Carbon Dioxide Pipeline Regulation

The Energy Law Journal, Vol. 30 Issue 1 pp.85

April 1, 2009

By Robert Nordhaus and Emily Pitlick

The ability to transport massive volumes of carbon dioxide (CO2) via pipeline will be crucial to using large scale carbon capture and sequestration (CCS) projects as a means of reducing greenhouse gas (GHG) emissions in the United States. The small existing CO2 pipeline infrastructure may eventually have to be expanded to be comparable in size to the country‘s natural gas pipeline system. To build out a national CO2 pipeline system, the U.S. will need to create a workable regulatory framework. Today, CO2 pipeline developers have no access to federal siting or federal eminent domain authority for construction of such pipelines; rather, they must deal with a patchwork of individual state laws and regulations. The shape of any applicable economic regulation, including rules on rate and access regulation, will also need to be resolved and addressed before project sponsors will build pipelines to support CCS. This article provides policymakers with analysis and recommendations respecting the federal regulatory regime governing the construction and operation of CO2 pipelines.

The article recommends that existing CO2 pipelines remain subject to state level regulation principally because the current state schemes in place can support the purpose for which they were built, which was not a national-level GHG emission reduction program. However, new pipelines should be able to elect to apply for federal permits for construction and operation similar to those granted for natural gas pipelines. Once a federal permit is issued, the project sponsor would not be subject to state siting requirements and would have eminent domain authority similar to that provided interstate natural gas pipelines. When operational, CO2 pipelines for which a federal permit is issued would be subject to federal common carrier regulation. This recommended framework should better support construction of the new CO2 pipeline infrastructure necessary for widespread deployment of CCS.

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The article is derived from work that is an adaptation of a chapter prepared by the authors for the Interim Report of the CCSReg Project and was originally commissioned by the CCSReg Project. The chapter was adapted and published in the Energy Law Journal (Volume 30:1) with the consent of the CCSReg Project.