Opinion: Investing in Carbon Capture Technology is Crucial in the Fight to Mitigate Climate Change
Updated: Oct 15, 2021
Climate Change: The Issue
As industrialization progresses, increased carbon emissions from fossil fuel usage are trapping heat inside the atmosphere. By artificially warming the atmosphere, humans have been drastically worsening the greenhouse effect since the 19th century. The greenhouse effect is a natural process that sustains the necessary temperature for life on earth, but human activities such as fossil fuel usage have taken the greenhouse effect’s impact to unsustainable levels. The consequences of climate change are extensive in scope and destructive in magnitude; problems such as drastic increases in natural disasters, losses in biodiversity, and subpar air quality will continue to worsen without rapid intervention.
In particular, the United States’ environmental footprint has grown to increasingly unmanageable levels over the past few decades. The average carbon footprint for an individual living in the U.S. is approximately 16 tons, over four times the global average and over eight times the maximum output per person needed to avoid a two degree Celsius increase in global temperatures.
The process of mitigating climate change is highly variable and its success is based on the success of transitioning to renewable energy sources, disincentivizing carbon emissions, and raising awareness about the climate crisis. The International Panel on Climate Change (IPCC) has created a set of “representative concentration pathways” (RCPs) to model predicted trajectories of greenhouse gas concentrations in upcoming years. Four of them include RCP 2.6, RCP 4.5, RCP 6.0, and RCP 8.5, which predicts a maximum global temperature increase by 2100 of 0.9-2.3, 1.7-3.2, 2.0-3.7, and 3.2-5.4 degrees Celsius, respectively.
The Paris Agreement established a lofty target of keeping warming well below two degrees Celsius, however, according to the IPCC, even meeting a two degree target requires removing 670 billion metric tons of carbon dioxide from the atmosphere during the 21st century. Decreasing the carbon intensity of energy used (i.e., the CO2 emitted per unit of energy) and decreasing the energy intensity of the economy (i.e., the energy used per unit of economic production) are rightfully looked at as a priority in the fight against global warming, however this alone is not sufficient in the long run due to the concept of carbon lock-in. Existing infrastructure often relies on the use of fossil fuels, and a transition to cleaner forms of energy may take decades due to unpaid capital costs, or stranded operational profits that come with abandoning the use of fossil fuels. Government policy also plays a role in incentivizing the use of fossil fuels; for example, subsidies targeted towards the petroleum industry increase its profitability. Thus, a rapid decrease in capital costs and an increase in investor confidence in the carbon removal industries is necessary for an effective climate crisis response.
Carbon Capture, Utilization and Storage (CCUS) Explained
Carbon Capture, Utilization, and Storage (CCUS) is a process of extracting carbon dioxide emissions from sources such as coal-powered power plants, and reusing it or sequestering it underground in geological formations. This process frequently uses direct air capture technology — this method of capturing carbon sends air through a filter that uses a solid/liquid sorbent to absorb carbon dioxide. Captured carbon can be repurposed in a multitude of innovative ways, including but not limited to helping create hydrocarbon liquid fuels and a growth stimulator for indoor crops.
Carbon capture technology provides a useful alternative for decreasing carbon footprints, especially in areas of the U.S. that are not able to transfer as easily from fossil fuel-based power generation to renewables. Not only do CCUS-equipped power plants take up less amounts of land than wind and solar power plants, and aren’t hindered by intermittent energy sources, but decarbonizing the power system without carbon capture technology could be anywhere from 50% to 250% higher in cost. In addition, CCUS-equipped plants can play an important role in increasing the flexibility of the electric system, or the extent of which the power system can respond to variance in energy consumption.
In just the past ten years, Direct Air Capture (DAC) technology has proved to be a promising industry. At the beginning of last decade, megaton scale DAC costs were over $1,000 per ton, but have since decreased to between $250 to $600, depending on the technology choice, low-carbon energy source, and the scale of their deployment. In context, these figures exaggerate the true cost of DAC technology, as most DAC projects in the status quo do not benefit from economies of scale due to their rather small size. However, although the industry has shown promising developments, federal intervention is still necessary in order to lower initial capital costs to promote large scale adoption. At least nine million tons of DAC capacity need to be operational in 2030 for the U.S. to be on track to meet 2050 carbon removal targets, and as of now, only ten large-scale carbon capture and sequestration plants have been fully constructed in the U.S. However, corporation 1PointFive is on track to begin constructing a DAC facility located in Texas capable of capturing one million metric tons of carbon dioxide annually, paving the way for the U.S. to spearhead innovation in this industry going forward.
Section 45Q Tax Credit and the Future of the CCS industry
The federal government has made efforts to incentivize the use of carbon capture technology, but its effectiveness in increasing the viability of the industry remains questionable. Section 45Q was added to the Internal Revenue Code in 2008 to provide tax credits per ton of carbon captured and sequestered/reused. However, the initial form of Section 45Q failed to spur industry growth at an effective rate, due to the credit only being available for the first 75 million tons of carbon captured, as well as requiring a minimum of 500,000 metric tons of carbon captured per year.
Just last month, a bipartisan bill named the Coordinated Action to Capture Harmful Emissions (CATCH) Act was introduced in the House of Representatives to modify the value of the 45Q tax credit. The bill expands eligibility by eliminating any annual carbon capture minimum needed to qualify for the tax credit, and increases its value to $85/metric ton of CO2 stored underground, and $60/metric ton of CO2 captured and converted into zero-fuels, chemicals, etc., a large expansion from $50/t and $35/t, respectively. The introduction of the bill has created excitement regards to the potential of the industry going forward, with Lee Beck, international director of the Carbon Capture, Clean Air Task Force stating the bill “forms the first-ever comprehensive carbon capture, removal, and storage commercialization policy package and could grow US carbon management capacity 13-fold by the mid-2030s, according to our analysis.”