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THE PROMISE FOR CARBON CAPTURE: A top advocate of carbon capture, removal, and storage technologies says President Joe Biden’s infrastructure plan could offer the industry the long-term certainty it needs to take off.
Biden is outlining the first comprehensive agenda that would both support carbon capture project deployment and finance the buildout of the pipelines needed to carry captured carbon dioxide to where it can be stored underground.
He’s also proposing to extend by 10 years federal tax incentives for carbon capture technology, and he would make those credits more readily available to developers as direct cash payments. Combined with a shorter extension of the tax credits that Congress passed last year, carbon capture developers would essentially have a 15-year window to plan out projects, said Brad Crabtree, director of the Carbon Capture Coalition.
In addition, Biden is backing bipartisan legislation that would help finance carbon dioxide pipelines and storage wells. His plans would also support 10 “pioneer projects” to retrofit large cement, chemical, and steel manufacturing facilities with carbon capture equipment.
Crabtree said the longer-term support and the inclusion of pipeline infrastructure will have the “intangible benefit” of bringing investors off the sidelines.
“They will start to actively consider projects that right now are not on the drawing board for reasons [such as] there’s not enough time, there’s too much policy uncertainty, they can’t see far enough down the road to know whether it makes sense to spend dollars now for returns that will come much later,” Crabtree told Abby.
He said the dual focus on project development and infrastructure also allows companies to think about “regional-scale infrastructure,” such as creating carbon capture hubs in states where there is a lot of heavy industry or underground storage capacity based on the geology.
Companies are already investing in new projects. For example, Summit Agricultural Group announced in February a carbon capture project that would build a CO2 pipeline to carry carbon captured from ethanol facilities in Iowa to North Dakota where it can be stored.
Some left-wing environmental groups, though, oppose the carbon capture efforts, arguing the administration should focus solely on aggressively building out renewable energy.
Crabtree, however, said the next decade is crucial for scaling up carbon capture and removal, without which he argued the U.S. and the world won’t be able to reach net-zero emissions by midcentury.
Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Josh Siegel (@SiegelScribe) and Abby Smith (@AbbySmithDC). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.
GRANHOLM HITS REPUBLICANS OVER ‘INFRASTRUCTURE’ DEFINITION: Energy Secretary Jennifer Granholm yesterday defended the Biden administration’s broadly defined infrastructure plan and criticized Republicans who are discounting the inclusion of spending on electric vehicle charging, transmission lines, and more.
“It seems to me like electric vehicles also drive on roads, and isn’t that infrastructure?” Granholm said during a virtual event hosted by League of Conservation Voters. “I don’t know of anyone who would seriously say transmission is not infrastructure.”
Republicans are trying to define the package as being mostly a liberal wishlist unrelated to traditional infrastructure, but Granholm said just counting roads and bridges is inappropriate for modern times.
“If you can’t see beyond roads and bridges as infrastructure, I am just not sure what is infrastructure,” Granholm said. “It’s an attack that doesn’t make sense in the 21st century.”
Granholm also accused Republicans of opposing Biden’s plan for partisan reasons, noting GOP lawmakers in the past have supported measures supporting EV charging, transmission, and replacing lead pipes.
“I can’t but think the minority in the Senate just wants to stop Joe Biden instead of supporting the people who elected them,” said Granholm, who has argued the infrastructure plan is broadly popular.
‘DECOUPLING’ OF ECONOMIC GROWTH AND EMISSIONS IS HAPPENING: An analysis yesterday from the Breakthrough Institute shows that it’s possible to have economic growth at the same time that carbon emissions decline, even accounting for emissions in goods imported from overseas.
Since 2005, 32 countries with a population of at least one million people have “absolutely decoupled” emissions from economic growth, according to Breakthrough climate scientist Zeke Hausfather.
This includes mostly wealthy countries such as the U.S., Japan, Germany, and the U.K., where clean energy has become cheaper and coal use has peaked.
For example, in the U.S. territorial emissions (those within national borders) have fallen around 15%, with consumption emissions declining 18% (embodied in the goods consumed in the country). At the same time, GDP has increased by about 29%.
Hausfather argues it’s “only a matter of time” before this decoupling occurs in developing countries, as clean energy costs become even cheaper.
“The extent to which this will occur rapidly enough to avoid dangerous levels of warming depends on both the degree of technological progress and the willingness of governments worldwide to invest in mitigating climate change,” he said.
OXY SPLITS FROM BIG OIL ON CARBON TAX: Not all large oil and gas companies support a carbon tax. Vicki Hollub, the CEO of Occidental Petroleum, a large Houston-based independent producer, declared yesterday that “a carbon tax is not what we’re pushing at all.”
“A carbon tax would be bad for a lot of the industry, a carbon tax would be bad for the consumers and especially for those consumers who are more disadvantaged from an economic standpoint,” Hollub said at a conference hosted by Texas Independent Producers & Royalty Owners Association, according to Bloomberg.
What it means: Oxy’s position is interesting because it has positioned itself as a leader on fighting climate change, being the first large U.S. oil producer to announce a goal to reach net-zero emissions by 2050. It is not as large as super major rivals such as ExxonMobil and Chevron that have endorsed a carbon tax.
Hollub said she prefers policies such as subsidizing carbon capture development and low carbon fuel standards. Oxy is developing several carbon capture projects, including the world’s largest direct air capture facility.
GOP SLAMS EPA PURGE OF SCIENCE ADVISERS AS POLITICAL: Top Republicans on the House Oversight Committee are accusing the Biden administration of politicizing the scientific panels that advise the EPA by purging them of all Trump-appointed members.
EPA Administrator Michael Regan, in a rare move last week, immediately dismissed all members of the Science Advisory Board and the Clean Air Scientific Advisory Committee in a move he said is meant to “reset” the panels.
Rep. James Comer, the top Republican on the House Oversight Committee, and environment subcommittee ranking member Rep. Ralph Norman slammed the move as “unprecedented.” In a letter to Regan sent this morning and shared first with Abby, the two lawmakers are seeking all documents related to the decision by April 21.
Comer, in a statement to Abby, said the dismissal of the advisers “is jeopardizing the credibility” of the EPA and “shows this administration is fast-tracking their radical far-left agenda.”
Environmentalists, former EPA officials, and Democrats, by contrast, have all largely welcomed Regan’s move to reconfigure the advisory panels that they said the Trump administration packed with industry representatives.
REGAN CALLS FOR STRICTER ENFORCEMENT OF POLLUTION RULES: Regan, in a memo this morning, is calling on EPA offices to be tougher on violations of pollution rules in heavy industrial regions that tend to be predominantly minority and lower income as part of the Biden administration’s push to tackle environmental inequities.
In addition, Regan is asking EPA staff to “incorporate environmental justice considerations into their work,” including by engaging in early and frequent consultations with the regions where people’s health suffers most from pollution and finding ways to direct the benefits of grant funding to those regions consistent with Biden’s Justice40 initiative.
Regan is meeting today with Democratic lawmakers working closely on environmental justice, including Sens. Tom Carper and Cory Booker and Reps. Nanette Barragán and Donald McEachin, as well as local officials who are members of the National Black Caucus of Local Elected Officials, the EPA said.
MIXED BAG FOR PROJECTED SUMMER GASOLINE USE: U.S. highways will see a 15% increase in travel this summer, but gasoline consumption won’t return to pre-pandemic 2019 levels during that time, the Energy Information projected yesterday in its Short-Term Energy Outlook. As demand picks up, gasoline prices could hit their highest level in three years this summer, when it will average $2.78 per gallon, up from $2.07 per gallon last year.
Overall this year, U.S. gasoline consumption will average 8.6 million barrels per day, up from 8.0 million b/d in 2020, but down from 9.3 million b/d in 2019.
Don’t expect an oil production surge either: U.S. oil output won’t return to its pre-pandemic high of 13 million barrels per day any time soon despite West Texas Intermediate crude prices projected to remain above $55 per barrel, up from $36 per barrel at the same period last year.
Oil production will average 10.9 million b/d in the second quarter of 2021, 11.4 million b/d by the fourth quarter of this year, and 11.9 million b/d in 2022.
BUT…OIL DEMAND FELL LAST WEEK: U.S. oil consumption dropped the week ending April 2 to 19.2 million barrels per day from 20.3 million b/d, EIA reported this morning.
Gasoline, jet fuel, and diesel demand fell across the board.
NO SURPRISE HERE…COLD WEATHER DROVE TEXAS PLANT SHUTDOWNS: More than half of the power plants driven offline during the deep freeze in Texas in February were due to the weather, underscoring that many of the state’s facilities were not prepared to withstand extreme cold.
At the peak of the power crisis, which put millions of Texans in the dark for nearly a week, 51,173 megawatts of electricity were offline, with 54% of those outages due directly to the cold, the Electric Reliability Council of Texas, the state’s grid operator, said in a preliminary report released Tuesday.
ERCOT also found that equipment failures unrelated to the weather and fuel limitations contributed to outages. The grid operator plans to issue a more comprehensive report on the outages by the end of August.
SPEAKING OF TEXAS…The American Council on Renewable Energy, on behalf of renewable investors, wrote a letter yesterday to Republican Gov. Greg Abbott and other elected leaders opposing legislation introduced in the state legislature forcing solar and wind farms to purchase “ancillary services” and backup power to manage fluctuations on the grid.
In the aftermath of the grid crisis, Texas Republicans have introduced various legislation to raise costs on renewable developers, despite the fact that failures in the natural gas system were most responsible for outages.
The renewable companies note that Texas, blessed with abundant sunshine and wind, is historically known to be accommodating to renewables, with more than $60 billion invested into those technologies in the state.
Those investments came “because of our confidence in Texas’ historically friendly business environment,” said ACORE President and CEO Gregory Wetstone, but that “trust would be undermined” by the proposed legislation which he said is “premised on the discredited assumption that renewable energy was disproportionately responsible” for the outages.
‘GREEN’ HYDROGEN COSTS TO FALL FAST: Hydrogen made with renewable energy (known as green hydrogen) will be cheaper than hydrogen made from natural gas paired with carbon capture (or blue hydrogen) by 2030, BloombergNEF says in new research this morning.
Currently, the cheapest way to produce decarbonized hydrogen is through natural gas paired with carbon capture, though there are few commercialized projects to date. Costs for green hydrogen are higher due to the cost of renewable electricity and the high cost of electrolyzers needed to split water into hydrogen and oxygen.
BNEF, however, expects that cost equation to change quickly over the next decade, in large part because they’re expecting renewable electricity costs to fall faster. BNEF expects the levelized cost of solar PV to be 40% cheaper by 2050 than their projections from two years ago.
By 2050, BNEF says green hydrogen production will be cheaper than producing hydrogen from natural gas without carbon capture, and even cheaper than natural gas in 15 of the 28 countries it analyzed (though not in the U.S.). In addition, BNEF says the opportunity for cost declines in blue hydrogen production in the next decade are minimal.
The Rundown
Washington Post ‘This is environmental racism’: How a protest in a farming town sparked a national movement
Reuters High stakes at sea in global rush for wind power
Bloomberg America’s top residential solar CEO has started selling peace of mind
New York Times PG&E charged with crimes in 2019 California wildfire
Bloomberg EPA’s new chief gets to work on climate goals—and hiring scientists
Calendar
FRIDAY | APRIL 9
12 p.m. OurEnergyPolicy will host a webinar on “The Future of Nuclear” discussing the state of the industry and its role in a clean energy future.
WEDNESDAY | APRIL 14
11 a.m. Green 2.0, US Climate Action Network, Climate Nexus, and the National Black Environmental Justice Network will hold an event called, “The First 100 Days: The People’s Town Hall for Justice.” Speakers include Rep. Donald McEachin, D-Va. and Shalanda Baker, deputy director for energy justice at the Department of Energy.
TUESDAY | APRIL 20
12:30 p.m. The National Capital Area Chapter of the United States Association for Energy Economics’ will hold its annual Energy Policy Conference. The virtual event runs over two days.
