A Market for Sequestration

Global carbon trading was worth more than $10 billion last year, according to a May 2006 report by the World Bank and the International Emissions Trading Association. Some experts predict the carbon market might grow to as much as $30 billion annually by year’s end.

Most of the world’s carbon trading happens in Europe. But in the absence of federal regulations on carbon emissions in the U.S., the Chicago Climate Exchange has already been trading voluntary carbon reductions (called offsets) since 2003. Participants attempt to cut their greenhouse gas emissions by 6 percent from an average of their 1998 to 2001 levels by 2010. Over 200 companies, including AEP, Motorola, Dupont, Dow Corning and Ford, as well as universities and local and state governments, currently participate. If a participant exceeds its targets, it can sell its offsets to participants who fall short.

Carbon reductions come from a wide range of projects including planting trees, capturing methane from dumps for use as fuel and replacing stoves in China and India with more efficient models. So far, carbon sequestration doesn’t make up a large proportion of traded reductions in carbon emissions.

In the short term, Ian Duncan, associate director of the Bureau of Economic Geology, believes a technique called Enhanced Oil Recovery (EOR) might instead lay the groundwork for more widespread carbon sequestration in Texas. EOR is an oil industry technique whereby carbon dioxide is pumped underground to force more oil or gas out of the ground. EOR is typically done using natural CO2 from the ground, missing out on the advantages of reducing emissions of manmade CO2.

“We’re investigating the feasibility and economics of building a network of pipelines in the Gulf Coast region to link carbon sources to EOR sites,” he said. “That infrastructure could later be used for carbon sequestration.”

Duncan envisions the Texas state government providing low interest loans and tax incentives to private companies to encourage them to build the infrastructure. “The state could actually make money because oil production in Texas is declining,” he said. “You could slow it through increased EOR.”

For more information about research on carbon sequestration, visit the article: Scientists deepen confidence in technique to reduce greenhouse gas emissions