Pipe Dreams: First in a continuing series on whether capturing carbon is a climate solution or a dangerous distraction.

With his climate agenda stalled in Congress, President Joe Biden has managed to win billions in federal spending for one pillar of his platform that is gaining increased attention globally: carbon capture.

In a major win for oil, coal, utilities and other industries, the federal government is poised to make its largest investment ever—more than $12 billion from last year’s infrastructure bill—in technologies that capture carbon dioxide from smokestack emissions or straight from the air.

ExxonMobil, Southern Company and other oil fossil fuel giants have promoted carbon capture and storage as a tool for cutting emissions for more than a decade, with little to show for it. 

Still, carbon capture is gaining traction with politicians in both parties, policy experts, scientists and even some environmentalists who say that the threat of climate change is so dire that it requires every possible solution.

Supporters including Sen. Sheldon Whitehouse, a Rhode Island Democrat and one of the Senate’s most outspoken champions of climate action, point to modeling by academics and others that show the technologies could play a critical role in curbing emissions, particularly from hard-to-tackle sectors like heavy industry and shipping.

Their arguments have won unprecedented spending on carbon capture over the past year, with governments in Europe, Canada and Australia also committing billions in subsidies. Proponents say all this funding could prove transformative and, within a decade, could help cut hundreds of millions of metric tons of pollution annually.

But many progressive climate groups like Greenpeace and 350.org say oil companies are promoting the technologies as a distraction to avoid phasing out their products. At best, they argue, carbon capture and removal will play a marginal role in limiting emissions. At worst, they warn, subsidies for the technologies will prolong demand for fossil fuels, squandering money that would be better spent on replacing coal, oil and gas altogether.

In 2020, U.S. greenhouse gas emissions totalled nearly 6 billion metric tons of carbon dioxide equivalent, including other pollutants like methane. Even optimistic projections say that carbon capture and removal technologies will be able to cut only about 250 million metric tons annually by 2035, or about 4 percent of 2020 emissions.  

“The Biden administration is really doubling down on the fossil economy and the false solutions that are entrenching that fossil economy in the name of addressing the climate crisis,” said Carroll Muffett, chief executive of the Center for International Environmental Law, a nonprofit advocacy group. “I think that is a really significant failure of vision and failure of leadership.”

The infrastructure bill, for example, will direct billions of dollars to producing electricity and hydrogen from fossil fuels paired with carbon capture and storage. Yet Muffett and others point out that wind and solar are already cheaper sources of electricity than fossil fuels, even without the added expense of operating carbon capture equipment.

The White House declined to comment for this article, but a spokesperson for its Council on Environmental Quality pointed to a report it issued last year, which said that in order to reach net-zero emissions by mid-century, “the United States will likely have to capture, transport, and permanently sequester significant quantities of carbon dioxide.”

Last month, the council attempted to square carbon capture with another pillar of Biden’s climate plan, environmental justice, issuing guidance that recommended including community input during the planning and approval of all carbon capture projects. 

Environmental justice advocates have been among the harshest critics of carbon capture, saying it won’t address the many other forms of toxic pollution from producing and burning fossil fuels. The White House’s own Environmental Justice Advisory Council included carbon capture and carbon removal in a list of the kinds of projects that would not benefit communities at all.

With the first batches of federal spending set to start flowing this year, these competing arguments are about to see their biggest tests yet.

A Flood of Investment

The last year has seen a wave of new carbon capture, storage and removal projects announced, with at least 55 in the United States alone since the beginning of 2021, according to the Clean Air Task Force, an environmental group. Some are highly speculative, such as a proposal by Exxon to build a $100 billion carbon capture “hub” in the Houston area. Exxon announced the first proposed project for the hub on Wednesday, a plan to attach carbon capture to its refinery complex in Baytown, Texas, to produce low-emissions hydrogen.

The company has said the hub can proceed only with substantial government funding and tax incentives worth $100 per ton of carbon dioxide removed, twice the current rate.

In North Dakota, an energy company bought a coal power plant slated for closure and said it would revive it by attaching carbon capture technology.

Other projects are further along, particularly in sectors including ethanol and fertilizer production, where the costs of capturing carbon dioxide are lower because of the emissions’ high concentrations of the greenhouse gas.

In the Midwest, companies want to build a network of carbon dioxide pipelines to connect corn ethanol plants and distribute the gas for injection underground. These proposals are being driven by a federal tax credit that was increased in 2018 and gives companies up to $50 per metric ton for capturing and storing carbon dioxide.

The Biden administration has promised its support. Its roadmap for reaching net-zero emissions by mid-century, released last year, included a significant role for carbon capture and storage. It has also said it wants to further increase the value of the carbon capture tax credit. The Build Back Better legislation would have raised the value to up to $85 per ton for carbon dioxide removed from smokestacks, and up to $180 per ton when the gas is removed directly from the air.

While the bill failed, the expanded tax credit enjoys support from lawmakers in both parties, including Sen. Joe Manchin (D-W. Va.), the powerful chairman of the Energy and Natural Resource Committee. 

The promise of a bigger payout has helped spur a wave of entrepreneurial activity and corporate investment in carbon removal. Microsoft, Stripe, United Airlines and other companies have announced millions of dollars in investments in carbon removal, and some have even bought carbon offsets from the first commercial “direct air capture” plant, which began operating last year in Iceland. Technology giants—and billionaire executives including Bill Gates and Jeff Bezos—have been pouring money into start-ups. Elon Musk’s foundation is funding a $100 million competition for efforts to pull carbon from the atmosphere, including direct air capture, nature-based and other approaches.

Occidental Petroleum has said it plans to begin construction this year on a direct air capture plant in Texas that will initially pull up to 500,000 metric tons of carbon dioxide from the air. The company could then pump the gas into depleted oil reservoirs to increase their production, a process that can also store most of the carbon dioxide underground.

The International Energy Agency last year said that the most “cost-effective and economically productive pathway” to reaching net-zero emissions by mid-century required not only the rapid phase-out of coal power plants and an end to the sale of gas and diesel cars by 2035, but also substantial amounts of carbon capture and storage, with a more than 40-fold increase in the technology’s capacity by 2030, to nearly 1.7 billion metric tons. 

That tremendous leap would still represent less than 5 percent of global carbon dioxide emissions in 2021. Direct air capture capacity, it said, would need to reach 90 million metric tons by 2030 from essentially zero today.

“We’re at a point when dealing with climate that we just have to look at all the options now,” said Shannon Heyck-Williams, senior director of climate and energy policy for the National Wildlife Federation. Her organization is part of the Carbon Capture Coalition, which includes fossil fuel producers, utilities and unions and has pressed for more federal funding for the technologies.

John Thompson is the technology and markets director at the Clean Air Task Force, which is also a member of the Carbon Capture Coalition, and he said that while the United States may be closing most of its coal plants, China is building more. Deploying the technology domestically, he said, could help China adopt it on a larger scale.

“If our retrofits in the United States shave five, 10 years off the time China takes to decarbonize, that’s globally significant,” he said. “We can’t bet the planet that those coal plants are going to close.”

Direct air capture is particularly alluring because it could draw carbon dioxide out of the atmosphere. Such “negative emissions” will be necessary to meet climate targets, scientists say. Restoring natural habitats also pulls carbon from the air, is far cheaper, and has many other benefits. But many scientists say the capacity of that method is limited, and planting new forests will face competing demands for land from agriculture. Storing carbon dioxide underground could also be more durable than storing it in trees, which are vulnerable to fires and droughts.

Supporters of pursuing direct air capture say that, by pulling carbon dioxide from the air, the technology could achieve something that even the most aggressive measures to avoid emissions could not.

“Carbon removal offers a way for those of us who have caused and benefited the most from climate change to clean up our mess, and that’s one of the things that to me makes it particularly attractive,” said David Morrow, director of research at the Institute for Carbon Removal Law and Policy at American University, though he added that direct air capture is only one of several approaches to removing carbon dioxide from the air. “Emissions abatement can’t do that. We can get to zero and the mess is still there.”

Expensive and Energy-Intensive

If these arguments sound convincing—who wouldn’t want to lock away emissions for good?—many environmental advocates say they gloss over an important detail. Despite decades of research and development, and billions of dollars spent, carbon capture and removal remain extremely expensive and energy-intensive, even as the costs of alternatives have plummeted.

Building new renewable energy projects is cheaper than building new fossil fuel power plants in much of the world, and in some cases is even cheaper than continuing to operate coal or natural gas plants. Adding hundreds of millions or billions of dollars to build and operate a carbon capture system only worsens the math.

A December report by the Government Accountability Office said the Department of Energy gave nearly $684 million to six coal plants for carbon capture projects from 2010 through 2017, but that only one of those projects was built and it ceased operations in 2020, citing high costs.

In the industrial sector, critics say, other technologies such as electrification or the use of hydrogen made with renewable electricity may be more cost effective than carbon capture equipment.

Direct air capture is even more expensive. The only commercial operation captures 4,000 tons of carbon dioxide per year, an insignificant number when it comes to reducing greenhouse gases. It was built in Iceland partly because of access to abundant geothermal, emissions-free energy to run the project. 

The technology generally requires large amounts of power, heat or both, so scaling it would consume vast quantities of energy and money. Skeptics argue that it would be cheaper and better to simply feed this carbon-free energy into the grid to electrify the economy.

Large-scale carbon capture would require pipeline networks that would rival the scale of existing oil pipelines. They would come with their own set of safety risks associated with leaks and ruptures—in large volumes, carbon dioxide is an asphyxiant.

Then there is all the other pollution associated with producing, transporting and burning fossil fuels, much of which would remain unaddressed by carbon capture equipment.

“That entire fossil fuel life-cycle pollution remains in place,” said Basav Sen, climate justice project director at the Institute for Policy Studies, a progressive think tank. “You are in a sense losing an opportunity to deal with multiple environmental problems in the way you tackle greenhouse gas emissions.”

Just a Down Payment?

Carbon capture has failed to catch on commercially—there are only a few dozen plants operating globally, most of them in the United States. But both supporters and critics say that might be changing, thanks largely to government support.

The funding in the infrastructure bill was the culmination of years of lobbying by industry and unions. One carbon capture bill, which was later included in the infrastructure law, drew lobbying from dozens of corporations and industry groups in the coal, oil and power sectors, as well as from labor unions, according to OpenSecrets, which tracks money in politics. In Exxon’s lobbying disclosures, carbon capture and storage was the only issue tied to the infrastructure law it reported discussing. In fact, Exxon reported lobbying on carbon capture more than on any other issue last year, according to an Inside Climate News analysis.  

The result was more than $12 billion dollars that will fund large scale demonstration projects to capture and store carbon dioxide, as well as funding for the pipelines and infrastructure that would tie it all together. The Department of Energy, which will oversee most of the money, is required to fund at least one demonstration project each for coal and natural gas power plants and an industrial application. The bill directed an additional $8 billion to “clean hydrogen” projects. Some of that funding, too, is earmarked for using fossil fuels paired with carbon capture to produce hydrogen. Today, hydrogen is commonly produced from natural gas, but the process emits carbon dioxide.

Thompson, of the Clean Air Task Force, said the funding is important to help demonstrate the technologies at commercial scale in different applications. But he said carbon capture will need far more government support in the form of tax incentives, or a price on carbon emissions, to play a larger role.

“You could see enormous growth, something like 200 million tons of CO2 captured every year in the 2030s” if the tax incentives were increased to the levels included in the Build Back Better Act, he said.

Put another way, $12 billion may be only a down payment.