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Policies Regarding CMM Recovery and Utilization

This workshop outlines the policies that support coal mine methane (CMM) recovery and utilization in different countries, including Australia, the US, and China.

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Policies Regarding CMM Recovery and Utilization

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  1. Policies Regarding CMM Recovery and Utilization Pamela M. Franklin U.S. Environmental Protection Agency April 7- 8, 2009 CMM Recovery and Utilization Workshop Chengdu, China

  2. Outline • Introduction • Policies that support CMM • Examples • Australia • US • China • Conclusions

  3. Methane is a Key Greenhouse Gas • 2nd most important GHG next to CO2 • A potent GHG with a global warming potential (GWP) of 23 (on 100 year scale) • Atmospheric lifetime of ~12 years

  4. Methane to Markets Partnership • International public-private partnership (established 2004) to reduce greenhouse gas emissions by increasing the capture and use of methane. • Coal mines, landfills, agriculture, oil & gas

  5. US EPA Coalbed Methane Outreach Program • Voluntary program since 1994 • Part of EPA’s Climate Change Division • Our mission • To promote the profitable recovery and use of coal mine methane by working cooperatively with coal companies and related industries • Domestic and international • Our focus • Greenhouse gas emission reduction opportunities: coal mine methane (CMM) rather than coalbed methane (CBM)

  6. Policies to support CMM recovery and utilization • Different roles for different governmental levels may be appropriate • Central (national) or state (province) • Inconsistent or conflicting state or local level regulations may be confusing and provide negative incentives

  7. Range of policies that can support CMM recovery and utilization • Regulatory requirements • To mitigate CMM emissions (e.g. oxidize or flare) • To recover and use CMM for energy • To use a certain technology • To meet a certain standard (“best practices”) • Include CMM under an emissions “cap” • Include CMM as a possible “offset” under an emissions trading program

  8. Range of policies (2) • Financial incentives: • Provide subsidies for CMM-generated power or natural gas • Provide tax breaks to producers or project developers • Provide price guarantees • E.g., CMM-generated electricity • Provide research and development funding • Support technology demonstration projects • Support development of infrastructure • E.g., natural gas pipelines or LNG facilities

  9. Clarity of ownership and regulatory policies • Ownership of coal seam gas must be clarified before, during, and after mining. Potential parties include: • Mine operator • Owner / lessee of coal estate • Owner / lessee of gas estate • Surface owner • Ownership of carbon emission reduction credits associated with CMM recovery and use must also be clarified and legally established. • Ventilation, flaring, and energy recovery of CMM may all be considered legally distinct activities. • Status of mining may affect legal status (operating or abandoned / closed mine).

  10. Australia

  11. Australia: role of central government • Signatory to Kyoto Protocol • Developing national Carbon Pollution Reduction Scheme (CPRS) • Fugitive emissions from coal mines may be covered • Support for research into low-carbon technologies, carbon capture & storage, Australian Coal Association Research Program • Greenhouse Gas Abatement Program - $43.47 million to support power generation using CMM at four project sites • Australian CMM Reduction Program: $15.9 million available to CMM project developers through grants starting 2008 • Bilateral work with China on CMM • Evaluation of technology to capture and use CMM • Feasibility study of generating electricity from Ventilation Air Methane • Technology demonstration (advanced gas capture techniques)

  12. Australia: legal framework • Each state has its own legal framework for regulating CMM / CBM capture and use, resource ownership, leases, and licensing. • Queensland: • Coal mining lease does not provide rights to coal seam gas. Mining and oil/gas leases can co-exist but royalties must be paid. • New South Wales: • Special lease arrangement needed to permit extraction of coal seam gas. CMM is considered a byproduct of coal mining. No provision for royalties on VAM or flared CMM. Pre-mining and post-mining drained CMM may not be vented, must be at least flared.

  13. United States of America

  14. USA: role of central government • Not a signatory to Kyoto Protocol • Federal legislation under consideration that may include CMM as potential offsets under a cap and trade program. • Central government funding: • US DOE funds research and development on carbon capture and sequestration, fossil energy • US EPA & US DOE co-funded technology demonstration of ventilation air methane project at a closed US mine • US EPA hosts voluntary Coalbed Methane Outreach Program (CMOP) • US EPA funds pre-feasibility and feasibility studies, development of technical and economic analyses, capacity building in US, China, and abroad through Methane to Markets Partnership

  15. USA: legal framework • On Federal lands (much of western US), federal government owns mineral leases. • Oil & gas estates are separate from coal estate • Currently, no clear policy for use, royalty on federal lands • On private lands, ownership of coal seam gas depends on laws of each state. • Several states have enacted legislation attempting to clarify ownership • Many disputes are resolved through legal challenges and negotiations.

  16. China

  17. China: role of central government • Signatory to Kyoto Protocol. • Hosts a number of Clean Development Mechanism CMM projects • National Development Reform Commission (NDRC) is responsible agency for approving CDM projects. • 11th Five Year Plan encourages CBM / CMM Development: national output to reach 10 billion cubic meters by 2010 • Price management for CMM transported via city pipelines (NDRC, April 2007) • Electricity from CMM to be given priority for the grid and a subsidized price (NDRC, April 2007) • Financial subsidies for onsite use, residential use, chemical feedstock (Ministry of Finance, April 2007)

  18. China: role of central government (2) Other national policies affecting CMM: • State Council (2006) requires CMM drainage at coal mines • Opinions on Speeding up CBM / CMM Extraction and Utilization • Ministry of Environmental Protection establishes emission standard for CBM / CMM (April 2008) • Prohibits emission of methane from CBM drainage systems • CMM drainage systems with > 30% methane concentration must use or flare the gas

  19. China: legal framework • Central government owns the rights to CMM. • CMM is considered an associated mineral of coal, so CMM rights are included with coal exploration and production. • For CDM projects, foreign ownership limited to 49%. • Central government requires fee of 2% of carbon credits.

  20. Conclusions • There are a broad range of government policies, regulations, and incentives that can be used to promote CMM projects • Countries with successful CMM and CBM industries have taken very different approaches – there is no one “right” way • Legal and regulatory frameworks, particularly with respect to ownership, are the most important (and often difficult) to assess

  21. Xie xie! Thank you! Pamela Franklin Franklin.pamela@epa.gov +1 202 343-9476 www.epa.gov/cmop www.methanetomarkets.org

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