Texas Has Taken Over Issuing Permits to Store Carbon Underground. Here’s What to Know

The move of authority to the Texas Railroad Commission from the federal government now makes it easier for energy companies to apply for permits to store carbon underground.

ODESSA — The Texas Railroad Commission spent two years working to secure the authority to issue the permits energy companies need to inject and store carbon dioxide underground, a power previously held by the federal government.

Last November, the Environmental Protection Agency approved that request, a development experts said will make it easier for energy companies to apply for such permits, called Class VI.

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Both Democratic and Republican presidential administrations have approved generous tax incentives to energy companies to encourage carbon capture. While the effectiveness of the practice and benefits to the environment have been debated for years, the oil and gas industry has embraced it as a climate-friendly solution to pollution driven by industrial-scale fossil fuel production.

But proponents of carbon capture technology argued that the federal government took too long to approve permits.

The transfer of permitting to Texas isn't likely to mean a rush of new projects, experts said, mainly because there hasn't been a recent significant expansion of government incentives for direct air capture projects that trap carbon dioxide emissions, incinerate them and inject them deep underground.

Here's what to know about Class VI permits in Texas:

What are Class VI permits?

Class VI authorizes companies to capture, inject and permanently store carbon dioxide (CO2) underground.

Carbon capture is a technology designed decades ago to reduce carbon dioxide emissions from large industrial sources such as power plants, steel manufacturing, cement production, and other industrial facilities that emit greenhouse gases. The primary intent of the technology is to prevent carbon dioxide from entering the atmosphere and contributing to climate change.

Through direct air capture, which is a specialized and expensive practice, CO2 is separated from other gases through a chemical process. It is then compressed and transported, usually through pipelines, to a storage location, then injected into deep underground rock formations where it can be permanently stored.

Who can issue Class VI permits?

Unless a state applies to take over, only federal regulators at the Environmental Protection Agency can issue Class VI permits. The Railroad Commission applied in December 2022 and was approved by the EPA in October, making Texas the sixth state to be granted that authority, known as primacy.

"In order to be granted primacy, a state program must meet federal requirements for the protection of underground sources of drinking water. The RRC has a long history of regulating various classes of injection wells, and is committed to strong oversight while protecting underground sources of drinking water," a spokesperson for the commission said in a statement.

How is the Texas Railroad Commission's office set up?

To be granted permitting authority, states must prove they can enforce the federal Safe Drinking Water Act while making filing paperwork easier for companies. The assumption is that Texas companies will be more familiar with the state commission's processes.

The Railroad Commission has staffed its Class VI office with four technical reviewers, three engineering specialists and a geoscientist. To fund the newly created office, the commission is using a five-year, $1.9 million federal grant in addition to state funds. The state charges companies a $50,000 application fee, which goes toward the commission's budget — amending an existing permit costs $25,000. And until the facility is closed, operators must pay an annual fee of $50,000 for each year they do not inject.

Companies must demonstrate that they are financially capable of covering the cost of their injection wells over their lifetimes.

How many companies have applied?

The commission has received 18 applications, the earliest one filed in 2022 by Oxy Low Carbon Ventures, LLC, which the commission approved in tandem with the EPA in October. The facility, which Oxy plans to build about 20 miles southwest of Odessa, is designed to store up to 8.5 million metric tons of carbon over 12 years.