Carbon Capture, Utilization and Storage

The use of various technologies to capture carbon from industrial facilities, power plants, and, ultimately, the atmosphere must be a critical element of a U.S. decarbonization strategy.

Carbon capture, utilization, and storage (CCUS) represents a set of technologies and applications that capture CO₂ from industrial processes and power generation and either store it underground or incorporate it into new products. There are 19 full-scale carbon capture projects currently operating around the world (including 11 in the United States), capturing nearly 40 million metric tons of CO₂ per year. The beneficial utilization of CO₂ in the production of building materials, fuels, and algae-based products is an area of growing interest.

IPCC scenarios for reaching the Paris Agreement’s 2 degrees C goal show that doing so without CCUS could more than double the overall cost. As some level of U.S. fossil fuel-powered electricity generation is likely to continue for decades, a strategy is needed for capturing the associated emissions. CCUS will be even more critical in addressing industrial emissions, as the manufacture of steel, cement, glass, and chemicals often requires extremely high temperatures, and a zero-carbon alternative fuel may not be readily available (as discussed in the Industry chapter).

In the long run, technologies to directly capture of CO₂ from the atmosphere can produce the “negative emissions” likely needed to achieve carbon neutrality (alongside natural sequestration approaches such as afforestation and reforestation). The continued refinement of traditional post-combustion capture technologies is essential to reducing the cost of direct
air capture.

In the long term, a meaningful carbon price is essential to driving the deployment of carbon capture.  Other supportive policies can continue to advance CCUS and build a market for captured carbon in the interim. Top priorities over the coming decade include expanding R&D, strengthening incentives for CCUS deployment, and establishing a robust CO₂ transportation infrastructure.

Key Recommendations

• Congress should reauthorize and increase funding for the Department of Energy’s carbon capture program and should extend both the “begin construction” and claiming deadlines for the 45Q tax credit for carbon capture, utilization, and storage.
• Congress should strongly ramp up research and development to cut the cost of direct air capture technologies, and should establish stronger tax incentives for direct air capture.
• Creating a “CO2 superhighway”—a network of pipelines connecting sources of CO2 to locations where it will be utilized or stored—should be a national priority in any major infrastructure legislation, with
  the aim of substantially completing such a network by 2030.

Expanding Research and Development

The aim of DOE’s Office of Fossil Energy’s Carbon Capture Program is to reduce the cost of capture to $30 per metric ton of CO₂ by 2030. An associated goal is scaling up novel technologies to a level where they can be commercially deployed in a variety of applications, including industrial processes and power generation.

Congress should reauthorize and increase funding for DOE’s Carbon Capture Program and establish performance-based objectives that direct research toward technologies with the greatest greenhouse gas reduction potential. Congress should also authorize more and bigger pilot and demonstration projects and should consider larger cost-sharing with the private sector. International collaboration efforts, such as the current joint testing program with Norway, should be encouraged.

In addition, Congress should strongly ramp up research and development to cut the cost of direct air capture, now an estimated $400 to $700 per ton CO₂, to less than $100 per ton. The National Academy of Sciences has recommended that federal funding, a total of $11 million to date, be ramped up to $1.5 billion over 15 years and cover all phases of direct air capture RDD&D.

Strengthening Financial Incentives

The 2018 enactment of an improved tax credit for CO₂ utilization and storage, known as 45Q, has created great interest in new CCUS projects of all sizes. However, the lack of official taxpayer guidance has hampered the ability of developers to utilize the 45Q tax credit to secure project financing. The Internal Revenue Service is expected to publish taxpayer guidance by early 2020, at which time developers will have less than four years remaining to begin construction and less than 10 years to claim the credit, which may not be long enough to realize a return on investment.

Congress should extend both the “begin construction” deadline and the period during which the 45Q credit can be claimed. In addition, it should lower the volume thresholds for credit eligibility to ensure that smaller (but still significant) projects can qualify. It should also make other financial tools available to developers, including private activity bonds and master limited partnerships. These have very little cost to the U.S. Treasury but would give developers access to useful financing tools already available to other types of publicly beneficial projects. Furthermore, programs such as DOE’s loan guarantee program should be targeted at enabling deployment of commercial-scale CCUS projects.

As direct air capture technologies advance, Congress should amend 45Q or establish a new tax credit for CO₂ from air capture of $100 per ton or more. (The current credit for stored or utilized CO₂, regardless of how captured, ranges from $35 to $50 per ton.)

Building CO₂ Transportation Infrastructure

Moving captured CO₂ from its sources to where it can be used or permanently stored is another major cost component—and a critical step in creating a market for CO₂. The United States currently has more than 300,000 miles of large interstate and intrastate natural gas transmission pipelines, along with millions of miles of smaller distribution pipelines. In contrast, it has less than 5,000 miles of dedicated pipelines for transporting CO₂.

It is estimated that a pipeline network of 25,000 miles is needed to connect the largest sources of CO₂ with both enhanced oil recovery and saline storage sites. Much research into routing and building such a network has been completed, but it remains for states and the federal government to implement a transportation construction plan in a timely manner. Creating a “CO₂ superhighway” should be a national priority in any major infrastructure legislation, with the aim of substantially completing such a network by 2030.

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Digitalization

As digital technologies become more ubiquitous, they are fundamentally changing how we use and consume energy. The digitalization of energy—through the use of sensors, networked devices, data, and analytics—has enabled a systems-based approach that can significantly reduce energy use and carbon emissions across the economy. Examples include:

• Power: The digitalization of the grid can transform how power is generated and distributed. A combination of digital technologies can increase the efficiency of power plants and improve the power grid’s ability to handle more intermittent generation from renewables and distributed resources while improving reliability. An interconnected power system can also expand the use of demand-response strategies to reduce or shift consumers’ energy use and avoid capital costs associated with additional generation.
• Transportation: The digitalization of transportation through sensors and connected vehicles can help manage fleets and optimize routes, resulting in increased efficiency and reduced maintenance costs. Digital technologies also have the potential
  to reshape personal transportation through automated driving technologies and new shared mobility services.
• Industry: Smart manufacturing enabled through networked industrial equipment, advanced controls for industrial processes, and additive manufacturing (i.e., 3D printing) can increase the operating efficiency of manufacturing plants while reducing their emissions.
• Buildings: The digitalization of buildings through management systems, smart heating and cooling systems, smart lighting, and connected appliances and equipment can both reduce energy use through greater efficiency and shift when energy is used in order to reduce emissions.
• Oil and Gas: Utilizing digital tools such as advanced modeling, machine learning, and remote sensing, the oil and gas industry can increase efficiency, as well as better predict and identify equipment failure and methane leaks, thus enabling significant emissions reductions.
• Agriculture: Precision agriculture—which makes use of satellite and weather data, connected devices and sensors, and automated equipment—can increase productivity while reducing emissions-producing agricultural inputs.

Digitalization can thus play a significant role in moving the economy toward carbon neutrality. Priorities over the coming decade to realize the full potential of digital solutions include prioritizing systems-based research and development, addressing information gaps, leveraging government procurement of digital solutions, and expanding access to broadband networks.

Key Recommendations

• Congress and the Department of Energy should prioritize RDD&D efforts that enable systems-based efficiency through digital technologies, and should support the development of real-time measurement and verification protocols for systems-level efficiencies in buildings, industry, and transportation.
• All levels of government—federal, state, and local—should lead by example by requiring agencies to procure digital solutions, documenting the related energy efficiencies and cost-savings, and publicizing the lessons learned.
• Congress should fund and oversee the scaling and accelerated deployment of broadband infrastructure nationwide, especially in rural areas.

Prioritizing Systems-Based RDD&D

Congress and DOE should prioritize RDD&D efforts that enable systems-based efficiency through digital technologies. A systems-based approach that interconnects the built environment, electrified transportation, distributed generation, and a smart grid can lead to real opportunities to reshape how power is generated and consumed so as to minimize carbon emissions.

Addressing the Information Gap

A key to unlocking the potential of digitalization is quantifying its systems-based performance so that companies, state public utility commissions, and other stakeholders can better understand the financial benefits and associated emissions reductions. Congress should direct DOE to provide financial and technical assistance to develop real-time measurement and verification protocols for systems-level efficiencies in buildings, industry, and transportation.

As connected devices and management systems proliferate, DOE and the National Institute of Standards and Technology should work with relevant stakeholders to develop interoperability standards and communication protocols between devices and systems.

Increasing Government Procurement

All levels of government—federal, state, and local—should lead by example by requiring agencies to procure digital solutions, documenting the related energy efficiencies and cost-savings, and publicizing the
lessons learned.

Expanding and Upgrading Broadband Access

Deployment of new connected devices requires the broad availability of reliable, high-speed internet. Congress should fund and oversee the scaling and accelerated deployment of broadband infrastructure nation-wide, especially in rural areas. Programs at the Federal Communications Commission, Rural Utilities Service, and U.S. Department of Agriculture that provide funding for expanded and upgraded broadband service should be scaled to help enable the deployment of digital solutions nation-wide.

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Bioenergy

Bioenergy has significant potential to contribute to decarbonization across multiple sectors of the economy.

Different forms of bioenergy can be produced from a wide range of organic materials including crops, agricultural and food wastes, and forest products. The potential benefits of biomass energy are well established and have been recognized by the Intergovernmental Panel on Climate Change. The CO₂ released by the burning of biofuels can be balanced out by the CO₂ absorbed from the atmosphere in the growth process, including through the long-term management of forests to increase carbon stocks. Pairing bioenergy with carbon capture and storage (BECCS), such as by running a power plant on biofuels and capturing and sequestering the resulting emissions, can contribute further to decarbonization by producing “negative emissions” that could offset emissions from other activities.

Current and potential applications of bioenergy include:

• Transportation: Biomass can be converted into liquid fuels for transportation, including possibly aviation fuels. The biofuels used most commonly today are corn ethanol and biodiesel, with select application and research of cellulosic ethanol and other fuels.
• Power: Biomass can be converted into heat and electricity through burning, bacterial decay, and conversion to gas or a liquid fuel. Bioenergy can more readily substitute for fossil fuels burned in power plants than some other types of renewable energy.
• Industry: Bioenergy can be used in industrial processes, primarily for heating applications in agricultural and chemical production, as well as in facilities like pulp and paper mills that have access to sources of biomass. (Biomass can also be used as a feedstock in the manufacturing of plastics, chemicals, and other products traditionally derived from petroleum or natural gas.)

Biomass fuels currently account for about 5 percent of U.S. energy use, most of which comes from biofuels (mainly ethanol) and from wood and wood-derived biomass, as well as a relatively small amount from biomass in municipal waste. Biomass production can be resource-intensive, with potential tradeoffs that need to be managed, including higher nitrous oxide emissions from increased fertilizer use, increased water pollution, loss of carbon storage as natural lands are converted to croplands, and increased food prices as crops are diverted to energy use.

To realize the decarbonization potential of bioenergy while minimizing negative tradeoffs, efforts over the coming decade should focus on expanding research and development of potential applications, improving methodologies for measuring emissions and other impacts, and strengthening incentives for the use of net-zero bioenergy.

Key Recommendations

• The Department of Energy should partner with businesses on pilot demonstrations of bioenergy with carbon capture and storage to study its emissions-reducing or negative-emissions potential and to encourage commercial development.
• Federal agencies should work collaboratively to develop consistent methodologies to more accurately assess the net emissions benefits of biofuels.
• States should provide incentives to the power and industrial sectors to use low-carbon bioenergy and bioenergy with carbon capture and storage in place of carbon-intensive fuels.

Researching Potential Applications

Federal research on bioenergy should be a key element of a White House-led low-carbon innovation agenda. DOE should partner with businesses on pilot demonstrations of BECCS to study its emissions-reduction and negative-emissions potential and encourage its commercial development. DOE should lead continued research on new biomass materials and growing methods, such as more efficient and higher-yield bioenergy crops, perennial grasses, and algae production on low-productivity land or offshore. The U.S. Forest Service should lead research on the conversion of vegetation thinned in wildfire resilience efforts to biomass in order to demonstrate economic benefits for private and public forest owners.

Improving Measurement and Analysis

Additional research is also needed to better assess the emissions benefits and other potential impacts of bioenergy. Current lifecycle estimates of emissions benefits vary widely; recent studies on currently available ethanol technology estimate greenhouse gas reductions of 27 to 43 percent compared to gasoline.

To more accurately assess the net emissions benefits of biofuels, federal agencies should work collaboratively to develop consistent methodologies to calculate supply chain emissions, land-use change emissions, and fossil fuel displacement benefits. This could include improving existing tools—such as DOE’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model—to better inform decisions about agricultural production and the design of products that might use bioenergy. In particular, efforts are needed to limit the displacement of food crops through better understanding the land-use change implications of different biomass options and identifying lands that are best suited to growing biomass instead of food crops.

Establishing Standards and Incentives

Improved analysis can inform the development of standards ensuring the carbon benefits of biofuels. Some biofuels currently qualify for California’s low carbon fuel standard by meeting requirements for reduced carbon intensity. The federal regulatory framework outlined in the Transportation chapter should similarly include biofuels that have qualified as low- and zero-carbon fuels.

As additional bioenergy options are developed and their emissions and other impacts are better understood, states should provide incentives to the power and industrial sectors to use low-carbon bioenergy and BECCS in place of carbon-intensive fuels and products, for instance through renewable portfolio standard carveouts.

The U.S. Department of Agriculture should support farmers growing biomass crops including experimental biofuel crops. This support should include federal crop insurance for additional biomass crops and payments to farmers hosting field tests. States and the Department of Agriculture should also develop conservation incentives that accompany federal biomass grower support, such as through specialized programs to support the use of agricultural conservation and soil health practices in biomass production.

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Hydrogen

Hydrogen has significant potential to contribute to decarbonization as a valuable zero-emission energy carrier across multiple sectors of the economy.

Currently, hydrogen is used primarily as a feedstock for crude oil refining, fertilizer production, and food processing. However, it can also be used to generate electricity and heat across all sectors. Importantly, hydrogen can be stored for long periods and used on demand. Converting hydrogen into heat and electricity produces no emissions—only heat and water.

The production of hydrogen itself can generate significant greenhouse gas emissions, depending on the method used. The primary pathway today is steam methane reforming, which creates hydrogen from natural gas, producing significant CO₂ emissions. Lower-emission pathways under development include methane pyrolysis, which splits natural gas directly to create hydrogen and solid carbon, and electrolysis, which uses electricity to create very pure streams of hydrogen and oxygen from water.

Surplus electricity from zero-emitting renewables and nuclear can be used during periods of overgeneration to produce large quantities of “green” zero-carbon hydrogen. Overgeneration, which typically occurs at times of day when electricity demand is low and renewables production is high, is projected to grow in the future, and hydrogen is an excellent and easy way to store that energy for later use, ideally as a substitute for carbon-emitting energy sources. In addition to “green hydrogen,” carbon capture can be applied to the steam methane reformation process to produce “blue” hydrogen, currently the lowest-cost form of low-carbon hydrogen.

Current and potential hydrogen applications include:

• Transportation: Hydrogen can be used either in a fuel cell or an internal combustion engine to power a vehicle. Several auto manufacturers produce fuel cell electric vehicles. Fuel cells may be particularly useful in larger vehicles like buses and trucks, as well as in maritime shipping.
• Power: Hydrogen can be blended with natural gas to produce lower-emission electricity from natural gas combined-cycle power plants.
• Industry: Hydrogen can be combusted to generate high-temperature heat for industry and used as a cleaner alternative for processing iron ore.
• Buildings: Hydrogen can be used in appliances such as cookstoves and water heaters. Fuel cells
  also can provide residential and commercial heat and electricity.

To realize the decarbonization potential of hydrogen, priorities over the coming decade include expanding research and development of production pathways and potential industrial applications, developing the necessary infrastructure, and creating incentives and standards for the use of hydrogen.

Key Recommendations

• The Department of Energy should partner with industry to accelerate the development of low-carbon pathways to produce hydrogen and to develop alternative industrial processes that rely on hydrogen instead of fossil fuels.
• Congress should fund the development of state and regional plans to kickstart the buildout of storage, pipeline networks, and other infrastructure to support higher levels of hydrogen use across sectors.
• Congress and states should provide incentives for the adoption of technologies employing hydrogen, such as hydrogen fuel cells.

Expanding Research and Development

Federal research on hydrogen should be a key element of a White House-led low-carbon innovation agenda. DOE should partner with industry to accelerate the development of hydrogen pathways by: bringing down the cost of low-carbon hydrogen production methods; developing alternative industrial processes that rely on hydrogen instead of fossil fuels; reducing the weight and volume, and increasing the durability, of hydrogen storage systems for vehicles and other applications; and developing alternative materials and standards for pipelines to transport hydrogen, which can embrittle steel and welds.

Building Hydrogen Infrastructure

To enable the increased use of hydrogen, a distribution network connecting production facilities and end users across multiple sectors must be established. As federal and state infrastructure plans are developed, they should consider potential hydrogen demand from industrial, transportation, power, residential, and commercial consumers. Congress should fund the development of state and regional infrastructure plans to help kick-start the buildout of storage, pipeline networks, and other infrastructure to support higher levels of hydrogen use across sectors.

Creating Incentives for Using Hydrogen

To help increase demand, Congress and states should provide incentives for the adoption of products using hydrogen. For example, Congress should expand the electric vehicle tax credit to include fuel cell electric vehicles (as recommended in the Transportation chapter). Congress also should offer tax credits for companies that invest in hydrogen-based processes to reduce their emissions, as well as for commercial and residential installations of hydrogen fuel cells.

Establishing a Regulatory Framework

Akin to the Natural Gas Act, Congress should grant the Federal Energy Regulatory Commission authority to assist with interstate hydrogen pipeline, storage, and compressor station siting. The commission should also consider rules that would enable hydrogen technologies to be part of wholesale electricity and natural gas markets.

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