February 26, 2021 at 5:00 am ET
It is safe to say that the energy field in 20 years won’t resemble its 2021 counterpart. Public consensus that climate change must be addressed has sparked governments at all levels to set increasingly ambitious goals to reduce greenhouse gas emissions. Companies and their investors are also keenly aware they must adapt and innovate to stay in business. This is why automakers are ramping up development of zero-emission vehicles, electric utilities are adding more renewables to their portfolios, and energy companies are investing new technologies necessary for economy-wide decarbonization.
But how quickly this global “energy transition” can take place depends on whether government policy and private-sector innovation can work in concert amid growing energy demand.
One area of innovation on which energy companies are now betting big is the capture, utilization and storage of emitted carbon dioxide. In recent years, even as the Washington partisan divide has grown, policy to support carbon capture has been a landing place for bipartisan cooperation. In 2018, Congress enacted an enhanced tax credit (known as 45Q) for geologic storage or use of CO2. Then, this past December, it greatly expanded federal spending on carbon capture research and development. Few other government policy areas — certainly no other aspect of climate policy — has received greater or more balanced support.
That support has been based in great part on a consensus among global agencies such as the International Energy Agency and the Intergovernmental Panel on Climate Change that reaching the Paris Agreement’s 2 degrees Celsius warming limit by 2050 will require a mix of options — specifically including carbon capture.
For instance, IEA said last year that a faster transition to “net zero” emissions could be achieved if carbon capture contributed as much as 15 percent of total greenhouse gas reduction. However, because carbon capture is capable of addressing certain emissions that aren’t easily eliminated by other means, the failure to deploy it increases the risk of meeting emissions goals. In short, whatever the cost of deploying carbon capture, the environmental and financial cost of not doing so may be greater.
The private sector responds favorably to policy certainty, and so the demonstrated commitment to carbon capture at all levels of government has prompted energy and power companies to actively pursue its development. Traditional energy companies like Shell, BP, Chevron and ExxonMobil have announced comprehensive plans to develop carbon capture and related technologies. ExxonMobil, for instance, will invest $3 billion over the next four years in specific carbon capture technologies like fuel cells, along with related new carbon-free energy systems like hydrogen power. These companies have extensive experience in carbon capture: ExxonMobil already captures about 9 million metric tons of CO2 in the United States per year, about a third of the national total. But strong policy commitments from Washington (along with a number of key states) have prompted these companies to significantly expand their own commitments.
With world energy demand expected to grow from pre-pandemic levels by as much as 30 percent in the next 20 years, power from fossil fuels cannot simply be turned off, while setting unachievable goals may lead to continued political gridlock and no progress at all. Regardless of the goals policymakers may set for development of renewables, they should not abandon carbon capture on the launching pad.
It is worth noting that, since 2000, the switch from coal to natural gas for power generation has provided a greater reduction in greenhouse gases than the addition of renewables like wind and solar. The conclusion is that fuel switching and renewables together cut carbon emissions more than either could have alone. Meanwhile, industrial processes like steel and cement cannot be replaced by renewables and so carbon capture innovation will help to ensure that these essential building blocks of the economy can function in a carbon-constrained environment.
Finally, as the scientific consensus has moved past the notion of “net zero” emissions to actually achieving negative emissions, developing the most ambitious form of carbon capture — direct air capture — has become a critical goal. It is no coincidence that both the most recent energy legislation and private sector announced investments target the development of DAC.
Private-sector commitments to low- and zero-carbon emissions technologies aren’t made out of the goodness of corporate hearts, but because companies want to stay in business in an increasingly carbon-constrained world, and because they see markets for technologies that reduce greenhouse gases. Government support for carbon capture and related technologies has the same motive of earlier subsidies for renewables: to drive innovation, lower deployment costs and commercialize them. It has worked so far for renewables, and it can work for carbon capture. Increasing private-sector investments show that we’re on the right technology track.
Jeffrey Bobeck served as director of external affairs at the U.S. Department of Energy under President George W. Bush from 2007 to 2009.
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