2021 ] CARBON CAPTURE , UTILIZATION , AND SEQUESTRATION 73
of CO 2 will be available for delivery from one project process to another and should account for the expected production capabilities and capacities of the different facilities involved in the project . Additionally , the remedies available to a party for the failure of its counterparty to meet the minimum delivery requirements should be understood and adequate to address the consequences of that breach .
In the event the emitter fails to deliver the agreed minimum volume of CO 2 ( or fails to conduct the agreed minimum level of activity at its facility that the capturer requires for the generation of CO 2 ), it is likely that the capturer will not be able to meet its downstream minimum delivery requirements to either end-users or storers under its Offtake Agreements . The impacts of these downstream consequences should be considered in setting the level of both deficiency payments that the emitter will owe under its CO 2 Supply Agreement and the potential deficiency payments that the capturer may owe under its Offtake Agreement . Because alternative sources of CO 2 may not be readily available ( especially those that can generate Section 45Q tax credits ), minimum volume commitments and the corresponding monetary damages for underdeliveries of CO 2 volumes are often the principal mechanisms used to support anticipated project economics . These mechanisms also force participants to internalize the risks presented by the project-level processes and facilities that are within that participant ’ s control .
It should be noted that CCUS projects that utilize EOR operations as the end-use for captured CO 2 may not need to rely on minimum volume commitments to the same extent as other CCUS projects . This is due to the fact that most EOR operations are sufficiently large in scale such that they will require an amount of CO 2 far beyond what can be captured and provided from a single industrial emitter . Thus , most EOR operations will have access to naturally sourced CO 2 and will be supplementing that supply with anthropogenic CO 2 from the CCUS project . While other project participants may seek minimum volume commitments ( or minimum operation levels ) from emitters to support the desired economics , EOR operators who are end-users of the captured CO 2 may be in a position to agree to take all the captured CO 2 generated by the project up to a certain requested amount without a strict minimum delivery requirement . This typically occurs where an EOR operator participates in the project through a joint venture with the capturer ( or other participants ) and thus locks in exposure to its portion of the economic benefits of the project at the joint venture level . In these situations , the EOR operator would still secure some contractual protections in its agreement with the capturer . These protections include the right to source CO 2 from alternative sources to the extent the project cannot supply the requested amount of CO 2 and the right to terminate its agreement with the capturer in the event that the project continually fails to deliver the requested amounts of CO 2 .