CARBONSHOT Recommendations

It is increasingly acknowledged that carbon dioxide capture and removal is an essential tool in the fight against climate change. Today, Secretary Granholm announced the launch of carbon negative Earthshots to remove gigatons of carbon by 2050. As more government institutions commit to massive carbon removal, the Global CO2 Initiative recommends the following steps that will be critically necessary in order to quickly and efficiently scale up carbon capture utilization and storage (CCUS).

CARBONSHOT RECOMMENDATION

RECOMMENDED ACTION FOR NATIONAL ENERGY OFFICES

1. Create a National Carbonshot Agency

Given the urgency to build CCUS capacity, we need an aggressive, coordinated effort to plan, guide, oversee, and monitor progress against milestones for the entire CarbonShot effort. This agency should engage all stakeholders, including within and between government, among civilian and defence entities, with academia, and with industry sectors and, importantly, with international actors.

2. Increase Funding of CCUS R&D

Building CCUS capacity will require increased funding of CCUS R&D. In concert with increased direct funding from the government, each national energy office can coordinate changes in tax policy that increase tax deductions and credits for individual or corporate support of CCUS R&D and streamline tax credits. Additionally, each national energy office  can leverage the lessons learned from the successful development of COVID-19 vaccines to establish public-private partnerships for accelerated CCUS R&D and CCU product development. Each national  government should also incentivize and leverage philanthropic and foundation resources to invest in further carbon management technology innovation and commercialization opportunities.

3. Establish CCU Products Pilot Centers

CCU Products Pilot Centers should be established to accelerate R&D, permit rapid iteration and demonstrate scaling of CCU products. The initial Pilot Center should focus on concrete and be prototypic for subsequent Centers focused on opportunities such as fuels and carbon fiber, followed by additional Centers to address each of the “hard-to-abate” sectors. Construction and operation of the Centers should be supported with a significant DOE cost share (e.g., 80% or 90%).

4. Pursue International Collaboration

International collaboration should include changing Mission Innovation rules to allow members to credit CCUS R&D toward Nationally Determined Contributions without restriction as to where the R&D is done, and focusing the newly formed Net Zero Producers Forum from not only development of strategies but to include tactical cooperation. Additionally, oil companies should be encouraged to accelerate CCUS R&D by involving appropriate academics and other experts. Relevant governments should be encouraged to provide R&D investment tax credits to private sector oil and gas companies to motivate them to significantly increase funding for CCUS R&D and increase the scope and throughput of CCUS research, development, and demonstration (RD&D) and pilot plant capacity.

5. Foster Creation of CCUS IP for the Long Term

Collaboration with the private sector to encourage investment in CCUS R&D may require reexamination of patent lives. Patent protection needs to be sufficiently long to yield an acceptable return on investments in R&D, but not so long as to stifle innovation. The academy is a major source of early stage research. Each national energy office should fund relevant academic research initiatives, increase stipends and funding for Summer Undergraduate Research Fellowships, graduate programs, and postdocs. Needing to help develop an entire generation of CCUS practitioners, each national energy office should also fund a CCUS high school science fair prize.

6. Expand CO2 Infrastructure

Space constraints at current industrial sources of CO2 may limit opportunities for siting of CCU product operations. Each national energy office  needs to provide leadership for significant increases in the infrastructure to move CO2 safely and economically from sources to users. This is one of the objectives of the SCALE Act in the USA. Additional efforts to grow the infrastructure should include providing the incentive structures to encourage private ownership and operation of CO2 pipelines. CO2 infrastructure will be needed throughout the world. In helping to coordinate initiatives and policies, the Carbonshot Agency should encourage CO2 infrastructure development in other countries.

7. Pursue Appropriate Standards and Regulatory Support

Some of the largest opportunities for CCU Products in terms of potential scale and permanence are in sectors that are governed by regulations, codes, and standards. In supporting and promoting widespread use of CCU products, each national energy office will need to coordinate with national departments of transportation and departments of housing and urban development as well as industry to develop standards supporting/favoring CCU concrete and other building materials, as an example. It will be important that there is regulatory consistency and certainty that lasts for relevant private sector planning and investment horizons. In working with regulators, each national energy office can point to wind and solar that stalled until there was regulatory consistency. Rewriting regulations (or incentives), even if to improve them, results in uncertainties that will cause investors to reassess. It is best to let markets choose winners and losers as they do so efficiently.

8. Pursue Policy Support

Numerous policy initiatives are needed to undergird and enable CCUS. These include: supporting tax credits to incentivize companies to capture CO2, supporting legislation that promotes creation of carbon capture utilization and storage infrastructure, supporting federal procurement guidelines that require CCU products, and using funds from fossil fuel royalty payments to support CCUS R&D and deployment. Tax credit legislation should include working with lenders who are nearing the ability to syndicate tax equity deals for carbon (as evidenced by recent deal activity); increasing the cap on overall available credits; making “avoided” CO2 eligible for credit and resizing qualification thresholds (currently too large) for utilization from ethanol fermentation plants, thus qualifying the lowest cost, purest form of industrial CO2. Renewable fuels should be redefined so as to include non-bio-based fuels, such as CCU made fuels. Each national energy office initiatives should include policies which foster CO2 sources and users to form symbiotic hubs. These may include a renewable energy source enabling CCU production using nocturnal excess renewable wind energy.

9. Collaborate with the Investment Community

Each national energy office  should work with the financial community to structure investment products that accelerate funding into CCUS R&D and commercialization. These might need to be some type of synthetic funding mechanism and, if so, should be subject to proper oversight. Each national energy office should also work with investment groups that focus on decarbonization investments and, through favorable tax treatment, encourage a focus on CCUS. So as to encourage investments by pension funds, there is a need to create an investable pool in multiple projects that would attract investments otherwise eliminated by pension fund policies against investments in single projects. The public-private partnerships should include investment banks as they know how to underwrite, syndicate and finance projects through tax equity. The banks look for repeatable project pipelines that scale.

10. Establish the Carbonstar Program

Building on the success of the EnergyStar program in the USA, an analogue CarbonStar program should create a product-based carbon intensity rating scheme for labeling, with special recognition to products that use CO2 in their production. Non-US efforts are emerging towards the development of such a label.

11. Establish a “CCUS Culture” Within Every National Energy Office

For CCUS to receive the government-wide support that will be critical to its development and commercialization at needed scales, every national energy office must become the CCUS champion, using the leadership processes that have been demonstrated to be successful on other initiatives in government and other organizations. This will include recognition of CCUS development successes in the performance review process, and encouraging and rewarding the behaviors of teams within each national energy office that work cross-functionally to successfully support CCUS development.