Although the presidential election drew some sharp distinctions between the two candidates on issues involving energy and climate change, there is one issue on which their positions converged, the need for the U.S. to accelerate the development of carbon capture, usage and storage technologies.
President-elect Biden in his Plan For A Clean Energy Revolution, calls for the nation to “accelerate the development and deployment of carbon capture sequestration (CCS) technology.” The plan goes further, to advocate for technology that not only captures the carbon but puts it to beneficial use, such as in enhanced oil recovery. Citing the BlueGreen Alliance, a coalition of labor unions and environmental organizations, the plan states that “carbon capture, use, and storage (CCUS) is a rapidly growing technology that has the potential to create economic benefits for multiple industries while significantly reducing carbon dioxide emissions.”
While support for CCS and CCUS marks a rare point of agreement for Biden and Trump, the two political rivals arrived at the policy position along completely different pathways. Biden’s clean energy plan calls for the U.S. to reduce the percentage of carbon dioxide in the atmosphere in order to limit global warming to 1.5 degrees Celsius above pre-industrial levels, in accordance with the Paris Climate accord.
President Trump, on the other hand, a well-known climate change skeptic, sees CCS and CCUS largely in terms of the creation of “clean coal,” an environmentally acceptable way to prolong the use of that fossil fuel. And although some of the early applications of carbon capture technology were to retrofit coal-burning power plants, today it’s more common for the technology to be applied to capture CO₂ from ethanol production, gas processing or the production of ammonia for fertilizer, processes whose emissions streams hold a higher percentage of CO₂, making the projects much more economical.
Earlier this year, NRG, the developer of the Petra Nova plant, the world’s largest facility to capture carbon from a coal-fired power plant, said it was shuttering the facility near Houston, because economic conditions brought on by the COVID-19 pandemic made it unprofitable to operate it. Petra Nova had been shipping the captured CO₂ via pipeline to an oilfield, where it was used to coax the production of crude from the ground.
Biden’s climate ambitions
Biden’s plan calls for investing $400 billion over 10 years — twice the investment of the Apollo program, in today’s dollars – on clean energy research. However, he’s unlikely to fulfill large parts of his agenda if the Senate remains in Republican hands after the results of Georgia’s two Senate runoff races in January. That’s where investment in carbon capture research and development is likely to come in because it is one of the few categories of “green investment” that has widespread bipartisan support in Congress.
In the near term, one potential area of agreement between the two political parties would be extending the length of time that the 45Q tax credit for carbon capture projects is offered. Congress updated and expanded the credit in 2018. Under the expansion, carbon capture project developers receive a tax credit of $35 per metric ton for CO₂ captured for use in enhanced oil recovery and $50 per metric ton for geologic storage by 2026. The current credit expires at the end of 2023 although carbon capture advocates say more time is needed to effectively incentivize the creation of a robust CCS industry.
“At the top of everybody’s list is ensuring that 45Q is a successful incentive,” Rich Powell, the executive director at ClearPath, a conservative clean-energy advocacy group. In an interview, Powell said emerging technologies such as carbon capture need “a long-term steady incentive for their early deployment.”
He pointed to the alternative production credit for shale gas, the wind production tax credit and the solar investment tax credit as government incentive programs that have proved to be successful in helping to bring new energy technologies to market. “Given COVID, and some delays that the IRS has had in issuing some of the enabling regulations for it, it’s pretty clear that that’s going to need to be extended for some period of time if it’s going to have an impact,” he said.
Brad Crabtree, director of the Carbon Capture Coalition, said there is growing support among both parties in Congress to extend the credit to stimulate investment into CCS technologies across a variety of industries.
“There’ve been bipartisan legislative proposals to extend it by two to four years and a Republican proposal to make it permanent,” Crabtree said in an interview. “More time is needed for planning, engineering, permitting and financing these projects.”
Carrots rather than sticks
Congress is also likely to look favorably on making investments in carbon capture projects that have the potential payoff of creating jobs and stimulating economic activity in the near term in an economy ravaged by the effects of COVID-19 Crabtree said.
While a Biden administration might have some degree of success in offering carrots — such as tax breaks and other incentives to industry to develop carbon capture technology — Congress is unlikely to provide the new administration with any sticks to compel industries to adopt clean energy technologies, such as a carbon tax.
Last month, Former Federal Reserve Chair Janet Yellen floated the idea of a carbon tax as a trial balloon. The idea seemed to gain some steam this week when Biden named Yellin as his pick to be the next Treasury secretary. Yet in the current economic environment, any such tax proposal is probably destined to be a non-starter in Congress, particularly if the GOP retains control of the Senate.
Steve Melzer, a consulting engineer in Midland, Texas, who hosts an annual conference on carbon capture and EOR in Midland, said a carbon tax would provide a strong headwind against the development of capture projects.
“How’s that tax plan going to look in terms of these projects? They all got to make money or you don’t do them,” he said in an interview.
