Capturing carbon as CO2 is one thing, but putting it in permanent storage adds an entirely new dimension. Nature has a demonstrated capacity to permanently store carbon.
CO2 storage domes that are millions of years old have been tapped as gas sources for Enhanced Oil Recovery (EOR). We have minimal experience creating, and possibly administrating, new large scale storage domains. Addressing these issues will require development of complex frameworks to administer the regulation and monitoring injection and long-term storage of CO2 in various reservoirs. Some critical areas that need to be addressed (and for brevity this has been limited to CO2 specific):
1. Monitoring of CO2 reservoirs. Accounting for CO2 stored in subterranean and possibly even above ground reservoirs (soils, agriculture, etc.). How are losses accounted for, and how to quantify changes that might occur due to man-made actions (drilling into a reservoir) or released from geological storage through seismic events?
2. Custody transfer. Where CO2 is recovered and shipped for long-term storage, what rules will be in place for handling the large volumes that would be transferred? Does the original generator retain any residual risk if a problem develops later?
3. Rights of ownership above ground and below ground. Is CO2 stored underground a resource, or a waste? Does it represent a risk, or benefit? CO2 is used in West Texas to recover oil from depleted oil fields. If stored in an aquifer, does it have any comparable value? If it diffuses into other reservoirs, is it producing value somewhere else, or undefined risk?
4. Insurance. Will private insurers fill the gap, or will it require specialized insurance instruments or funding? Is some sort of specialized legal standard required? Does it share the usual definition as "property," or is it really something else. If it really is property, with defined qualities and risks, it should be insurable.
5. Long-term storage risks. What happens in the event of a failure? Who should pay, and how are the effects accounted for? Should credits that were once transferred to a source in exchange for CO2 captured be revoked if that CO2 is eventually lost from storage? In light of recent financial upheavals, developing and accounting for the value of carbon (as CO2) must be much more carefully thought out.
6. Valuation. Finding a way to value carbon dioxide has not been particularly easy. Developing a regulated trading system may provide part of the answer, but successfully benchmarking a price for CO2 will require extensive monitoring. And protocols to make this happen are still being developed. As a starting point, one could link the value of carbon as CO2 directly to the value of the carbon in the fuel. Successfully functioning fuel markets already exist.
Property rights, insurance, and valuation are probably the most vexing. CO2 may be property in one sense, and at the same time, a liability. A failure to properly and clearly define its legal status could make it next to impossible for insurers to enter the markets. The financial dislocations that erupted in 2008 provide some hint of the speed and scale that markets react when exposed to uncertain and undefined risks. CO2 sequestration will become a herculean undertaking and the stakes in sequestration's success or failure are huge, making quantification a major challenge in its own right. The desired length of sequestration is probably longer than the lifespan of any institutions that we know of that could either monitor or regulate its storage. Our strategy should be one that allows for alternative solutions in parallel, such as renewables and energy efficiency, technologies that function today and can produce measureable results much more quickly.
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