COMMENTARY
22
The smart policy bet for carbon neutrality.
Paying tribute to 50 years of citizen-led action on environmental protection, the City of Houston launched its Climate Action Plan on Earth Day 2020. The energy capital of the world committed to carbon neutrality by 2050. Meanwhile, global energy companies located in the city have reiterated their pledges to decarbonize, despite the challenges of the COVID-19 pandemic, low oil prices and the resulting global recession.
Enacting smart policies now will allow us to repair the economy while meeting long-term climate objectives. Direct air capture technology must be part of both goals.
Direct air capture works by filtering ambient air through a series of chemical processes to remove carbon dioxide from the atmosphere. The carbon dioxide can then be stored, or sequestered, in underground geological formations or converted to new products, including carbonneutral fuels.
We know direct air capture is technologically feasible, but its economics can’t yet drive broader adoption. The right policies could change that.
First, we must take advantage of the ability to use it almost anywhere. This can solve the cost problem — direct air capture is energy-intensive, and expensive, as much as $600 to capture a ton of carbon dioxide. By co-locating direct air capture systems with renewable energy facilities and close to where the captured carbon dioxide can be geologically stored, the cost can be dramatically reduced.
The coronavirus lockdowns haven’t only lowered emissions; electricity demand has dropped as much as 21 percent in much of the United States. Increasing the use of renewable energy to meet climate goals by mid-century without storage technologies can exacerbate the gap between supply and demand. Instead, excess renewables can be a free and low-carbon source to power direct air capture systems, lowering the costs.
The U.S. is well-suited for this. It has the greatest global capacity for both onshore and offshore geological sequestration of carbon dioxide, often overlapping with regions that produce wind and solar energy.
Integrating direct air capture with renewables and using these sequestration sites offer multiple competitive advantages. The renewables industry can advance without fear of over-generation, cost recovery challenges, supplychain instability and stranded assets, while direct air capture can achieve economies of scale with safe and reliable sequestration.
The projected growth of renewables by 2030 could support the removal of 650 million tons of carbon dioxide via direct air capture, equivalent to 11 percent of 2019 U.S. emissions.
Policy incentives are crucial to changing where and how direct air capture facilities are located and powered.
Only one federal policy conceivably addresses direct air capture. Section 45Q of the FUTURE Act of 2018 offers a $50 credit for geologically storing a ton of carbon dioxide, but only if a minimum of 100 kilotons is sequestered annually. Hence, small-scale projects do not qualify. Without a progressive set of policies, new concepts that initially target small quantities of carbon dioxide will not be commercially viability.
A second proposed policy change would lower costs and ensure a steady supply of lowcarbon energy for direct air capture. Production tax credits, which have enormously benefited the wind and solar industries, are set to expire this year. This expiration will magnify challenges facing renewables, ranging from tariffs on international imports to disrupted supply chains.
Production tax credits must be extended to target co-located direct air capture and renewable projects.This could support up to 100,000 new jobs by 2030, critical for a sustainable economic recovery.
A third issue ripe for policy support is transport of carbon dioxide, the critical link between capture and sequestration. Pipeline projects are often caught in onerous permitting processes, predominantly because carbon dioxide is classified as a waste stream.
Appraising it instead as “gainful” and classifying all carbon dioxide pipelines as common carriers would consolidate policy and close the decarbonization cycle by connecting sequestration sites to capture sites.
Direct air capture presents an opportunity to advance carbon neutrality, even in the face of the current economic crisis. The U.S. has globally led by example on this front, and it is time we did so again with direct air capture.