Why are federal units spending $ 2.5 billion on carbon capture?

Energy Secretary Jennifer Granholm asks questions during a press briefing at the White House in Washington, DC, USA, 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 two-party infrastructure law, signed by the president in November, for carbon capture technology.

Carbon dioxide emissions are the result of fossil fuel combustion and are the primary cause of anthropogenic climate change, and the amount of carbon dioxide in the atmosphere has been steadily rising for the past 60 years.

Carbon capture technology aims to collect carbon dioxide where emissions are generated or spread from the atmosphere. The industry is still emerging, and critics say better use of resources is to increase clean energy infrastructure.

But Energy Minister Jennifer Granholm thinks there is room for both.

“Certainly our first desire is to make sure we are powered by clean, carbon-free energy. And we do it all. But you can walk and chew tires,” 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 a green energy policy as she asked oil and gas companies to increase their production to counter rising pump prices.)

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

“There are criticisms that something like this – carbon sequestration and sequestration – only prolongs fossil funding [fuel] the industry would benefit, “Granholm said.” I will say this: all we can do for decarbonization is a good thing. “

In particular, carbon capture technologies will be important to compensate for economic sectors that are difficult to decarbonize, such as heavy industry and steel and cement production, she said.

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

“We have a net zero target by 2050. And you know, the IPCC said fossil fuels will be present during this transition,” Granholm said. “So we need to start with these technologies right away.”

Carbon capture technology is at a very early stage and is 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 carbon dioxide gigatons from the atmosphere and store it for less than $ 100 per tonne by 2050.

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

But for carbon capture technology to truly grow and expand, some investors believe that carbon needs to be priced.

The closest financial incentive the United States has is a tax credit called 45Q, which offers as much as $ 35 per tonne for carbon dioxide or carbon monoxide stored as part of improved oil recovery projects and as much as $ 50 per tonne for gases if stored in geological formations outside the EOP projects.

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

“In America, we have historically allowed the free market to make those decisions, but other countries, with their state-owned enterprises and their subsidies, have joined or entered and said, we will take control as a government and make sure to make us more competitive. “Other countries do it. Well, we don’t do it in America,” she said.

“But what we’re doing is creating public-private partnerships and investing in technology at an early stage to reduce those costs through scale.”

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