EPA Proposes Giving Texas Authority to Oversee CO2 Injection Permits

WASHINGTON, June 9 (Reuters) - The U.S. Environmental Protection Agency on Monday proposed approving Texas' application to oversee its own permitting for projects to inject carbon dioxide underground, a move long sought by that state's regulators and oil and gas companies with projects in the wings.

EPA Administrator Lee Zeldin said Texas is best positioned to protect its drinking water from contamination while enabling lucrative CO2 injection projects, also known as carbon capture and storage (CCS) projects to mitigate climate change, to proceed.

Carbon injection will enable the permanent storage of CO2 emissions from power plants and industrial facilities deep underground, a way some companies seek to offset the emissions from their operations.

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"EPA is taking a key step to support cooperative federalism by proposing to approve Texas to permit Class VI [CO2 injection] wells in the state," Zeldin said in a statement.

The planned approval comes amid concerns by some landowners and environmental groups that pumping CO2 into the ground could harm their groundwater and exacerbate earthquakes and old oil-well blowouts already happening in the Permian Basin as Texas struggles to manage wastewater disposal, for which it already has oversight authority.

Federal tax credits to incentivize carbon sequestration projects that were expanded under the former Biden administration's Inflation Reduction Act legislation have been left largely intact, even as House Republicans voted to gut or defang other similar subsidies for clean energy and electric vehicles.

The Trump administration, Republicans and some oil companies, like Occidental, have maintained support for CCS technology, even as President Donald Trump has sought to roll back most regulations aimed at reducing CO2 and other greenhouse gas emissions.

Oil companies that have expertise in deep underground drilling see an opportunity to expand their businesses by branching out to carbon sequestration. Some companies with industrial projects that still have voluntary emission reduction targets may seek to bury their CO2 emissions to reduce their carbon footprint.

OPEC plus countries pumped 26.75 million barrels of oil a day in May according to a Reuters survey as they reverse cuts that have been limiting output.

"Texas is a leader in energy production, and part of that is pioneering carbon capture and storage practices," said Texas Republican Senator John Cornyn.