The climate law boosted carbon capture. Is it enough?

Your guide to the political forces shaping the energy transformation

Jul 29, 2024 View in browser   By Carlos Anchondo and Francisco "A.J." Camacho POLITICO illustration by Claudine Hellmuth/Photos by iStock The progress report is in for one of the biggest drivers of U.S. carbon capture deployment, two years after it was revamped by President Joe Biden’s signature climate law. The outcome is mixed and depends on who you ask. The number of operating projects in the United States has grown — increasing by 23 percent from October 2022 — but there is still only one commercial-scale carbon capture project on a U.S. power plant today. Up-and-running projects are still concentrated on ethanol, natural gas processing and ammonia facilities, and the U.S. needs to be capture far more carbon dioxide to achieve the administration’s goal of net-zero greenhouse gas emissions economywide by 2050. Planned projects are affected by everything from inflation to permitting challenges to the complex nature of development, observers said. Driving the growth is 45Q, a tax credit for carbon capture and storage (CCS) projects that got a refresh in the Inflation Reduction Act. The name comes from 45Q’s place in the tax code. While CCS deployment in the domestic power sector remains limited, the technology’s proponents note that applications for carbon storage wells have jumped since Biden signed the Inflation Reduction Act, as have the number of proposed projects. The Department of Energy, for example, told POLITICO’s E&E News that 45Q’s influence is “undeniable.” The agency referenced a “rapid expansion” in project announcements and an “uptick in investment” since the IRA was passed and signed. The sweeping law made several enhancements to 45Q, a performance-based tax credit that provides money per metric ton of stored CO2. The changes, which included tweaks like raising the credit value for stored CO2 and pushing out the deadline for developers to begin construction, were heralded at the time by supporters, who maintain that the modifications are crucial to the sector’s continued growth. Developers of CCS projects need an incentive like 45Q to capture CO2, they told me, as it’s cheaper to let the greenhouse gas escape into the atmosphere. Critics of the technology said while projects have been announced, what’s more important is if capture facilities are ultimately built, how well they perform and how much it costs to trap CO2. For 45Q to be a success, projects will need to capture almost all of the CO2 they produce, said David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis. But he said there's "no evidence" that projects will capture as much as they claim and that trapping CO2 will be expensive.   It's Monday — thank you for tuning in to POLITICO's Power Switch. I'm your host, Carlos Anchondo, with help from Francisco "A.J." Camacho. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to jkirkland@eenews.net. Listen to today’s POLITICO Energy podcast Today in POLITICO Energy’s podcast: Catherine Morehouse speaks with Allison Clements, who left her commissioner post at the Federal Energy Regulatory Commission in June.   Live briefings, policy trackers, and procedural, industry, and people intelligence from POLITICO Pro Analysis gives you the insights you need to focus your policy strategy this election cycle. Secure your seat.      Power Centers The Supreme Court building in Washington. | Mark Schiefelbein/AP Checks and balances Biden is formally supporting term limits and an ethics code for the Supreme Court, and environmental groups are eagerly endorsing the proposal, writes Lesley Clark. Biden’s announcement comes a month after the Supreme Court struck down Chevron deference, a doctrine holding that courts should allow federal agencies to exercise their interpretations of regulatory statutes as long as they are reasonable. Green groups say this and other SCOTUS decisions have eroded environmental protections. Yellen's $3 trillion appraisal U.S. Treasury Secretary Janet Yellen said that $3 trillion in global capital will be required annually to help mitigate climate change, writes Ester Wells. The comments came after Yellen met with G20 economy ministers in Brazil to discuss taxes on billionaires and climate financing, among other economic development topics. Yellen also called a low-carbon economy “the single greatest opportunity of the 21st century.” A more perfect union (relationship)? Labor unions are rallying behind Kamala Harris’ presidential campaign, and the vice president might be able to avoid the labor-climate tightrope Biden has walked over the past four years, writes Adam Aton. Biden’s industrial union allies — who still hope to maintain influence in a Harris White House — see some climate policies as threatening their members’ jobs. While that pushed the president into a balancing act, the service unions closest to Harris are gung-ho on climate change, seeing it as a risk to their workers’ health and safety. In Other News No fury like a Musk scorned: Elon Musk’s shift toward former President Donald Trump started when Biden and Democrats snubbed him at a White House electric vehicle summit. Keeping the lights on: Texas grocer H-E-B kept the lights on as Hurricane Beryl plunged millions of people into darkness thanks to investments in microgrids. Subscriber Zone A showcase of some of our best subscriber content. Vice President Kamala Harris waves upon arriving at Andrews Air Force Base near Washington on Saturday after a political event in Massachusetts. | Stephanie Scarbrough/AP Harris’ campaign says she no longer supports a national ban on natural gas fracking, a position she ran on in the 2020 Democratic presidential primary. West Texas is experiencing unusually frequent and strong earthquakes, and the U.S. Geological Survey says the oil and gas industry’s practice of injecting wastewater into the ground is likely responsible. EV makers saw disappointing sales in the previous quarter, but incoming EU regulations are likely to bring the industry back to life. That's it for today, folks! Thanks for reading.   The space economy is already woven into our lives in ways we don't always appreciate, creating a global backbone for communications, media, data, science and defense. It's also becoming an increasingly competitive zone among nations - and a venue for complex and important public-private partnerships. Join POLITICO on July 30 for a conversation about what Washington needs to understand is at stake – which sectors of the global economy see their growth arc in space, and what the role of government leaders is in both growing and regulating the explosion of orbital ideas. 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