning failure in the race to sequester carbon, the world’s largest carbon reduction project is working at just one-third capacity and decreasing. Australia’s Chevron Gorgon gas plant has already cost Chevron $3.2B and more investment is needed to allow for water to be moved to effectively store the carbon, the reason for this is to “manage the pressure in the formation and keep “induced microseismicity” – or feint earth tremors – within allowed limits.” Sounds like a wonderful concept for Alaska!
Who pays for these mishaps? As a wise friend says, “corporations don’t pay for taxes, consumers do.”
To summarize, HB 50/SB 49 – Carbon Storage is one of the worst of the worst. There is no upside to this aside from the promised future revenues we might see from carbon schemes. This is a promise dangled in front of Alaskans as to imply we will not have investment in our state unless we capitulate to the extortion of carbon control. When was the last time you were asked as an Alaskan if you wanted to participate in a carbon reduction strategy at all, especially considering our limited footprint on the global scale?
#Alaska #Decarbonization #CarbonStorage #CO2 #Dunleavy #Republican #CCUS
Thanks, Thomas. I'm no geologist, but I just have kind of an instinctual feeling that gas pumped underground will find a way to escape. It seems to me that even a very small, previously undetected fracture point would allow the CO2 to slowly leak out - but what do I know? If I happen to be right, then billions and billions of dollars will be going 'down the drain', pun intended.
For some context of the types of lawmakers we are dealing with, here are some of the worthy amendments that were offered and did not pass (by a long shot):
-Amendment offered by Representative Donna Mears for a minimum floor (4%) for monetary recovery to the state – gross revenue from carbon credit sales on the lease was offered and failed to pass.
-Amendment offered by Representative David Eastman to find that the carbon storage lease would be profitable without 45Q tax credit failed 38-1 with only the member who offered the amendment voting in support of it. With a republican member stating that the “private sector is taking the risk based on a federal tax credit, it would constrain opportunity for development and that we are in competition with Texas and Wyoming – we’d be at a comparative disadvantage.” And another Republican member, Representative McCabe, stating “As a fiscal conservative I am not sure why I would ever vote for this amendment – it gets in the way of a free market economy.” “Why would we ever want to do that - If there is tax credits available they take them, if they are not available we don’t.” He went on to compare the carbon management tax incentive to child tax credits. He asked “Why would we ever interfere with the business of a business?” There was no mention of the fraud rate of the 45Q. When it comes to the state, it is clear by the actions of the body that they don’t care if tax payers are taken advantage of at the federal level. With the federal government being tens of trillions in debt, it was of no importance to the body to consider that perhaps the 45Q may cease to be part of the internal revenue service code.
-Amendment offered by Representative David Eastman to ensure that the storage reservoir has been depleted of mineral resources prior to use and that property owners were consulted and that they “obtained the consent of all persons with an ownership interest in the proposed storage reservoir” failed. The original language that the storage operator has “made a good faith effort” to consult property owners was deemed good enough to the body with a vote of 1 to 38. Maybe the body doesn’t know that property owners in South Dakota are having farmland stolen from them for CO2 pipelines?
-Amendment offered by Representative David Eastman to shift damages, liability from the state to fall with the operators of the storage facility and all persons who injected carbon. Amendment failed 7-32.
-Amendment offered by Representative David Eastman for seismic activity monitoring requiring a comparison in activity – if increase in seismic activity found, commission to halt permitting until findings determine increase in activity not attributable to carbon storage activities. Amendment was vehemently rejected 2-37 with one member stating it “defies reason.”
-Amendment offered by Representative David Eastman for contracts exceeding $5M require legislative approval. I am not sure I have ever witnessed legislators shoo away a chance at more power for themselves but there it was. Amendment failed 2-36.
-Amendment offered by Representative David Eastman for a legislative finding recognizing how carbon regulation inevitably impact and increase the cost of goods and services to the end user (the public) on the floor David Eastman stating “this is the point that is left out of the legislative PowerPoints.” This amendment struck a nerve with Republican Will Stapp who took to criticizing Rep. Eastman by saying he appreciates his “crystal ball” and took to touting the ability that we will have with this legislation for a wildly expensive coal plant with carbon capture and sequestration and said this legislation might even lower the cost to the consumer! Unbelievable. He finished by asking members to reject the amendment due to how it is “superfluous” and “not fact based.” Amendment failed 1-38.
-Amendment by Representative David Eastman to further define “reservoir” to mean “devoid of recoverable mineral resources” he expressed out of concern based on the Alaska State Constitution Article VIII Section 1 – the policy under the constitution is that our resources should be made available for maximum use consistent with the public interest – sharing concerns of many Alaskans that the tax policy is driving us in a certain direction, we may be making decisions in the short term which seem good but in the long term may be very bad. Long term permanent decisions based on current policy that will impact our ability to pursue mineral resource recovery in the future. Democrat Zach Fields with great confidence stood in opposition to say “this is a strange and arbitrary way to attempt to manipulate the market such reservoirs are going to be used for the most profitable use– companies will figure that out based on mineral content or anything else.” In wrap up, Eastman reiterated that with this bill we are not looking at something that is driven by the market. We are looking at something that is driven by government policy and the market responding to that policy. He expressed continued concern that some of the intent behind federal policy is for Alaska to have less resource development. His amendment failed 1 to 38.
The bill was placed into 3rd reading and will come before the floor again on 4/17 for final passage.