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.
Do We Really Need Carbon Removal?
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.
That Will Be Technically Hard
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.
A Brief Aside About Trees
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.
The Politics Are Hard, Too
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.
What the Biden Administration Is Doing
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.
The Worst Named Industrial Policy I Have Ever Seen
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.
“Responsible Community Management Initiative”
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 It Work?
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.
