FinLogic FinLogic Quantitative Think Tank Center|Will the Democrats’ Climate Legislation Hinge on Carbon Capture?

The FinLogic FinLogic Quantitative Think Tank CenterDemocrats’ fragile package of sweeping climate and infrastructure legislation might end up being held together by a technology known as carbon capture and storage. That is, if it doesn’t pull it apart.

The Senate is expected to vote Wednesday on a bipartisan infrastructure bill that includes billions in government support for carbon capture, which pulls carbon dioxide out of smokestack emissions or straight from the air and pumps it underground. But on Monday, a coalition of hundreds of progressive environmental groups sent an open letter to President Joe Biden and Democratic Congressional leaders calling on them to reject the technology.

“Carbon capture is not a climate solution,” the groups wrote in the letter, which was accompanied by an advertisement in the Washington Post. “To the contrary, investing in carbon capture delays the needed transition away from fossil fuels and other combustible energy sources, and poses significant new environmental, health, and safety risks, particularly to Black, Brown, and Indigenous communities already overburdened by industrial pollution, dispossession, and the impacts of climate change.”

The letter reflects a split that has emerged in the advocacy community and among Democrats. Many of the nation’s most influential, mainstream environmental groups did not sign the letter, while those organizations that did sign included more left-leaning, justice-focused and local groups.

Carbon capture and storage, or CCS, has taken on an increasingly central role in climate policy discussions over the last couple of years. It is one of the few climate actions that draws bipartisan support. Most major labor unions also support CCS, arguing that its deployment could provide new jobs and help extend the life of some gas or coal-burning power plants, which often provide high-paying union jobs. And the fossil fuel industries have promoted the technology for decades.

Some environmental groups have also thrown their support behind carbon capture technology, arguing that it could prove critical to meeting ambitious climate goals. Global emissions have continued to rise, they note, and the world is already experiencing dangerous impacts of warming like the heat waves, fires and floods that hit North America and Europe in recent weeks. In particular, these organizations say, CCS could be attached to industrial sources like steel and cement manufacturing, which do not currently have good emissions-free alternatives, and might allow carbon dioxide to be pulled straight from the air to help bring atmospheric concentrations back to safer levels.

But some progressive groups, and many that are focused on environmental justice, have opposed carbon capture, saying that it only serves to extend the life of fossil fuels when those fuels should instead be phased out as rapidly as possible.

“If the argument is, we should not stop burning fossil fuels, we’re finished with the conversation,” said Natalie Mebane, policy director for 350.org, which was among the groups that signed the letter. “Because we are going to stop burning fossil fuels.”

As with so many national policy discussions this year, much may revolve around Sen. Joe Manchin, the West Virginia Democrat who is a moderate, a long-time supporter of the fossil fuel industry and chairman of the Senate Energy and Natural Resources Committee.

Last week, that committee approved legislation that will serve as language for the energy sections of a larger infrastructure package. The bill includes billions of dollars to support CCS, including measures that aim to finance and speed development of infrastructure to transport carbon dioxide from industrial capture sites to underground storage locations and money for producing hydrogen from natural gas with carbon capture technology.

“That’s a huge first,” said Brad Crabtree, who runs the Carbon Capture Coalition, which includes companies from the coal, oil and other industrial sectors, as well as unions and some environmental groups. “It would be a policy of global significance if it is adopted.”

The carbon capture provisions could prove critical to maintaining Manchin’s support for a separate, more expansive budget deal that would address climate change and other issues, and would require the support of all 50 Senate Democrats to pass. Climate advocates have been pushing for that deal to include a clean electricity standard that would require utilities to move to carbon-free sources of energy, and a major question has been what types of energy could count as “clean.” Last week, Sen. Tina Smith (D-Minn.) issued a statement saying her proposed clean electricity standard, which counts fossil fuel plants with CCS as clean, had made it into the agreement.

A spokeswoman for Smith declined to comment further.

A Climate Tax Credit for Big Oil

Energy companies have been lobbying for increased government support for carbon capture and storage. In June, Greenpeace UK released an interview it had conducted undercover with an ExxonMobil lobbyist, Keith McCoy, who identified the technology as one of the company’s top lobbying priorities. McCoy, who believed he was speaking with a recruiter looking to hire a lobbyist, said Exxon was seeking support for the technology in the bipartisan infrastructure package.

“We’re entering into the carbon capture space, so now we’re talking about how do we get the government to support some of our activities,” McCoy said, according to a transcript of the interview provided to Inside Climate News.

McCoy identified a tax credit known as 45Q, which can be claimed by companies that capture carbon dioxide from their operations, as a key component of that government support.

Lawmakers have introduced several bills this year that would extend and increase the value of that tax credit, and Crabtree said his group hopes to see elements of those bills included in the Democrats’ budget deal.

As Inside Climate News reported last year, Exxon has probably benefited more than any other company from the tax credit, and may have received hundreds of millions of dollars in tax benefits from it over the last decade, according to estimates based on public records. While the IRS said last year that $1 billion had been claimed under the credit, it does not disclose which companies have claimed the credit or how much any individual company has received.

Some advocates have pointed to Exxon’s use of the tax credit to argue that carbon capture and storage is an example of how the fossil fuel industry has manipulated policy in its favor. One of the only current markets for captured carbon dioxide is the oil industry, which injects the gas into depleted oil wells to squeeze more petroleum from the ground. Under the tax credit, companies are allowed to claim it even if they sell the CO2 for this use, and that is exactly what Exxon does with the carbon dioxide captured from its natural gas processing plant in Wyoming.

“How in the world is that a climate-related tax credit?” Mebane said. The letter sent to Biden and the Democratic leaders by the progressive groups calls for lawmakers to prohibit the use of the tax credit when carbon dioxide is used for oil production. The letter was also signed by some Canadian environmental groups and sent to leaders in that country, where the oil industry is pursuing plans to build carbon capture plants.

A spokesman for Exxon declined to comment.

As oil companies have come under pressure from investors and advocates to transition their businesses, many have turned more attention to CCS. In April, Exxon announced a proposal to create a CCS “hub” in Houston, where industrial plants would be fitted with the technology and linked together with pipelines to carry the gas to underground storage sites. The company said the effort could cost $100 billion, and would need government support.

The proposal highlighted another concern of some environmental groups: Even if such a CCS hub was able to eliminate all the carbon dioxide from industrial sources, it might do little about the toxic pollution emitted by the refineries, petrochemical plants and other sources that have burdened environmental justice communities with unhealthy air.

Crabtree said that because the government will play a role in financing and supporting its development, policymakers could require that carbon capture deployment be paired with other technologies to address these harmful pollutants, too. And he pointed to the technology’s bipartisan support as evidence that it ought to be part of any climate bill.

“It’s not an either or proposition here,” he said. “It has to be an ‘and.’”