Newly juiced subsidies for carbon capture and storage have led to renewed hostilities within environmental groups and the Democratic Party over whether it is a properly green technology or a handout to fossil fuel companies.
Among the hundreds of billions in grants, loans, and other green energy subsidies passed in Democrats’ Inflation Reduction Act is an expanded 45Q tax credit, which incentivizes firms to capture, store, or utilize their carbon dioxide emissions for other industrial processes rather than allow emissions to escape into the atmosphere. CCS, sometimes also called CCUS to include “utilization,” has been widely embraced by sectors that rely on fossil fuels, including energy producers, utilities, and manufacturers, as a way to reduce their environmental footprints.
However, some academics and environmental groups have deemed CCS a failed technology for not being more widely in use after Congress allocated billions to fund demonstration projects. They also consider carbon capture also to be a license for oil and gas companies to keep on drilling and are lobbying against more subsidies now that the government will be devoting more money to it.
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The new law increases credit values to $85 per ton for industrial facilities and power plants that capture carbon and store it in geologic formations. It also raises credit values to $60 per ton of captured carbon for both generic utilization and for a process known as enhanced oil recovery, whereby captured carbon is then injected back into the ground for oil production.
The changed credit also extends eligibility for projects to 2033 so that any project that commences construction before Jan. 1 of that year can claim the credit, and it allows for a novel “direct pay” option.
Pro-CCUS groups like the Carbon Capture Coalition, a group of more than 100 companies, unions, and environmental policy organizations that support carbon management technologies, praised the expanded credits, as did some oil and gas industry groups that otherwise had little nice to say about the bill.
The American Petroleum Institute, the most influential U.S. oil and gas trade group, said the bill “takes important steps” in favor of CCS, although it opposed the overall bill.
At the same time, skeptics and outright opponents of CCS have been arguing against more subsidies, arguing that taxpayers are funding a technology that encourages the continued extraction of oil and gas against the preferences of much of the Democratic Party and its green coalition to more quickly phase out fossil fuels.
Jim Walsh, policy director for environmental nongovernmental organization Food & Water Watch, stressed that the installation of carbon capture would itself require huge amounts of electricity, including demand that would be met by burning more fossil fuels.
“Carbon capture is not an energy generator — it is an energy user,” Walsh told the Washington Examiner. Instead, money dedicated to CCS could be better used to develop more renewable generating sources, he said.
Furthermore, Charles Harvey, a professor of environmental engineering at the Massachusetts Institute of Technology, and Kurt House, CEO of metals exploration company KoBold Metals, published an op-ed in the New York Times on Tuesday that called CCS a “counterproductive waste of money.”
CCS allows “for the continued production of oil and natural gas at a time when the world should be ending its dependence on fossil fuels,” the two wrote.
“By promoting C.C.S., the fossil fuel industry is slowing the transition away from fossil fuels,” Harvey and House said, also noting the failure or closure of several industrial and power generation projects that received government funding to demonstrate CCS.
Pro-CCS groups have argued that the technology more or less meets the economy where it’s at.
“The truth is, the overwhelming majority of our energy consumption today is based on fossil energy, with roughly one-third of that driven by the industrial and commercial sectors,” the Carbon Action Project wrote in a blog post it circulated Thursday in response to Harvey and House. “Carbon capture is a technological solution available right now to address just that.”
The blog also dismissed the notion that Congress is devaluing renewable energy by devoting resources to CCS, saying also that critics undervalue carbon capture for industrial uses.
“As it stands right now, implementing carbon capture for industrial heat, for example, is the only real competitive, commercially-available option,” the Carbon Action Project said.
CCS has bipartisan support in Congress, although no Republicans voted in favor of the Democrats’ sweeping new green energy, tax, and healthcare law.
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The new law also increased the value of incentives for another carbon management technology, direct air capture, which removes carbon dioxide directly from the air rather than capturing it from an industrial process.
The technology, which is currently very expensive, was recently dubbed the “holy grail” by ExxonMobil CEO Darren Woods.
