“We don’t want the environmentalists to see what we’re really up to.” That is what Theo Pahos, a managing partner for a firm whose clients include Calpine Corp. and the California Independent Petroleum Association, told Capital & Main in an unusually frank phone interview.
Pahos was talking about plans by lobbyists to change a bill meant to regulate the industry’s handling of carbon dioxide, a potent greenhouse gas, in a way that would mislead lawmakers and environmentalists.
“To be blunt,” he added, “we are misadvertising what the bill does, what our intention is.”
SB 438 purports to clarify the state’s rules governing carbon dioxide (CO2) capture and storage, which prohibit companies from injecting fluid-gaseous CO2 into the ground in order to produce more oil. The bill says companies will not be penalized for inadvertently pulling up oil while burying CO2.
But this is a red herring, Pahos said. He said he and other lobbyists intend to push for changing the bill later in the legislative session, so that it instead speeds up approvals for CO2 pipelines by handing greater authority to state regulators who are under pressure to meet emissions reductions goals within the decade.
Yet that could undermine a key compromise in California’s current carbon capture law while exposing communities to little-understood hazards from CO2 pipeline leaks, warn environmental and climate groups. In one recent event, a CO2 pipeline rupture sent dozens to the hospital in rural Mississippi.
Companies have known for many years how to capture CO2 from industrial processes to prevent its release into the atmosphere, but governments are now offering generous incentives to scale up the practice as the climate crisis has intensified.
The bill’s author, Sen. Anna Caballero (D-Merced), was unaware of Pahos’ plan, according to her chief of staff, Luis Quinonez.
Caballero “does not respond kindly to this kind of heavy-handed pressure,” Quinonez said.
Oil Drilling Technique Re-Branded as a Climate Solution
Using highly pressurized CO2 to stimulate oil production in depleted fields has been around for decades and is known as enhanced oil recovery. But more recently, CO2 capture and burial has been touted as a climate solution. The industry, in particular, has led efforts to re-brand this old drilling technique as a 21st century answer to the climate crisis.
In some situations, such as at a gas power plant in Kern County, companies may be able to capture CO2 and bury it in a nearby oil patch. But others will have to transport it hundreds of miles, from refineries and gas plants in Los Angeles and the Bay Area to declining oil and gas fields in the Central Valley.
Changing the approval process would undo a moratorium on intrastate CO2 pipelines, which currently can’t be approved until federal regulators finalize safety laws. The industry believes this conflicts with company plans to start doing CO2 capture quickly. And a state agency warned this slower pace puts California at risk of missing its climate targets.
“We put [the decoy language] so we could move it through the legislative process, and when we get it to the [Assembly Natural Resources Committee], we’re gonna switch out the language for the language we really want,” Pahos explained.
The revelation sets up a showdown over how California rolls out CO2 capture.
“State rulemaking has to, at best, go in tandem with the federal rulemaking, and we shouldn’t be rushing it because we need time for research [on the risks] to catch up,” said Dan Ress, a staff attorney at The Center on Race, Poverty, and the Environment.
Communities Face CO2 Pipeline Risks
California’s law on CO2 capture and storage, enacted this year, directs the state to sequester 20 million metric tons by 2030.
The law was the result of significant negotiation. Former air regulators who now lobby for oil and gas companies have pushed hard for CO2 capture. Climate and environmental justice groups have argued its merits as a climate solution are limited, noting that the technology can prolong toxic fossil fuel infrastructure while failing to sequester CO2 despite billions in investments.
Technology proponents point out that facilities with the ability to capture 244 million metric tons of CO2 are in development worldwide. That’s less than 0.01% of the world’s annual emissions, but the U.N. says it could be substantially more by 2050.
CO2 pipelines also present risks for communities that will be sited near them. NPR interviewed people who were sickened by a large CO2 leak along a road in Satartia, Mississippi, in 2020. The odorless gas deprived people of oxygen and starved combustion-powered engines, stalling cars and hampering emergency response. Forty-five people were hospitalized.
“I feel like [the state] is being cavalier about the risks and communities they intend to expose us to,” said Ress.
The Pipeline and Hazardous Materials Safety Administration, a federal agency, won’t finalize pipeline safety rules for at least two more years, according to the California Natural Resources Agency.
Kevin Morrison, an analyst at the Institute for Energy Economics and Financial Analysis based in Australia, said the industry-led rush for CO2 capture is overwhelming governments that aren’t able to fully account for concerns.
“The laws aren’t mature enough,” Morrison said. “Often, the politicians can be blinded by the lobbying of powerful industries.”
Industry’s Use of “Gut and Amend” is “Abuse,” Clean Air Rep Says
The process of completely rewriting a bill later in the legislative session, known as “gut and amend,” isn’t always done for deceptive reasons.
Last year, Gov. Gavin Newsom and allies in the legislature used gut and amend to recast several bills as part of the administration’s climate package. This is how a law to block oil wells near homes was introduced and eventually passed..
But it gets dicey when legislation is introduced with full awareness that it’s a placeholder for something else. If a bill looks suspicious, rules committees in the Senate or the Assembly could block it.
“It has to look like you’re really doing something, so skilled lobbyists have to come up with something,” Pahos explained.
SB 438 sailed through the Senate, earning votes from climate stalwarts. But experts who spoke with Capital & Main said the bill’s filler language, which claims to shield companies from penalties for “inadvertently” pulling up oil during CO2 burial, didn’t make geological sense.
It’s unwise to inject CO2 in the ground without pulling up oil or gas or brine, because this messes with “mass balance,” or the pressure of the underground shelf, Steve Melzer, a geological engineer who has consulted for oil companies and the U.S. Department of Energy said. Put too much in without taking anything out, and the result could be earthquakes.
“If you’re going to put a mass [of carbon] in a reservoir, you will raise pressures if you’re not pulling something out,” said Melzer.
Recent reforms have softened egregious uses of gut and amend, but lobbyists and lawmakers still do it often. The industry’s tactics in this case represent “an abuse,” said Bill Magavern, policy director at the Coalition for Clean Air.
“It concerns me when someone’s trying to go around that public process because they know it wouldn’t withstand sunshine and scrutiny,” Magavern said.
