Pilot program to enable the capture and storage of carbon dioxide; establishes the carbon capture and sequestration act

Summary of provisions: Section 1 of the bill would amend PSL § 120(2) and (4) to include a captured carbon transmission line within the defi- nition of "major utility transmission facility," and to define "captured carbon" to mean carbon dioxide (CO2) in any state and associated constituents extracted from the emissions of an electric generating facility or an industrial facility for the purpose of sequestration.

Section 2 of the bill would amend PSL § 123(1) to provide that upon receipt of an application for a captured carbon transmission line that complies with PSL § 122, the Public Service Commission (PSC) must fix a date for commencement of a public hearing not less than 60 nor more than 90 days after receipt of such application.

Section 3 of the bill would amend PSL § 126(1)(e), which relates to PSC' s decision to grant a certificate for the construction or operation of a major utility transmission facility, to require that PSC find and declare, in the case of a captured carbon transmission line, that the location of the line will not pose a hazard to persons or property along the area traversed by the line.

Section 4 of the bill sets forth the Act. In summary, the Act contains the following provisions:

Section 1 of the Act would set forth the Act's short title.

Section 2 of the Act would set forth the legislative findings, including that it is in the public interest to encourage the research and develop- ment of technology to facilitate the capture, transport and underground storage of CO2 emissions, and that the public health and the environment would be served by authorization for and the regulation of such a project.

Section 3 of the Act would define key terms used in the Act, including "buffer zone," "captured carbon," "carbon sequestration," "reservoir," and "waste."

Section 4 of the Act would provide that except to the extent adminis- tration of the Act is entrusted to other persons or entities, the Act will be administered by the Department of Environmental Conservation (DEC).

Section 5 of the Act would enumerate the powers and duties of DEC and the Commissioner of Environmental Conservation in relation to carbon sequestration reservoirs.

Section 6 of the Act would establish the procedures for leasing state lands for the exploration and development of carbon sequestration reser- voirs and the sequestration of captured carbon.

Section 7 of the Act would list the information required to be included in an application for a carbon sequestration permit, and would: (1) provide that no person shall commence operations to drill, plug back or convert a well for use in the operation of a carbon sequestration reser- voir before obtaining a permit to drill; (2) provide for annual report- ing requirements; and (3) establish fees for an application for a carbon sequestration permit.

Section 8 of the Act would set forth the authority of an owner or opera- tor of a well subject to the Act to acquire lands required to operate the carbon sequestration reservoir and its buffer zone through an acqui- sition proceeding.

Section 9 of the Act would provide for procedures for the closure of a carbon sequestration reservoir, including monitoring for a period speci- fied by DEC of at least ten years following the cessation of CO7 injection.

Section 10 of the Act would define who owns captured carbon and reser- voir pore space.

Section 11 of the Act would set forth the fees for an application for a permit to drill a well subject to the Act.

Finally, Section 5 of the bill would provide that the bill takes effect immediately and applies only to a municipally-owned electric generating facility that has submitted a complete application to DEC by December 31, 2010.

Existing law: Existing law does not authorize the siting or regulation of a captured carbon sequestration reservoir or captured carbon trans- mission line. Article 7 of the PSL authorizes the siting of major util- ity transmission facilities. Article 23 of the Environmental Conserva- tion Law authorizes the regulation by DEC of oil and gas wells and the underground storage of gas.

Legislative history: This is a new proposal.

Statement in support: The potential consequences of global climate change require research and development of new methods to reduce the emission of greenhouse gases (GHG). While energy efficiency and renewa- ble energy are important strategies for reducing CO2 emissions, and for advancing the State's priorities for meeting its electricity needs, additional measures to mitigate GHG emissions need to be explored.

Carbon capture and sequestration (CCS) refers generally to technologies by which CO2 is captured either before or after combustion of a fuel, typically coal, compressed to a super critical liquid, transported by pipeline to a well at an injection site, and then pumped deep under- ground into the pore space of geologic formations where it is trapped by overlying impermeable formations.

As part of a portfolio of available GHG reduction strategies, large scale CCS could play an important role in stabilizing CO2 concentrations in the atmosphere and mitigating climate ' change. Research and devel- opment of CCS technology in New York also could help to maintain the State as a leader in the development of new and innovative energy-relat- ed technologies.

The United States relies on coal for half of its electricity needs and New York depends on coal as a fuel source to generate a significant portion of its electricity. Further, the use of coal will increase substantially as economies in the developing world grow. The Interna- tional Energy Agency and the U.S. Department of Energy both expect that coal will continue to serve as an important energy source for many years. The successful use of CCS at electric generating facilities and other industrial facilities could substantially mitigate the climate impacts from the use of coal and other carbon-intensive fuels, while clean-energy technologies are developed, advanced and deployed.

By developing CCS as a technology for cleaner energy production, New York would be helping to explore possible solutions to climate change and could stand to reap economic benefits. Development of carbon capture technology could contribute to expansion of the "clean technology" busi- ness sector in the State - industries that develop and implement tech- nologies that protect the environment and help reduce GHG emissions while creating jobs. The State's infrastructure and labor force support manufacturing expansion, and CCS has the potential to stimulate signif- icant private-sector investment and creation of jobs in New York. The successful development of CCS technology in the State also could result in export business throughout the world as developing nations seek tech- nology to limit CO2 emissions while taking advantage of cheap coal to power their growing economies.

This bill would allow New York State to advance a carbon capture and sequestration demonstration project, by authorizing the PSC to render a decision on an application for a certificate of environmental compat- ibility and public need for a captured carbon transmission line pursuant to PSL Article 7. It would also authorize DEC to permit and regulate the operation of carbon sequestration reservoirs, including the drilling of wells, the injection and storage of captured carbon and the monitoring of captured carbon reservoirs. These authorizations would apply only to a municipally-owned electric generating facility that has submitted a complete application to DEC by December 31, 2010.

Finally, by authorizing the siting and permitting of a CCS demonstration project, this bill would ensure that the demonstration of CCS technology

is implemented in New York in a manner that is protective of public health and the environment.

Budget implications: This bill would have no significant fiscal impacts on the State.

Effective date: This bill would take effect immediately and apply only to a municipally-owned electric generating facility that has submitted a complete application to DEC by December 31, 2010.