Recently-enacted Infrastructure Investment and Jobs Act to Bolster Economywide Deployment of Carbon Management Technologies upon Full Implementation
January 21, 2022 | Blog
On November 15, 2021, the bipartisan Infrastructure Investment and Jobs Act (IIJA) made headlines as President Biden signed the “once-in-a-generation” investment to reform the nation’s hard infrastructure and bolster our global competitiveness into law. Not only did this mammoth piece of legislation enable the rebuilding of America’s roads, bridges and railways, but it made an essential down payment on carbon management deployment to meet critical emissions reduction targets, while retaining and creating high-wage jobs and fostering domestic energy and industrial production.
While the legislation authorized countless important clean energy programs to be funded through the Department of Energy (DOE), the bill made the single largest investment in carbon management provisions in history. Specifically, the IIJA funds four key areas of carbon management policy: carbon capture, utilization and storage research, development and demonstration (RD&D); carbon transport and storage infrastructure and permitting; carbon utilization development; and carbon removal.
Carbon Capture, Utilization and Storage Research, Development and Demonstration
The IIJA is atypical for legislation in that it authorizes and provides direct appropriations for several of its programs, meaning that Congress provided up-front funding. Transformative policies included in the Energy Act of 2020, such as the Carbon Capture Technology Program and the Carbon Capture Pilot and Demonstration Program to help scale carbon management at the rate necessary to meet midcentury climate targets were recipients of direct appropriations in the bill. This allows DOE to get these programs off the ground and get funding into the hands of project developers in short order.
- Carbon Capture Pilot and Demonstration Program: Appropriates more than $3.47 billion over the course of four years for carbon capture demonstration and pilot projects that can scale-up the technology for commercial deployment. This money will flow through the newly established Office of Clean Energy Demonstrations at DOE.
- Carbon Capture Technology Program: Appropriates $100M for a frontend engineering and design (FEED) program to support deployment of carbon dioxide transport infrastructure.
Carbon Transport and Storage Infrastructure & Permitting
In addition to critical funding for RD&D projects, the IIJA authorized foundational investments in the buildout of regional CO2 transport and storage infrastructure with the complete inclusion of the bipartisan Storing CO2 and Lowering Emissions (SCALE) Act. Similar to the buildout of other forms of infrastructure needed to support the deployment of low- and zero-carbon technologies over the next 30 years, scaling a national CO2 transport and storage system is an essential component to meeting midcentury climate goals. Much like the development of other infrastructure systems, the SCALE Act positions the federal government to partner with private capital to invest in both regional and national CO2 transport and storage infrastructure networks.
- CO2 Storage Commercialization Program: Authorizes $2.5 billion Large-Scale Carbon Storage Commercialization Program at DOE to provide grant funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, including funding for the feasibility, site characterization, permitting, and construction stages of project development. Language is derived from the SCALE Act.
- Carbon Capture Transportation Infrastructure Program: Authorizes $2.1 billion in loans and grants to build new CO2 management infrastructure. This language is derived from the SCALE Act.
- Funding for Class VI Well Permits at EPA and States: Directs EPA to advanced Class VI injection well permitting for geologic CO2 sequestration, authorizing $5 million a year through 2026 for the EPA permitting process. Authorizes $50 million over five years for grants to states to defray the costs of state agencies for permitting and monitoring Class VI CO2 injection wells.
Growing the Carbon Utilization Marketplace
Carbon utilization is a growing and emerging market, which includes new and innovative technologies and processes to produce low- and zero-carbon fuels, building materials, chemicals, and other advanced materials and products sourced from captured CO2 and its precursor, CO. Increasingly, carbon utilization is seen as an important complement to large-scale carbon storage, as it provides value-added markets for carbon capture operations and constitutes an important component of a circular carbon economy. Taken together, the National Academies of Science has estimated that globally, utilization pathways could take up to 1 gigaton of CO2 per year. The growing carbon-to-value market could be worth an estimated $800 billion annually by 2030. Recognizing the inherent potential of carbon utilization technology, the IIJA authorized DOE to begin offering grants to states, local governments and utilities to incentivize the production of products sourced from carbon capture, like cement, aggregates, and fuels among many others.
- Carbon Utilization & Procurement Grant Program: Authorizes $310.1 million for carbon utilization through 2026 and establishes a new grant program for states, local governments, and utilities to procure products made using captured carbon.
Carbon Removal Priorities
Carbon removal technologies, including direct air capture (DAC), bioenergy with carbon capture and storage and other advanced technologies that remove CO2 already in the atmosphere must play a pivotal role in reaching U.S. climate targets by midcentury. The IIJA, for the first time in legislative history, authorized robust funding for a program to develop four regional DAC hubs. The formation of these hubs certainly speaks to the Biden Administration’s priority of keeping the US a global competitor in the energy sector as the hubs will undoubtedly secure the US as an early leader in developing and deploying direct air capture technologies.
- DAC Hubs: Authorizes $3.5 billion for a program that will develop four regional, commercial scale direct air capture hubs that can remove carbon from ambient air resulting in negative emissions.
- Direct Air Capture Prize: The legislation also funds another $115 million in prizes for precommercial and commercial DAC demonstrations.
The historic investments made to carbon management funding and policy support in the IIJA are a crucial leap forward in reaching economywide deployment of the full value chain of carbon management technologies – however, this is only one piece of the larger puzzle. Fortunately, Congress is poised to deliver a broad portfolio of federal policy support for carbon management that is essential to put these technologies on a pathway to reach economywide deployment and meet our midcentury climate goals. The bipartisan enhancements to the cornerstone 45Q tax credit proposed in pending budget reconciliation legislation represent a complementary suite of policies, which, if enacted and implemented in tandem with the IIJA, would result in an estimated 13-fold increase in carbon management capacity and annual CO2 emissions reductions of 210-250 million metric tons by 2035.
As the Carbon Capture Coalition looks toward the full implementation of these important new investments at DOE, we remain committed to working closely with our federal and external partners to meet the aggressive timeline set by the IIJA and ensure that these programs work as efficiently and effectively as intended.