Climate Compass Blog

Leaders focus on policy parity for carbon capture technology

When it comes to carbon capture, innovative technology exists, but the financial and policy support needed to accelerate its deployment is lacking. 

At a recent Carbon Capture, Utilization & Storage (CCUS) Conference attended by leaders of industry, federal and state agencies, and environmental organizations, one theme that emerged is the importance of policy parity with other low- and zero-carbon energy technologies like wind and solar to advance widespread deployment of CCUS technology. 

Essential Technology

We know that CCUS technology is essential to meet our mid-century climate goals. In fact, without CCUS, mitigation costs will rise by 138 percent.

Exchange Monitor, the organizer of the CCUS conference, noted that it is “an extremely important technology, enjoying a bit more spotlight on the heels of the Paris climate change agreement.” Many nations specifically referenced CCUS technology in their Nationally Determined Contributions to the agreement, including Canada, China, Norway, Saudi Arabia, the United Arab Emirates, and the United States.

Even as nations diversify their energy portfolios, fossil fuels are expected to serve 78 percent of the world’s energy demand in 2040. The most recent Energy Information Administration analysis suggests that global energy consumption is expected to rise 48 percent over the next 30 years.

Clearly, there will be a need for CCUS technology to be widely deployed, in both the power and industrial sectors. Industry, including refining and chemicals, steel, and cement production, contributes roughly 25 percent of global emissions and there are no practical alternatives to CCUS for achieving deep emissions reduction in this sector.

CCUS project development is not on track, however. The most recent International Energy Agency (IEA) Tracking Clean Energy Progress report notes: “No positive investment decisions were taken on CCUS projects, nor did any advanced planning begin in 2015, resulting in a fall in the total number of projects in the development pipeline.”

Since a project can take five to 10 years from conception to operation, financial and policy support is critical now, the EIA adds. The report concludes: “As with other low-carbon technologies, the market for CCS projects in most regions will be created by policy and regulation.”

Policy Parity

That conclusion was echoed at the conference by Dr. Julio Friedmann, the Senior Advisor for Energy Innovation at the Lawrence Livermore National Laboratory and former Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy. He said the financing challenge for CCUS projects “is fundamentally a policy issue; this is not a technology issue.” Barry Worthington, Executive Director of the U.S. Energy Association, emphasized at the conference that “providing identical fiscal tools for all no-carbon/low-carbon technologies reduces market distortion.”

Policies that would accelerate the deployment of CCUS technology include:

  • Stronger federal and state incentives for carbon dioxide enhanced oil recovery (CO2-EOR)
  • The inclusion of CCUS technology in state clean energy standards
  • Funding for continued CCUS research, development, and demonstration
  • A price on carbon

These policies would help overcome the barriers that innovative CCUS projects face, such as higher cost and higher perception of risk by investors. The cost reductions and performance improvements experienced by the wind and solar energy industries demonstrate that these kinds of policies (tax incentives, renewable portfolio standards, etc.) can accelerate the deployment of low- and zero-carbon energy technologies.

What policy parity means is sustained public sector support through the process of achieving a declining cost curve: from deploying initial first-of-a-kind CCUS technologies in both power and industrial applications to driving deployment of next-of-a-kind projects. It also means sustaining R&D on CCUS technologies so that low- and zero-carbon energy technologies are ultimately competitive without incentives.

As more CCUS projects come online, opportunities for cost reductions become apparent. SaskPower estimates it can save up to 30 percent on future CCUS units at the Boundary Dam power plant. 

Finally, there is significant support for accelerated deployment of CCUS technology. C2ES co-convenes the National Enhanced Oil Recovery Initiative, which is a broad and unusual coalition of executives from the electric power industry; state officials; and environmental and labor representatives, all of whom support improved policy for CCUS technology in the United States. Based on our experience, and as expressed at the conference, policy parity needs to be an essential component of future federal and state efforts on climate to meet our agreed-upon goals and to match the growing need for CCUS technology.

C2ES and The US Conference of Mayors team up on climate

Separately, cities and businesses have been showing tremendous leadership in reducing the emissions responsible for climate change and building resilience to climate impacts.

Imagine what they can do together.

By sharing research and analysis, building crucial connections, and fostering innovative partnerships, cities and businesses can accelerate progress toward our climate goals – progress we sorely need.

That’s why the Center for Climate and Energy Solutions (C2ES) and The U.S. Conference of Mayors are teaming up to create the new Alliance for a Sustainable Future. This alliance will help mayors and business leaders develop concrete approaches to reduce carbon emissions, speed deployment of new technology, and implement sustainable development strategies.

City and business action and input are vital as states consider how they will implement the Clean Power Plan, and as the U.S. works toward its Paris Agreement goal to reduce emissions 26-28 percent by 2025.

Through the Alliance, we plan to:

  • Improve city and business engagement with state climate planning to add to our overall emissions-cutting efforts.
  • Provide a forum for problem solving among cities, businesses, and states, and build platforms for more public-private partnerships on climate and sustainability.
  • Identify best practices for coordinated action by cities, businesses, and states to reduce greenhouse gas emissions and deal with the consequences of climate impacts.

About the alliance

C2ES has long been a voice for pragmatic policy and a catalyst for constructive business engagement on climate change. Our Business Environmental Leadership Council, created in 1998, brings together industry-leading, mostly Fortune 500 companies across a range of sectors that are committed to climate action and support mandatory climate policy. C2ES has also been working closely with states and cities, including on implementation options for the Clean Power Plan.

The U.S. Conference of Mayors has long been a leader on climate change. In 2005, more than 1,000 mayors signed the Mayors’ Climate Protection Agreement, a landmark pledge to take local action to reduce carbon emissions. That pledge was updated in 2014 to also focus on making cities more resilient to climate impacts. The U.S. Conference of Mayors has encouraged federal and state cooperation with mayors to accelerate clean energy and energy efficiency.

Cities and companies in action

As the Alliance’s co-chair, Santa Fe Mayor Javier Gonzales, said: “Cities are our nation’s economic powerhouses, making them a key proving ground for policies to increase energy efficiency, deploy clean energy, and foster clean transportation.”

Cities are taking the lead in advancing more energy-efficient buildings; tracking electricity and water use, setting emissions reduction targets, and promoting electric vehicles. These programs make for stronger and more resilient communities and economies.

A number of cities, including Los Angeles, are even setting a goal of being powered by 100 percent renewable energy.

Companies are investing in clean energy projects, reducing emissions throughout the supply chain, establishing internal carbon pricing, and helping customers reduce their carbon footprint. More than 150 companies have signed the American Business Act on Climate Pledge, committing to steps such as saving energy and reducing water usage.

These steps, over and above regulatory requirements, could produce greater emission reductions than we can foresee.

Taking the next step

Climate change is global, but the impacts are local, and our communities are already experiencing them, including more frequent and intense heat waves, heavy downpours, and rising sea level. How we reduce climate-altering emissions will have implications for economic development, public health, and community wellbeing, especially for our most vulnerable populations.

Cities and businesses both have a strong interest in cost-effective approaches. Local-level and business innovation is critical to the success of the Clean Power Plan and other state and federal policies to shrink our carbon footprint. And these successes will point the way to a national strategy to help us transition to a clean energy future.

Separately, cities and businesses have already been demonstrating climate leadership. Together, we can put our foot on the accelerator and reach our goals.

Transportation emissions roll over power sector emissions

There’s a new challenge in the drive to reduce carbon emissions. Efforts in the power sector are apparently succeeding, but now transportation emissions are rising.

In fact, for the first time since 1979, U.S. cars, buses, trucks and airplanes emitted more carbon dioxide than U.S. power plants.

Based on the latest available rolling 12-month average, the electricity sector emitted 1,868 million metric tons (MMt) of carbon dioxide while the transportation sector emitted 1,876 MMt.

What happened

For the past 10 years, electricity emissions have been declining due to a number of factors, including growth in renewable energy, level electricity demand, and a shift from coal to natural gas. Since 2005, coal-fired generation has fallen from 50 to 33 percent of the mix, while less carbon-intensive natural gas-fired generation has risen from 19 to 33 percent.

Transportation emissions had been largely flat since the early 2000s, likely due to increasing vehicle efficiency and a combination of social trends (e.g. growing cities, ageing population, increasing telework). But emissions have begun to creep up in the past couple of years.

Some of this uptick can be attributed to much lower oil prices over the past 12 months. But even before oil prices dropped, the total number of vehicle miles traveled was increasing. So, even though our vehicles are getting more fuel efficient over time thanks to corporate average fuel economy (CAFE) standards, the increase in vehicle use is moving emissions in the wrong direction.

The projections

Over the long-term, the Energy Information Administration (EIA) projects that transportation emissions will decline as stricter vehicle emission standards come into force for cars and for trucks. As a result of these policies, we expect the adoption rate of vehicles with improved fuel economies, including zero-emission vehicles, will begin to accelerate in the next decade.

At the same time, EIA sees electricity sector emissions continuing to fall, especially as states begin to comply with targets set out in the Environmental Protection Agency’s Clean Power Plan and as the industry responds to other zero-emission incentives like the recently extended renewable tax credits.

Over the next 25 years, the rate of emission decline in the power sector is expected to be greater than in the transportation sector, so it looks like transportation will remain the largest emitting sector for the foreseeable future.

The good news is that carbon dioxide emissions will be declining in the two largest emitting sectors, due in part to strong policies to encourage a low-carbon future.

However, it’s also clear that additional policies and actions will be required for all economic sectors to see larger emissions reductions, which scientists say are necessary by mid-century in order to avoid the worst effects of climate change.

Working together for more efficient buildings

Cities and states on the West Coast are teaming up to tackle one of the biggest sources of urban emissions: energy use in buildings.

Three governors, six mayors, and the environment minister of British Columbia adopted the Pacific North America Climate Leadership Agreement this month at the Clean Energy Ministerial in San Francisco. The leaders of British Columbia, California, Los Angeles, Oakland, Oregon, Portland, San Francisco, Seattle, Vancouver, and Washington state agreed to work together to address the energy use and greenhouse gas emissions from buildings.

Energy use in buildings is one of the largest sources of emissions in most cities. Buildings account for 52 percent of emissions in San Francisco, and 33 percent in Seattle. Even in smaller cities, the building sector remains a significant source of emissions. If cities can cut energy use in buildings, it can help them deliver on their ambitious climate mitigation commitments.

Since cities are already filled with buildings, improvements must be made to those that are already in use, rather than waiting for newer, more efficient buildings to be constructed.

A place to start is with benchmarking and disclosure policies, which are in place in 15 cities. Cities require building managers to record and report their energy use with the help of EPA tools. The resulting database can help identify opportunities for reducing energy use. And city officials can use the information to guide policy and create long-term strategies to reduce energy use and emissions.

To ensure that buildings achieve reductions in energy use, cities are complementing benchmarking and disclosure policies with additional actions, including: retro-commissioning, a process that assesses buildings to uncover low-cost operational improvements; supporting buildings through retrofit processes; and ensuring that buildings undergoing major renovations are brought up to current code. 

Examples of these policies can be found throughout the West Coast and the U.S. at large. Seattle recently required commercial buildings 50,000 square feet or larger to undertake retro-commissioning processes every five years. Los Angeles is supporting property owners and managers to execute building performance upgrades to achieve 20 percent reductions in energy usage. And Washington, D.C., like many cities, requires major upgrades to existing buildings to meet current, more energy-efficient building codes.

With a comprehensive suite of policies aimed at commercial building efficiency, cities can take action to address one of their largest sources of emissions. We are heartened to see that the Western states and cities have committed to work together on this challenge, and look forward to seeing the local progress that might be accelerated with supportive state policies. By working together, cities and states can help shape policy, investment, and behavior change strategies that can become models for broader action.

International transparency provides domestic benefits

A central feature of the Paris Agreement is a stronger transparency system requiring countries to regularly report on their emissions and their national climate efforts.  

At the international level, this provides a critical means of accountability by letting countries see whether others are sticking to their commitments.

But one of the key messages that emerged at last month’s U.N. climate negotiations in Bonn, Germany — including at a side event organized by C2ES — is that greater transparency has important benefits back at home, too.

The May climate meeting, the first since negotiators adopted the Paris Agreement, featured a first-ever facilitative sharing of views (FSV) for developing countries. Thirteen developing country parties gave presentations on their first biennial reports on their efforts to reduce emissions, required under the 2010 Cancún Agreements, and responded to questions from other parties.

These countries, were applauded for their efforts and their achievements. Most of them focused on the challenges they faced in fulfilling their reporting obligations, the lessons learned in addressing or overcoming these obstacles, and what they might need to do more.

Many of these lessons were echoed in a C2ES side event, “Learning from UNFCCC Transparency Experience: Perspectives of Parties and Expert Reviewers.” The event featured negotiators and technical experts from Canada, the European Commission, New Zealand, South Africa and Brazil, with the latter two countries just having completed the FSV.

Both developed and developing countries said compiling their reports benefited them domestically by stimulating regular conversations among various levels of government and with nongovernment stakeholders. The process also helped institutionalize measurement, reporting and verification (MRV), and identified opportunities to strengthen domestic climate policies.

In two other side events hosted by the UNFCCC secretariat, Uruguay, Vietnam, Ghana and Peru reflected on their experiences under the existing transparency framework. Regular reporting and review is a significant undertaking, and they learned how much time and coordination is required. Even so, their initial experiences proved to be interactive and facilitative. Countries were provided assistance in their own language, and could communicate easily with experts and staff through technology like Skype.

The co-chairs of a new working group that will develop detailed decisions implementing the Paris Agreement also took up these themes, asking parties to share their experiences and lessons learned from the existing MRV arrangements. These lessons will also inform the next session of FSV, which will take place in Marrakech, Morocco, during COP 22.

Parties hope these lessons will inform the new rulebook that must be developed for the “enhanced transparency framework” called for in the Paris Agreement. One of the key takeaways is that by learning as they go, countries significantly improve the quality of their reporting, and their own policymaking becomes more effective as a result.