Jackson Hole, Wyoming
Donald Trump is not interested in cutting carbon emissions. Apart from pulling the US out of the Paris climate agreement, president Trump also refused to sign the communique at the G7 meeting earlier this June, in which all the other members—Canada, France, Germany, Italy, Japan, and the UK—committed to climate actions “through reducing emissions.” If anything, since taking office, the Trump administration has worked on undermining climate action by, for example, trying to roll back car fuel-efficiency standards, delaying methane-emissions regulations, and scrubbing mentions of “climate change” from many government websites.
And, yet, thanks to the federal budget Trump was forced to sign in February, he’s ended up inadvertently supporting at least one piece of emissions-reduction legislation: extending tax credits for the use of carbon-capture technology. The so-called “45Q” tax credits incentivize emitters of carbon dioxide, such as power plants and chemical industries, to trap the emissions instead of dumping them into the atmosphere. (In 2017, Quartz published an in-depth series investigating the technology’s use to mitigate climate change.)
At the CO2NNECT conference in Jackson Hole, Wyoming on June 18, Occidental Petroleum, the fifth-largest US oil company by market capitalization, and White Energy, a Texas-based biofuel producer, announced plans to evaluate building two carbon-capture plants. If they succeed, it would likely be the first such new plant to take advantage of the extended 45Q tax credits.
White Energy produces ethanol through fermentation of sugars and starch. As a byproduct, it also makes water and carbon dioxide. In theory, after condensing out the water, White Energy can compress the carbon dioxide gas and sell it to Occidental, which would then transport it through pipelines to an oil field. The CO2 can then be used to increase oil production by as much as 25% using a process called enhanced oil recovery (EOR). In the process, the majority of the carbon dioxide ends up left buried in the ground.
Such projects can help displace the use of non-anthropogenic carbon dioxide. As Quartz has previously reported:
Oil companies currently pump about 68 million metric tons of CO2 into oil fields in the US every year. Only 25% of that comes from capturing emissions from human-made sources. The primary source of carbon dioxide for enhanced oil recovery today is—I kid you not—naturally occurring CO2 fields. In other words, oil companies are mining carbon dioxide just as the world is desperately trying to stop producing so much of it.
Though the project is still only in the evaluation phase, CEOs of both Occidental and White Energy say they believe the plans are likely to succeed. If deemed viable, the full-scale capture plants could be built as soon as 2021 at White Energy’s biofuel-production facilities in Hereford and Plainview, Texas. Combined, these two facilities produce about 250 million gallons of ethanol annually and thus can provide up to 700,000 metric tons of carbon dioxide for EOR.
When realized, the project will provide many benefits. First, it will reduce anthropogenic CO2 emissions. Second, the 45Q legislation will give investors—for a period of as much as 12 years—up to $35 in tax credits for each metric ton of carbon dioxide they use for EOR. And, third, White Energy’s biofuel will qualify for sale in California, which is considering setting up a new “low-carbon” standard for transportation fuels produced through the use of carbon-capture technology.
The announcement is also significant, because, as one expert at the conference told me, “If anyone can do it, it’s Occidental.” The fossil-fuel multinational is one of the world’s largest employers of EOR technology, with as many as 36 projects currently trying to maximize yields from aging oil fields. In 2015, the US environmental protection agency approved one of Occidental’s EOR oil fields—the first-ever such approval—under its monitoring, reporting, and verification plans, which set out strict criteria to ensure the injected CO2 can be stored safely and permanently.
The capital cost of the project is estimated to be $150 million, which may change based on the evaluation study, and it will be mainly used to build compressors, dehydrators, and the CO2 pipeline. Greg Thompson, CEO of White Energy, had his first conversations with Occidental about the carbon-capture plants three years ago. But it was the 45Q tax credits that made the project economically viable, he said.
The plan to extend the 45Q tax credits has been in the works for at least six years, according to Brad Crabtree, the co-director of the Carbon Capture Coalition (CCC), a nonpartisan group supporting the deployment of the technology. But what secured its spot in the recent budget bill was its bipartisan support, including that of Republican senators John Barrasso of Wyoming and Shelley Moore Capito of West Virginia, and of Democrat senators Sheldon Whitehouse of Rhode Island and Heidi Heitkamp of North Dakota.
Since the extension of the 45Q tax credits, three other bills with bipartisan support have been introduced to support carbon-capture technology in the US. When put together, they try to address other bottlenecks in the deployment of carbon-capture technology, such as building CO2 pipelines to transport emissions from the source to the sink and providing funding to support research that can make the technology cheaper.
“45Q was the starting gun,” said Kurt Waltzer, director of Clean Air Task Force, a group that lobbies for low-carbon energy. “We will hopefully see a lot more of such announcements.” Like with solar and wind power, the goal is that such incentives will drive down the cost of carbon-capture technology, which scientists consider a crucial tool to fight climate change.
Building on the momentum established by the Occidental-White Energy project, a number of other initiatives were announced at the conference. The Governors Partnership, which includes governors of six US states dependent on extractive industries—Wyoming, Montana, Kansas, Oklahoma, Louisiana, and Utah—will work on promoting carbon-capture technology through congressional and presidential action. Another initiative, called the Regional Carbon Capture Deployment Initiative, has begun mapping CO2 sources and sinks across the northern plains and midwestern regions of the US, modeling the construction of CO2 pipelines, and seeking out lowest-cost carbon-capture projects that could be deployed before 2024. That’s the deadline by which plants must be built in order to take advantage of the 45Q tax credits.
This article was update with additional announcements made at the event on June 19.