Federal Legislation Supports CCUS as Economy-Wide Climate Solution

John D. Siciliano
Posted March 1, 2021

The COVID-19 relief and government spending bill passed by Congress in December, the Energy Act of 2020, included an important boost for carbon-capture utilization and storage (CCUS) technology – a must-have as an economy-wide way to address the risks of climate change.

According to Democratic Sen. Joe Manchin of West Virginia, the new Senate Energy and Natural Resources Committee chairman, during a recent call with the Bipartisan Policy Center:

“If you want to clean up the world then you better get the technology that does carbon capture and sequestration, utilization. We have new technology coming on now, and we can make [CCUS] feasible.” (Manchin was commenting on the energy measures he helped secure in the legislation).

The natural gas and oil industry, along with groups representing a broad range of industry sectors, have demonstrated continued and growing support for CCUS, and believe the Energy Act of 2020 lends critical support for key research and innovation to reduce the nation’s carbon footprint.

Economy-Wide Benefits

While oil industry players, including Occidental, Exxon, Shell, Chevron, and BP, have been proponents of CCUS, other industries are also looking to benefit from the technology that captures carbon dioxide (CO₂) for storage or repurposing in a variety of useful products. Major electric utilities, agribusiness companies like Archer Daniels Midland, manufacturers General Electric and Honeywell, United Airlines and the airline industry, and building materials company LafageHolcim are all interested in carbon capture projects.

CCUS has both the ability to remove CO₂ from an industrial facility’s emissions and use it to produce many products, including the prospect of creating net-zero fuels to low-carbon intensive building materials. Net-zero refers to a scenario whereby the same amount of CO₂ emissions are being captured, or removed, from the atmosphere as are being emitted.

Additionally, more is being done to advance basic research forward. For example, Exxon Mobil has been working with the electricity services firm Fuel Cell Energy in developing a new carbon capture technology that can significantly reduce emissions from natural gas power plants more efficiently than more conventional carbon-capture technologies. Fuel Cell Energy estimates that carbonate fuel cells can capture nearly 90% of the CO₂ from a plant’s emissions.

Aiming Toward Paris

Removing carbon from industrial emissions is just the beginning. Direct Air Capture (DAC), refers to technology used to extract CO₂ directly from the atmosphere.

DAC is described by the United Nations and the International Energy Agency as an important technology for meeting global emission reduction targets included in the 2015 Paris Climate Accord. The Energy Act of 2020 incentivizes widespread commercial deployment of DAC.

Occidental, which has been using and storing CO₂ in its operations for more than 40 years toward its goal of a net-zero future, is focused on developing cutting-edge CCUS technologies to remove human-made CO₂ from the atmosphere for use in lower carbon oil production and to create less carbon-intensive products like fuels, chemicals and materials like concrete. The company’s subsidiary, Oxy Low Carbon Ventures, which was formed in 2018, is working with Carbon Engineering to build the world’s largest industrial-scale DAC facility in the Permian Basin.

Other companies are also moving forward. For instance, Shell has a number of carbon capture projects underway around the world, from capture and storage sites in Norway and Australia, to the landmark use of Shell Cansolv’s carbon capture technology in Canada.

Chevron operates in partnership with Shell the Gorgon CO₂ storage site in Australia and announced in January that it would be investing in the San Jose-based startup Blue Planet Systems Corporation. The startup manufactures and develops CCUS technology intended to reduce the CO₂ intensity at industrial facilities.

Meanwhile, BP continues work with Shell, the utility National Grid, Eni, Equinor, and Total to form the Northern Endurance Partnership to develop offshore infrastructure for capturing and storing millions of tons of CO₂ beneath the United Kingdom’s North Sea.

When it comes to Congress, the Energy Act aims to create a concerted effort within government to support these vital technologies, expand research and development, while supporting demonstration projects meant to commercialize the technology. This has the dual effect of addressing the climate challenge, while ensuring the U.S. maintains its lead on technology innovation.

A Closer Look at the Energy Act of 2020

The legislation authorized billions of dollars for programs including:

• Pilot projects and commercial-scale demonstrations for different carbon-capture technologies at industrial facilities across multiple sectors.
• Development of CO₂ storage projects in different regions of the country. This is important because the CO₂ that CCUS captures must be either stored underground or reused in various products.
• Creation of a carbon utilization program to support development of commercially valuable products from captured CO₂. This will result in significant emissions reductions.
• An Energy Department Loan Program that will help finance both technology development and deployment in the field.    
• The creation of a carbon removal program, which includes a new prize competition for DAC projects.

The bill also further extends the 45Q tax credits for CCUS projects by two years, allowing those that begin construction before 2026 to receive a credit.

We applaud Congress for legislation that gives technology and innovation a central role in developing a new energy future. However, this is the start of what will need to be an ongoing mobilization, including more support for basic research and development, deployment, and regulations for advancing CO₂ infrastructure, like pipelines and other essential facilities needed to make a low-carbon future a reality.

With a sustained effort from both the private and public sector, we believe we can advance net-zero sources using CCUS technologies that are a safe, clean and reliable part of the climate solution.