How to ensure the “expected loss” is low in the real world

I’m doing some work related to Geologic Carbon Sequestration (also called Geologic Capture and Storage): the idea is to capture carbon dioxide from power plants or other industrial sources, and pump it deep underground into geologic formations that will trap it for centuries or millenia. It sounds desperate, and I initially had substantial misgivings, but upon looking into it more I think it is a good idea and we should get started. But there are still some major political, legal, and economic issues that have to be resolved. I’m working on an issue that is on the border between the technical and regulatory spheres:

The State of California will soon be called on to decide whether sequestration should be allowed in some specific places. The government will have to assess the risks and decide whether a particular spot is “safe enough.” Any site that is likely to be proposed will be considered by experts to be highly likely to retain almost all of the CO2 that is pumped into it…but of course, the experts could be wrong. It’s very hard to characterize the subsurface—there could be faults or old boreholes that you don’t know about—so maybe the CO2 could leak out. If it does, bad things can happen.

One bad thing that could happen is that the carbon dioxide could leak into an aquifer and turn the water into something like Perrier. Doesn’t sound so bad—could even be worth a lot of money—but actually it could be a big problem. Carbonated water is acidic (carbonic acid), and could dissolve minerals and leach bad stuff like lead or arsenic into the water. That’s bad if the aquifer supplies drinking water!

One way to assess a site is to look at the “expected loss” or “expected cost” of using the site. For example, suppose the probability that CO2 will leak into the aquifer is 0.001, and if this does happen then the cost (e.g. the cost of purifying the water so people can still drink it) has a Net Present Value of $100 Million. Then the expected loss from this particular failure mode is $100,000.

Here’s the thing: we can estimate the cost, if there is a failure, fairly accurately: you can look at how much it costs to build a filtration plant or to import water from somewhere else, and get it maybe within a factor of 2. But the other part of the equation, the failure probability, is just impossible to answer. Some people will say it’s really high, some will say it’s really low. There’s very little in the way of empirical data, since there are only a few large-scale sequestration sites operating.

If we want to be sure that (probability of failure) x (cost of failure) is low, a common-sense idea is to start with sites where the cost of failure would be low: then it doesn’t matter if the probability of failure is a lot higher than we thought. As more sites are used, and are monitored for a few decades, we’ll learn more about our ability to predict subsurface CO2 behavior — we’ll never know less than we know right now! — and then we can relax the constraint on the (cost of failure) term and start looking at the putative product.

You’re with me so far, right? OK, then here’s where I need help: I need some examples of places where this common-sense idea was EXPLICITLY used in creating regulatory policy. I hope someone who reads this blog can help me here.

18 thoughts on “How to ensure the “expected loss” is low in the real world

  1. Another method is to look for a less risky plan. In this case, we should sequester matching amounts of carbon, in the form of coal, charcoal, and carbon black in place of the carbon dioxide. You only need to sequester 3 tons of coal to replace 11 tons of carbon dioxide. The coal is more stable, does not need to be compressed, etc.

    Carbon dioxide is a bit nasty if you get a lot of it in one place. "On August 21,1986, a cloud of carbon dioxide gas was released from Lake Nyos. Because carbon dioxide is more dense than air it hugged the ground and flowed down valleys. The cloud traveled as far as 15 miles (25 km) from the lake. It was moving fast enough to flatten vegetation, including a few trees. 1,700 deaths were caused by suffocation. 845 people were hospitalized." To prevnt future occurances, they are dumping a steady stream of CO2 into the atmosphere.

    Thanks,

    Jim

  2. Not sure this is close to what you're looking for, but did you have a look at U.S. NRC's Risk-Informed Regulatory Programs and the 10 CFR 50.69? Another one worth a look is NRC's SOARCA.

  3. What about the nuclear waste disposal site in Nevada? I thought the point was we don't know how long we'll really need to store it or how difficult it will be to contain, but that the consequence will be small if we are wrong because it is far from people and there is little groundwater nearby.

  4. Regarding high-level nuclear waste disposal at Yucca Mountain, I don't think there was ever an explicit analysis along the lines suggested.

  5. Jim, there's no need to sequester coal, all we would have to do is stop digging it up! We (as a society) are not willing to do that because it means we don't get any energy out of it. The theory with carbon sequestration is that we could have the energy without most of the bad environmental consequences.

    This is a classic "The Best is the enemy of The Good" situation: yes, there are things that I (and probably you) think are better than using coal for energy, but I don't think the literally trillions of dollars of worldwide coal infrastructure are going to be shut down in the next dozen years or so, whereas I think there is a chance that we can add sequestration on to them. If we're going to burn coal — and we are — then we should sequester the CO2.

    As for Lake Nyos and Lake Monoun, I insisted on including a very brief discussion of them in a chapter some colleagues and I wrote for "Geologic Carbon Sequestration Strategies for California: The Assembly Bill 1925 Report to the California Legislature", California Energy Commission, 2007, but in fact it is very hard to see how a carbon sequestration site in the U.S. could lead to this kind of event. You have to have a deep, stratified lake — one whose "overturning" rate is so low that very high carbon dioxide concentration can build up deep in the lake, rather than mixing with the rest of the lake and dissipating to the atmosphere. There are literally only a few lakes (I forget, it's either 3 or 5 I think) like that in the whole U.S. We shouldn't totally ignore the possibility — any proposed carbon sequestration site near a deep lake should consider the issue — but this particular risk has a probability somewhere between incredibly tiny and zero, in the United States.

    One-eye, Yes, Yucca Mountain is an obvious analog, but in the documents I've seen I have not seen an explicit official statement that one of the reasons YM is appealing is that a disaster there would be less costly (in terms of lives affected) than a disaster elsewhere. Project proponents seem to have taken the stance that the probability of failure is so low that the expected cost is guaranteed to be low — in short, they focus on the first term of the Expected Loss = (Probability of failure) x (Loss in the event of failure) rather than the second term. I'm looking for the opposite.

    Project _opponents_ do make the case: they suggest that the Department of Energy wants to use YM because they "don't care about the lives of the people who live in the area" or words to that effect, which I guess is another way of saying that they think DoE rates the Loss-in-the-event-of-failure lower there. But DoE doesn't seem to be saying that.

  6. These would be idiosyncratic situations, I think. Maybe look into how the Manhattan Project Trinity site was chosen. It's hard to find initial risk of that scale. I think that people approach from the opposite direction. Start with a scaled down model, which has a manageable max risk, work out the details, then scale it up to operating size.

  7. The Manhattan Project? My initial thought is to dismiss this analogy because the (probability of destruction) was very high, whereas the idea with carbon sequestration is to make (probability of failure — i.e. destruction) very low. But it's true that in the MH example, they chose the site because they knew the cost of the bomb going off would be low. It's just such an extreme, loaded example, though.

  8. To be an advocate of doing any of the things above, you would have to believe that atmospheric CO2 is a problem. Scratch that, you would have to provide evidence that high concentrations of atmospheric CO2 are a problem…something that has not been shown. There is no extant data that CO2 is a pollutant, although those with a certain ideological bent seem to want to posit that as fact. Throw in the (true) fact that CO2 concentrations are lagged in respect to "global" temperature, and any discussion vis-a-vis the need to sequester carbon in the form of CO2 is fraught with half-truths and ideological bias.

  9. Coal would make a much better storage medium, but if you insist on a low energy medium, than at least make it a solid. Plant burial would make for much better storage.

    I don't know of any explicit regulatory scheme for this, but it is at least implicit in both air safety and nuclear power plants.

  10. Plants have the unfortunate habit of decomposing into CO2 (at best) or CH4 (rather worse). There is a fair amount of research into burying biochar, where we get some energy from the plant and some relatively stable carbon which may be buried. But of course even in this case a more complete combustion would generate more energy – it can hardly be worthwhile mining coal to burn for energy, and simultaneously making solid carbon to sequester!

    I agree with many commenters that the consequential loss aspect is surely a significant component of many decisions, but PC considerations may make it hard to discuss openly. I'd look at nuclear power stations in the UK, but am not aware of anything in particular that discusses it.

    OK, my first google explicitly mentions considering both the risk to the individual, and the societal risk which integrates over the at-risk population (and infrastructure).
    http://www.hse.gov.uk/nuclear/tolerability.pdf

  11. skh.pcola, no amount of evidence is enough for some people. No point arguing about it when that is the case.

    Lord, if you're thinking of growing plants and then burying them (or the equivalent), then sure, that's an OK idea and there are projects being considered. For instance, there has been a pilot project already in the Sacramento Delta, where thules (reeds) are allowed to grow, then flooded to kill them, then new thules grow, etc. This is appealing because, on a large scale, it could kill two birds with one stone: sequester some CO2 and build up areas that are way below sea level and are surrounded by dikes. But as a large-scale solution, growing plants doesn't come remotely close to consuming enough carbon per year. Power-plant emissions alone generate 2.5 billion tons of CO2 per year. Sequestering with plants is a fine idea but we need a lot more than that, unless we're ready to give up fossil fuels.

    As for the main point of my post: yes, I know of many examples of industrial sites being chosen in part because if there is a failure, the costs will be low. What would really help me, though, is an _explicit_ statement of this, especially if coupled with the idea that the goal is to keep the Expected Loss low, and that when the probability of failure is unknown or hard to agree on, the best you can do is focus on the loss-in-the-event-of-failure term. I know it's obvious, I know it's common sense, and I know it's been implicit in many decisions, but I want an EXPLICIT case.

    Thanks for all comments.

  12. Note to editor: under preview, my paragraph breaks aren't retained.

    I'm sympathetic to your plight. On a much smaller scale, however. We had a big-box store apply for a permit, which would have included a gasoline station. The underground storage tanks (UST) would have been in the groundwater; the headwaters to a designated cold-water trout stream. No matter how many times I insisted on a rational risk assessment, all the store offered was a list of safety features. Who cares about that?! What are the odds of failure & how much damage can it be expected to do?

    I was in a better position than you, since in the end, I was able to find empirical data on leak rates and allowable leak rates under properly functioning leak detectors. With that data & EPA standards on water quality, I was able to show the scale of potential pollution from undetected leaks. It was sufficient to get the township to demand the store put the gasoline station where the USTs wouldn't be in the groundwater. It stood up in court.

    I'm not sure what you mean by the "real world." If you mean reckoning the odds of failure of various sites, then good luck with that. If you mean getting the regulations or decisions to insist on choosing safer sights until we have more information (i.e., getting people to listen to you), then work out the consequences until you've got something they care about. In my case, I had gallons of water per time period at the headwaters of an important township asset.

    Lastly, if you mean how to write a regulation to ensure what you want is what the text says, then get a legal draftsman, someone who *specializes* in writing clear legal documents.

  13. Addendum to my comment:

    I could get almost no one to listen to me *until* I told them how many millions of gallons of water they should expect (as in math expectation) to be made undrinkable from benzene, from leaky USTs, *without* ever setting off an alarm from properly functioning leak-detection equipment.

    I explained the idea of a good risk assessment, that the data were most likely available, that the applicant should provide this analysis, &c. But only when I said something like 2-million gallons made undrinkable per month did people really listen. Since you're asking for a specific example, I infer that you also want to know how it came to fruition, and the above is how it came to be in a relatively small specific case. ^_^

    I hope that helps.

  14. If you have to rely on sequestration of CO2 you might as well give up in advance. Gases require enormous volumes and would pile up so quickly the hazards would be anything but small. If you don't think plants can provide the capacity, nothing else surely can.

  15. James, thanks for your comments, with which I generally agree; I will look at the url you suggest.

    John, that's a good story and congratulations on your victory. In your case, the fact that you can document leakage of other tanks is key. The company's response is all too typical: "trust us, it will be safe." In the sequestration case, there will be a lot of people who will not be willing to trust the companies or the government about the safety, and there won't be any empirical data to point to either. A lot of people in the fledgling sequestration industry (and its regulators) think that they will address all concerns simply by making sure that all sites are perfectly safe, but I think that is misguided: (1) they won't be able to attain that level of perfection in practice, and (2) even if they could, they won't be able to prove it so people won't believe it.

    Lord, the volumes are not hard to estimate. At the depths being considered, the CO2 is under a lot of pressure and is in a "supercritical fluid" state; it is substantially less dense than water (and thus will be buoyant) but it is much denser than gaseous CO2. As I say, the volumes are easy to estimate and the capacity does exist for at least a few decades and possibly several centuries of storage. Consider, by the way, that we are currently taking natural gas out of the ground in enormous quantities; most of those places would be good to put CO2 back in. There are thousands of researchers working on sequestration, some of them specifically at the issue of figuring out how much capacity there is.

    Thanks to everyone who commented.

  16. Phil,

    Thanks, it *was* a victory.

    I agree that it's obviously true that perfect safety isn't possible. I knew this intuitively for quite a while, but I really came to *understand* it when high humidity started setting off my smoke detector.

    I'm not in your shoes and don't presume to know better than you. That said, Gerd Gigerenzer's book "Calculated Risks" offers a pretty good discussion of why people are bad at understanding risk and how to communicate to help them get it. His discussion of rocket-failure rates helped me understand the UST issue.

    I'm still confused what specific problem(s) you are faced with. If after this much discussion, I'm still confused about what problem(s) you're trying to deal with, may I suggest you take the time to more precisely define your problems? It might help you communicate with your audience(s).

  17. A few areas that are analogous to what you are looking for come to mind. There was a rash of demonstration projects, especially in health policy, during the late 1990s. Many of these demonstration projects were focused on groups that would demonstrate the largest effect (alternatively, that would exhibit the least cost for a given effect). I'm trying to remember specific examples and coming up with a blank except generic areas like rural hospital reimbursement. One could also argue that sulfur emissions trading is a way of doing the same thing–identifying the least costly areas and then working your way up the list, but this was done without a central administrator.

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