In a carbon management regime designed to mitigate climate change, a value will be put on not emitting carbon into the atmosphere. Those capable of storing carbon will compete for the opportunity to do so, creating a CO2 storage market. Low-cost storage will be available at only a few facilities in only a few locations; storage at higher cost will be available at many more locations. Owners of low-cost storage capacity will be at a commercial advantage. As the demand for storage grows, the clearing price for storage may climb as a result of greater demand or fall as providers accumulate knowledge that translates into lower costs.
The lowest-cost storage is likely to be at EOR sites. Today, the oil industry pays about $10 to $15/t CO2 (roughly, $40 to $60/t C) for CO2 delivered to the EOR site (Kuuskraa and Pekot, 2003). In the United States in 2001, about 10 Mt C/yr were injected for EOR, enhancing domestic oil production by 180,000 barrels per day (bbl/d) (Hill, 2003), or about 2 barrels of oil produced for each metric ton of CO2 injected.
The next-lowest-cost storage is likely to be at depleted oil and gas fields, where reservoir geology is already known, wells suitable for injection of CO2 may have already been drilled, relevant permits may already exist, and subsurface rights may be well defined.
Those purchasing CO2 storage will take into account the proximity and capacity of the storage site. Buyers and sellers will allocate costs for site characterization, leakage monitoring, and liability insurance.
Storage sites will differ in many respects. The value of a storage site may increase when the site can be demonstrated with high probability to be effective for a long time, when the loss of storage integrity can be easily detected, and when damage from the loss of storage integrity is small. One can imagine storage sites rated much as bonds are rated, with lower-quality storage being valued less.
The supplier of carbon storage may be able to gain further revenue by providing additional services—for example, offering co-storage of carbon and sulfur, relieving the purchaser of storage of aboveground sulfur management costs.19
A CO2 storage regime can emerge only if public acceptance of the concept is widespread. Among the critical issues are these (Socolow, 2003):
Trust. Public trust is critical. To what extent will openness, lack of bias, fairness, and vigilance be achieved?
Goals. What constitutes success? Will society be relaxed about the loss of 1 percent of the stored CO2 each year through slow leaks? What about the loss of 1 percent per year from 10 percent of the sites?
Permissiveness. The level of leakage allowed during the first few decades of storage can probably be greater than that allowed in later decades, not only because experience will permit improvements, but also because the total quantities stored will increase over time. How can the permitting process be made sufficiently permissive?
Reversibility. Should the storage system be one that future generations can undo?
Storage integrity at individual sites. Concentrations of more than a few percent of CO2 in air are dangerous, so bulk releases of CO2 must be guarded against. Under some conditions, safety may be an issue, as evidenced by the lakes in Africa that erupted with CO2, asphyxiating many local residents.20 Upward migration of injected CO2 could contaminate hydrocarbon reservoirs or surface drinking water supplies, so certain slow releases may also be of concern. How should such risks be addressed?
Property rights to storage space. Are ownership rights belowground clear? What about below the ocean floor and in the ocean? The market in carbon storage will generate requirements for well-defined property rights, attribution of ownership, liability rules, insurance, monitoring, and, in some cases, active intervention to limit damage.
Net carbon. It will be important to quantify, for various technologies and energy supply systems, the additional carbon that will be brought out of the ground to provide the energy necessary to capture and store the CO2.
Monitoring. Can infrastructure and storage be designed in ways that facilitate attribution and monitoring (e.g., by adding tracers to the injected gas)? What techniques are available to respond constructively to evidence that stored materials are not behaving as expected? How can long-term monitoring be institutionalized?
Precedents. There are two obvious precedents in the United States for the storage of CO2: underground injection of hazardous waste and nuclear waste storage. Both offer lessons to the designers of CO2 storage. The underground injection of hazardous wastes is governed by an Environmental Protection Agency (EPA)-regulated permitting process based on detailed modeling intended to prove that nothing serious will happen belowground after injection, followed by little, if any, post-injection monitoring and verification of what is actually happening belowground. The program to store nuclear waste began with promises of leakproof, very
Today, in Alberta, Canada, H2S and CO2 are routinely removed from natural gas between wellhead and transmission pipeline and then co-stored belowground.
For example, in 1986, Lake Nyos in Cameroon erupted in a massive outgassing of CO2, killing 1800 people nearby. The cold bottom water of the lake, saturated with CO2 seeping up from the earth below, became unstable. The CO2-laden air, heavier than ordinary air, filled nearby valleys. Further information is available online at http://helios.physics.uoguelph.ca/summer/scor/articles/scor158.htm (accessed December 11, 2003) and http://perso.wanadoo.fr/mhalb/nyos/index.htm (accessed December 11, 2003).