Why the carbon capture subsidies in the climate bill are good news for emissions

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But in the heated debate about carbon capture, it’s often lost that the technology can also play a crucial role in accelerating emissions reductions in various industries. This includes cleaning up highly polluting industrial sectors such as cement, steel and fertilisers. The measures may also support the development of low-emission fuels and what is known as bioenergy with carbon capture and storage, or BECCS, which the UN climate panel’s models rely heavily on to draw scenarios feasible that prevent the planet from warming more than 2 ˚ C above pre-industrial levels.

Finally, the subsidies should spur the development of pipelines and carbon dioxide storage facilities that will be needed to reliably move and sequester increasing volumes of carbon dioxide in the coming decades, says Paulina Jaramillo, a professor in engineering and public policy from Carnegie Mellon University.

This will be instrumental in reducing the cost of other carbon capture efforts, making it more affordable to clean a wider range of products. It will also give a big boost to growing efforts to suck greenhouse gas out of the atmosphere on a massive scale, which a growing body of research finds will also be essential to controlling global warming. (This type of technology, known as carbon sequestration, is different from capturing emissions before they leave a power plant or factory.)

The Repeat Project, a Princeton effort to model the impact of climate policies, estimates that the package will generate about $28 billion in annual capital investments in carbon dioxide storage and transport projects, as well as power plants with equipment of carbon capture, by 2030. At that time, US facilities would capture and sequester about 200 million metric tons of carbon dioxide per year, a 13-fold increase over what would likely happen with only the infrastructure bill approved last year. The amount of carbon captured will double again by 2035, according to the analysis. (For comparison, the country’s greenhouse gas emissions amounted to about 5.6 billion tons in 2021.)

“The IRA creates an opportunity for the US to do that [carbon capture and storage] right,” says Julio Friedmann, chief scientist at Carbon Direct, a research, investment and advisory firm focused on carbon removal. “It provides opportunities for communities to reduce pollution, to grow and test technologies, to create clean jobs and to be globally competitive in trade and technology.”

The details

The IRA includes hundreds of billions in grants, loans, federal procurement and tax credits designed to fuel research and development efforts, renewable energy projects, electric vehicle sales, the buildup of an energy manufacturing sector clean and much more. In addition, it could accelerate the development of carbon capture and storage in several ways.

Most notably, it increases so-called 45Q tax credits for projects that capture, remove and store carbon. With these larger subsidies, companies in certain sectors could break even or even profit from adding the necessary equipment and managing the resulting carbon.

Specifically, the credit increases from $50 a metric ton to $85 a ton for industrial facilities and power plants that permanently sequester carbon dioxide in deep underground geological reservoirs, according to an analysis by law firm Gibson Dunn. It also increases that credit from $50 to $180 for facilities that remove carbon dioxide from the air and permanently store it, a process known as direct air capture.

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