Speaking of hypothetical versus actual climate risk … I’m not shy about my cynicism of underground injection of carbon (carbon capture and storage, or CCS). My concerns are borne out of having direct experience with industrial wells used for hazardous waste injection, produced water disposal, groundwater monitoring and oil and gas exploration/production. The things is, they – and the ancillary equipment required for operating the wells – break down or fail in various ways. CCS is, unfortunately, a solution directly supported by the Inflation Reduction Act’s climate-oriented industry subsidies and tax credits – and therefore is becoming increasingly popular.
Last June, I wrote about EPA’s first Notice of Violation for a CCS operation, issued against Archer-Daniels-Midland (ADM) in Decatur, Macon County, Illinois. More information is coming out about the situation, as reported by Northern Public Radio:
“In September, the public learned of a leak at ADM’s Decatur site after it was reported by E&E News, which reports on energy and environmental issues. Additional testing mandated by the EPA turned up a second leak later that month. The EPA has confirmed these leaks posed no threat to water sources. Still, they raise concerns about whether more leaks are likely, whether the public has any right to know when leaks occur and if CCS technology is really a viable climate solution.
… the infractions weren’t made public until Sept. 13, when E&E News first reported the leak. Two weeks later, ADM notified the EPA that it had discovered a second suspected leak. Only then did they temporarily pause CO2 injections into the well.”
The article also raises questions about the timing of, and ambiguous legal obligations for, reporting the leaks.
Leaks can happen with either aboveground equipment or from a well blowout resulting in CO2 being pushed back up the wellbore into the atmosphere – creating a “dome of death.” Any company involved in or considering underground injection of CO2 should learn about the 1986 Lake Nyos incident in Cameroon that killed 1,700 people and 3,000 domestic animals. Yes, Lake Nyos was a natural occurrence, but the point is the effect of a massive acute CO2 emissions event that could happen with a catastrophic failure of a CO2 pipeline or CCS operation.
ESG leaders, staff and advisors: If CCS is part of your GHG management program, expect failures of equipment – creating risk to your company. Heck, they may have already happened. You face a few complexities when it comes to how – how or if – you report those in SEC filings. As a 10-K Item 1A Risk Factor, you must evaluate the question of hypothetical versus actual past events concerning CCS operations. Working closely with experienced securities counsel is critical to address the matter properly.
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