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Infrastructure bill could fund carbon hub in Kern

Elk Hills Power LLC (copy)

Carbon dioxide would be removed from the emissions stream of the Elk Hills Power Plant under a proposal by facility owner California Resources Corp. The idea is to store that CO2 permanently underground while also benefiting the company's local oil production.

Kern County could become one of four federally funded technological hubs for removing carbon dioxide from the atmosphere and burying it permanently underground if the House approves President Joe Biden's $1 trillion infrastructure plan.

Legislation passed by the U.S. Senate with bipartisan support Tuesday would spend $3.5 billion on carbon capture and sequestration, or CCS, a technology for fighting climate change that has already been proposed locally and partially funded by the federal government.

No decisions have been made on which parts of the country would receive the bill's money, or where the four hubs might be located. But Kern has previously been recognized as a good place for CCS investment, including by federal officials.

Kern is seen as having an advantage partly because of its geology and local expertise, and partly because of California's generous support for fighting climate change as compared with incentives available in other states. Also, the bill prioritizes regions with oil production and in need of economic development.

Federal CCS investment in Kern County would advance priorities identified by the local economic-development collaboration known as B3K. Its contributors have identified the technology as a potential generator of good jobs in the future now that the traditional employment engines of oil and agriculture face regulatory and other challenges.

The historically ambitious infrastructure legislation would additionally fund a variety of clean energy projects, including hydrogen-energy development and work on conventional infrastructure like roads and bridges.

POLITICAL CONSIDERATIONS

The county's congressional delegation has not embraced the bill but neither has it ruled it out.

The office of Rep. David Valadao, R-Hanford, reserved comment, saying he is actively studying the legislation. The House minority leader, Rep. Kevin McCarthy, R-Bakersfield, said he is doing the same. But he criticized the Biden administration's approach to taxpayer investment in national infrastructure.

“With inflation on the rise due to the Biden administration’s flagrant overspending, it’s important that we put forth policies that are paid for — and this bill does not accomplish that," McCarthy said in a statement.

“This legislation explicitly blocks the Shasta Reservoir Enlargement Project — a project that would improve California’s drought resiliency — from receiving funding. It would also only provide $110 billion for repairing our nation’s roads and bridges while not prioritizing permit reforms, likely delaying future construction projects," he continued. "I will continue reviewing the bill before it reaches the House Floor.”

Any local applications for funding under the bill would compete against projects in other states such as Texas, which already has carbon dioxide pipelines and other CCS infrastructure in place, more so than California.

LOCAL ADVANTAGES

Part of what makes Kern attractive, said professor David Hart at George Mason University, a close observer of the CCS industry and Biden's bill, is the county's industrial experience and state financial support in the form of California's Low Carbon Fuel Standard.

"I certainly think it's possible" Kern will receive money under the bill if it passes, Hart said. "It sounds like you've got the expertise and the motivation and maybe some companies that have kind of a jump in this."

Local geology works in the county's favor. A report released in January 2020 by the Lawrence Livermore National Laboratory concluded the state can achieve its goal of carbon neutrality by burying or offsetting 125 megatons per year of carbon dioxide, by means including CCS. It pointed to a significant role for Kern.

Kern's first experience with a CCS proposal was a coal-fired fertilizer and power plant that would have aided oil production in western Kern. Hydrogen Energy California, as it was known, received a $408 million commitment of federal taxpayer money. The project fizzled five years ago.

The new bill has the support of Santa Clarita-based California Resources Corp., the local oil producer behind two publicly disclosed CCS projects in Kern, one of which would include utilization of carbon dioxide. It called carbon capture technology a "real solution" for helping the state decarbonize and meet its emissions reduction goals under the Paris Climate Accord.

EXISTING PLANS

CRC has proposed CalCapture, which would remove carbon dioxide from the smokestack of its 550-megawatt Elk Hills Power Plant then inject it into underground oil formations to enhance the company's nearby oil extraction.

In late 2019, the U.S. Department of Energy agreed to pay for initial engineering work. The project is planned to generate nearly 3,500 jobs statewide and more than $200 million in taxes during its three-year construction period, plus 150 permanent jobs and $200 million in taxes over 20 years.

Separately, the company announced this month it has the capacity to store up to 1 billion metric tons of carbon dioxide across the state using CCS technology. It has submitted permits for two initial projects in Elk Hills with 40 million metric tons of storage. Together, they would accept more than 1 million metric tons of carbon dioxide per year, just burying it in this case rather than also putting it to use, as in the power plant project.

"Carbon capture projects can have immediate and long-lasting environmental, economic and employment benefits to nearby communities," CRC said by email. "We hope the infrastructure bill helps industry adopt carbon capture technologies to make infrastructure more resilient, more environmentally friendly and more cost effective to benefit Kern County and the Golden State."

GRADUAL INDEPENDENCE

Hart, the George Mason University professor, said CCS projects are high-dollar, high-risk ventures that typically receive major funding support from national governments. Eventually their taxpayer subsidies are phased out and the projects are intended to make a profit.

They tend to create good jobs, but most of the associated employment happens in construction stages, he said.

It's likely the Department of Energy would give special financial support to regions impacted by government efforts to cut fossil fuel projection, Hart said.

"The (oil and gas) resources that were developed in places like Kern County were valued and have helped create communities, create the livelihoods," he said.

"I do believe the idea that they're somehow to blame (for climate change) is wrong," he continued. "The goal should be to bring everyone into the new energy economy."

ECONOMIC BENEFITS

Nick Ortiz, CEO of the Greater Bakersfield Chamber of Commerce and a central organizer in the B3K initiative, said by email that carbon management will be critical to helping California meet its climate goals "while ensuring that industries like oil and gas can continue to provide safe, reliable and affordable energy."

"In Kern County, carbon management isn’t just a potential compliance tool," he wrote. "We have the potential to become a global knowledge center for demonstration and innovation of carbon management technologies."

"We’ve identified in the B3K Prosperity initiative that carbon management is a significant economic development opportunity for the region," he continued. "Realizing that opportunity will take capital and concerted effort by the private sector, regulatory pathways and funding from the public sector, and research and development by our educational institutions."