(559u) Regional Economic Impacts of Carbon Capture and Sequestration

Regional economic impacts are a critical piece of the decision process surrounding carbon capture, utilization, and sequestration (CCUS) implementation. Integration of carbon capture technologies with the existing coal fleet not only helps to ensure the longevity of an existing industry, jobs are created at the capture plant during the construction and operational periods. A significant number of jobs are created during the construction period, which results in additional job creation through indirect and induced effects. Local suppliers will see an uptick in sales due to the high demand for construction materials, which is considered an indirect impact on the local economy. Workers spend money on housing, food, and entertainment that can induce additional job creation. The ripple effects of a project such as this can last for many years and result in increased tax revenue to the state and other localities. Permanent jobs are created during the operational phase at both the plant and oil wells that are ready for enhanced oil recovery (EOR) operations. The incremental oil production can also increase tax revenues to the state. This presentation will review the potential regional economic impact of wide-scale CCUS technology implementation on coal-fired power plants and oil fields in North Dakota.

The economic impacts of activity in the energy sector can be determined through the use of input–output (I-O) models. There are many commercially available I-O software models; the three most commonly used software models for economic impact modeling are the Regional Input–Output Modeling System (RIMS-II), Impact Analysis for Planning (IMPLAN) and Regional Economic Models, Inc. (REMI). All of the I-O analysis models produce the economic impacts of three basic effects—direct effect, indirect effect, and induced effect—which, when totaled, are equivalent to the total economic impact/change based on the circumstance modeled. The direct effect is essentially the amount of spending as a direct result of the change in the industry sector under study. For the purposes of this study, this would be the amount of capital expenditure for the construction of a CO₂ capture system at a power plant and the construction of the pipeline required to transport the CO₂ to the oil fields for EOR activity. This direct effect would include not only the capital plant expenditures but the salaries paid to the employees by the companies building the plant. The indirect effect would be the amount of economic impact on the state from the contractors and subcontractors purchasing goods from local/state entities such as steel, concrete, welding supplies, etc. The induced effect is the change in economic impacts due to employee spending of earned income for restaurants, clothing, cars, visits to doctors, etc.

The EERC has evaluated the economic impact of CCUS technology implementation in the state of North Dakota. The estimated capital and operational costs for these activities have been determined and then analyzed using the IMPLAN model with region-specific modifications. The direct, indirect, and induced effects have been determined for a number of scenarios. This presentation will review the results of these studies and show the positive regional economic impact that can be realized when CCUS technologies are deployed.