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How Team Biden learned to stop worrying and love carbon removal.
What does the new American climate policy look like?
Last week, we got a better sense. On Friday, the Biden administration unveiled a massive investment — more than $1.2 billion — that aims to create a new industry in the United States out of whole cloth that will specialize in removing carbon from the atmosphere.
As President Joe Biden’s climate law hits its one-year anniversary, the investment shows the audacity, the potential, and — ultimately — the risks of his approach to climate and economic policy.
If successful, the investment will establish a new sector of the American economy and remake another one, while providing the world with an important tool to fight climate change. If unsuccessful, then the investment could set back an important climate technology and forever link it to the fossil-fuel industry.
The investment’s centerpiece is two large industrial facilities in Louisiana and Texas that will remove more than 1 million tons of carbon from the atmosphere every year. But the program is much broader than those hubs, encompassing more advanced and experimental approaches to carbon removal, or CDR, than the government has previously funded. The government has unleashed old industrial policy tools, such as advanced market guarantees, toward the nascent field.
Although Biden is implementing this policy, the approach will almost certainly outlive his administration. America’s support for carbon removal is strongly, perhaps surprisingly, bipartisan. The new hubs and the other policies announced last week were funded by the bipartisan infrastructure law or by other bipartisan legislation.
Given all that, it’s worth it to spend some time on these investments to better understand how they work and what they might mean for the future of the American economy.
Let’s start here: Yes, we will probably need carbon dioxide removal, or CDR, to meet the world’s and the country’s climate goals.
This wasn’t always clear. When I started as a climate reporter in 2015, carbon removal was taboo, something that only climate deniers and other folks who wanted to delay decarbonization brought up. An influential Princeton study from earlier in the decade had concluded that carbon removal — especially capturing carbon in the ambient air, a strategy called direct air capture, or DAC — would never pencil out financially and that it would always be cheaper to reduce fossil-fuel use rather than suck carbon out of the sky.
But in 2018, the Intergovernmental Panel on Climate Change made a startling announcement: So much carbon dioxide had accumulated in the atmosphere that it would be virtually impossible to keep global warming below 1.5 degrees Celsius without carbon removal.
The IPCC studied global energy models and found that even in optimistic scenarios, humanity would release too much carbon by the middle of the century to keep temperatures from briefly rising by more than 1.5 degrees Celsius. But if we began removing carbon from the atmosphere, then we could avoid locking in that spike in temperatures for the long term. That is, in order to hit the 1.5-degree goal by 2100, humanity must spend much of the 21st century removing carbon from the atmosphere and sequestering it for thousands of years.
We need carbon removal, in other words, not so we can keep burning fossil fuels, but to deal with the fossil-fuel pollution that is already in the atmosphere.
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This change was only possible because CDR’s costs were falling. A few months earlier, a company called Carbon Engineering had announced that it would soon cut direct air capture’s cost to $230 a ton. (DAC was once thought to cost $600 a ton.) This suggested that in a handful of cases — a small handful — it might make financial sense to use DAC instead of decarbonizing a particular activity.
Even so, the numbers involved in this effort are mind-boggling. This year, several thousands tons of carbon will be removed from the atmosphere worldwide, at a cost of $200 to $2,000 a ton, according to one industry expert. Perhaps 100,000 tons of carbon have ever been removed from the atmosphere by a human-run process, according to CDR.fyi, a community-run database.
But by 2050, in order to hit the IPCC’s targets, humanity must remove about 5 billion tons a year at a cost of roughly $100 a ton.
For context, the global shipping industry moves about 11 billion tons of material each year.
In other words, in the next three decades, humanity must perfect the technology of CDR, find a way to pay for it, and massively scale it up to the degree that it captures roughly half of the amount of material that travels via oceanborne trade today. And it must do this while decarbonizing the rest of the energy system — because if we fail to bring fossil-fuel use nearly to zero during this period, then all of this will be for naught.
Q: Well, if we have to store all this carbon for a very long time, why don’t we plant a lot of trees?
A: For a few years in the mid 2010s, trees did seem like the cheapest way to pull carbon out of the atmosphere.
But the scale of the carbon problem exceeds what biology alone can fix. Since 1850, humanity has pumped 2.5 trillion tons of carbon dioxide into the atmosphere. This is nearly twice the total biomass of all life on Earth. Only geology can deal with such a massive (literally) problem. To truly undo climate change, we must put carbon back into geological storage. Plus, even if you sopped up a lot of carbon with trees, they might burn down. Then you’d be back where you started.
Yet CDR isn’t just a logistical problem.
Fossil fuel companies have long used the rhetoric of carbon removal — and its relative, carbon capture and storage, which sucks up climate pollution from a smokestack or industrial process — as an excuse to keep drilling for oil and gas. At the same time, they’ve resisted any federal regulation that would require them to actually capture carbon when they burn fossil fuels.
What’s more, the infrastructure and the expertise best-suited for carbon removal is largely in the same places that have fossil-fuel industries today. (Think of the Gulf Coast or North Dakota.) Some people who live in those places want to see decarbonization end the fossil-fuel industry forever — not transform it into something different, like a carbon management industry.
And although the technology to inject captured carbon dioxide into the ground is decades-old, concentrated CO2 can be dangerous if mishandled.
It’s not hard to imagine a world where the promise of CDR allows oil and gas companies to keep drilling and polluting, but where a lack of any binding regulation — and local pushback whenever a CDR facility is announced — means that very little carbon actually gets removed from the atmosphere. In that world, no matter how powerful CDR is technologically, the politics of CDR would make climate change worse.
Which brings us to the Biden administration’s strategy for scaling up the CDR industry. It has three components:
1. Build massive direct air capture facilities around the country.
2. A slew of new programs to boost alternative (and maybe less energy-intensive) approaches to CDR.
3. A new “Responsible Carbon Management” guideline.
In short, the administration is seeking to scale up the most straightforward carbon-removal technology, financially support other promising approaches, and then ensure it all happens in an above-board way.
The marquee announcement here are the carbon capture hubs, which were widely covered last week. The Energy Department will spend $1.2 billion on large-scale facilities in Louisiana and Texas that will use industrial processes to cleanse carbon from the ambient air. Each will remove about one million tons of carbon a year when complete.
Project Cypress, the Louisiana hub, will be run by the federal contractor Battelle in conjunction with Climeworks, a Swiss DAC company, and Heirloom, which stores carbon dioxide in concrete.
The boringly named South Texas DAC Hub will be run by Occidental Petroleum, an oil company, in conjunction with the DAC company Carbon Engineering and Worley, an engineering firm.
These are going to be the charismatic megaprojects of the CDR industry. They are meant to create clusters of expertise and infrastructure, concentrated in a geographic core, that will give rise to more innovation. You can think of them as little Silicon Valleys — or, more pointedly, little Shenzens — of carbon removal.
As goes these hubs, so goes CDR. If the hubs have an accident, or take too long to build, then the industry will struggle; if they succeed, it will have a running start. Therefore, the Energy Department has made a big fuss about how these projects should help local residents: When selecting these projects, it took the unusual step of ranking these projects’ “community benefits” as highly as their more technical aspects.
Last week, an Energy Department official was quick to point out to me that these projects have merely been selected and that neither has received any money yet. Next, the department and these hubs will negotiate binding contracts that will seek to lock in community benefits for locals. Only then will the funds flow.
What’s more interesting, though, is what’s not here. In the infrastructure law, Congress required that the Energy Department establish four DAC hubs. Only two have been announced. That’s because officials realized last year that fewer than four places nationwide had the expertise and understanding of DAC necessary to erect a massive million-ton facility on demand.
So the department set up a kind of starter DAC hub program — a series of grants that will allow cities, nonprofits, universities and companies to study the feasibility of establishing a DAC hub in their town. It gave out more than a dozen of these grants last week to companies and universities in Utah, California, Illinois, Kentucky, and more.
Officials clearly hope that these starter grants may produce more than two full-fledged DAC hub projects, which Congress can then fund at the same level as the Texas and Louisiana facilities.
Even those starter projects will specialize in DAC, though, which means that each approach will use industrial machinery to capture carbon from the ambient air and inject it underground.
But removing carbon doesn’t necessarily require DAC. It may be possible to remove carbon passively by using certain kinds of rock, for instance, or by growing lots and lots of algae. These approaches will probably use less energy than DAC, and they may even remove more carbon than DAC, but they will be harder to measure and verify, and there will be more uncertainty about exactly how much carbon you’re taking out of the atmosphere.
But federal policy has a strong pro-DAC bias. That’s not only because of the DAC hubs, but also because of the Inflation Reduction Act: Biden’s climate law pays companies $180 for each ton of carbon that they remove from the atmosphere, but it is written such that it can essentially only be used for DAC.
The department is trying to diversify away from DAC within the bounds that Congress has given. Last week, it announced that it would soon sponsor small pilot programs that use alternative technologies, including rock mineralization, biomass, and ocean-based processes. It will also fund efforts to measure and verify those techniques so as to make sure they remove a dependable amount of carbon from the atmosphere.
The Energy Department also announced that it will create a new pilot purchase program for carbon removal efforts, providing an “early market commitment” to carbon-removal companies in the same way that it provided one to COVID vaccine makers. This program, which will have an initial budget of $35 million, will use federal expertise to identify which CDR techniques are the most viable and promising, allowing a DOE purchase contract to function as a de facto stamp of approval. (Heatmap first covered the existence of this program earlier this month.)
Finally, the department will launch a separate prize for commercial DAC providers with the goal of cutting its costs down to $100 a ton.
These programs have the unfortunate name “Carbon Negative Shot,” which is meant to evoke a “moonshot” but sounds more like an overpriced product for deer hunters. We will not dwell on it any longer.
All these efforts will turn the Department of Energy into the world’s biggest public buyer and supporter of carbon removal. That lays the groundwork for the final aspect of its strategy that launched last week: a “Responsible Carbon Management Initiative.”
This is a nonbinding list of principles that any carbon-management project will have to follow: These include engaging respectfully with communities before setting up a project, consulting with local tribes, developing the local workforce and ensuring good jobs, and monitoring local air and water quality. (The department is seeking public comment on what, exactly, these principles should be.)
Eventually, the Energy Department hopes to use these principles to provide “technical assistance” to projects that meet the guidelines. It will also recognize developers that have demonstrated they meet the principles.
In other words, the initiative could, over time, become a kind of soft standards-setting body for the industry — a way to distinguish good carbon-removal projects from the bad (and hopefully eliminate the bad in the first place). It will help that the same department publishing these guidelines will also be where all the funding is coming from.
Will all this work? I don’t know. But the scale of the effort is meaningful in itself, because it shows how the Biden administration approaches the task of erecting an industry de novo. If there’s such a thing as Bidenomics, this is what it looks like: a place-based development strategy that admires industrial clustering, supports domestic supply and demand, and applies an optimistic approach to regulation.
You can also see the risk of Biden’s approach. Decarbonization requires technical expertise and real-world know-how; in America, most of that expertise resides in the private sector. Occidental, an oil company that describes itself (optimistically) as a carbon management company, will operate one of the DAC hubs. Although it is prohibited by law from doing anything really egregious — like using the carbon that it’s capturing to drill for more oil — the Biden team cannot ensure that its heart or actions will remain pure. Occidental will be a good carbon-removal team player only so long as it benefits its bottom line.
Yet I don’t want to overstate the importance of this investment either. The vast majority of the Biden administration’s climate investment is going to cutting emissions: If anything, the Biden administration is spending too little on carbon removal, not too much. By my estimate, these programs, including the DAC hubs, will amount for 2% of the roughly $173 billion that the bipartisan infrastructure law devotes to climate or environmental projects. And when you include the Inflation Reduction Act’s climate spending — which is where most federal climate spending is in the first place — the programs discussed here drop to perhaps one percent of total climate spending, although that will depend on how many facilities use the DAC tax credit.
That is a small price for a big prize. If this funding “works,” then these investments will represent the beginning of a new industry — a carbon management industry capable of pulling millions of tons of pollution out of the sky. But even if they fail, then we’ll have learned something too: that carbon removal — and especially DAC — may in fact be unworkable, and that we should not comfort ourselves in the years to come with the hope of cleaning up the atmosphere.
“Our responsibility is to do what we can, learn what we can, improve the solutions, and pass them on. It is our responsibility to leave the people of the future a free hand,” the physicist Richard Feynman once wrote. A couple billion seems a worthy price for learning if that hand is free or not.
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A conversation with Mary King, a vice president handling venture strategy at Aligned Capital
Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.
The following conversation has been lightly edited and abridged for clarity.
How do you approach working in this field given all the macro uncertainties?
It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.
That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.
With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?
Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.
One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.
My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.
The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.
How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?
Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.
This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?
What gives you optimism in this moment?
I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.
The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.
And more news around renewable energy conflicts.
1. Nantucket County, Massachusetts – The SouthCoast offshore wind project will be forced to abandon its existing power purchase agreements with Massachusetts and Rhode Island if the Trump administration’s wind permitting freeze continues, according to court filings submitted last week.
2. Tippacanoe County, Indiana – This county has now passed a full solar moratorium but is looking at grandfathering one large utility-scale project: RWE and Geenex’s Rainbow Trout solar farm.
3. Columbia County, Wisconsin – An Alliant wind farm named after this county is facing its own pushback as the developer begins the state permitting process and is seeking community buy-in through public info hearings.
4. Washington County, Arkansas – It turns out even mere exploration for a wind project out in this stretch of northwest Arkansas can get you in trouble with locals.
5. Wagoner County, Oklahoma – A large NextEra solar project has been blocked by county officials despite support from some Republican politicians in the Sooner state.
6. Skagit County, Washington – If you’re looking for a ray of developer sunshine on a cloudy day, look no further than this Washington State county that’s bucking opposition to a BESS facility.
7. Orange County, California – A progressive Democratic congressman is now opposing a large battery storage project in his district and talking about battery fire risks, the latest sign of a populist revolt in California against BESS facilities.
Permitting delays and missed deadlines are bedeviling solar developers and activist groups alike. What’s going on?
It’s no longer possible to say the Trump administration is moving solar projects along as one of the nation’s largest solar farms is being quietly delayed and even observers fighting the project aren’t sure why.
Months ago, it looked like Trump was going to start greenlighting large-scale solar with an emphasis out West. Agency spokespeople told me Trump’s 60-day pause on permitting solar projects had been lifted and then the Bureau of Land Management formally approved its first utility-scale project under this administration, Leeward Renewable Energy’s Elisabeth solar project in Arizona, and BLM also unveiled other solar projects it “reasonably” expected would be developed in the area surrounding Elisabeth.
But the biggest indicator of Trump’s thinking on solar out west was Esmeralda 7, a compilation of solar project proposals in western Nevada from NextEra, Invenergy, Arevia, ConnectGen, and other developers that would, if constructed, produce at least 6 gigawatts of power. My colleague Matthew Zeitlin was first to report that BLM officials updated the timetable for fully permitting the expansive project to say it would complete its environmental review by late April and be completely finished with the federal bureaucratic process by mid-July. BLM told Matthew that the final environmental impact statement – the official study completing the environmental review – would be published “in the coming days or week or so.”
More than two months later, it’s crickets from BLM on Esmeralda 7. BLM never released the study that its website as of today still says should’ve come out in late April. I asked BLM for comment on this and a spokesperson simply told me the agency “does not have any updates to share on this project at this time.”
This state of quiet stasis is not unique to Esmeralda; for example, Leeward has yet to receive a final environmental impact statement for its 700 mega-watt Copper Rays solar project in Nevada’s Pahrump Valley that BLM records state was to be published in early May. Earlier this month, BLM updated the project timeline for another Nevada solar project – EDF’s Bonanza – to say it would come out imminently, too, but nothing’s been released.
Delays happen in the federal government and timelines aren’t always met. But on its face, it is hard for stakeholders I speak with out in Nevada to take these months-long stutters as simply good faith bureaucratic hold-ups. And it’s even making work fighting solar for activists out in the desert much more confusing.
For Shaaron Netherton, executive director of the conservation group Friends of the Nevada Wilderness, these solar project permitting delays mean an uncertain future. Friends of the Nevada Wilderness is a volunteer group of ecology protection activists that is opposing Esmeralda 7 and filed its first lawsuit against Greenlink West, a transmission project that will connect the massive solar constellation to the energy grid. Netherton told me her group may sue against the approval of Esmeralda 7… but that the next phase of their battle against the project is a hazy unknown.
“It’s just kind of a black hole,” she told me of the Esmeralda 7 permitting process. “We will litigate Esmeralda 7 if we have to, and we were hoping that with this administration there would be a little bit of a pause. There may be. That’s still up in the air.”
I’d like to note that Netherton’s organization has different reasons for opposition than I normally write about in The Fight. Instead of concerns about property values or conspiracies about battery fires, her organization and a multitude of other desert ecosystem advocates are trying to avoid a future where large industries of any type harm or damage one of the nation’s most biodiverse and undeveloped areas.
This concern for nature has historically motivated environmental activism. But it’s also precisely the sort of advocacy that Trump officials have opposed tooth-and-nail, dating back to the president’s previous term, when advocates successfully opposed his rewrite of Endangered Species Act regulations. This reason – a motivation to hippie-punch, so to speak – is a reason why I hardly expect species protection to be enough of a concern to stop solar projects in their tracks under Trump, at least for now. There’s also the whole “energy dominance” thing, though Trump has been wishy-washy on adhering to that goal.
Patrick Donnelly, great basin director at the Center for Biological Diversity, agrees that this is a period of confusion but not necessarily an end to solar permitting on BLM land.
“[Solar] is moving a lot slower than it was six months ago, when it was coming at a breakneck pace,” said Patrick Donnelly of the Center for Biological Diversity. “How much of that is ideological versus 15-20% of the agencies taking early retirement and utter chaos inside the agencies? I’m not sure. But my feeling is it’s less ideological. I really don’t think Trump’s going to just start saying no to these energy projects.”