2022 CCS Program Review @ NETL

Good morning, everyone. I appreciate the opportunity to help kick off this plenary session.

• The 650 people registered for this event reflect the breadth and depth of the groundbreaking carbon management research, development and demonstration work being funded by DOE’s Office of Fossil Energy and Carbon Management and the National Energy Technology Laboratory—and that you are all accomplishing in the field. 
• A special thanks to all the NETL Technology Managers and Karen Lockhart, the event organizer, for making this in-person conference a reality. It is a tremendous amount of work, and I appreciate all of your efforts.
• And I want to thank all of you for being here.
• I would like to use my time to take stock of where we are at and the extraordinary opportunity before us.
• From COVID to supply chain constraints and inflation to the Russia’s brutal and unprovoked invasion of Ukraine roiling global energy supply and markets, it has been a challenging time in our nation and the world. So, it is good to be gathering immediately following last week’s exciting legislative outcomes in Washington.
• And what a week it was. On Tuesday, the President signed the bipartisan CHIPS and Science Act, which authorizes a $67 billion investment in the Department of Energy, including $50 billion for DOE’s Office of Science to boost clean energy R&D and advanced computing and manufacturing.
• Then, on Friday, the U.S. House followed the Senate in passing budget reconciliation legislation known as the Inflation Reduction Act, which represents the most important energy and climate investment in our nation’s history.
• As you know, the Biden administration has set a goal of a 50 percent reduction in greenhouse gas emissions by 2030, zero emissions in the power sector by 2035 and net-zero emissions economywide by 2050.
• Midcentury decarbonization is both an essential goal and a profound challenge. Central to achieving net-zero emissions by 2050 is economywide deployment of carbon management technology and infrastructure in energy, industry and manufacturing—across the entire value chain of carbon capture, removal, conversion, CO2 transport and geologic storage.
• Until now, we lacked the federal funding and incentives to bring commercial deployment of carbon management to climate scale. Thanks to historic bipartisan progress over the past few years, culminating in Friday’s passage of several hundred billion dollars of clean energy and industrial tax credits, that has now changed.
• I will speak more about the budget reconciliation bill and its turbocharging of the 45Q tax credit, but it’s important to highlight that the passage of this and previous legislation has taken place despite a media narrative of political polarization and failure.
• There is an important under-told story, featuring years of bipartisan legislating in Congress, and supported by a committed and persistent coalition of industry, NGOs, labor unions and others—including many of you in the audience.
• And none of this happened by accident.
• Bipartisan work by some of the most conservative Republicans and progressive Democrats in Congress, together with major efforts by industry, NGOs, unions, state officials and many others, created the first breakthrough, with legislation in 2018 to reform and expand the 45Q tax credit to incentivize carbon capture, carbon utilization and direct air capture projects. For the first time in decades, developers of carbon management projects had access to a tax credit comparable to other low and zero carbon technologies.
• Next, members of Congress from both parties and advocates worked to pass the Energy Act of 2020, which fundamentally retools and expands U.S. federal programs and funding for energy technology research and development.
• This legislation broke new ground by finally extending R&D to include the third D of commercial-scale demonstration. I personally remember discussions with carbon capture technology developers 20 years ago about how to overcome the “Valley of Death” and secure investment in technologies emerging from the federally-funded R&D process.
• While the Energy Act marked a profound policy shift, it did not include funding. Fortunately, a major bipartisan push followed to pass the Infrastructure Investment and Jobs Act, which was signed in November of last year by President Biden.
• Commonly called the Bipartisan Infrastructure Law, the legislation provides $62 billion to the Department of Energy over five years for all things energy and climate.
• And within that $62 billion is $12.1 billion for carbon management technology and infrastructure, and even more, if one includes clean hydrogen production with carbon capture and storage. This is the world’s largest investment to date by a national government in carbon management.
• It is a historic accomplishment, not just in the amount of money allocated but, again, because the law extends beyond traditional R&D to fully encompass commercial-scale demonstration of the critical technologies. In fact, DOE is standing up an Office of Clean Energy Demonstrations under a new Office of Undersecretary for Infrastructure to foster commercial deployment of technology and infrastructure in partnership with the private sector
• And since the passage of the Bipartisan Infrastructure Law, the staff of FECM, NETL and other DOE offices have been immersed in implementing the wide-ranging provisions and funding contained in the legislation.
• Behind the scenes, work has been done by NETL, FECM and other DOE offices to put a strong programmatic apparatus around these new resources through a series of Notices of Intent (NOIs) and Funding Opportunity Announcements (FOAs) derived from the infrastructure law passed last November.
• After years of supporting individual carbon capture projects connected to single geologic storage projects, DOE is establishing programs and funding to ensure that we build out the broader ecosystem of CO2 transport and geologic storage required to scale carbon management technologies across multiple facilities and industries, and across every major region of the country.
• For example, we are expanding our CarbonSAFE initiative with a roughly $2.5 billion investment to permit the development of 20-40 dedicated regional storage hubs across the country and at least 65 million additional tons of annual CO2 storage by 2030.
• Each hub must be able to store at least 50 million tons of CO2 a year underground over 30 years, and potentially much more.
• These regional storage hubs will be served by the buildout of regional CO2 transport infrastructure made possible by a roughly $2 billion investment in the DOE Loan Program.
• This investment will be used to stand up the Carbon Dioxide Infrastructure Finance and Innovation Authority. CIFIA will leverage much larger amounts of private capital with federal low-interest loans and grants to enable the development of CO2 transport infrastructure that achieves true economies of scale with a reduced overall environmental footprint.
• These investments in the future carbon management ecosystem will support a wide range of later stage R&D and initial commercial scale demonstration, including:
• $2.5 billion for at least six commercial scale carbon capture retrofits, including two industrial facilities, two natural gas power plants and two coal power plants.
• $1 billion for large-scale carbon capture pilots, which is not limited by industry or technology. This provides an opportunity to seed innovation across the many different industry sectors requiring technology to decarbonize.
• We are also implementing a globally unprecedented investment in direct air capture technology—$3.5 billion for four regional direct air capture hubs, each to demonstrate carbon dioxide removal technology at million-ton scale between now and 2030.
• And finally, another $8 billion is going to build four or more regional clean hydrogen hubs to demonstrate commercial-scale hydrogen production, transport, storage and end-uses. At least one of those hubs will be dedicated to hydrogen production with fossil fuels combined with carbon management.
• In the next several months, we anticipate publishing funding opportunity announcements for:
  • Development of regional geologic storage sites;
  • Front end engineering and design or FEED studies for the financing and development of CO2 transport projects through CIFIA;
  • CCS demos and pilot projects;
  • ​​​​​​​Direct air capture hubs, plus pre-commercial and commercial direct air capture prizes;
  • ​​​​​​​CO2 conversion projects that transform captured carbon emissions into low-carbon fuels, chemicals, building materials and other valuable products; and
  • ​​​​​​​Regional clean hydrogen hubs.
• So, when you think about all of these commercial technology demonstrations, the buildout of CO2 transport and storage, and development of regional direct air capture and hydrogen hubs, the overall scale of infrastructure bill investments in carbon management has never been attempted before, anywhere in the world.
• And that was before Friday, when Congress enacted transformative enhancements to the federal 45Q tax credit in the Inflation Reduction Act. If the Bipartisan Infrastructure Law provides the second D of commercial demonstration, the improvements to 45Q deliver the third D of deployment in RDD&D.
• These bipartisan 45Q provisions will unleash private capital to flow into commercial deployment of carbon capture, carbon conversion and direct air capture projects, leveraging the impact of infrastructure bill investments in technology demonstration and CO2 transport and storage infrastructure.
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• Here’s what’s in store for 45Q:​​​​​​​
  • Increased credit values up to $180 per ton for direct air capture and $85 per ton for industrial and power sector carbon capture and conversion projects—finally bringing lower-concentration and higher cost sources of CO2 within commercial reach of project developers and investors;
  • ​​​​​​​An extension of the tax credit for all projects beginning construction through 2032, providing a 10-year window for the private sector to plan, invest and construct;
  • ​​​​​​​Direct pay for 5 years, followed by unlimited transferability for the remaining 7 years to claim the credit, opening the door for projects to access new and greatly expanded sources of private capital; and
  • ​​​​​​​Near elimination of annual facility capture thresholds that have only served to reduce eligibility for the credit and stymy innovation and emissions reductions.
• The Rhodium Group estimates that congressional enactment of enhancements to 45Q, coupled with investments in the Bipartisan Infrastructure Law, will lead to an increase in annual U.S. CO2 capture and storage capacity of 210 to 250 million metric tons by 2035—up to a quarter gigaton of carbon management.
• Taken together, there is globally no precedent for this combined U.S. federal investment in carbon management demonstration and deployment. And that is before we even consider the authorized investments of the CHIPS and Science Act.
• This extraordinary legislative progress now requires all of us to up our game.
• For those of us at FECM, NETL and other DOE offices, we have to deliver effectively on implementation of wide array of programs and funding that have dramatically expanded in scale and scope;
• For those involved in traditional R&D, there will be a growing expectation to demonstrate how your work can more reliably and quickly advance to higher technology readiness levels and, ultimately, to commercialization; and
• For industry, the focus must now shift decisively to commercial project deployment that puts steel in the ground and demonstrates that carbon management as a feasible and desirable component of a broader portfolio of climate solutions.
• Many of us here today have been involved in carbon management for years and even decades. It has not always been easy, and there have been many ups and downs and twist and turns.
• We now have a once-in-a-generation and perhaps once-in-a-lifetime opportunity to meet the expectations of policymakers and the public by delivering real-world carbon management solutions that meet our climate obligations, ensure energy security and reliability, create high-wage jobs and improve people’s lives and communities.

This is our moment.

Thank you.