Donald Trump is no champion of the environment. But this morning, in signing a bill to continue funding the US government, he also ended up supporting two pieces of new legislation that could create the next big technologies to fight climate change.
Trump found himself in this situation because of the peculiar way in which the US government works. Every so often, both houses of the US congress have to pass a bill to continue funding the government. This bill needs a super majority, which means that even though Republicans have a majority in both houses, they have to get some Democrats on their side.
The budget bill passed today included a lot of extra defense spending. In return for scratching the Republicans’ back, Democrats secured a slew of spending and tax credits on health care, education, and clean energy. Some of these had huge Republican support, such as the 45Q tax credits for carbon capture and 45J nuclear-power production credits.
“This is a stunning one-two punch for the future of US-led clean and reliable energy,” says Rich Powell, director of ClearPath, an organization that lobbies for clean energy.
For the uninitiated, carbon capture use and storage (CCUS) is a technology that traps emissions from power plants and industries and then stops them from entering the atmosphere. Currently, there are 17 large-scale carbon capture plants in the world, sequestering 40 million metric tons of carbon dioxide in total—about 0.1% of total global emissions. The technology needs to scale up and fast. The International Energy Agency estimates that the world needs to sequester about 6 billion metric tons of CO2 by 2050.
“The carbon-capture community is a dispirited community,” says Powell. Though the technology can reliably reduce emissions from fossil-fuel use, it has lacked wider adoption because of costs and poor public perception. (Quartz published an in-depth series investigating the technology and its uses.)
The 45Q tax credits could prove to be just the cure the industry needs. Here’s how they work: Any new fossil-fuel power plant or carbon-dioxide producing industry that commences construction before 2024 is eligible for tax credits for up to 12 years (a time cap on the credits). The tax credits offered are per metric ton of carbon dioxide captured: up to $35 if the carbon dioxide is put to use (pushing out oil from depleting fields is the most popular use) or up to $50 if it is simply buried in underground storage.
The world’s largest coal power plant with carbon-capture technology is Petra Nova in Houston, and it captures about 1.4 million metric tons of CO2 each year at an estimated cost of about $60 per metric ton. The tax credit is a way to help technology developers find a way to lower the cost, and already there are candidates. A startup called Innovator Energy says it has technology that could bring down capture cost to $10 per ton. Another startup called Net Power has built a natural gas power plant that is able to do it essentially at zero cost. So far, however, there are only a handful of such startups, because it was difficult to make a business case for the technology.
The 45Q tax credits, Powell says, will change the equation and spur the development of the technology. Tax credits have the power to do for carbon capture what they did for wind and solar power: create an industry that can get through the teething phase and stand on its own feet. One immediate impact could be for the Kemper County power plant in the state of Mississippi, which ended its carbon capture plans because of cost overruns, and may rethink them if the tax credits create a business model for the technology’s use.
Still, Powell insists, tax credits are only the first step. As with renewable energy, carbon capture has to attract wider support, say from corporations and states that want to deploy low-carbon baseload power, even if it comes from fossil fuels. Carbon capture will also have to overcome the additional barrier of poor public perception.
Similar developments could occur through the 45J nuclear-production credits, which in effect provide tax credits up to $18 per megawatt-hour (MWh) of electricity produced by a nuclear plant and those will be provided for up to 6GW of new nuclear generation capacity (a volume cap).
The credits should allow the US to restart the stalled construction of the Vogtle nuclear power plant in the state of Georgia, and accelerate the development of advanced nuclear technologies, which include small, modular rectors that produce little or no nuclear waste. “It’ll start a race between nuclear startups to make use of the credits on offer,” Powell says.
In both cases, the credits provided don’t have a direct financial cap. 45Q has a time cap to spur development in a narrow timeframe The previous version of the 45Q bill had a volume cap for the amount of carbon dioxide sequestered, and, according to Powell, it proved to be a major deterrent to the goals of technology development.
ClearPath says that the new credits could help sequester between 200 million and 2.2 billion metric tons of carbon dioxide. The range is wide because of the uncertainties of technology development and adoption. For comparison, from the 1970s when carbon capture was commercialized until 2017, the world had cumulatively sequestered (pdf) about 220 million metric tons of carbon dioxide.
Similarly, 45J has a volume cap of 6 gigawatts (GW) to start the race between already existing nuclear startups. The Vogtle power plant would consume 2.2 GW of that when it’s built in 2021, but the remaining 3.8 GW is open to be bid upon by new nuclear startups. Those who get there first can reap the production credits for eight years.
The bill also includes tax credits for other clean-energy technologies, such as geothermal heat pumps, fuel cells, and small wind farms. These credits, which were left out of a 2015 deal, will now be phased out starting in 2020 and will expire in 2022.
Both bills support some of Trump’s agenda around providing support to fossil fuels through carbon capture and to nuclear power. The upshot is that they are also likely to help cut US emissions, which is not something the Trump administration is explicitly looking to do.