As new subsidies spur companies to invest in carbon capture and storage, policy needs to address the associated harms.
The path to the Inflation Reduction Act (IRA) is Senator Joe Manchin. His home state of West Virginia is the second-largest producer of coal and the fourth-largest producer of natural gas in the country, so gaining his support for this important climate legislation will require significant funding for carbon capture and storage (CCS). CCS can keep fossil fuels in the energy mix even as carbon emissions are phased out. It is a tantalizing set of technologies and infrastructure that allows the economy to benefit from the best of fossil fuels – high energy density, widespread availability, ability to supplement renewable generation – but eliminate the worst – CO2 emission.
For those concerned about CCS, much is practical: the first CCS power plants built in the US experienced massive cost overruns and non-competitive operating costs. Canada currently has the only North American CCS power plant in operation. Critics also worry that it could increase other environmental hazards of fossil fuel extraction and use. In my opinion, these criticisms deserve attention. Policymakers need to anticipate and address the potential hazards associated with CCS, otherwise the success of CCS could be a failure for the environment.
The IRA expanded the 45Q tax credit program, which pays companies for every metric ton of carbon dioxide produced by industrial processes or power plants that is captured and stored rather than released into the atmosphere. The legislation increases existing incentives for storing carbon dioxide in geological formations from $50 per ton to $85 per ton. Smaller credits are available for carbon dioxide used for enhanced oil recovery. The bill removes the total funding cap that can be used for these credits. The recent Infrastructure Investment and Jobs Act also includes billions of dollars in CCS-related investments, including the construction of carbon dioxide pipelines.
As with other promising environmental technologies, CCS has been underinvested by private companies. In most U.S. markets, power plants and other carbon emitters can still pump carbon dioxide into the atmosphere for free. Developing new technologies to capture and store CO2 will not be profitable without subsidies. Another challenge for private companies is that some of the knowledge gained through CCS innovations will spill over to their markets and to competitors around the world. Innovators will not be able to capture all the profits generated by their discoveries, causing innovators to invest less.these types market failure Government spending on innovation can be justified.Continued dominance of fossil fuels in China global power generation Advocates for the inclusion of CCS as a technology supported by the government with its limited resources. However, CCS itself poses environmental risks that policymakers need to recognize and address before the CCS market can take off.
Unlike other IRA-funded technologies, including wind, solar, and storage, CCS is fundamentally intertwined with fossil fuels.environmental justice organize The risks posed by links to fossil fuels are being highlighted.
On the one hand, industrial facilities and power plants that are candidates for CCS also produce local air pollutants and toxic chemicals. CCS subsidies can increase the viability and throughput of these facilities and increase the generation of co-pollutants that harm nearby communities. In addition, the company will build a CO2 pipeline to support CCS.Carbon dioxide is known to corrode pipelines, and pipeline accidents can endanger human health due to the high concentration of carbon dioxide. Injecting carbon dioxide underground also has potential negative effects, polluting groundwater and triggering earthquakes. In other words, policies that reduce the climate change harms of fossil fuels increase other environmental and health harms.
The Biden administration is taking Pipeline safety issues are serious Federal pipeline regulators are strengthening pipeline rules and oversight. However, addressing other potential harms of CCS will require joint federal and state action. Gaps in state-level regulation of toxic substances and air and groundwater pollution could become apparent if CCS takes off. As the funder of these subsidies, the federal government has a responsibility to identify any gaps and help states address them.
The IRA is betting big on CCS, which could finally bring this globally important climate technology to market. Whether CCS will be able to compete economically with other power generation technologies is uncertain, but I think it’s a worthwhile bet given the uncertain global path to decarbonizing the grid in a cost-effective and reliable manner. But without strong protections for human health and safety, the US CCS push may instead prove that fossil fuels have no future on a carbon-free grid.
Andrew Campbell is executive director of the Haas Energy Institute. Andy has worked in the energy industry his entire career. Before coming to UC, Andy worked at Tendril, an energy efficiency and demand response company, and Sentient Energy, a provider of grid management technology. He helped both companies navigate the complex energy regulatory environment and adapt their sales and marketing approaches to meet the needs of the utility industry. Previously, he served as Senior Energy Advisor to California Public Utilities Commission (CPUC) Commissioner Rachelle Chong and Commissioner Nancy Ryan. While at the CPUC, Andy was a lead consultant in the areas of demand response, rate design, grid modernization and electric vehicles. Andy has led the successful development and adoption of policies on smart grid investment and data access, electric vehicle charging regulators, demand response, dynamic pricing for utilities and LNG quality standards. Andy also worked at Citigroup’s Global Energy Group and as a reservoir engineer at ExxonMobil. Andy has a master’s degree in public policy from Harvard University’s Kennedy School of Government and a bachelor’s degree in chemical engineering and economics from Rice University.