Policy implications of Monetized Leakage Risk from Geologic CO2 Storage Reservoirs

Geological storage of carbon dioxide (CO2) as a part of the CO2 capture and storage (CCS) process has a large potential to mitigate greenhouse gas emissions, but its deployment will require accurate assessment of both the possibility and cost of leakage. In this study, we took the Michigan sedimentary basin as an example to investigate the monetized risks associated with leakage, using the Risk Interference of Subsurface CO2 Storage (RISCS) model. The monetized leakage risks derived from the RISCS model were then used to modify existing cost curves in GCAM (Global Change Assessment Model). With the modified cost curves, the model provided policy-relevant results to help inform the potential role of CCS in future energy systems when carbon mitigation targets and incentives are in place. The results showed that leakage risks from geologic storage reservoirs can reduce the deployment of CCS as much as 60%. The extent of this impact is sensitive to the permeability of potential leakage pathways, the regulations governing leakage interferences with other subsurface activities, and the stringency of climate policies. With low well leakage permeability, the costs of leakage will be manageable, and under more stringent carbon mitigation policies such as a high carbon tax, higher leakage risks can be afforded and incorporating leakage risks will have a smaller impact on CCS deployment. Our results also show that if the leakage risks were accounted for by charging a fixed premium - similar to how the risk of nuclear waste disposal is treated - the projected scale of CCS deployment in the energy mix is less affected. (C) 2014 The Authors. Published by Elsevier Ltd.