Most climate-change stories are doom and gloom. The world has committed to keeping global temperature rise below the dangerous 2°C threshold, which requires reducing greenhouse-gas emissions to zero. Around the world, businesses small and large believe there’s money to be made in the race. Since profits usually drive innovations, this piece investigates how the revival of left-for-dead carbon-capture technology could save humanity.
In December 2017, a bill to increase tax credits for large-scale use of carbon-capture technology was stuck in limbo in the US Congress. Proponents of carbon capture considered the bill, called the FUTURE Act, the first major step the US could take to remain a carbon-capture powerhouse. Just as tax credits spurred innovation in the wind and solar power that caused their prices to drop, the same could happen for carbon capture, experts said. Globally, carbon capture has received a tiny fraction of government spending compared to wind and solar power.
On Feb. 9, 2018, as part of a budget deal, US president Donald Trump signed the bill into law. It will offer tax credits to any plant built before 2024 that can capture and store at least 100,000 metric tons of carbon dioxide annually. The tax credits offered are per metric ton of carbon dioxide captured: $30 if the carbon dioxide is put to use (pushing out oil from depleting fields is the most popular) or $50 if it is simply buried in underground storage.
In the week following, energy experts took a rather long and twisted Twitter thread to debate whether the tax credits could work in practice. Here’s an extremely condensed summary:
Alex Doukas of Oil Change International said tax credits are a blunt tool that could be misused. For instance, oil companies could game the system and benefit from the tax credits, by burying emissions without actually developing any new technology to bring carbon-capture costs down.
Tyler Norris of Cypress Creek Renewables said that governments can only spend a limited amount on tackling climate change, and he wasn’t convinced that the bill did enough to ensure that every dollar would be well spent towards that goal. If fossil-fuel industries were to get taxpayer subsidies of any form, they should have to meet a higher standard than, presumably, renewable-energy companies getting similar tax credits. (Fossil-fuel companies like ExxonMobil have been found guilty of funding misinformation campaigns that sowed doubts about climate change.)
Julio Friedmann, a former official in the US Department of energy, considers that point moot. “The money is not going to the fossil-fuel companies, it goes to whoever reduces emissions, We’re incentivizing good behavior.”
MIT researcher Jesse Jenkins acknowledged the criticism but wasn’t convinced that the limitations of the tax credits would kill the benefits. The ugliness of actual lawmaking, he said, may leave loopholes enabling bad actors to game the system, but it’s still good news that federal government policies are going in the right direction. His case is basically that, without the FUTURE Act—however flawed—development of carbon-capture tech would’ve almost certainly stalled, and every climate model insists that the world will need the technology in its arsenal to fight climate change.
The one thing both proponents and critics agreed on was that the benefits of the tax credits won’t be fully realized until supporting policies, such as a universal carbon price, are put in place and create the market pull for carbon-capture technology. Some policies only truly succeed with a long-term view.