Why the Federal Government is Spending $2.5 Billion on Carbon Capture

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Energy Secretary Jennifer Granholm answers questions during a press conference at the White House in Washington, United States, November 23, 2021.

Evelyn Hockstein | Reuters

The U.S. Department of Energy announced Thursday that it is taking its first steps to disburse more than $2.3 billion for carbon capture technology included in Biden’s bipartisan Infrastructure Act, which the president signed into law. in November, for carbon capture technology.

Carbon dioxide emissions result from the burning of fossil fuels and are one of the main causes of anthropogenic climate change, and the amount of carbon dioxide in the atmosphere has steadily increased over the past 60 years. .

Carbon capture technology targets carbon dioxide at the point where emissions are generated or from the atmosphere more broadly. The industry is still nascent and critics say the best use of resources is to develop clean energy infrastructure.

But Energy Secretary Jennifer Granholm thinks there’s room for both.

“Certainly our first preference is to make sure we’re powered by clean, carbon-free energy. And we do all of that. But you can walk and chew gum,” Granholm told CNBC in a video interview. Thursday. (She used the same metaphor at a conference earlier this year to describe the contradiction between pursuing green energy policies while asking oil and gas companies to increase production to counter rising prices at the pump. .)

Granholm knows there is skepticism about carbon capture technologies. Critics say it is mainly used by polluting industries as a way to delay needed work to reduce emissions.

“There are criticisms that something like this – carbon capture and sequestration – just prolongs the assets that the fossil [fuel] industry would use,” Granholm said. “I will say this: Anything we can do to decarbonize is a good thing.”

In particular, carbon capture technologies will be important in offsetting hard-to-decarbonise sectors of the economy, such as heavy industry and steel and cement production, she said.

She also said that fossil fuels will be part of the global energy infrastructure for some time.

“We have a goal of net zero by 2050. And you know, the IPCC said fossil fuels would be there during that transition,” Granholm said. “So we have to start now in these technologies.”

Carbon capture technology is still in its infancy and still quite expensive.

The Department of Energy aims to help reduce the cost of carbon removal technologies as part of its Carbon Negative Shot, or Earthshot. Earthshot’s goal is to be able to remove gigatons of carbon dioxide from the atmosphere and store it for less than $100 a ton by 2050.

“The advantage of being energy secretary is that I can see what the 17 national laboratories are working on,” she says. “And that makes me extremely optimistic about the future, because technology will eventually be our friend in solving this big problem.”

But for carbon capture technology to really develop and expand, some investors believe there needs to be a price on carbon.

In the United States, the closest thing to a financial incentive is a tax credit called 45Q, which provides up to $35 per ton for carbon dioxide or carbon monoxide stored at projects. enhanced oil recovery, and up to $50 per ton for gas. if they are stored in geological formations outside EOP projects.

For now, Granholm is content to rely on the private sector to help create this market.

“In America, we’ve historically allowed the free market to make these decisions, but other countries have, with their state-owned companies and their subsidies, have partnered up or come in and said, we’re going to take control as a government. and make sure that we make ourselves more competitive. That’s what China is doing. That’s what other countries are doing. Well, we don’t do that in America,” she said.

“But what we’re doing is creating public-private partnerships and investing in seed technology to help drive down those costs through scale.”

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