CCUS-EOR State Incentive Roadmap

Transcription

1 CCUS-EOR State Incentive Roadmap Mike Nasi, General Counsel Contact Information: (512) ;

2 Roadmap for Regional CCUS Incentives Little things are big Yogi Berra A. Local Tax Exemptions/Abatements B. State Tax Exemptions and Credits C. Environmental Regulatory Certainty D. Oil & Gas Regulatory Certainty E. Utility Regulatory Certainty 2

3 Local Property Tax Abatements Clarify that CCUS-EOR network qualifies as property tax exempt under existing programs For non-exempt components, abate school property taxes, as well as other property taxes Significant economic value here (e.g., $80-300MM+ per plant projected in Texas) ALL locally-controlled and relatively state budget-proof 3

4 State Tax Exemptions & Credits - Sales Tax Exemption Clarify sales tax-exempt status of carbon capture, transportation & injection equipment relating to anthropogenic emission source Gross Receipts Tax Exemption/Redirection Permanent exemption from gross receipts & similar taxes Redirection of Gross Receipts/Similar Taxes on Existing Fleet Fertile ground for developing funds for grants/loans/bonds Note: Tx utilities currently pay >$320 Million/ year for this tax Corporate Income / Franchise Tax Credit Programs New & retrofit projects meeting criteria Ensure it can be monetized (multi-year & assignable) 4

5 Severance Tax for oil recovered using CO 2 captured from a manmade source 75% tax exemption for oil recovered using EOR through the use of captured man-made CO 2 Ensure that duration meets project needs (TX 30 yrs) Fiscally-neutral, but significant incentive No Oil Revenue Oil Revenue State Economy or Severance Tax Revenue Manmade CO 2 Recycled CO2 75% 25% State Treasury Severance Tax Exemption Revenue CO 2 Miscible Zone Oil Bank Oil Recovery Enhanced Oil Recovery (EOR) 5 Stranded Oil (Needs EOR)

6 Regulatory Incentives - Environmental Time-Certain Permitting Cap time & refine public participation process BACT/LAER/NSPS Clarifications Subsidized projects do not automatically set BACT, LAER, or NSPS achievability Regulatory treatment of CO 2 as a product and not a waste or pollutant when sold Carve out and passage of parallel state air acts Water & waste statutory exclusions 6

7 Oil & Gas Regulatory Incentives Class 2 show of strength across regions could go a long way to motivating EPA to recognize the wisdom of acknowledging sequestration credit under a Class 2 regime Pipeline regulation needs to be tended to (e.g., clarification of common carrier) Majority rights protection still on horizon as unfinished business in some states (Texas) 7

8 Utility Regulatory Incentives Regulated Market Ideas Deemed prudence Early cost recovery from FEED forward Clear economic tests Deregulated Market Ideas Capacity payments Clean energy portfolio standards? Dispatch priority? 8

9 Telling the CCUS Story... Regionally Diversity Means Security Domestic Energy Double Play Jobs & Economic Impact No Megawatts to Spare (if applicable) Empower States to Hedge Against Federal Regulatory Uncertainty Low Carbon Power & Oil (if applicable) 9

10 Business Case for Gulf Coast CCUS Gulf Coast EOR Opportunities are Significant Gulf Coast Electric Power Demand is Growing Proximity to Gulf & Other Industries Road Map Is in Place and Could be Expanded 10

11 Population, Industry, & Climate Make the Texas Power Market... Like a Whole Other Country 3,724 3, The Texas power market is the largest in the US (40% larger than California) and the 11 th largest in the world USA China Japan Russia India Germany Canada France Brazil South Texas Electricity consumption 2009; Million MWh Korea UK Italy Spain

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20 QUESTIONS? State CCUS-EOR Incentive Roadmap Mike Nasi, General Counsel Contact Information: (512) ;