The Texas Railroad Commission has recently gained a significant authority that could reshape the landscape of carbon dioxide storage in the state. After two years of effort, the Commission secured the ability to issue permits for the injection and storage of carbon dioxide underground, a power that was previously under the purview of the federal government.
In November 2022, the Environmental Protection Agency (EPA) approved this request, a move that experts believe will streamline the process for energy companies to apply for Class VI permits. These permits are critical to the practice of carbon capture and storage (CCS), a technology that has garnered both support and scrutiny over its effectiveness.
Historically, both Democratic and Republican administrations have incentivized carbon capture through generous tax incentives aimed at energy companies. Despite ongoing debates about the environmental benefits of CCS, the oil and gas industry has embraced it as a potential solution to mitigate pollution from fossil fuel production.
Advocates of carbon capture technology have long argued that the federal government’s approval process was sluggish. Nevertheless, experts caution that the transfer of permitting authority to Texas may not lead to a sudden influx of new projects due to a lack of recent expansions in government incentives for direct air capture technologies.
What are Class VI permits?
Class VI permits allow companies to capture, inject, and permanently store carbon dioxide (CO2) underground. This technology has been designed to target emissions from large industrial sources, including power plants and manufacturing facilities, with the specific goal of preventing CO2 from entering the atmosphere and exacerbating climate change.
The process of direct air capture, while specialized and costly, involves separating CO2 from other gases, compressing it, and transporting it—often through pipelines—to designated storage sites where it can be injected into deep underground rock formations for permanent storage.
Who can issue Class VI permits?
Before states can issue Class VI permits, they must apply for and receive approval from federal regulators at the EPA. Texas officially applied for this authority in December 2022, and it was granted in October 2023, making Texas the sixth state to gain this capability, commonly referred to as “primacy.”
To be awarded primacy, a state program must adhere to federal regulations designed to protect underground sources of drinking water. The Texas Railroad Commission has a robust history of regulating various classes of injection wells, ensuring strong oversight and protection of these vital water resources.
How is the Texas Railroad Commission’s office set up?
In order to secure permitting authority, states must demonstrate their capability to enforce the federal Safe Drinking Water Act while simplifying the application process for companies. The expectation is that Texas-based companies will be more familiar with the Texas Railroad Commission’s operating procedures.
The Railroad Commission has established a dedicated Class VI office, staffed with technical reviewers, engineering specialists, and a geoscientist. Funding for this office comes from a combination of a five-year, $1.9 million federal grant and state resources. The commission charges a $50,000 application fee, which contributes to its operational budget, and also requires an annual fee of $50,000 for each year that facilities do not inject CO2.
How many companies have applied?
To date, the Texas Railroad Commission has received 18 applications for Class VI permits. One of the earliest applications came from Oxy Low Carbon Ventures, LLC, which was approved in conjunction with the EPA in October 2023. Oxy plans to construct a facility approximately 20 miles southwest of Odessa, with the capacity to store up to 8.5 million metric tons of carbon dioxide over a 12-year period.
