Two Years After IRA: Carbon Capture Coalition Executive Director Reflects on Coalition’s Progress and What’s to Come

This week marks the second anniversary of the Inflation Reduction Act (IRA), a critical milestone for the section 45Q tax credit, the foundational policy for the deployment of carbon management technologies, which was further enhanced in the IRA. The 45Q tax credit provides a credit on a per-ton basis for carbon that is captured from emitting facilities, or directly from the air, and then permanently stored or reused to make useful products. Like any significant anniversary, it’s a chance for us to celebrate, take stock, and plan for the future.

Two years in, if one thing is clear, it’s that the passage of the IRA marked the beginning, not the end, of necessary efforts to build the portfolio of policies for carbon management technologies and fulfill the promise of this landmark legislation.

Carbon management technologies enjoy broad support: political, business, economic, and environmental leaders representing diverse interests and perspectives agree on the need for these technologies as part of the overall mix of technologies to address climate change. Over the past decade, the Carbon Capture Coalition and our 100+ members have helped to build this bipartisan foundation and played a central role in advocating for a comprehensive portfolio of bipartisan federal policies to commercialize the full suite of carbon management technologies, which includes carbon capture, removal, transport, reuse, and storage.

Thanks in large part to Coalition efforts, for the first time, there is now a supportive policy framework for large-scale deployment of these technologies across emitting sectors.

The IRA, coupled with the historic investments for carbon management in the Bipartisan Infrastructure Law (BIL), has turbocharged interest in carbon capture and direct air capture. When the Coalition first tallied projects under development in 2020, just two years after the 45Q tax credit was significantly updated in the 2018 FUTURE Act, we counted about 30 projects in development. Today, there are now nearly 200 announced projects in the U.S.; dozens of Class VI well permits are under review at EPA. Taken together, these leading indicators show that we can expect to see more carbon capture and removal projects come online in a variety of sectors throughout the remainder of this decade.

While we certainly have a lot to celebrate—we must also be clear-eyed about the challenges in front of us and double down on what is needed to realize the deployment of these crucial emissions reduction and removal technologies across sectors.

In early August, I had the opportunity to attend the Department of Energy’s (DOE’s) Fossil Energy and Carbon Management/National Energy Technologies Laboratory Program Review in Pittsburgh, Pennsylvania. My time in Pittsburgh provided a good opportunity to take the pulse of the carbon management industry and check in with DOE staff, company executives, and others in the value chain to learn more about where we are as a community at this critical juncture. Over and over, I heard that there is more confidence in the technology, as compared to a few years ago. Additionally, DOE is making progress on implementing funding from the BIL, with announced projects spanning DOE funding areas from carbon capture demonstrations at power and industrial facilities, to large-scale direct air capture hubs, carbon storage demonstrations, and more.

However, despite these positive indicators, we still face significant headwinds to maturing and deploying the industries that make up the carbon management value chain. First and foremost, costs of project deployment, thanks to inflation, have risen sharply over the past few years; analyses indicate that inflation has already consumed about half of the value increase of the credit we saw under IRA. What this means is that unless we see cost reductions (whether through further policies or technology development), we’ll see fewer carbon management projects come online. Ultimately, this means less emissions mitigation and removals, and less of a chance of meeting midcentury climate goals.

Second, navigating permitting of carbon management transport and storage systems is currently too slow and complicated, ultimately risking project financing and undermining progress on announced projects. And there are too few markets to uptake the services and products sourced from carbon management projects – which range from clean, firm power, to carbon recycled products and carbon removal and permanent storage.

Over the past two years, the Coalition has been addressing near-term needs in the available policy framework, which includes inflation indexing for 45Q much sooner than the statute allows, as well as addressing the complex mixture of permitting challenges facing carbon transport and storage systems. However, it is now clear that additional policies are needed to reach widescale deployment, as Congress has envisioned.

As we look to the next generation of policies needed to ensure carbon management can reach its full potential as a climate mitigation strategy, this challenge requires bold and ambitious leadership from a coalition of diverse voices, like the Carbon Capture Coalition.

We must work together to imagine, develop, and advocate for the next generation of policies that advance a critical mass of commercial-scale deployment of carbon management technologies and associated infrastructure across industries and regions between now and 2030.

We must see a significant demonstration, cost reduction, and deployment of these technologies in the remainder of this decade to enable the availability and eventual scale-up of these technologies by 2050 to levels consistent with reaching net zero targets and meeting U.S. climate goals across industrial, electric power and carbon removal sectors. I’m confident we can do that, and I look forward to working with our members, allies, and partners across the spectrum to advance the next policies necessary to fulfill the promise of the IRA.

(Editor’s note: This blog post was reprinted with permission from the Carbon Capture Coalition. You can read the original commentary here.)

—Jessie Stolark is executive director of the Carbon Capture Coalition. Convened by the Great Plains Institute, the Carbon Capture Coalition is a nonpartisan collaboration of more than 100 companies, unions, conservation and environmental policy organizations, building federal policy support to enable economywide, commercial scale deployment of carbon management technologies. This includes carbon capture, removal, transport, utilization, and storage from industrial facilities, power plants, and ambient air.