Legislature(2023 - 2024)DAVIS 106
02/27/2023 06:00 PM House WAYS & MEANS
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Ocean Pasture Restoration | |
| Presentation(s): Carbon Capture/sequestration | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON WAYS AND MEANS
February 27, 2023
6:00 p.m.
MEMBERS PRESENT
Representative Ben Carpenter, Chair
Representative Jamie Allard
Representative Tom McKay
Representative Kevin McCabe
Representative Cathy Tilton
Representative Andrew Gray
Representative Cliff Groh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION(S): OCEAN PASTURE RESTORATION
- HEARD
PRESENTATION(S): CARBON CAPTURE/SEQUESTRATION
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
TED CROOKSTON, Vice President
OPR Alaska, Inc.
OPR World, Inc.
Kenai, Alaska
POSITION STATEMENT: Co-presented a PowerPoint on ocean pasture
restoration, titled "OPR Alaska, Inc."
RUSS GEORGE, CEO
OPR Alaska, Inc.
OPR World, Inc.
Kenai, Alaska
POSITION STATEMENT: Co-presented a PowerPoint on ocean pasture
restoration, titled "OPR Alaska Inc."
JOHN CROWTHER, Deputy Commissioner
Office of the Commissioner
Department of Natural Resources
Anchorage, Alaska
POSITION STATEMENT: Gave a PowerPoint presentation, titled
"Alaska's Carbon Management Opportunities."
ACTION NARRATIVE
6:00:25 PM
CHAIR BEN CARPENTER called the House Special Committee on Ways
and Means meeting to order at 6:00 p.m. Representatives Allard,
McKay, McCabe, Tilton and Carpenter were present at the call to
order. Representatives Groh and Gray arrived as the meeting was
in progress.
^PRESENTATION(S): Ocean Pasture Restoration
PRESENTATION(S): Ocean Pasture Restoration
6:01:13 PM
CHAIR CARPENTER announced that the first order of business would
be a presentation on ocean pasture restoration.
6:03:12 PM
TED CROOKSTON, Vice President, OPR Alaska, Inc., OPR World,
Inc., co-presented the PowerPoint presentation, titled "OPR
Alaska, Inc" [hardcopy included in the committee packet]. He
explained the presentation will lay out the steps needed for
ocean pasture restoration (OPR). This includes how the
legislature could define a public-private partnership between
OPR Alaska and the state, as well as supporting federal
legislation.
6:08:09 PM
RUSS GEORGE, CEO, OPR Alaska, Inc., OPR World, Inc., co-
presented the PowerPoint presentation, titled "OPR Alaska, Inc."
On slide 3, he shared that he has been doing eco-restoration
projects most of his life and was influenced by OPR's founder,
John Martin. He stated that Mr. Martin's assertion is global
warming could be resolved if plankton issues are addressed. He
pointed out that ORP has been proven to be safe and sustainable,
and the task now is to prove ORP can be economically successful.
Regarding the company's profits, he explained that it would not
own the salmon; however, it would own the carbon offsets. On
slide 4, he continued that the goal would be to capture 10
million to 100 million tons of carbon dioxide (CO2) from the
ocean and turn this into phytoplankton. He said the federal
government has made carbon capture an initiative and is seeking
technologies to be invented which can produce carbon offsets for
less than $100 a ton. He stated that two weeks ago the U.S.
Department of Energy (DoE) released a $45 million Advanced
Research Projects AgencyEnergy (ARPA-E) grant to develop
hardware technologies to measure carbon capture in the ocean.
He said the Paris Climate Accords directs that there should be
work to make "blue carbon," which is the process of growing
plant life in the ocean to store CO2.
6:12:48 PM
MR. GEORGE showed a pie chart on slide 5 which points out the
location of carbon on earth, with 94 percent in the oceans. He
presented a map on slide 6 of the potential Alaska ocean pasture
regions, which could grow to be about 30,000 to 50,000 square
kilometers. He moved to slide 7 and explained that OPR is a
nature-based technology which has been proven to restore fish.
He stated that OPR is derived from 50 years of ocean science and
can deliver large volumes of high-value blue carbon. He moved
to slide 8 and pointed out that in Alaska the volcano Kasatochi
erupted in 2008, leaving millions of tons of ash in salmon
pastures in the Gulf of Alaska. He stated that in 2010 the fish
came back to British Columbia in the largest return of sockeye
salmon in history. He acknowledged Mr. Crookston's comment that
the large fish returns were in 2010 and 2011.
6:16:52 PM
MR. GEORGE explained that after a giant dust storm in Australia,
millions of tons of dust were deposited in the ocean, and this
caused a return of fish. He also explained how Antarctic
icebergs can hold centuries of accumulated windblown dust, and
once melted, the ocean is restored to health. He said that
today, because of high CO2, grass is growing and covering the
world's dusty lands, and this is not good news for oceans, as
mineral dust regulates the oceans primary productivity. In
other words, more grass means less dust blowing to feed ocean
pastures. He moved to slide 9 to show pictures of the Gobi
Desert, which is the primary source of dust for Alaska ocean
pastures. He explained that the desert has been greening for
the last 20 years and reiterated that more grass growing means
less dust blowing, thereby causing the ocean to be in a drought
of dust.
MR. GEORGE moved to slide 10 and said that the U.S. recognized a
crisis in 1970, when plankton population collapsed in the
oceans. He explained that the first OPR satellite launched in
1978, capturing the picture displayed at the bottom of the
slide. He pointed out that slide 11 explains the technology and
methodology of OPR.
6:20:47 PM
MR. GEORGE moved to slide 12 to detail the results of a 2012
experiment which targeted pink salmon. He said that a pink
salmon pasture off Haida Gwaii had been dusted and the "salmon
feasted and thrived." He stated that during the following year
salmon swam in record numbers into the rivers and streams
throughout Alaska, Canada, and the Pacific Northwest. He moved
to slide 13 and explained that 2 trillion tons of CO2 has
already been captured in the atmosphere. He explained that OPR
Alaska has proprietary technology, and each year one of the
company's OPR will capture 10 to 100 million tons of CO2. He
pointed out that OPR Alaska has employees in the state and pays
corporate taxes. The message that OPR Alaska wants to send to
the state is the ocean pastures are a state resource. He said
the company would support a branding deal, offering the state
the same mineral royalty as an oil company. He pointed out on
slide 16 that OPR Alaska would pay a 12.5 percent royalty for
branding rights. He outlined that, in annual sales for 100
million tons of blue carbon at $100 a ton, the total would be
$10 Billion in state revenue.
6:27:28 PM
MR. GEORGE summarized slide 17, which read as follows [original
punctuation provided]:
OPR Alaska Business Model
3 Year Commercial Scale Ocean Pasture Restoration &
Development Plan:
• $20 Million over 3 years venture finance
• Public private partnership agreement with Alaska
• 3 year pilot project science proves OPR is SAFE,
SUSTAINABLE, AND SUCCESSFUL
• Verification and certification proves 'blue carbon'
sales compliant with Paris Treaty
• On going management of Alaska ocean pastures
continues for 50+ years
MR. GEORGE moved to slide 18, which read as follows [original
punctuation provided]:
OPR Alaska ASK
Support: OPR Alaska Resolution
Support: Federal Ocean Restoration Act
Support: OPR Alaska / Alaska Public Private
Partnership
Support: OPR Alaska eligibility for Salmon Cost
Recovery Program
Support: OPR Alaska as the number one carbon capture
and storage technology for the nation
6:32:18 PM
MR. GEORGE, in response to a question from Chair Carpenter,
answered that ocean pastures are eddies in the ocean which
attract fish. He recounted the results of the 2013 Haida Gwaii
project where the eddies bloomed as a result of OPR.
6:36:02 PM
MR. GEORGE, in response to a question from Representative Gray,
answered that the carbon offset process uses a small percentage
of the carbon in photosynthesis, and this would be "blue
carbon." He said the ARPA-E would help fund the fine tuning of
the process, and [OPR World, Inc.] would bring the product to
market. He added that the mission is to bring all the pastures
on the map into production; however, the current question is
whether enough value can be produced. In response to a follow-
up question, he stated that iron is everywhere in the ocean, and
it arrives by natural sources. He explained that today's high
CO2 makes grass grow on land better, decreasing the dust,
causing the oceans to die. He expressed the opinion that the
OPR process is safe, as the plankton blooms from dust storms
have been studied for many years. In response to a comment that
the Sahara Desert is growing and is blowing dust throughout the
world, he stated that there is a plan to plant the desert south
of the Sahara in order to limit dust.
6:45:19 PM
MR. CROOKSTON explained that when the company unloaded 100,000
pounds of dust in 100 square miles, this equaled one 50-pound
bag of iron per square mile.
MR. GEORGE stressed that the presence of iron is like a switch
during photosynthesis; however, large amounts of iron would not
make a difference.
6:46:40 PM
REPRESENTATIVE ALLARD asked whether carbon efforts could
undermine the state's resource development industry.
MR. GEORGE shared that he spoke with a tar sands company who
would like to buy OPR's carbon offsets so it can make its oil
"green." He said that the Paris Climate Accord supports
offsetting emissions. He further responded that OPR would not
"hurt" the resource industry.
6:49:07 PM
REPRESENTATIVE GROH expressed the understanding that there are
less fish in the waters because of higher temperatures in the
oceans, which is a result of climate change and pollution. He
asked if the presenters are suggesting that the issue actually
relates to less dust from land reaching the ocean.
MR. GEORGE responded in the affirmative. He pointed out that
the oceans downwind of deserts are high in iron; however, there
are vast regions of the oceans low in iron. He explained that
the Gulf of Alaska is high in nutrients but low in plant life
growth. In response to a follow-up question concerning why OPR
has not been used more, explained that in 1990 John Martin had
announced the idea of dumping iron in the ocean. He continued
that the governments of Egypt and India have recently committed
to OPR. To bring back fish and to provide blue carbon for
revenue, coastal African nations are showing interest. He noted
that OPR Madagascar has been in operation since 2019. In follow
up, he responded that academic studies have shown OPR is safe.
He pointed out a report from the National Academy of Science,
and he added that there is an abundance of science papers on the
topic.
6:54:08 PM
MR. GEORGE, in response to a question from Representative McKay,
answered that volcanos add iron to the oceans. He used the
Tongan eruption from last year as an example. He stated that
satellites caught images of the ocean turning from blue to green
where the ash plumes had landed. In response to a follow-up
question, he explained that there are four volcanos in Alaska
which have put ash in the Gulf of Alaska. He pointed out that
the OPR process only works during the spring, not during the
winter. In response to a question about salmon farms, he stated
that concerns have been raised about flooding the market with
salmon.
6:56:50 PM
MR. GEORGE, in response to a question from Representative
Allard, stated that in 2005 he gave the first testimony in
California about OPR. He said Bill Gates put $200 million into
a direct air-capture machine which scrubs CO2 from the air, and
it has scrubbed 4,000 tons of CO2 from the atmosphere in one
year, and now more funding is being received from DoE to expand
this process.
6:59:23 PM
MR. GEORGE, in response to a question from Representative Gray
concerning harmful algae blooms, explained that harmful algae
blooms, like red tide, are not an offshore issue. He said that
the company only works offshore because coastal waters are
already saturated with iron.
7:01:20 PM
The committee took an at-ease from 7:01 p.m. to 7:02 p.m.
^PRESENTATION(S): Carbon Capture/Sequestration
PRESENTATION(S): Carbon Capture/Sequestration
7:02:57 PM
CHAIR CARPENTER announced that the final order of business would
be a presentation on carbon capture and sequestration.
7:03:40 PM
JOHN CROWTHER, Deputy Commissioner, Office of the Commissioner,
Department of Natural Resources (DNR), gave a PowerPoint
presentation, titled "Alaska's Carbon Management Opportunities"
[hardcopy included in the committee packet]. He outlined that
the presentation would cover carbon management, carbon offsets,
carbon capture, carbon utilization, carbon storage, and why
carbon management is food for Alaska. He advanced to slide 4 to
explain carbon management using an illustration. He moved to
slide 5 and said carbon management is not simple, as there are
170 types of carbon credits. He pointed out the different types
of carbon credits businesses are seeking to create. He advanced
to slide 7 and pointed to a map of Alaska and the areas owned by
the state. He said that DNR supports making these lands
available for carbon capture use and storage (CCUS).
7:09:28 PM
MR. CROWTHER moved to slide 8 and presented data from the Boston
Consulting Group, which addresses the value in carbon markets.
He said that in 2021 the voluntary market was $2 billion in
value. He voiced the opinion that this market should be sought
rather than a compliance market.
7:11:42 PM
REPRESENTATIVE MCCABE asked for assurances that the program
would not turn into a cap-and-trade market.
MR. CROWTHER answered that the governor is not proposing a cap-
and trade-program, and any proposed legislation would not
include land restrictions.
7:13:32 PM
REPRESENTATIVE MCKAY asked whether a future state administration
could convert this type of program into a mandatory cap-and-
trade program, and he asked whether any proposed legislation
could prevent this from happening.
MR. CROWTHER answered that the intent of legislation would be to
make carbon available as a resource and not to make revenue
through compliance.
7:16:08 PM
REPRESENTATIVE MCCABE stated that the legislature has a
constitutional mandate to develop resources.
MR. CROWTHER answered that DOR recommends developing and using
carbon resources for the benefit of the people.
7:17:26 PM
MR. CROWTHER, in response to a question from Representative
Allard, explained the CCUS process would be laid out in
legislation. When sequestering carbon, an operator would have
to pay for the right to state land, and the operator would have
to pay a fee which would go to the carbon capture storage fund.
He said the intent of the fund would be to cover long-term
liabilities the state may have with CCUS activities. He
detailed that the state assumes title to the carbon after 10
years of the project closing. He compared this to insurance
markets where people pay to purchase coverage, so the liability
is borne by other parties, as well as the direct holder. He
noted that there is no tax liability. He stated that, if
legislation passes, DNR would have an obligation to continue to
monitor the liability.
7:21:14 PM
MR. CROWTHER, in response to a question from Chair Carpenter,
answered that some other public jurisdictions are "dipping their
toes" into the CCUS space. He explained that in Washington and
Michigan new projects need 10,000 to 100,000 acres of land to
generate offsets for the communities; Alaska is unique because
the state brings millions of acres to the carbon offset space.
7:23:31 PM
MR. CROWTHER, in response to a question from Representative
McCabe, answered that CCUS would not restrict land access, as
people could still traverse the land.
REPRESENTATIVE MCCABE expressed the opinion that the best
"carbon eaters" would be growing trees. He pointed out that, in
order to conduct selective harvests, logging roads would need to
be built.
MR. CROWTHER, in response, answered that increased road access
is a part of the plan. He said the intent of carbon offsets in
forests is to increase carbon on the landscape, and part of this
may require forest thinning and reforestation; therefore, new
roads could be needed.
7:28:10 PM
MR. CROWTHER pointed to slide 9, which read as follows [original
punctuation provided]:
KEY ATTRIBUTES OF CARBON CREDITS
Robust verification and validation of carbon removal
and reduction is essential to credibly claim credits
Real
A physical project with defined boundaries and a
tangible impact on GHG emissions
Measured
Measurable and verifiable impact on GHG emissions
Permanent
Indefinite removal or reduction of GHG emissions
Additional
Project wholly reliant on Carbon finance
Independently Verified
Competent and independent assessment and verification
MR. CROWTHER advanced to slide 11 to present a flow chart
illustration of a typical CCUS project. He summarized slide 12,
which read as follows [original punctuation provided]:
CCUS - WHAT AND WHY?
What is it?
•Carbon Capture, Utilization, and Storage (CCUS) is a
process to capture carbon dioxide (CO2 ), from
industrial processes, point sources, or even directly
from the atmosphere, for the purpose of utilizing it
for other activities or storing it underground in
geologic formations
Why Now?
•Sets the stage for continued development of Alaska's
oil resources, and potential major gas development
•The CCUS market is rapidly expanding, both within the
U.S. and worldwide
•Recent federal legislation has expanded grants and
tax incentives for CCUS, increasing industry interest
•Federal funds are available for states seeking Class
VI well permitting, showing federal support for state
primacy
•Protracted project timelines and milestone
requirements in
the federal tax credit structure necessitate prompt
action
What is the potential in Alaska?
•Alaska's depleted oil & gas fields, saline aquifers,
and deep coal seams have significant CO2 storage
potential
•Alaska has important competitive advantages we own
the pore space & we know the reservoirs
•Fifteen other states have passed CCUS omnibus
legislation that we have learned from
7:32:19 PM
MR. CROWTHER moved to slide 13 to explain the requirements for
geologic CO2 storage. He pointed to a graphic regarding the
Kenai Gas Field, which showed different hydrocarbon reservoirs.
He moved to slide 14 and provided an overview of the basins in
Alaska which can store carbon. While on slide 15, he detailed
CCUS in other places across the U.S., showing states with
framework legislation. He moved to slide 16 to summarize the
work of the University of Alaska led CCUS work group.
7:36:17 PM
MR. CROWTHER explained the graph on slide 18, which was sourced
from the International Energy Agency. He stated that it assumes
a scenario where the world is net-zero on carbon emissions by
2070. He said there are currently about 35 commercial CCUS
facilities globally, and in order to hit the scenario, there
must be 2,500 facilities operating. He summarized slide 19,
which read as follows [original punctuation provided]:
NET ZERO GREENHOUSE GAS (GHG) INITIATIVES OF NORTH
SLOPE COMPANIES
ConocoPhillips Emissions Reductions Targets and
Performance
•Reduce methane intensity by 10% and routine flaring
to zero by 2025.
•Reduce Scope 1 and Scope 2 Greenhouse Gas (GHG)
intensity by 40-50% (gross operated and net equity) by
2030
•Net zero Scope 1 and Scope 2 emissions by 2050
Emissions Reduction Targets | ConocoPhillips
ENI's Strategy Against Climate Change
•35% reduction in net Scope 1, 2, and 3 emissions by
2030
•55% reduction in net Scope 1, 2, and 3 emissions by
2035
•80% reduction in net Scope 1, 2, and 3 emissions by
2040
•Net zero Scope 1, 2, and 3 emissions by 2050
Net Zero al 2050 | Eni
Exxon 2030 Greenhouse Gas (GHG) Emission Reduction
Plans:
(Relative to 2016 level and apply to Scope 1 and Scope
2 GHG emissions from
operated assets)
•20-30% reduction in corporate wide GHG intensity
•40-50% reduction in upstream GHG intensity
•70-80% reduction in corporate wide methane intensity
•60-70% reduction in corporate wide flaring intensity
Advancing climate solutions | ExxonMobil
Hilcorp
"We have to operate to the same high standards as
everyone else. We may be private, but we have capital
providers, we have partners, we have lots of other
people involved in business with us. They're feeling
those pressures (i.e. ESG, emissions reductions), and
we have to be responsive to those as well." - Greg
Lalicker , Hilcorp CEO.
How America's Biggest Privately Owned Oil Company
Takes A Divergent Approach To The Energy Transition
(forbes.com)
Repsol Path Towards Decarbonization
•55% reduction in scope 1 and scope 2 emissions in
operated assets by 2025
•30% reduction in scope 1, 2, and 3 net emissions by
2030
•Net zero by 2050
Net zero emissions by 2050 commitment | Repsol
Santos Path to Net Zero
•26-30% reduction in scope 1 and scope 2 absolute
emissions (from 2020 baseline) by 2030
•Actively work with customers to reduce scope 1 and
scope 2 emissions by > 1 million tons of carbon
dioxide per year by 2030
•Scope 1 and scope 2 absolute emissions at net zero by
2040.
• Santos has committed to net zero emissions (scope 1
and scope 2) for the Pikka Project
Santos to be net zero emissions by 2040 | Santos
Santos Announces Pikka FID | Santos
7:38:38 PM
CHAIR CARPENTER questioned whether the goals on slide 19
represent an altruistic desire or whether these are business
choices.
MR. CROWTHER offered the understanding that all companies are in
the business of producing energy and generating returns, and
investment is a precondition of this. He related that capital
providers are saying carbon management is part of providing an
investment, and companies are coming forward with these goals.
In response to a follow-up question, he stated that companies
are working from internal goals, and if the state were to give
them in-jurisdiction opportunities, the companies would be more
likely to pursue this. He concluded the presentation on slide
20.
7:42:43 PM
The committee took an at-ease from 7:42 p.m. to 7:43 p.m.
7:43:26 PM
MR. CROWTHER directed members' attention to the document titled
"Hypothetical Revenue Opportunities." He explained the three
scenarios: scenario one assumes adding CCUS capability for an
existing regional power, which would provide a total of
$11,796,641 in revenue to the state in over 20 years; scenario
two assumes a standalone CCUS project on the North Slope for
existing resource operations, which would generate $210,761,893
in revenue over 20 years; scenario three assumes importing CO2
and sequestering it in Alaska, which would generate
$1,014,120,959 in revenue over 40 years.
7:49:18 PM
REPRESENTATIVE GRAY asked if the state could get carbon credits
for acres of undeveloped trees.
MR. CROWTHER answered that development would make the project
more valuable but is not inherently the only way to do a
project. He said that DNR supports making the lands available,
and if people come forward to start a CCUS project, the
department would offer the ability to do so.
REPRESENTATIVE GRAY expressed the understanding that the state
could be paid to not cut down trees, which were not going to be
cut down. He asked if the state threatened to cut the trees
down, would it then be paid not to.
MR. CROWTHER responded that, if all of the areas which have
active harvests stopped for five years, it would be a big
change. He explained that the department's longer-term hope is
that enough energy is in the system to justify putting roads in
areas where there is no activity and also justify re-
forestation.
7:52:55 PM
CHAIR CARPENTER asked whether carbon projects have been done in
Alaska.
MR. CROWTHER answered that Alaska Native Regional Corporations
have done much work in CCUS and have brought in millions in
revenue.
CHAIR CARPENTER questioned the realized revenues in these
situations.
MR. CROWTHER responded that this is only speculation. He said
the number of credits generated are often logged in public
registries. He advised that the credit market is volatile.
7:55:24 PM
REPRESENTATIVE GRAY asked whether it is possible for the state
to get paid to not extract oil from the ground.
MR. CROWTHER expressed uncertainty about such a proposal. He
said the department has an obligation to maximize value and
development.
REPRESENTATIVE GRAY pointed out that the oil would still be in
the ground.
7:57:06 PM
REPRESENTATIVE MCCABE offered that there is a missing line in
scenarios one and two. He suggested that these scenarios should
show consumer expense increasing because power companies may
have to ship carbon outside the state.
MR. CROWTHER answered that any proposed legislation would not
require CCUS, so the consumer would not bear the cost of a power
company doing this. He pointed out that there is coal in
Alaska, but it is hard to attract investment because CO2 is ever
present to investors. He said, if carbon emissions were to be
addressed in state, it would be a consumer benefit.
8:00:12 PM
CHAIR CARPENTER thanked the presenters.
8:00:30 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Ways and Means meeting was adjourned at
8:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| OPR Alaska Presentation.pdf |
HW&M 2/27/2023 6:00:00 PM |
|
| 2023 02 27 HW&M DNR Carbon Management Presentation.pdf |
HW&M 2/27/2023 6:00:00 PM |