Growing Momentum for Carbon Capture

Mark Green
Posted July 2, 2021

Carbon capture, utilization and storage (CCUS) is a rarity in Washington: a technology that apparently is liked by just about everyone – Democrats, Republicans and Independents alike. It certainly looks like the future for CCUS – identified in API’s Climate Action Framework as key in addressing the risks of climate change while also developing the energy America needs to grow and be safe – is bright.

That’s the big takeaway from this week’s webinar by Our Energy Policy, a non-profit facilitator of civil dialogue on energy policy issues. Event panelists agreed that CCUS generally and specifically, the 45Q tax credit to spur CCUS projects, has lawmakers on Capitol Hill practically locking arms in support.

Fast-tracking the commercial scale-up of CCUS is a major industry priority, because it allows continued robust natural gas and oil development while simultaneously reducing carbon dioxide associated with that development. The U.S. is the world leader in deploying CCUS technology, with a dozen commercial-scale, operating facilities. Again, the policy horizon for accelerating CCUS deployment looks promising. Amanda Eversole, API executive vice president and chief operating officer and co-host of this week’s webinar:

“Climate change poses a major risk, and API and our member companies are poised to play a pivotal role in its solution. … There is certainly more work to do, and following the CCUS model, America's natural gas and oil industry is laser-focused on scaling existing technologies and developing new ones that will maximize emissions reductions in ways that are cost effective for businesses and consumers.”

Key points from the discussion:

CCUS has broad application

Using CCUS to capture CO₂ isn’t limited to oil and natural gas. Energy-intensive industries including steel, cement-making and others have need to capture those emissions as well. In addition, captured CO₂ can be used to create beneficial products. Ryan Edwards, Oxy Low Carbon Ventures:

The versatility of “carbon capture is one of its great points. It's a really broad family of applications and technologies. … There is no one size or value for the credit that fits everything. And so, policy side we recognized that with proposals to enhance the value of 45Q for direct air capture. … For industrial capture things like cement, carbon capture is absolutely essential to decarbonize. It’s going to need a higher credit to [move forward].”

A higher level of support for CCUS would be consistent with the 2019 report of the National Petroleum Council. ClearPath’s Jeremy Harrell said wide CCUS deployment is essential for the most significant CO₂ reduction:

“As we’ve talked to folks on the ground, we see really key opportunities moving forward on the utilization side, and that extends beyond enhanced oil recovery. But we see enhanced oil recovery as probably an imperative in the medium run is as we look to … get to the challenge of getting those deep emissions reductions. [It’s] a huge opportunity as we move forward … because I don't think we can meet these deep carbonization objectives without CCUS, carbon capture technologies, taking off.”

Needed: Policies to enhance expansion

Harrell called the 45Q tax credit, which Congress extended late last year, the “most robust policy lever” to speed up CCUS deployment. He said there are 30 to 40 U.S. projects in various stages of development across various sectors. Edwards said 45Q was a game-changer:

“The initial 45Q credit back in 2018 really catalyzed the industry and opened the door to be actually able to make this as a business. It's the first time there's really a clear economic incentive for CCUS.”

The Biden administration is considering steps government can take to help deployment of CCUS and related technologies such as direct air capture, he said. This week the Council on Environmental Quality issued a report on advancing CCUS at increased scale. And again, there was almost unheard of consensus in Congress around expanding the tax credit. Edwards:

“45Q in itself is not the end point. It's critical. It's been a great catalyzer and starting point, but we really do need a strengthened and broadened policy framework to really launch CCUS at the scale we need.”

Add to the policy mix a new report from former Energy Secretary Ernest Moniz and AFL-CIO President Richard Trumka that includes recommendations the White House, Congress and a number of federal agencies identify priority regions for CO₂ transport and storage development – infrastructure – and development of CO2 hubs in energy production areas.

Promising outlook

Harrell said the next year and a half looks very good for CCUS in Congress – evidenced by its inclusion in the bipartisan infrastructure package under consideration. Harrell:

“We think that [bipartisanship] sends a really important market signal to the private sector as they look to invest in these technologies. We're getting an influx [of interest from] the financial community wanting to talk through these technologies and … on the application side we're seeing more and more [examples]. … This is not just an oil and gas technology. It goes across the realm of technologies moving forward. It's a really exciting time, and I think the politics here are going to play out well over the next 18 months.”

Eversole said CCUS is an example of the collaboration among stakeholders that will address the intertwined climate and energy issues and bring about a lower-carbon future:

“With a combination of public policies and industry initiatives and lots and lots of fact-based, civil discourse, we can tackle the climate challenge, maintain our nation's economic competitiveness and prepare for the world's long-term energy needs. CCUS puts long-awaited promises into practice. So, it bears repeating, policymakers and industry leaders share a vision for a lower-carbon future. Clearly, CCUS provides a major opportunity for the public and private sectors to come together.”