Initiatives

Key Insights for Expanding Microgrid Development

Key Insights for Expanding Microgrid Development

April 2017

Dowload the fact sheet (PDF)

C2ES held a half-day Solutions Forum in March 2017 in Washington, D.C., focusing on the benefits of microgrids and examining what is standing in the way of accelerating their deployment. Two panels, comprising business and city leaders, shared their first-hand experience in the small, but rapidly developing microgrid industry. Discussion focused on what developers are learning from successful microgrid projects and overcoming obstacles to deployment. About 100 people, including policymakers, entrepreneurs, and academics, attended the forum at The George Washington University School of Law and 200 watched online. 

Key Takeaways

The nation’s first microgrid architect, Shalom Flank, Ph. D., of Urban Ingenuity, identified three economically viable categories of microgrid frameworks.

  1. The classic success model, considering primarily the urban situation, is the “combined heat and power (CHP) plus solar” microgrid. These work downtown, on campus, or at a large facility like a hospital. With improvements in modern electronics and controller technologies, these projects can earn even greater revenues (e.g. providing grid services).
  2. “Thermal only” microgrids pay for themselves. These involve creating a condenser water loop across multiple buildings with heat sources and sinks. They are highly efficient for serving heating and cooling loads. There is no resilience benefit in this instance, but emissions savings are excellent.
  3. “Solar saturation” microgrids are viable. The current grid can’t accommodate an entire neighborhood where all homes have solar without a microgrid. This kind of project provides emissions and resilience benefits.
 
 

Video

Watch our March 8, 2017 discussion at Geoge Washington University.

 
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Webinar: Helping Small Businesses Build Climate Resilience

Promoted in Energy Efficiency section: 
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2:00-3:00 PM, EDTRegister Here

Photo of 2010 Annapolis, Maryland, flooding courtesy of the Chesapeake Bay Program via Flickr.

Helping Small Businesses Build Climate Resilience

Wednesday, April 26, 2017, 2:00 – 3:00 p.m., EDT

Register Here

An extreme weather disaster can force some small businesses to close their doors forever. How can small businesses better evaluate, prepare for, and respond to the increasingly frequent and intense extreme weather events that climate change brings? 

This free webinar will explore:

  • Risks small businesses face from climate and extreme weather
  • Challenges to making small businesses more climate resilient
  • Resources for small businesses
  • Recommendations for engaging small businesses on resilience

Speakers:

Charissa Cooper, Private Sector Liaison, National Capital Region Planner, Maryland Emergency Management Agency

Jon Philipsborn, Associate Vice President, Climate Adaptation Practice Director, Americas at AECOM

Katy Maher, Science Fellow and Resilience Project Coordinator, C2ES

 

C2ES Events at the 6th Annual Climate Leadership Conference

Promoted in Energy Efficiency section: 
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Mariott Chicago DowntownChicago9 a.m. -- 11 a.m.How Cities Are Driving a New Climate Future11 a.m. -- 12:30 p.m.What Makes Infrastructure Resilient?

Climate Leadership ConferenceThe Center for Climate and Energy Solutions and The Climate Registry co-convene the Climate Leadership Conference each year around the prestigious Climate Leadership Awards. The CLC is dedicated to professionals addressing global climate change through policy, innovation, and business solutions.

Climate Leadership Conference
March 1-3, 2017 at the Marriott Downtown Chicago

See Our Speakers
Register Here
 

C2ES will host or co-host the following events at the 2017 Climate Leadership Conference.

March 1, 2017
9 a.m. -- 11 a.m.

How Cities Are Driving a New Climate Future

Hosted by: C2ES and the Great Lakes and St. Lawrence Cities Initiative

This event highlights two important aspects of local climate action: 1) how cities and their leaders are using their platform to facilitate transformative climate solutions, and 2) how cities and private actors are implementing local solutions. Speakers will engage attendees in a discussion about how cities are driving the new climate future through political leadership and action, and present tangible ideas that attendees can take home and put into practice. Who should attend? Local leaders, practitioners and private sector partners.

March 1, 2017
11 a.m. -- 12:30 p.m.

What Makes Infrastructure Resilient?

Hosted by: C2ES

What makes infrastructure resilient? Cities and businesses across the country are taking action to strengthen the resilience of their buildings, transportation systems, energy and water services, and telecommunication systems to climate change. This session will explore issues associated with resilient infrastructure, including challenges and barriers, priorities, innovative solutions, and opportunities for collaboration. Facilitated discussions will allow participants to discuss some of these issues based on their own experiences, and exchange ideas about infrastructure needs and opportunities.

Speakers

Darcy Immerman
Senior Vice President, Resiliency
AECOM
 
Emilie Mazzacurati
Founder & CEO
Four Twenty Seven
 
Michael Mondshine
Vice President
WSP | Parsons Brinkerhoff
 
Katy Maher
Resilience Project Coordinator
C2ES
 
Janet Peace, Ph.D.
Senior Vice President, Policy and Business Strategy
C2ES

 

Year Ahead: We must strengthen climate action wherever possible

When I wrote a blog a year ago taking stock of the strengthening climate change effort, I reflected on a year of unprecedented progress, capped by the Paris Agreement, and outlined ways we could build on those successes.

At the beginning of the new U.S. administration, the outlook is unfortunately far different.  Now, our challenge is to preserve as much of this progress as we can, and to devise new strategies to continue strengthening climate action wherever possible.

Despite coming setbacks, it’s worth reminding ourselves that we have a solid base to work from. Thanks in part to strong policies, but also to growing market forces, the U.S. is on the path to a clean-energy transition, and the continued momentum is strong.

A few examples, just since the election:

·      Some of the world’s wealthiest entrepreneurs, including Bill Gates, Richard Branson, and Mark Zuckerberg, launched a billion-dollar fund to invest in cutting-edge clean energy technologies.

The new policy landscape won’t be clear for some time and is likely to evolve. But as we monitor the early signs, and take soundings with policymakers and stakeholders around the country and around the world, we are coming to a clearer view of immediate imperatives, and of opportunities that may lie ahead.

One imperative is ensuring that the United States remains a reliable partner in the global climate effort – by staying in the Paris Agreement, and by working constructively with other countries to establish sound rules for its implementation. 

We were encouraged to hear Secretary of State nominee Rex Tillerson note the importance of the United States staying at the table. Indeed, the Paris Agreement reflects long-standing bipartisan principles. It fully preserves national sovereignty while providing a means of holding other countries accountable. U.S. businesses benefit from full access to the clean energy markets the agreement helps drive.

We were encouraged also to hear EPA Administrator nominee Scott Pruitt express respect for the “endangerment finding” underpinning the regulation of greenhouse gases under the Clean Air Act. What is critical is how EPA chooses to fulfill the inherent legal obligation to regulate emissions, starting with the power sector.

While the Clean Power Plan appears unlikely to survive, decarbonization of the power sector is already underway. Thanks to improved energy efficiency and a more diverse energy mix, emissions dropped more than 20 percent over the last decade. Last year was the third in a row that renewables accounted for more than half of new U.S. power capacity.

Continued tax credits enjoying strong bipartisan support will help sustain that growth.  State-level conversations on lower carbon energy policies are continuing as states, cities and utilities find economic opportunity in modernizing the power sector. But the imperative remains: We need an overarching federal framework to deliver sustained, cost-effective emission reductions. We urge the new administration and Congress to get on with the job.

In the near term, we see opportunities for bipartisan steps that benefit both the climate and the economy and strengthen the foundation for a longer-term clean energy transition. These include:

Incentivizing carbon capture, use and storage.

Carbon capture technologies like those deployed this month in Texas are essential to meeting the climate challenge. Senate Majority Leader Mitch McConnell was among the bipartisan sponsors of a bill last year to help advance these technologies by supporting the use of captured CO2 in enhanced oil recovery, as recommended by a coalition of industry, labor, and environmental groups we help lead. We expect similar legislation in this Congress.

Advancing nuclear energy.

Bipartisan bills have already been introduced in the House and Senate to spur advanced nuclear technologies. Nuclear is our largest source of zero-carbon energy and the only one that provides continuous baseload power. It will have to play a significant role in any realistic long-term climate strategy.

Modernizing our infrastructure.

A viable infrastructure package could open significant opportunities to address climate change while creating jobs and growth. Examples include:

  • A modernized electric grid that can better distribute renewable power and is more climate-resilient.
  • Expanded charging and refueling networks for electric, natural gas and hydrogen vehicles.
  • Roads and bridges that can better withstand more frequent extreme weather.

One reason we’re confident of continued momentum is that the vast majority of the American people support it. In a Yale survey conducted after the election, nearly 70 percent favored staying in the Paris Agreement. And 70 percent – including a majority of Republicans – supported strict carbon limits on existing coal plants.

Business leaders, too, recognize the growing risks of climate impacts, and the opportunities to create new products, services and jobs.

And a growing number of cities are finding they can save money and create jobs by encouraging energy efficiency and clean energy and transportation.

At C2ES, while we are bracing for setbacks, and are prepared to defend against reversing course, we also will continue working as hard as ever to bring diverse interests together to make progress wherever we can. We face significant new challenges. But from the local to the global level, we’ve got strong momentum. And we can’t turn back.

 

How about using that captured carbon?

carbon shoes

These "shoes without a footprint" were made from carbon that was captured from power production.

Photo courtesy NRG

Imagine if the carbon dioxide (CO2) that emerges from smokestacks at coal- and natural gas-fired power plants and steel and cement facilities could actually be used for something.

Some innovators are imagining just that.

For even more creative ideas, just look at the semi-finalists for the $20 million NRG COSIA Carbon X Prize.

Research teams from around the world submitted ideas for using CO2 in building materials, paint, fertilizers, plastics, and even toothpaste. Other ideas include CO2-based fuels and carbon nanotubes that could be used to make environmentally sustainable lithium-ion and sodium-ion batteries. The prize will be awarded in 2020 after the top ideas are tested in real-world conditions.

Carbon dioxide from burning fossil fuels is contributing to a changing climate that is bringing more frequent and intense heat waves, downpours, and drought and rising sea levels. Capturing CO2 from power plants and industrial sources will help reduce these harmful emissions.

In the U.S., we have been capturing CO2 from manmade sources such as commercial-scale natural gas processing plants since the early 1970s. We can offset the costs of capturing and storing carbon dioxide and increase the number of carbon capture projects if we put the CO2 to work.

One way this is already being done is with carbon dioxide enhanced oil recovery (CO2-EOR), where pressurized CO2 is pumped into already developed oil fields to get out more of the oil. CO2-EOR boosts domestic energy production, makes use of already developed oil fields, and stores carbon dioxide underground.

C2ES co-convenes a coalition of industry, labor, and environmental groups encouraging greater deployment of carbon capture technology for CO2-EOR. There’s bipartisan support for incentivizing technologies to capture carbon dioxide from manmade sources and put it to use in marketable ways.

The U.S. produces 300,000 barrels per day, or nearly 3.5 percent of our annual domestic oil production, through CO2-EOR. But we’re mostly using CO2 that isn’t from manmade sources.

For every barrel of oil produced using manmade CO2, there is a net CO2 storage of 0.19 metric tons even considering the emissions from the oil, according to the International Energy Agency and Clean Air Task Force. In other words, EOR using power plant CO2 results in a 63 percent net reduction of the total injected volume of CO2 or a 37 percent reduction in the life cycle emissions from oil.

At the end of 2016, NRG completed construction on Petra Nova, the first American retrofit of a coal-fired power plant to capture CO2 emissions, which are then used for EOR. The Texas project was on schedule and on budget. It’s capturing more than 90 percent of the CO2 from a 240 MW slipstream of flue gas from an existing coal unit at the WA Parish plant. It’s now the largest project of its kind in the world.

Finding more ways to turn carbon dioxide from an energy and industrial sector waste product to a useful commodity could spur the development of new technologies and products while limiting climate-altering pollutants. There’s promise, but also scientific, regulatory, and market challenges.

The Global CO2 Initiative, which advocates a mix of policy, research funding, collaboration, and infrastructure improvements to accelerate commercial deployment, estimates that the size of the global CO2 non-EOR utilization market could be as large as $700 billion by 2030. Aside from EOR, we could be using 7 billion metric tons of CO2 per year for fuels, concrete, polymers and more. That’s about 15 percent of current global CO2 emissions.

The new administration and new Congress need to consider how best to incentivize continued research, development, and commercial-scale application of CO2 utilization. With the right policy incentives, the U.S. can take a leadership role in this vital technology.

C2ES again ranks among top environmental think tanks

Press Release
January 26, 2017
Contact Laura Rehrmann, rehrmannl@c2es.org

C2ES again ranks among top environmental think tanks

WASHINGTON -- The Center for Climate and Energy Solutions (C2ES) is honored to be recognized once again as one of the world’s leading environmental think tanks.

C2ES ranked fourth among environment policy think tanks in the University of Pennsylvania’s 2016 Global Go To Think Tank Index, based on a worldwide survey of more than 2,500 scholars, academics, public and private donors, policymakers, and journalists.

C2ES was also recently named the top U.S. energy and environment think tank by Prospect magazine for helping lay the groundwork for the Paris Agreement.

“C2ES’s consistently high ranking is a tribute to our unique ability to bring together diverse stakeholders to achieve practical, commonsense solutions,” said C2ES President Bob Perciasepe. “We work with companies, cities, states, and national governments to develop and implement economically sound, innovative policies to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts.”

“I congratulate and thank our outstanding staffers, supporters, partners, and board members, including Board Chairman Ted Roosevelt IV, who have helped C2ES achieve and maintain our success,” Perciasepe said.

This is the 10th year for the University of Pennsylvania’s Think Tanks and Civil Societies Program to rank the world’s 6,846 leading think tanks. According to the report, the top environmental think tanks “excel in research, analysis and public engagement on a wide range of policy issues with the aim of advancing debate, facilitating cooperation between relevant actors, maintaining public support and funding, and improving the overall quality of life.”

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About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonpartisan, nonprofit organization working to forge practical solutions to climate change. Our mission is to advance strong policy and action to reduce greenhouse gas emissions, promote clean energy, and strengthen resilience to climate impacts. Learn more at www.c2es.org.

Volkswagen Settlement Funding: What Cities Should Know

Volkswagen Settlement Funding: What Cities Should Know

December 2016

Download the fact sheet (PDF)

In October 2016, the U.S. government granted final approval of a $14.7 billion settlement against Volkswagen (VW) for equipping more than 500,000 of its diesel vehicles to cheat U.S. vehicle emissions tests in violation of the Clean Air Act. Volkswagen will spend $10 billion on vehicle buybacks and $4.7 billion to mitigate the pollution from these cars and invest in green vehicle technology. This latter amount will be split between two investment programs that states, cities, and tribes can use to expand alternative vehicle projects and access to zero emission vehicles (ZEVs). Cities can play a key role, starting now, by identifying local emissions-cutting and zero-emission vehicle deployment projects that could benefit from increased investment and proposing ideas to states and Volkswagen about ways these funds can best be leveraged.

Since October 25, 2016, when the $14.7 billion settlement for claims related to emissions testing “defeat devices” installed in 2.0 liter diesel-powered vehicles was finalized, Volkswagen (VW) has resolved additional legal challenges with the U.S. Department of Justice. On December 20, 2016, a settlement for claims related to emissions testing “defeat devices” installed in 3.0 liter diesel-powered vehicles was announced, setting aside $1 billion for vehicle buy-backs and fixes and $250 million dedicated toward nitrogen oxide mitigation and zero emission vehicle investments. On January 11, 2017, VW agreed to plead guilty to criminal felony counts and a pay $2.8 billion criminal penalty.  VW also agreed to settle civil environmental, customs, and financial claims by paying $1.5 billion to the U.S. Environmental Protection Agency and U.S. Customs & Border Patrol.

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The Alliance for a Sustainable Future

             

The Alliance for a Sustainable Future

A partnership of C2ES and The U.S. Conference of Mayors

U.S. cities and businesses are exploring how to prepare for climate impacts and how to address the emissions that are the cause – by improving energy efficiency and deploying more clean energy and transportation.

Both see sustainability as a smart strategy for the future.

That’s why The U.S. Conference of Mayors (USCM) and Center for Climate and Energy Solutions (C2ES) formed the Alliance for a Sustainable Future: to bring cities and businesses together to play a more significant role in shaping sustainable communities and achieving climate goals.

 


“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.”

- Santa Fe Mayor Javier Gonzales, Alliance Co-Chair


 

Cities and businesses are each doing their part to demonstrate climate leadership.

Cities are leading by:

Companies leading by:

  • Investing in clean energy projects
  • Reducing emissions throughout the supply chain
  • Setting an internal carbon price
  • Helping customers reduce their carbon footprint.

 

Together, cities and businesses can accelerate the momentum toward a more sustainable, low-carbon future. The Alliance for a Sustainable Future creates a framework for mayors and business leaders to develop concrete approaches to reduce carbon emissions, speed deployment of new technology, and respond to the growing impacts of climate change.

Goals of the Alliance

  • Empower local leaders to contribute to the design and implementation of state climate plans and other supporting federal, state, and local initiatives;
  • Inform and engage mayors, city officials, and business leaders so that strategic opportunities can be identified and explored;
  • Build new public-private partnerships; and
  • Raise the profile of city and business contributions in accelerating sustainable development, resilience, and climate action to help implement international commitments.  

Through the alliance, city and business leaders will identify barriers to action and share research and analysis on climate and sustainable development solutions. By building crucial links between cities and companies, the alliance aims to spur innovative partnerships.

The alliance will also identify local, state, and federal policies that reduce greenhouse gas emissions, increase energy efficiency, and promote renewable energy development, and explore how those policies can produce new partnerships among cities and the business community.

Baltimore Mayor Stephanie Rawlings-Blake announced the alliance at the USCM’s 84th Annual Meeting in June 2016. Santa Fe Mayor Javier Gonzales is leading the steering committee, which consists of founding sponsors JPMorgan & Chase Co., Duke Energy, and AECOM, and the mayors of Austin, Des Moines, New York City, Salt Lake City and West Sacramento.

At the alliance’s first public event Sept. 21, 2016, at Climate Week NYC, a panel of city and business leaders discussed ways cities and the business community can work together to reduce carbon emissions.

Read more about the Alliance for a Sustainable Future

For more information, contact C2ES Director of Sustainability and Engagement Amy Morsch.

Blogs:

RESOURCES

Exceeding Expectations: Recent developments in U.S. Carbon Capture Policy

By Fatima Maria Ahmad, Solutions Fellow, Center for Climate and Energy Solutions

A version of this article first appeared in the Sep./Oct. 2016 edition of the Carbon Capture Journal

Introduction

Even in an election year, there are areas of energy policy where leaders of both parties and stakeholders from diverse sectors of the economy can find common ground. Encouraged by the landmark Paris Agreement in December 2015 and motivated by the need to avoid stranded assets and preserve jobs in the power sector, policymakers took seriously the challenge of accelerating deployment of carbon capture, use and storage (CCUS or carbon capture). Midway through the year, the International Energy Agency issued a report concluding that financial and policy support for carbon capture is not at a sufficient level to ensure an adequate pipeline of carbon capture projects that will enable the world to stay on track to meet mid-century goals of keeping global warming within 2 degrees Celsius of pre-industrial levels.[1] Bipartisan proposals that are before Congress this year would encourage CCUS technology. State political leaders also supported carbon capture in notable ways this year.

H.R. 4622, the Carbon Capture Act

On Feb. 25, 2016, Rep. Mike Conaway (D-Texas) introduced H.R. 4622, the Carbon Capture Act, a bill to extend and expand Section 45Q, which is the primary tax credit for the use of carbon dioxide in enhanced oil recovery (CO2-EOR), a form of tertiary production.[2] In the United States, carbon dioxide has been safely used in commercial enhanced oil recovery for more than 40 years. The United States produces about 4 percent of its oil through CO2-EOR. However, most of the carbon dioxide used is from naturally occurring underground reservoirs instead of from man-made sources. In addition to the climate benefits of reducing the amount of carbon dioxide vented into the atmosphere, CO2-EOR maximizes production from existing oil fields and may displace more carbon-intensive imported crude oil.

Rep. Conaway’s bill has 45 co-sponsors: 30 Republicans and 15 Democrats. These co-sponsors hail from 24 states and all regions of the country. This broad support challenges the notion that energy policy debates must be polarized and partisan.

H.R. 4622 provides four changes to 45Q. First, it would remove the existing cumulative cap of 75 million tons of CO2 and make the tax credit permanent. With less than half of the credits left for new projects to use, there is too much uncertainty for carbon capture project developers to secure financing.[3] By making the tax credit permanent, the bill aims to establish certainty that would enable carbon capture project financing.

Second, the bill would increase the value of the credit per ton of CO2. Under current law, there is a credit of $10 per ton of CO2 for EOR and $20 per ton of CO2 for saline storage. Rep. Conaway’s bill would increase these values to $30 for both EOR and saline storage. These increases would ramp up over time reaching their full value in 2025. 

Third, the bill would lower the threshold for qualifying facilities to 150,000 tons of CO2 for both power plants and industrial facilities. Industrial facilities that emit CO2 include ethanol plants; natural gas processing facilities; steel, cement, fertilizer and chemical plants; hydrogen production plants, and refineries.[4] Capture of industrial CO2 emissions is critical because the sector accounts for almost 25 percent of global greenhouse gas emissions.[5]

For these industrial sources, the cost to capture CO2 is often lower than for power plants.  Technology to separate the CO2 stream has been used in natural gas processing for decades.  The by-product CO2 stream is often of higher purity, i.e. less mixed with other gases, than power plant emissions. Importantly, there is no alternative to CCUS to achieve deep decarbonization in the industrial sector because production of CO2 is often an inherent part of the chemical or industrial process. By lowering the threshold for industrial sources of CO2, the bill aims to incentivize investment in industrial carbon capture projects. 

Finally, the bill would allow transferability of the credit within the chain of CO2 custody. This change would allow entities with little or no tax liability to benefit from the incentive by transferring it to entities with the ability to use the credit.   

In the Senate, companion legislation was offered on April 12, 2016, by Sens. Heidi Heitkamp (D-ND) and Shelly Moore Capito (R-WV) in the form of an amendment to the Federal Aviation Administration (FAA) reauthorization bill.[6] The amendment had bipartisan support from two Democrats and five Republicans.[7] While the amendment was voted into the tax title of the FAA bill, the tax title was ultimately dropped for other reasons.[8]

S. 2012, Energy Policy Modernization Act

On Apr. 20, 2016, the Senate passed a broad energy bill authored by Senate Energy Committee Chairwoman Lisa Murkowski (R-Alaska) and Ranking Member Maria Cantwell (D-WA).[9] The bill was approved 85-12, demonstrating bipartisan support. Section 3403 of the bill authorizes a new research, development and demonstration program at the U.S. Department of Energy (DOE) on CCUS technology.[10] Section 3404, added by Sens. Heitkamp and Capito and co-sponsored by six Democrats and four Republicans,[11] directs the DOE to report on long-term contracts to provide price stabilization support for carbon capture projects, a mechanism that is often referred to as a Contract for Differences (CfD).[12] The DOE report would identify the costs and benefits of entering into CfDs and would outline options for how such CfDs could be structured and describe regulations that would be necessary to implement such a program.[13]

North American Climate, Clean Energy, and Environment Partnership

On Jun. 29, 2016, President Barack Obama, Canadian Prime Minister Justin Trudeau, and Mexican President Enrique Peña Nieto announced the North American Climate, Energy, and Environment Partnership.[14] The three nations aim to achieve 50 percent clean power generation by 2025, including through CCUS technology. One of the goals identified in the White House Action Plan is leveraging participation in Mission Innovation[15] by identifying joint R&D initiatives to advance CCUS technology. By highlighting the role of CCUS in achieving deep decarbonization in North America, there is a renewed opportunity to focus on how the three nations can work together.  

S. 3179, the Carbon Capture Utilization and Storage Act

On July 13, 2016, Sens. Heitkamp and Sheldon Whitehouse (D-RI) introduced S. 3179, the Carbon, Capture, Use and Storage Act, along with co-sponsoring Sens. Jon Tester (D-MT), Brian Schatz (D-Hawaii), Cory Booker (D-NJ), Tim Kaine (D-VA), and Bob Casey (D-PA).[16] Republican co-sponsors include Sens. Capito and Blunt and Senate Majority Leader Mitch McConnell, putting the Kentucky Republican and some of the Senate’s leading advocates for climate action on the same side.

The Senate bill allows forms of CO2 utilization beyond EOR to be eligible for the tax credit.  Under the bill, utilization is expanded to include the fixation of CO2 “through photosynthesis or chemosynthesis, such as through the growing of algae or bacteria,” chemical conversion of CO2 to a material or chemical compound in which CO2 is securely stored, or the use of CO2 for “any other purpose for which a commercial market exists.”[17] A leading example of carbon dioxide use beyond EOR is algae biofuels. 

The Senate bill would extend the tax credit for seven years and would allow the credit to be claimed for 12 years.[18] For new facilities, the Senate bill increases the value per ton of CO2 of the tax credit to $35 for EOR and $50 for geologic storage.[19] The bill lowers the threshold for qualifying facilities to 100,000 tons for industrial facilities.[20] Finally, the Heitkamp-Whitehouse bill provides the tax credit to the owner of the carbon capture equipment.[21]

Other Federal Efforts:  H.R. 2883, the Master Limited Partnerships Parity Act and S. 2305, the Carbon Capture Improvement Act.

Developments this year build on previous efforts to promote carbon capture. On June 24, 2015, Rep. Ted Poe (R-Texas) and Rep. Mike Thompson (D-CA) re-introduced H.R. 2883, the Master Limited Partnerships Parity Act, which would extend the publicly traded partnership ownership structure available for certain oil and gas activities to renewable energy development.[22] The bill would also extend the tax treatment to carbon capture for EOR or other secure geologic storage. The bill was co-sponsored by six Democrats and six Republicans.[23]

Additionally, on Nov. 19, 2015, Sens. Michael Bennet (D-CO) and Rob Portman (R-OH) introduced S. 2305, the Carbon Capture Improvement Act, which would allow the use of tax-exempt private activity bonds (PABs) issued by state or local governments to finance carbon capture projects.[24]

From the perspective of project developers, the extension and expansion of Section 45Q will do the most to accelerate the deployment of CCUS technology, although the MLP and PAB efforts will play a critical role.[25] Like with other low- and zero-carbon energy technologies such as wind and solar, multiple and complementary incentive policies are often more effective in enabling investment to drive deployment than any single incentive policy.

State Policy

A number of states have demonstrated leadership on carbon capture policy in 2016 by voicing growing support for federal incentives. In February, the National Association of Regulatory Utility Commissioners (NARUC) adopted a resolution urging Congress and the Obama Administration to support state efforts on CCUS including CO2-EOR.[26] In June, the Western Governors’ Association followed up on a June 2015 resolution supporting CO2-EOR[27] with a letter of support for federal incentives for this technology.[28] In July, Montana Governor Steve Bullock released Montana’s Energy Future Blueprint, which highlights the need for federal and state support of accelerated commercial deployment of CCUS technology.[29] Last fall, the Southern States Energy Board also issued a resolution supporting federal incentives for CO2-EOR.[30]

Conclusion

Despite encouraging progress at the federal and state levels, formidable challenges lie ahead. Developers of carbon capture projects face serious obstacles in obtaining financing. Deployment of carbon capture technology is not on track to meet our climate goals. Fewer than half of the Intergovernmental Panel on Climate Change models were able to stay within a 2-degree scenario without CCUS.[31] Without carbon capture, the costs of climate change mitigation increase by 138 percent.[32] Carbon capture projects are capital-intensive and require long lead times to reach commissioning. In this context, the need for action is urgent. 

What we have seen this year is that U.S. political leaders are able find common ground on energy policy where the goals of emissions reduction, energy security, and economic development converge. Looking forward, there is reason to hope that through working together on carbon capture policy this year, elected officials on both sides of the aisle have developed working relationships and built bridges that will enable continued action on climate in the next administration.



[1] International Energy Agency, Tracking Clean Energy Progress 2016 11, 30-31, available at https://www.iea.org/etp/tracking2016/

[2] See H.R. 4622, 114th Cong. (2016) available at https://www.congress.gov/bill/114th-congress/house-bill/4622

[3] The IRS announced that almost half of the credits available under the cumulative cap have been claimed. U.S. Internal Revenue Service, Notice 2015-44, Credit for Carbon Dioxide Sequestration:  2015 Section 45Q Inflation Adjustment Factor (2015), available at https://www.irs.gov/pub/irs-drop/n-15-44.pdf

[4] In the U.S., there are states and regions that will have candidates for carbon capture at lower-cost industrial facilities before they do in the power sector.

[5] Global CCS Institute, Global Status of CCS: Special Report – Introduction to Industrial Carbon Capture and Storage 4 (2016), available at https://www.globalccsinstitute.com/publications/industrial-ccs

[7] Senators Joe Donnelly (D-IN), Jon Tester (D-MT), Roy Blunt (R-MO), John Barrasso (R-WY), Dan Coats (R-IN), Steve Daines (R-MT), and Mike Enzi (R-WY).

[8] Geof Koss, Blame Game Follows Collapse of Senate Tax Talks (E&E News PM, Apr. 12, 2016).

[9] S. 2012, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/senate-bill/2012

[10] Section 3403 establishes a new coal technology program, which includes programs for research and development, large-scale pilot projects, demonstration projects, and co-fired biomass-coal projects.  Id.  The section authorizes $632 million annually from 2017 – 2020, and $582 million in 2021.  DOE continues to do substantial work and focus domestic and international policy efforts on CCUS.  An important domestic DOE initiative is the creation of seven Regional Carbon Sequestration Partnerships to help develop infrastructure and regulations for CCUS technology and sequestration.  An important international DOE initiative is the Carbon Sequestration Leadership Forum, a ministerial-level panel that meets to advance CCUS RD&D worldwide.

[11] Senators Joe Manchin (D-WV), Cory Booker (D-NJ), Sheldon Whitehouse (D-RI), Jon Tester (D-MT), Roy Blunt (R-MO), Al Franken (D-MN), Joe Donnelly (D-IN), John Barrasso (R-WY), Dan Coats (R-IN), and Mike Enzi (R-WY).

[13] As context, carbon capture projects often face steep financing challenges. This is because one of the main uses of CO2 that is in commercial operation today is CO2-EOR and the revenue from the sale of CO2 for EOR is dependent on volatile oil prices. The futures market for oil prices does not enable the type of commercial hedge that is needed to finance these projects. A CfD would address that market weakness by providing a reference oil price that would remain the same over the duration of the contract. When oil prices are above the reference oil price, the developer would pay the U.S. Treasury. When oil prices fall below the reference oil price, the Treasury would pay the developer. By providing certainty, a Federal CfD would make it easier for carbon capture projects to reach financial close.

[14] The White House, North American Climate, Clean Energy, and Environment Partnership Action Plan (Jun. 29, 2016), available at https://www.whitehouse.gov/the-press-office/2016/06/29/north-american-climate-clean-energy-and-environment-partnership-action

[15] Mission Innovation is an initiative that was launched in Paris in November 2015. Through this initiative, 20 nations have committed to doubling their clean energy R&D investments over five years.  The Breakthrough Energy Coalition is an independent initiative spearheaded by Bill Gates that launched simultaneously with Mission Innovation.  Through the Breakthrough Energy Coalition, a global group of private investors have committed to commercializing the research that is funded by Mission Innovation. 

 

[17] S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(e)(7)(A).

[18] S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(a)(3) and 45Q(d)(1)(A).  The determination of eligibility is based on the date that a project commences construction.  This provides greater certainty for investors than the existing cumulative cap of 75 million tons of CO2 but not as much certainty as a permanent tax credit. 

[19] S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(b)(1).  The value of the credit ramps up over time.  The Senate bill does not increase the value of the credit for existing facilities.  S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(a)(1)-(2).

[20] S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(d)(1)(B).  For power plants, the threshold for power plants remains at 500,000 tons.  This would exclude some smaller demonstration carbon capture projects at power plants.  The threshold is 25,000 for projects that utilize CO2.     

[21] S. 3179, 114th Cong. § 2 (2016), providing a new Section 45Q(e)(5).  Like H.R. 4622, this would enable rural electric cooperatives without tax liability to benefit from the incentive because the incentive could be claimed by a third-party that puts up the investment funds in the equipment.  This would reduce the cost of capital for these projects. 

[22] H.R. 2883, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/house-bill/2883

[23] Representatives Mark Amodei (R-NV-2), Peter Welch (D-VT-At Large), Paul Gosar (R-AZ-4), Earl Blumenauer (D-OR-3), Mike Coffman (R-CO-6), Jerry McNerney (D-CA-9), Mia Love (R-UT-4), Tammy Duckworth (D-IL-8), Carlos Curbelo (R-FL-26), John Delaney (D-MD-6), Chris Gibson (R-NY-19), and Scott Peters (D-CA-52).

[24] Access to tax-exempt private activity bonds will provide project developers an important tool in a broader toolkit of measures needed to help attract private investment and finance carbon capture projects.  The benefits to consumers and businesses of PABs include their tax-exempt status and the fact that they can be paid back over a longer period of time.  S. 2305, 114th Cong. (2016), available at https://www.congress.gov/bill/114th-congress/senate-bill/2305

[25] MLPs and PABs will be especially helpful for electric power generation and some industrial sectors where the costs of carbon capture remain high.

[26] National Association of Regulatory Utility Commissioners, ERE-1: Resolution on Carbon Capture and Enhanced Oil Recovery (Feb. 17, 2016), available at http://pubs.naruc.org/pub/66436AF7-DFB2-C21E-43B2-1AE83A02D8F5

[27] Western Governors’ Association, Policy Resolution 2015-06 (Jun. 25, 2015), available at http://westgov.org/images/images/RESO_EOR_15_06.pdf

[28] Letter from Matthew Mead, Governor, State of Wyoming, and Steve Bullock, Governor, State of Montana to Rep. Mike Conaway (R-TX-11) and Sens. Heidi Heitkamp (D-ND) and Shelley Moore Capito (R-WV) (Jun. 3, 2016), available at http://westgov.org/letters-testimony/343-energy/1195-letter-governors-support-enhanced-oil-recovery-technology

[29] State of Montana, Montana’s Energy Future (Jun. 21, 2016), available at https://governor.mt.gov/Newsroom/ArtMID/28487/ArticleID/4325

[30] Southern States Energy Board, Resolution Supporting Carbon Capture and Storage and Enhanced Oil Recovery (Sep. 28, 2015), available at http://www.sseb.org/wp-content/uploads/2015/09/6.2015.pdf

[31] Intergovernmental Panel on Climate Change, Working Group III Contribution to the Fifth Assessment Report (2014), available at https://www.ipcc.ch/pdf/assessment-report/ar5/wg3/ipcc_wg3_ar5_full.pdf

[32] Id.

 

How the first US offshore wind project holds lessons for carbon capture

Top: Siemens 2.3 MW Offshore Wind Turbines, courtesy Siemens Press.

Bottom: The ADA-ES 1 MWe pilot unit, courtesy US Department of Energy.

This fall, America’s first offshore wind farm will come online off the coast of Rhode Island, launching a new industry with the potential to create clean energy jobs in manufacturing and in the marine trades, attract private investment to New England, and reduce carbon emissions.

In Europe, the number of offshore wind farms grew from zero to 84 in just a few decades. What lessons can we draw from the growth of offshore wind that could help advance carbon capture technology?

State Leadership

New energy technologies often need both state and federal support to be deployed commercially. Rhode Island has been a leader in supporting offshore wind. In 2010, its legislature authorized a state utility to enter into an offtake agreement for offshore wind power. This year, Massachusetts did the same, and New York announced a new Offshore Wind blueprint.

Rhode Island also brought stakeholders together to create an Oceanic Special Area Management Plan outlining multiple uses for the marine environment. These efforts laid the groundwork for Deepwater Wind to develop the Block Island Wind Farm, a 30 MW, five-turbine project that can provide power for most of Block Island’s 1,051 residents.

Similar state policies could help deploy more carbon capture technology as well. A handful of states have clean energy standards that include carbon capture technology, including Illinois, Massachusetts, Michigan, Ohio and Utah. This year, Montana Gov. Steve Bullock highlighted carbon capture in his state’s Energy Future Blueprint. Other states could follow this model.

Both the Western Governors’ Association and the Southern States Energy Board have issued resolutions supporting carbon capture technology as did the National Association of Regulatory Utility Commissioners

Financing Support

National policies and early financing support played a role in the success of offshore wind projects in Europe. A report by the Global Carbon Capture and Storage Institute noted that European nations included offshore wind in national energy policies and established feed-in tariffs to provide incentives for deployment.

Multilateral development banks like the European Investment Bank played a leadership role by lending to early offshore wind projects, paving the way for commercial banks to follow. Once these major factors were in place, then technology development, the establishment of standardized contract structures, and maintaining a certain level of deal flow helped drive efficiencies that brought down costs.

When it comes to financing carbon capture, use and storage (CCUS) in the U.S., we have some pieces of the puzzle in place. There is already a basic federal and state regulatory framework for underground storage of CO2, for example.

Still, financing policies are needed to enable investment in carbon capture projects. We should extend and expand commercial deployment incentives like tax credits and open up the use of master limited partnerships and private activity bonds to carbon capture, among other things.     

Regional Approach

A third lesson to draw from offshore wind is that to create new domestic industries, it helps to take a regional approach. Last year, the U.S. Department of Energy (DOE) announced funding for a multi-state effort for offshore wind in the Northeast to develop a regional supply chain.  

DOE is taking a similar approach with CCUS and launched seven Regional Carbon Sequestration Partnerships to characterize CO2 storage potential in the U.S. and to conduct small and large-scale CO2 storage injection tests. Millions of tons of CO2 have already been stored for decades in West Texas as part of enhanced oil recovery operations. The regional partnerships characterized the potential for more CO2 storage in deep oil-, gas-, coal-, and saline-bearing formations as illustrated in the Carbon Storage Atlas. To date, the partnerships have safely and permanently injected more than 10 million metric tons of CO2 in these types of formations.    

Investing seriously in carbon capture technology has economic benefits including for electrical workers, boilermakers, the building trades, and steelworkers. A new CO2 commodity industry could be created to reuse CO2 to make other products.

Carbon capture also has environmental benefits, helping us address emissions from industrial plants, which are the source of 21 percent of U.S. greenhouse gas emissions, and from coal and natural gas power plants, which currently supply two-thirds of U.S. electricity.

This fall, as we celebrate the beginning of the new offshore wind industry in the U.S., let’s keep thinking big about what is possible with carbon capture technology. With sufficient financial and policy support, we can create skilled jobs, attract private investment, and lower CO2 emissions.  

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