Issue 2, 2023 Carbon Capture Magazine by BBI International

Taking DAC-tion

The California DAC Hub Consortium’s Vision and Development Plan Page 16

Plus

Voluntary Carbon Markets Accelerating Climate Action Page 20

AND

Factors that contribute to a successful Class VI well permit application Page 24

Issue 2 2023

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CONTENTS ISSUE 2 2023 VOLUME 2 ISSUE 2

COLUMN 4 PUBLISHER’S NOTE

Partnerships Drive Project Success By Danielle Piekarski

DEPARTMENTS

6 BUSINESS BRIEFS Companies, Organizations & People 8 Carbon Capture Magazine’s Podcast Series Covering the Industry’s Hottest Topics 12 SPOTLIGHT: MicroSeismic

Moving CO2 Storage Monitoring Forward By Danielle Piekarski

13 SPOTLIGHT: Toshiba

Pioneering Carbon Capture Solutions for Over 50 Years By Toshiba

14 SPOTLIGHT: SCS Engineers

Starting Right with SCS Engineer’s Feasibility Study Expertise By SCS Engineers

FEATURES 16 INNOVATION

Hub of Collaboration

Consortium Aims to Bring Direct Air Capture to California By Chris Gould

20 MARKET

CCS and the VCM: Voluntary Carbon Markets Accelerating Climate Action Finding the best decarbonization projects is no longer a needle in the haystack By David LaGreca

24 PERMIT

De-risking the well permitting process for CCUS projects

Factors that contribute to a successful Class VI well permit application

ADVERTISER INDEX 6 & 10 National Carbon Capture Conference & Expo 27 2024 Carbon Capture & Storage Summit 11 Foss & Company 28 Greenedge 9 MBA Energy & Industrial 12 MicroSeismic, Inc. 19 Navigator CO2 Ventures 23 Salof Ltd, Inc. 5 Saulsbury Industries 15 SCS Engineers 2 Summit Carbon Solutions 13 Toshiba America Energy Systems

By Michelle Pittenger

For the Latest Industry News: CarbonCaptureMagazine.com Follow Us PHOTO: CALIFORNIA RESOURCES CORPORATION

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PUBLISHER’S NOTE

Partnerships Drive Project Success In the past six months, the Department of Energy (DOE) has issued several announcements regarding funding and support of projects including direct air capture (DAC), carbon transportation and converted CO2 emissions. This federal level of

support highlights the increasing need to deploy carbon capture, utilization and storage systems (CCUS). It also emphasizes the need for collaboration we will need across sectors to make climate goals a reality. Collaboration between researchers, policymakers, corporations and the general public is necessary to ensure the responsible development of projects and the distribution of accurate project information. We’ve recently obtained the policy framework to meet climate targets via the Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA). Now, the challenge is engaging all parties who are involved and/or affected by a project and guaranteeing that projects remain safe and compliant with regulatory standards and any community concerns are addressed. We start this issue by examining some of the most recent, groundbreaking news within the industry. From Milestone Carbon’s acquisition of acreage for CO2 storage to Carbonvert and Castex’s offshore CCS Hub joint venture, these examples underscore the industry’s reliance on collective efforts. There are also spotlights on pages 12 – 14 covering industry pioneers who each play a unique role in moving CCUS adoption forward. Perhaps the most notable of recent DOE news was the announcement of up to $1.2 billion to advance the development of two commercial-scale DAC facilities. This announcement was the world’s largest investment in engineered carbon removal and will advance Project Cypress and the South Texas DAC Hub. Additional funding was announced for 19 other projects specifically focusing on the feasibility and design of DAC technology. One of these 19 projects was the California DAC Hub which consists of more than 40 organizations and was formed by Carbon TerraVault Holdings. Learn more about how this project leverages partnerships and aims to revolutionize DAC, plus storage, on page 17. On page 21, David LaGreca examines the critical nexus between government incentives and the voluntary carbon markets (VCM) in advancing CCUS solutions. As mentioned above, the IRA has set the stage for CCUS investments, but we often see projects fall short when it comes to the comprehensive cost of deployment, a situation that resonates with companies striving to reduce emissions. In this context, the VCM emerges as a powerful and complementary force, designed to render CCUS projects financially viable. Lastly, on page 24, we look into the best practices when applying for a Class VI well permit application. A permitting application is a pivotal aspect of any sequestration project, so it is important to minimize risk at any and every step of the process. From identifying project-slowing factors at the outset to managing the extensive permit application requirements and engaging stakeholders effectively, this insight offers a roadmap to navigate the intricate CCUS permitting journey. Enjoy the read!

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THE TEAM CEO Joe Bryan jbryan@bbiinternational.com President Tom Bryan tbryan@bbiinternational.com Vice President of Operations, Marketing & Sales John Nelson jnelson@bbiinternational.com Vice President of Production & Design Jaci Satterlund jsatterlund@bbiinternational.com Senior Account Manager Chip Shereck cshereck@bbiinternational.com Account Manager Bob Brown bbrown@bbiinternational.com Content Manager Danielle Piekarski dpiekarski@bbiinternational.com Circulation Manager Jessica Tiller jtiller@bbiinternational.com Advertising & Marketing Manager Marla DeFoe mdefoe@bbiinternational.com

Subscriptions Subscriptions to Carbon Capture Magazine are free of charge to everyone with the exception of a shipping and handling charge for any country outside the United States. To subscribe, visit CarbonCaptureMagazine. com or you can send your mailing address and payment (checks made out to BBI International) to: Carbon Capture Magazine/Subscriptions, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203. Reprints and Back Issues Select back issues are available for $3.95 each, plus shipping. Article reprints are also available for a fee. For more information, contact us at 866-746-8385 or service@bbiinternational.com. Advertising Carbon Capture Magazine provides a specific topic delivered to a highly targeted audience. We are committed to editorial excellence and high-quality print production. To find out more about Carbon Capture Magazine advertising opportunities, please contact us at 866-746-8385 or service@bbiinternational.com. Letters to the Editor We welcome letters to the editor. If you write us, please include your name, address and phone number. Letters may be edited for clarity and/or space. Send to Carbon Capture Magazine/Letters, 308 Second Ave. N., Suite 304, Grand Forks, ND 58203 or email to dpiekarski@bbiinternational.com.

DANIELLE PIEK ARSKI CONTENT MANAGER Carbon Capture Magazine dpiekarski@bbiinternational.com

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SUPPORTING THE FUTURE OF ENERGY WITH THE STRENGTHS OF OUR PAST

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Business Briefs Companies, Organizations & People Milestone Carbon announces CO2 sequestration hub in Midland Basin

Milestone Carbon, a subsidiary of Milestone Environmental Services, announced the development of a CO2 sequestration hub in the southwestern Midland Basin., spanning parts of Midland and Upton counties. The company acquired rights to over 10,000 acres for permanent CO2 storage, secured a Class II injection well permit for local gas processors, and submitted a Class VI permit for expanded industrial CO2 injection. The hub has potential to store 30 million metric tons of CO2, supporting emission reduction efforts. Milestone Environmental Services’ experience in waste sequestration, regulatory compliance, land leasing, and subsurface analysis underpins the development of Milestone Carbon’s carbon hub in the Midland Basin. These hubs offer a cost-effective solution for emissions reduction, benefiting heavy industry and energy producers, with job creation potential and the possibility of attracting low-carbon technologies. The Permian Basin’s established history of safe CO2 handling further supports Milestone Carbon’s role in industrial decarbonization.

Carbonvert, Castex execute joint venture for offshore CCS Hub

Carbonvert Inc. and Castex Energy’s subsidiary, Castex Carbon Solutions, have formed a partnership to develop a 24,000-acre offshore tract in Louisiana’s Cameron Parish for permanent carbon dioxide (CO2) storage. Based on the subsurface geology, the Cameron Parish CO2 Hub has a total storage capacity of more than two hundred and fifty million metric tons of CO2 which will service the region’s industrial emitters. The JV Partners are considering repurposing existing pipelines for the project. They entered a 50/50 joint venture in August 2022 to advance CCS projects in Louisiana, focusing on economic and environmental benefits for the region. Castex will operate the Cameron Parish CO2 hub, aiming for global competitiveness while stewarding the land responsibly. Additionally, the JV Partners remain dedicated to advancing Louisiana’s sustainable future through responsible and innovative business practices.

CARBON CAPTURE MAGAZINE ISSUE 2, 2023

U.S. Department of Energy announces $27M for CO2 transport networks

The U.S. Department of Energy’s Office of Fossil Energy and Carbon Management (FECM) is making up to $27 million available to support the transport of carbon dioxide (CO2) from industrial and power facilities, as well as from legacy emissions, for permanent storage or conversion. This funding aligns with President Biden’s climate goals and supports a growing carbon storage industry. It aims to develop a CO2 transport network to connect sources to suitable geological formations or conversion sites. Front-end engineering and design (FEED) studies will receive funding, focusing on carbon transport costs, network configurations, and technical and commercial aspects. Societal considerations and community engagement are emphasized, with a deadline of November 16, 2023, for applications. FECM has already invested nearly $400 million in carbon transport and storage projects since January 2021, contributing to economic development, innovation, and job creation in the clean energy sector.

Large-scale Petra Nova Carbon Capture Facility restart announced

JX Nippon Oil & Gas Exploration Corporation has resumed operations at the Petra Nova CCUS Project’s Carbon Capture Facility, one of the world’s largest, capable of capturing approximately 1.4 million metric tons of CO2 annually. This facility captures CO2 from a thermal power plant’s flue gas and injects it into an oil field to boost crude oil production. JX Nippon is committed to achieving carbon neutrality by FY2040, viewing CCS/CCUS as vital in this effort. The ENEOS group to which JX Nippon belong is taking on the challenge of achieving both “a stable supply of energy and materials” and “the realization of a carbon-neutral society” and has been working to achieve carbon neutrality of its emissions by FY2040.

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Carbon Capture Magazine's Podcast Series Covering the Industry’s Hottest Topics

PODCAST PREVIEW PLAY

FEATURING

Ryan Kammer & Matt Fry Great Plains Institute

In Season 2, Episode 12, of the Carbon Capture Magazine podcast, we chatted with Ryan Kammer, Carbon Management Research Manager and Matt Fry, Senior Policy Advisor at the Great Plains Institute (GPI). The focus of the discussion was GPI’s recently released Carbon Capture Co-benefits report. This first-of-itskind study observes and quantifies health impact of the co-benefits of reducing other air pollutants with carbon capture technologies. CCM: Since we last had GPI on the podcast, you have released a Carbon Capture Co-Benefits report. Could you share with us what all is covered in this report and what GPI’s objective was in releasing it? Kammer: We’re really hoping that we could provide the message that carbon capture is more than just a climate solution. It can also improve air quality around various sources in both industry and power. When you’re using an amine-based solvent or low purity carbon capture, you’re typically wanting to also remove SO2, NOx and particular matter from your system so that it can work optimally. And in doing so that you’re also improving the air quality for both 8

CARBON CAPTURE MAGAZINE ISSUE 2, 2023

of the area around the facility, but then also across the country and across regions as air travels. So, we really wanted to quantify what that health benefit would be for removing CO2, but also SO2, NOx and particulate matter for facilities across the country. Fry: I’ll just add we get questioned a lot about the benefits outside of climate solutions are, like Ryan mentioned, so this was a first-of-its-kind opportunity to actually quantify that and answer some of the questions that we hear routinely from communities and stakeholders. CCM: Ryan, you mentioned some of the different pollutants that are included in the research. It also spans across several industries. What materials or regulations did you observe to help develop this report? Kammer: There were too many sources that we used to design the study itself to talk about here, but there were a couple NETL reports that were really impactful. One that was published 2019 that was looking at carbon capture for coal power plants and then one in 2022 surrounding various industrial capture opportunities. Those

were really helpful for us to kind of understand what equipment we would assume to be installed for these various opportunities as well as what the estimated cost and the estimated removal efficiencies would be for removing these various co-pollutants. Finally, we wanted to be conservative with the estimates that we were making so that our health benefits would also be conservative. So we decided to use equipment that would meet the EPA’s new source performance standards, specifically for pulverized coal technology installed post 2011. They have the highest allowed emissions amounts. So by doing that, we were hoping to be conservative with our estimates. CCM: How do those co-pollutants impact amine-based capture systems? To quantify the benefits of capturing CO2 and these other co-pollutants, your team developed an approach. Can you walk us through this approach and what exactly the benefits were that you were quantifying? Through this approach, what conclusions were you able to draw across the nation and across each of these industries that you observed? How do you anticipate this information will affect the deployment and the public perception of carbon management systems? Listen to Ryan and Matt’s response by visiting https://carboncapturemagazine.com/pages/podcasts/.

Don’t Miss an Episode:

Carbon Capture Magazine’s podcast series: S2 E08 Adding Value to CO2 Markets with Infrastructure Featuring Cody Johnson, CEO at SCS Technologies

S2 E7 A Look Into Worley’s Portfolio and the Scalability of CCUS Projects Featuring Rob Berra, Group Senior Vice President of CCUS at Worley Interested in being a guest? Contact Danielle Piekarski at dpiekarski@bbiinternational.com

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MBA Energy & Industrial specializes in nationwide industrial structures and process construction, giving you a competitive edge through custom facility construction. With extensive experience in design-build services for carbon capture, we create advanced facilities for hydrogen production and carbon capture, promoting sustainability. Our in-house design team manages facility design and construction for carbon capture utilization & storage, direct air capture, and electrolyzer buildings.

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10 CARBON CAPTURE MAGAZINE ISSUE 2, 2023

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Miller Mechanical Specialties, Inc. Nuada Pelican Energy Consultants Salof Ltd., Inc. SCS Engineers SCS Technologies, LLC Summit Carbon Solutions Toshiba America Energy Systems Corp Vallourec North America Verity Carbon Solutions

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SPOTLIGHT: MICROSEISMIC BY DANIELLE PIEKARSKI

MicroSeismic, Inc: Moving CO2 Storage Monitoring Forward To achieve effective CO2 storage, it is imperative to monitor, report and validate (MRV) the process continually via the CO2 protocols to ensure containment of the stored carbon. Dr. Peter M. Duncan, CEO and Founder of MicroSeismic (MSI), emphasized the significance of monitoring during injection to maintain carbon storage formation and caprock integrity, preventing leakage and induced seismicity. In a significant stride towards clean energy innovation and development, MicroSeismic, Inc. was awarded its first of three grants from the Department of Energy (DOE) in March of 2023 totaling $199,721. This grant is part of a broader initiative that allocates more than $16 million to 77 small businesses across 25 states. MSI’s project aims to create an electromagnetic monitoring network, known as CO2SeQure®, to ensure the safe and compliant operation of industrial-scale carbon storage facilities during carbon storage and injection operations. The Small Business Innovation Research (SBIR) and Small Business Technology Transfer programs underscore both parties’ commitment to advancing scientific breakthroughs into practical products and services. Another groundbreaking development is MicroSeismic’s collaboration with EverAware LLC and the Climate Change Response Research Division of the Korea Institute of Geoscience and Mineral Resources. This partnership aims to enhance technological cooperation related to Carbon Capture Utilization and Storage (CCUS) in the United States and Korea. The collaboration encompasses subsurface measurement, surface monitoring, and the use of artificial intelligence

12 CARBON CAPTURE MAGAZINE ISSUE 2, 2023

analytics to evaluate vast datasets collected during continuous monitoring. Furthermore, they have formed an alliance with Terra15 to provide a comprehensive turnkey monitoring solution for geoscience and civil engineering applications using distributed fiber optic sensors and Distributed Acoustic Sensing (DAS). Through this alliance, MicroSeismic can now deliver monitoring services for the carbon pipeline industry. MSI recently received a Phase 2 DOE SBIR Grant worth $1,096,839. This project involves the installation of a permanent BuriedArray® of microseismic sensors, autonomous data collection, and event detection. The system will ensure the safe and efficient operation of industrial-scale CO2 storage facilities by detecting induced seismic hazards, monitoring reservoir integrity, and tracking the injection plume and pressure field. MicroSeismic’s CO2SeQure technology excels in tracking issues during CO2 injection, offering real-time monitoring, fault mapping, and early seismic event detection. What’s more, it’s a cost-effective solution, harnessing renewable energy through the BuriedArray system and DAS fiber for continuous monitoring and leak prevention. MicroSeismic’s dedication to advancing carbon sequestration aligns with global emission reduction goals, offering hope in realizing carbon management ambitions.

SPOTLIGHT: TOSHIBA

Toshiba: Pioneering Carbon Capture Solutions for Over 50 Years As a leader in energy solutions, Toshiba America Energy Systems (TAES) is pioneering carbon capture utilization and storage (CCUS) innovations to reduce emissions in the United States and worldwide. With over 50 years of experience delivering advanced energy technologies, including renewable power generation, TAES leverages their unmatched expertise to drive the development of CCUS. Through partnerships with energy producers, technology innovators and research institutions, by optimizing the carbon capture processes and identifying new ways to repurpose CO2, the company aims to enable cost-effective, sustainable carbon solutions that will be pivotal in the global transition to carbon neutrality. By driving CCUS research, collaborating to deploy projects and sharing knowledge, TAES is accelerating the adoption of transformative capture and conversion technologies. With their long history of leadership in the energy sector, TAES is at the forefront of pioneering carbon solutions to mitigate climate change. A key achievement is an integration with Toshiba’s Mikawa Biomass Plant, paving the way for wide CCUS adoption. The innovative system achieves 90%+ capture rates with optimized energy use. By combining biomass power and future offshore storage, this project provides a real-world model for bioenergy with CCUS. Beyond Mikawa, TAES is enabling the scalable integration of renewables and supporting the path to carbon neutrality with

breakthroughs in areas like CO2 conversion, hydrogen storage and fuel cells by: • Driving innovations in carbon repurposing and renewable energy storage to support the transition to carbon neutrality. Through a power-to-chemicals process, CO2 is efficiently converted into usable carbon monoxide using a proprietary high-efficiency electrocatalyst. • Pioneering sustainable alternatives to greenhouse gases like SF6 for electric power systems. • Advancing hydrogen solutions to address intermittent challenges. • Optimizing hydrogen fuel cell technology, which provides reliable, renewable power for off-grid applications. Join TAES’ Shane Hughes at the “How Decarbonization Incentives via Carbon Capture are Shaping the Future of Fuel and Power Production” session during the National Carbon Capture Conference on November 7th for his presentation about the Mikawa integration, "Lessons Learned from the Mikawa Post Combustion Capture Pilot Plant." With expertise honed through Mikawa, TAES is ready to replicate their carbon capture achievements worldwide. Visit us at www. toshiba.com/taes to learn more about our innovative carbon neutral technologies.

SESSION LED BY SHANE HUGHES Toshiba America Energy Systems Corp.

Lessons Learned from the Mikawa Post Combustion Capture Pilot Plant Join us on November 7 at the National Carbon Capture Conference in Des Moines, Iowa. To learn more, visit Toshiba.com/taes/carbon CarbonCaptureMagazine.com 13

SPOTLIGHT: SCS ENGINEERS

Starting Right with SCS Engineer’s Feasibility Study Expertise SCS Engineers provides Class VI underground injection control (UIC) pre-permitting, permitting, design, construction and operations & maintenance services for geologic carbon dioxide sequestration projects. Our commercially focused interdisciplinary team of scientists and engineers can get your project off to a good start. If you are asking yourself if you should do a sequestration project, we can assist you in navigating the first steps with a feasibility study.

What is the Importance of a Feasibility Study?

Geologic sequestration projects are a multi-decade commitment with significant technical, regulatory and financial complexities to consider at the front end. Conducting a feasibility study before pursuing the Class VI UIC application process provides vital information that will assist you in making fundamental decisions early on regarding your project design. Deep well injection for geologic sequestration of CO2 is not possible everywhere. The complexity of these projects can vary widely depending on your facility’s location. It is important to develop an understanding of the financial impacts of a sequestration project, as well as the regulatory framework and the geologic suitability for Class VI UIC in a given project location before pursuing the application process. The feasibility study ultimately helps guide decisions on overall conceptual project designs. For instance, if the feasibility study uncovers complexities for the option of developing a Class VI well on-site at the generating facility, this is a good time to explore what alternative project designs may be available for developing the safest and most efficient project for your facility.

What does SCS Engineers examine during the Feasibility Study?

We consider several principal factors when conducting Class VI feasibility studies and their impact on the conceptual project design, including technical (geologic), regulatory and financial factors. First, we evaluate the regulatory authority for Class VI UIC for a project location and the maturity of the UIC regulatory framework. This includes having preliminary conversations with the regulatory agencies. We also consider existing state, county and other local regulations that may deter or prohibit Class VI UIC. We also consider the concept of pore space ownership and whether agreements with adjacent land owners or those who may own subsurface mineral rights are needed.

14 CARBON CAPTURE MAGAZINE ISSUE 2, 2023

If there are no red flags uncovered during the regulatory evaluation, SCS evaluates whether there is suitable geology present on-site for sequestration. Our geologic evaluation considers what geologic data are available to aid in the development of a project, whether the appropriate geology exists or is likely to exist on-site, and provides recommendations for addressing data gaps should the project proceed to the permitting phase. This is also a good time to consider what project funding options are available to support your sequestration project. These include federal incentives such as 45Q tax or Low Carbon Fuel Standard credits. Projects may also be funded in the form of a grant through the U.S. Department of Energy’s CarbonSAFE program. There are caveats to the federal funding related to the timing of project expenditures versus the timing of receiving federal funding. The overall costs of developing and implementing a sequestration project will depend on the complexity of your project and therefore the outcome of your feasibility study.

What if on-site sequestration is not feasible or incurs a high degree of risk?

Fortunately, off-site sequestration options are often available. This would involve transportation from the facility via pipeline, railroad, truck or barge to some off-site injection location. This location may be other company-owned property or a regional carbon storage hub, which could be privately owned or developed as a centralized location for multiple company facilities. This could also be on public land, such as through the Bureau of Land Management, or on leased private land where you enter an agreement with the public land owner or property/pore space owner. While there are many options available for off-site sequestration, the options available to you will be strongly dependent on the location of your generating facility. Off-site sequestration may increase the complexity of the project and the feasibility study; however, you can weigh each of the available options for the advantages and disadvantages and how your project may ultimately be impacted. Kacey Garber serves clients nationwide as a project geologist on SCS Engineers’ Carbon Sequestration and Deep Well Injection Service Team. Kacey may be contacted at KGarber@scsengineers.com.

CarbonCaptureMagazine.com 15

INNOVATION

CONTRIBUTION: The claims and statements made in this article belong exclusively to the author(s) and do not necessarily reflect the views of Carbon Capture Magazine or its advertisers. All questions pertaining to this article should be directed to the author(s).

16 CARBON CAPTURE MAGAZINE ISSUE 2, 2023

Hub of

Collaboration Consortium Aims to Bring Direct Air Capture to California By Chris Gould

California is leading the way in setting ambitious decarbonization goals and driving innovative solutions and cross-sector collaborations to address climate change. To

help meet this need, a consortium of more than 40 organizations across industry, technology, academia, national labs, community, government, and labor was formed by Carbon TerraVault Holdings, LLC (CTV), a subsidiary of California Resources Corporation, to pursue Department of Energy (DOE) funding under its Regional Direct Air Capture (DAC) Hubs initiative to create the California DAC Hub, the state’s first full-scale DAC plus storage (DAC+S) network of regional hubs. In August 2023, the consortium was selected to receive $11.8 million in funding from the DOE, the largest amount of funding allocated to a California DAC project through this initiative. The first hub is targeted to launch in Kern County, California and the consortium will look to expand to other locations across the state.

PHOTO: CALIFORNIA RESOURCES CORPORATION

CarbonCaptureMagazine.com 17

INNOVATION

’California is pioneering new solutions to fight climate change. It’s not enough to cut emissions – we have to go further by actively removing carbon pollution from the atmosphere. This project will be the first of its kind in our state and will help us meet our worldleading climate goals.’ California Governor Gavin Newsom

18 CARBON CAPTURE MAGAZINE ISSUE 2, 2023

Following California Governor Gavin Newsom’s call for more ambitious climate action, the California Air Resources Board (CARB) released its 2022 Scoping Plan for Achieving Carbon Neutrality to implement the most ambitious climate action of any jurisdiction in the world. The plan includes annual carbon removal/capture targets of 20 million metric tonnes (MT) of carbon dioxide (CO2) equivalent by 2030 and 100 million MT by 2045. In its Scoping Plan, CARB quoted the Intergovernmental Panel on Climate Change (IPCC) saying, “The deployment of CDR [carbon dioxide removal] to counterbalance hard-to-abate residual emissions is unavoidable if net zero CO2 or GHG [greenhouse gas] emissions are to be achieved.” Additionally, according to the IPCC, carbon removal methods such as DAC+S are key to mitigation pathways aimed at keeping global warming to below 1.5°C. In addition to the goals the state has set that call for carbon dioxide removal, such as DAC+S and carbon capture and storage (CCS) projects, California is considered a prime location for the development of CO2 storage thanks to its abundance of geological reservoirs that are ideal for storage. The state’s Low Carbon Fuel Standard and Cap-and-Trade programs, together with the federal 45Q tax credit of $50 per ton of CO2 captured and permanently stored, also incentivize the development of carbon removal projects. Motivated by the need for a major DAC+S project in California, core members of what would become the California DAC Hub consortium came together in the summer of 2022 and set a shared vision and investment agenda for the project’s community benefits plan focused on promoting shared regional prosperity in Kern County in

the form of durable economic growth, quality jobs and environmental resilience through the development of the DAC Hub. In December 2022, the DOE announced it had authorized $3.5 billion in grants through the Regional Direct Air Capture Hubs initiative to develop four domestic regional direct air capture hubs, each of which will demonstrate a DAC technology or suite of technologies at commercial scale with the potential for capturing at least 1 million MT of CO2 annually from the atmosphere and storing that CO2 permanently in a geologic formation or through its conversion into products. This and other funding opportunities drove the growth of the consortium to involve more organizations with goals that aligned with the project’s intended environmental and community benefits. The California DAC Hub is led by CTV Direct, LLC, a wholly-owned subsidiary of CTV focused exclusively on DAC+S; Kern Community College District (KernCCD), the community benefits plan lead; and Electric Power Research Institute (EPRI), a non-profit energy research and development institute. When forming the consortium, CTV involved prominent and impactful community organizations to help facilitate open and meaningful dialogue with diverse community stakeholders to develop an equitable, just, and environmentally responsible approach to the project. In addition to helping the state meet its carbon removal goals, each hub will provide benefits to the surrounding communities. As the community benefits plan lead, KernCCD works to ensure that the California DAC Hub provides transformational benefits to the surrounding communities, such as optimizing the use of renewable energy, providing high-paying and permanent jobs and

workforce development programs, and investing in STEM education programs to help California progress the energy transition and meet its carbon removal goals. KernCCD is geographically one of the largest community college districts in the United States, serving more than 54,000 students who represent the region’s rich diversity. KernCCD’s insights will support the California DAC Hub’s development of the future energy workforce. The consortium includes a long list of community partners, including the Greater Bakersfield Chamber of Commerce, African American Network of Kern County, Kern County Hispanic Chamber of Commerce, Tejon Indian Tribe and the Open Door Network – to name a few – as well as the City of Bakersfield and the West Kern Water District. Involving the perspectives of diverse community stakeholders is a main priority for the consortium at the outset of developing the first hub in Kern County and future regional hubs. While CCS and DAC+S are proven and effective methods for decarbonization, they are new technologies to many regions where carbon removal technologies may soon be employed. It is essential for residents in surrounding communities to have access to educational resources about how the technologies work, the benefits they will bring, and the organizations involved in the projects. The consortium members have a common goal of building a clean and equitable energy economy with the support of the communities near the California DAC Hub. The consortium also includes partners that will provide significant expertise and resources to the project. Climeworks and Avnos, leaders in CCS processes, serve as technology partners. National laboratory partners include the Lawrence Livermore National Laboratory, National Renewable Energy Laboratory, and Pa-

cific Northwest National Laboratory. Academic partners that will support research include California State University, Bakersfield and the University of California, Los Angeles Institute for Carbon Management. Labor unions including the International Brotherhood of Electrical Workers and International Union of Operating Engineers will provide a skilled workforce. Brookfield Renewable, Southern California Gas Company, Pacific Gas and Electric and other industry partners will provide crucial expertise in their fields as the California DAC Hub takes shape. In a statement following the announcement of the DOE’s funding of the California DAC Hub, Governor Newsom said, “California is pioneering new solutions to fight climate change. It’s not enough to cut emissions – we have to go further by actively removing carbon pollution from the atmosphere. This project will be the first of its kind in our state and will help us meet our world-leading climate goals.” The California DAC Hub was inspired by California’s culture of innovation and strong ambitions. The DOE’s recognition of the project’s strengths sets the path for it to move forward and become California’s first full-scale DAC+S network. The DOE funding to the California DAC Hub will be used to perform Front End Engineering Design (FEED) studies in 2024 on the proposed DAC facilities in Kern County, followed up with additional funding requests and planned development and construction potentially beginning in 2025. This significant step forward will help pave the way for California to address climate change and develop a sustainable future for the state. Author: Chris Gould, Executive Vice President and Chief Sustainability Officer, California Resources Corporation; and Managing Director, Carbon TerraVault Holdings, LLC

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CCS and the VCM: Voluntary Carbon Markets Accelerating Climate Action By David LaGreca

While the Inflation Reduction Act (IRA) has paved the way for a dramatic increase in investment in carbon capture and sequestration (CCS) solutions for heavy-emitting industries, the funding from these incentives frequently falls below the total cost to deploy these systems. At the same time, the entire raison d’être for the voluntary carbon markets (VCM) is to make CCS projects financially viable. The marriage of financial incentives from public sector financing and the VCM is an important, if not imperative union in getting many CCS installations off the ground and fully realizing the potential of these technologies in the near term. Often, companies are so focused on the regulated markets and tax incentives, that these funding streams are overlooked and underutilized in the financial stack to get to the final investment decision (FID). According to the U.S. Department of Energy (DOE), capture costs for industrial-scale CCS projects range from $140/ metric ton for ethanol, gas processing, and hydrogen steam methane reforming (SMR), up to $1,700/metric ton for coal power

PHOTO: STOCK

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David LaGreca Senior Carbon Markets and Sustainability Consultant, EcoEngineers

plants.1 Section 45Q of the IRA provides for a maximum of $85/metric ton, leaving an obvious hole in the justification for investors and companies in nearly every sector endeavoring to reduce their emissions through carbon management. Though much less certain in terms of willingness to pay for a metric ton of carbon sequestration, the international marketplace is currently starved of industrially sourced, readily quantifiable carbon credits to be used for environmental, social, and governance (ESG) reporting and carbon footprint reductions. The Carbon Neutral Buyers Alliance, Mitsui, and others have incorporated CO2 credits generated from CCS into claims of “carbon neutral liquified natural gas (LNG)”. Similarly, UK-based energy utility, Drax, inked a memorandum of understanding (MOU) with Respira for the sale of upwards of two million of their bioenergy carbon capture and storage (BECCS) credits to be issued this decade. While under scrutiny, this is a clear signal that there is a demand for such credits generated from CCS, be it biogenic or fossil in origin. A McKinsey & Company analysis from 2022 states that carbon capture, utilization and storage (CCUS) uptake needs to grow 120 times over by 2050 for countries to achieve their netzero commitments.2 Whereas their analysis somewhat downplays the relevance of voluntary markets in driving financing to these new projects outside of more niche, carbon dioxide removal (CDR) categories such as BECCS and direct air capture (DAC), they are presently attracting bids for credits (ex-ante in many cases) in the range of $300/metric ton and $1,200/ metric ton, respectively. These prices are leading to a rapid entry into this space by registries, project developers and investors alike. Though likely not a mainstay for funding throughout the lifespan of these projects, agreements for the offtake of voluntary carbon credits may be a key factor in going from design to implementation in many cases. Unlike commodity markets (i.e., crude oil or corn) and regulated credit markets (i.e., Low-Carbon Fuel Standard or EU’s Emissions Trading Scheme), VCMs have wide-ranging

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prices for credits emanating from similar project types. As many transactions are inherently bilateral, taking place over the counter between a developer and an end-user (think Microsoft offsetting their historical emissions), projects are frequently valued on their nuances as much as their atmospheric benefit. In the case of CCS activities, the most apparent distinction is between carbon avoidance (point source capture) and carbon removal (CCS from biogenic feedstock). Though capturing CO2 from any operation is, in essence, preventing emissions from entering the atmosphere, capturing emissions from combusted organic material has, due to photosynthesis, the indirect impact of reducing net carbon in the atmosphere. This biogenic differentiator propels these projects into a higher echelon of pricing in the current market as they are being treated as “carbon removals.” Other project characteristics come into play as well in the VCM, such as general sentiments towards fossil fuels and whether credits purchased from projects are effectively subsidizing their continued profitability. In contrast and in addition to CCS projects that register their activities for harvesting 45Q and other tax incentives under the IRA, projects registering in the VCM must go through a rigorous process involving disclosure and proof of project activities to independent assessment bodies. This process requires the development of traceable data systems to be audited by both a third-party verification body and an independent registry for credits to be issued and legitimized. At present, few CCS crediting pathways exist, including under the Puro. earth standard and the California Air Resources Board (CARB), with the former for crediting CO2 removals and the latter for fuel carbon intensity (CI) reductions. On the horizon are comprehensive protocols to be released by the American Carbon Registry, the Verified Carbon Standard, and numerous jurisdictions globally. Because VCM crediting is an incentive mechanism, project proponents must show that they require the funds from credit sales, or that they have overcome other substantial, non-financial hurdles, to qualify. Whereas the U.S. Environ-

mental Protection Agency (USEPA) Class VI well permit places a strong, primary focus on water quality along with other components, VCM protocols also emphasize the notions of additionality, permanence, life cycle emissions, co-benefits and environmental harm. These differences illustrate how federal incentives are complementary to voluntary incentives and allow for many of them to be at times “stackable” rather than exclusive to one another. Entities involved in renewable fuel production can leverage federal, state, and voluntary incentives to establish a differentiated profile of revenue streams. A U.S. ethanol plant with carbon capture installed may, for example, apply for multiple outlets for their low-carbon intensity (CI) fuels, as well as the carbon attributes. Double counting of attributes is not the intention here, but rather a doubling of available sales outlets for fuel and its climate ben-

efits. In these installations, the fuel may be sold, with or without the CI reduction from CCS, into Canada’s Clean Fuel Regulation (CFR), Clean Fuel Programs into Washington and Oregon, California’s LCFS or to voluntary markets. When the CO2 value is sold separately, it provides for the opportunity to garner the absurdly high CDR credit prices on the VCM as is the case in the market today. This approach of maintaining multiple outlets for revenue, selected by the winds of market prices across all the pathways available, is what we call “optionality.” This is a key and underutilized financial benefits for many companies. CCS is an environmental imperative, according to the Intergovernmental Panel on Climate Change (IPCC). Between 300600 gigatons (Gt) (or 1 billion metric tons) of CO2 must be cumulatively captured and stored between now and 2100, in conjunc-

tion with a massive drawdown of emissions, to maintain our climate within the 1.5°C threshold for heating established in the Paris Agreement. For this level of activity to transpire across the energy and industrial sectors, both governments and the private sector will need to drive substantial finance using multiple methods of incentives. Where governments fall short in terms of ambition and regulation, it is up to the VCM to step in to fill gaps, as it has done for more than 30 years. 1 US Department of Energy. 2023. Pathways to Commercial Liftoff: Carbon Management. 2 McKinsey & Company. 2022. Scaling the CCUS industry to achieve net-zero emissions. October 28, 2022.

Author: David LaGreca, EcoEngineers

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De-risking the well permitting process for CCUS projects Factors that contribute to a successful Class VI well permit application By Michelle Pittenger

Carbon capture and storage (CCUS) projects are essential to the energy transition and momentum is growing in recent years with hundreds of projects set to be in operation by 2030. In GHD’s global research report SHOCKED, quantitative opinion research and qualitative interviews were conducted with energy leaders across the globe. Based on these surveys, three-fifths said their company is deploying CCUS projects, a critical technology for net-zero scenarios. These projects involve the geologic sequestration of carbon dioxide. The US Environmental Protection Agency (EPA) developed a permitting process in 2010 for geologic sequestration (Class VI) wells. The Class VI well permit application is a federal requirement designed to protect underground sources of drinking water. The Class VI well-permitting application process can be a daunting one, with ten sections and hundreds of pages necessary for the final application document. So, what makes a good permit application? The more complete your application is when you submit, the less likely major revisions will be required and the quicker your project will be approved. Here are nine important factors to consider before you begin the application process that will reduce risk and help your project move forward:

Before the process begins

1. Ensure your site doesn’t have any fatal flaws Some factors will stop a project in its track before it is

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PHOTO: STOCK

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even off the ground. A project sited too close to a major fault or a poor cement job in an offset well could be dealbreakers for a project to advance. Understanding and scanning for any immediate factors that will cause your application to be rejected will save your time and investment. 2. Complete the necessary studies in advance Countless studies contribute to the permit application. The EPA has a checklist for Class VI well permit applications that includes the various studies and data requirements. You should complete these in advance, but in line with the permit application. If all studies have not been completed up front, there may be an opportunity to do them ad hoc, working with a consultant who has the appropriate capabilities. 3. Understand the heavy lift required One fundamental part of the permit application is project management, given the significant time and resources required to undertake the application. It could take up to a year to complete the application requirements. If the process is not managed properly, some steps could be skipped, resulting in potential delays. Working with a consultant who understands the technical and regulatory aspects, coupled with a strong administration team and a quality management system will set you up for success.

During the permitting process

4. Leverage a strong subsurface team’s expertise The largest portion of the permit is subsurface evaluations. Some of the technical sub-surface considerations that help form a solid application include evaluating well construction for wells within the area of review, identifying faults and fractures, defining site geochemistry and geomechanics, interpreting seismic data, and modeling the reservoirs. Using the same subsurface team to complete your permit application ensures the right information is included. 5. Engage stakeholders at the right time Stakeholder engagement is a critical piece of any CCUS project and often one of the biggest roadblocks to advancing a project. Engaging the public through authentic, honest conversations on the energy transition cost, the effects of inaction and the infrastructure needed to reduce emissions is extremely important. Stakeholders must understand the why’s and how’s, along with the benefits and risks. A two-month public comment period is required as part of the application, however, proactive, early engagement will help ensure a positive outcome. Each project is unique. Thoughtful consideration of the timing of public engagement is paramount. More information on securing social acceptance to succeed is available on GHD’s website. 6. Liaise with regulatory authorities early on Work collaboratively with regulators throughout the permitting application process. Though only two states currently have the authority to administer these Class VI permits, it is expected that several other states will gain primacy over these regulations in the coming years. Keeping up with these developments will be neces-

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sary to ensure the correct regulatory agencies, either regional EPA or state level, are engaged. In either case, early engagement and regular check-ins with regulatory staff can help detect application issues and anticipate additional requirements, keeping your application on schedule. Working with a team that has strong existing relationships with regulators allows you to be proactive with communications. 7. Look for opportunities to work permitting streams in parallel There is a sequence of various permits to undertake depending on where your project is located. It’s necessary to establish permitting pathways and understand the most efficient order to complete them. The California Environmental Quality Act and Environmental Impact Assessments are examples of possible additional permits required. There are also additional Class VI permit requirements based on region, such as the Louisiana House Bill No. 571 requiring an environmental analysis submitted to the conservation commissioner under the state Department of Natural Resources and a notification to local governments of permit filings. Having a consultant with a strong geographic presence across regions helps you understand regional permitting applications needed for the process. 8. Provide evidence of financial assurance Robust cost estimating and economics modeling defines subsurface costs, CO2 capture and transportation costs and the project’s ability to pay royalties and returns to the operator. Importantly, are cost estimates and procedures appropriate? Part of the permit application involves proving financial assurance - having funds available to account for site remediation costs. Providing a bond to the regulator assures the site can be remediated to its original state in the event of a shutdown.

After the permit submission

9. Leave time and resources available The permit isn’t complete once you click submit. The EPA requires time to review and approve applications. Even the strongest of applications likely won’t escape without comment. Leave additional time and resources to respond to questions or comments, pull additional data, and engage with the public. As the CCUS permitting process is relatively new, it is important to do things right to ensure regulatory processes do not become even more rigid. We can elevate this relatively new CCUS industry through productive pioneer projects. Protecting the reputation of CCUS means having successful projects; and the backbone of these successful projects is a strong permitting application. For more information on how GHD can help you with a Class VI well permit application or any of the studies necessary to start the process, contact us. Author: Michelle Pittenger Director of Subsurface michelle.pittenger@ghd.com

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