Carbon Capture Coalition Inflation Reduction Act Virtual Media Briefing Summary
October 14, 2022 | Blog
On September 8, the Carbon Capture Coalition hosted an online media briefing on the carbon management provisions included in the recently-enacted Inflation Reduction Act (IRA). The briefing featured commentary and insight from Coalition participants representing NGO, labor and industry organizations and it provided reporters covering energy, business, climate, environment, technology and policy with the opportunity to hear from carbon management policy experts about the impact the “historic” carbon management provisions in the Inflation Reduction will have on the broader industry.
“As a private company we cannot do this alone. We need governments to adopt smart policies that allow for deployment and development of low carbon products,” said Michael LeMonds of Holcim US, during his remarks on the legislation’s impacts for hard-to-abate industrial sectors like the cement industry. “We need policies that foster innovation and help springboard American manufacturing that allow us to create the cleanest and strongest building materials necessary to create the infrastructure of tomorrow. The Inflation Reduction Act delivers on those policies.”
Alongside LeMonds, the panel included four other Coalition members who reflect the diverse membership of the Carbon Capture Coalition, a unique bipartisan partnership between industry, conservation and environmental non-profits and labor unions. In addition, Coalition staff provided an overview of the groundbreaking federal policies included in the IRA, which will be instrumental in realizing the economywide deployment of carbon management technologies, prioritizing industrial decarbonization and scaling infrastructure at the rate required to meet midcentury climate goals, foster domestic energy and industrial production, and provide environmental and economic benefits to affected communities.
As the panelists highlighted, carbon management technologies are a crucial tool to meet ambitious but necessary midcentury climate goals, while building a strong and sustainable 21st century economy. Coming from diverse labor, industry, and environmental lenses, the panelists argued that the Inflation Reduction Act makes an essential down payment on deployment of carbon management technologies to meet midcentury emissions reduction targets, providing environmental and other benefits to communities, preserving and creating jobs that pay family-sustaining wages, and safeguarding the long-term viability of America’s domestic industries.
Jessie Stolark and Madelyn Morrison of the Carbon Capture Coalition introduced the briefing, touching on the Coalition’s work and the monumental enhancements made to the 45Q tax credit within the Inflation Reduction Act. Coupled with the $12 billion in investments made in the Bipartisan Infrastructure Law, they argued that the US now stands to have the most comprehensive federal policy support for carbon management technologies in the world. These investments will fuel a 13-fold increase in carbon management deployment by 2035. Madelyn also provided an overview of the multitude of provisions contained in the IRA which will accelerate carbon management deployment, including:
- A multiyear extension of the commence construction window;
- A direct pay mechanism;
- Expanded transferability of tax credits;
- Increased 45Q credit values; and
- Lowered capture thresholds.
The event also featured two open Q&A sessions with members of the media. You can find a transcript of the full Q&A portion below the summaries of the panelists’ remarks.
This blog post provides highlights from Coalition members’ remarks and discussion along with a link to the full event recording below.
Senior Policy Advisor for Carbon Management, Third Way
Kapila opened her remarks by discussing her role in advocating for carbon management priorities with Third Way, highlighting that many of the policies which the organization prioritized were included in the enacted legislation. As she explained, Third Way has sought policy solutions which would enable the fastest and fairest deployment of carbon management technologies over the past decade, and this legislation puts us squarely on that path. Kapila continued to highlight the job benefits of the law, and its prospects for revitalizing industries in economically disadvantaged communities and those which have faced the most significant environmental harms. “We’re very excited, particularly about the potential to increase jobs and the prospects for revitalizing industries,” Kapila noted, “creating new industries, increasing manufacturing and new opportunities in communities, following behind the industrialized initiatives taking place in other parts of the world.”
She closed her remarks by pointing out that, while IRA is a landmark piece of legislation, that the Bipartisan Infrastructure Law and CHIPS and Science Act represent a crucial suite of policies. Together, this package of carbon management legislation staunchly places the US on pathway to decarbonize a variety of heavy emitting sectors over the course of the next decade.
Deputy Director, AFL-CIO Industrial Union Council
Lipman focused her remarks on the key role the IRA will play in high-wage job creation. She explained that it is a comprehensive package with historic investments not only in clean energy and climate technology, but also in the next generation of high-wage, high-quality energy and industrial jobs. Pointing to an AFL-CIO analysis which estimated a reduction in carbon emissions by 40% as a result of the law she highlighted that, “this is also a hugely significant bill across climate, job creation in manufacturing, and energy security and energy access.” The same AFL-CIO analysis found that the IRA will create 1.5 million jobs above a growing economy by 2030, which Lipman said will underpin the kind of 21st century economy that is needed for a just energy transition.
In Lipman’s view, it is crucial that as the U.S. implements climate solutions, domestic jobs are improved rather than degraded. The IRA is an investment in good jobs and competitive carbon removal solutions across the full range of energy and industrial solutions. While the package includes historic down-payments towards accelerating a new wave of clean energy jobs, there is also a direct focus on strengthening clean manufacturing, as hard-to-abate industries like steel, aluminum, and cement are foundational both today and in a future point economy and require deployment of these technologies to decarbonize. In her view, this will allow the U.S. to develop a competitive, sustainable industrial sector, which will not only maintain existing jobs but create new ones. These carbon management provisions in the package will provide critical interventions to retain jobs in heavy industry and other high-carbon-intensity fields, which is a crucial step towards putting the U.S. on par with our competitors globally.
Vice President, Business Development, Carbon Capture Inc.
Loria opened her remarks by highlighting CarbonCapture Inc.’s newly launched large-scale Direct Air Capture project, Project Bison, which is slated to initially capture and store 5 megatons of CO2 annually. As she explained, the IRA played a significant role in getting the project, and many like it, off the ground, and paved the way for project developers to engage with investors to continue funding activity for the long-term. Loria stressed the importance of the 45Q credit increases for direct air capture, as she argued that “this mixture of $180 a ton with these private buying commitments will allow us to drop our prices on carbon removal credits even more quickly and allow a larger number of corporate buyers into the fold. It’s been huge.”
Loria also stressed the importance of non-tax credit-based tweaks to carbon management policy enacted through the Inflation Reduction Act. The removal of annual capture thresholds was a key step towards increased deployment, as many of these technologies are modular, and therefore grow in a modular and sustained way. Project Bison, as an example, is expected to significantly ramp up its capture volumes over the coming years, and this allows such projects to get the funding support needed to get off the ground initially. The removal of thresholds, coupled with additional 45Q enhancements like direct pay, not only accelerates existing carbon management technologies, but also allows new business models to potentially become profitable, with Loria highlighting applications in sustainable aviation fuels as one area of focus.
Loria closed her remarks expressing support for environmental justice considerations related to accessing the federal Section 45Q tax credit. As she highlighted, CarbonCapture Inc. is deeply invested in community engagement and job creation in Wyoming, and whenever possible utilizes previously impacted land from the oil and gas industry rather than harming any natural lands.
Vice President of Environment, Land, and Public Affairs, Holcim US
Representing Holcim, the largest cement manufacturer in the world, LeMonds centered his comments on the importance of deploying carbon management technologies to decarbonize hard-to-abate industrial processes. As he explained, cement manufacturing is both a high-energy and carbon-intensive process, as 2% of US carbon emissions can be linked to cement and lye manufacturing. He explained that the IRA includes crucial policy interventions to help companies like Holcim reach their decarbonization goals, as industries like cement present unique challenges which cannot be easily solved through processes like electrification.
As LeMonds pointed out, “cement manufacturing needs carbon capture to reach net-zero. Roughly 60% of the emissions generated in cement manufacturing are process emissions. They are the direct result of the chemical transformation that occurs when we heat limestone. What this means is that we could power a cement plant with nothing but clean energy and clean electricity, and we would still have to deal with the 60% of emissions that come from the process emissions. We need carbon capture, sequestration, storage and reuse.”
In his view, the bill’s investments in environmental product declarations focused on transparency, research and deployment of low-carbon building materials, and support for carbon capture technology will all be critical in helping cement manufacturing reach net-zero emissions. These enhancements are already having a tangible impact for companies in the industry, as LeMonds explained that the changes in the IRA will be instrumental in helping Holcim take one or both of their previously announced CCUS projects in the US from concept, to design, to reality.
Executive Vice President of Commercial Operations, Calpine
In Stephenson’s point of view the suite of policies present in the IRA represent a gamechanger for the electric power industry. Calpine, the largest natural gas and renewable power operator in the US, has focused heavily on carbon capture, as Stephenson believes the technology can reduce carbon intensity of the power sector while also supporting grid reliability. Reliability will be increasingly important, he explained, because decarbonization of the economy at large will require significant increases in electricity usage.
While renewableswill be important in the energy transition, Stephenson explained that alone, renewable energy will likely be insufficient. “It is a clear and present reality that the US electricity sector needs low-carbon, firm, dispatchable, non-duration-limited generation resources,” he said. “Wind, solar and batteries will continue to grow, and will be helpful in terms of decarbonizing the power sector, but we believe we need carbon capture applied to our gas plants, which can be the fastest and most cost-effective solution to low-carbon, clean, firm dispatchable power.”
Calpine has identified 11 facilities in Texas and California that the company views as particularly fruitful for carbon capture applications, and which also present excellent storage opportunities. As a benefit, a subset of these facilities will be able to operate as co-generation facilities, meaning that they produce heat and steam as a byproduct which can then be diverted towards industrial processes. In LeMonds view, the increased credit levels for projects claiming 45Q included in the IRA will significantly accelerate the pace at which these projects can deploy. The new credit level of $85 for power sector projects storing captured CO2 in secure geologic formations, bridges much of the existing financial gap and puts many of Calpine’s projects within reach. Furthermore, continued scaling, standardization, and repeat installation can drive down cost even further to continue to accelerate deployment at the rate necessary to reach midcentury climate targets. Stephenson closed his remarks by highlighting that Calpine will be looking forward to making announcements on such projects soon.
Convened by the Great Plains Institute, the Carbon Capture Coalition is a nonpartisan collaboration of more than 100 companies, unions, conservation and environmental policy organizations, building federal policy support to enable economywide, commercial scale deployment of carbon management technologies. This includes carbon capture, removal, transport, utilization, and storage from industrial facilities, power plants, and ambient air.