Research and Development
Federal investment in research and development (R&D) supports economic growth, drives down costs for key technologies that be used domestically and exported abroad, and promotes U.S. leadership on clean energy and climate. Investment in R&D for industrial carbon capture technologies is driven primarily by the U.S. Department of Energy’s (DOE’s) Office of Fossil Energy (FE). However, FE’s carbon capture program focuses primarily on carbon capture from coal power plants. Further R&D for industrial carbon capture comes from DOE’s National Labs and Advanced Research Projects Agency-Energy (ARPA-E).
Federal policymakers should increase investment and enact programmatic reforms to ensure DOE focuses on advancing R&D for:
- Post-combustion capture for manufacturing processes;
- Use of captured CO2 in chemicals, fuels, and concrete production; and
- Reducing the cost of CO2 transportation and storage.
Validation and Early Deployment
Before we can deploy promising clean energy technologies at scale, we must demonstrate and validate their cost and performance in real-world conditions. Since demonstration projects reduce the economic and institutional risks of new technologies, DOE should develop a robust portfolio of such projects for industrial carbon capture, including for post-combustion capture in cement manufacturing and iron/steel production.
Absent targeted policies to promote early-stage deployment, producers are often not sufficiently incentivized to develop new technologies and consumers tend to shy away from using emerging products. Tax credits, loan guarantees, and other fiscal incentives targeted at carbon capture technologies can reduce the green premium and drive private sector demand. Well-designed tax incentives must be technology neutral, predictable, flexible, and accessible to all.
Risk-Based Safety Standards
Getting to net-zero emissions will require a substantial and rapid expansion of carbon capture for manufacturing applications in the near-term, as well as negative emissions options such as direct air capture (DAC) by mid-century. For this to occur, federal requirements for siting and monitoring carbon capture need to be developed and reformed. Regulatory clarity and environmental protection are crucial as carbon capture and sequestration technologies progress toward full-scale commercial deployment. Safety standards must be equitable and ensure that low-income and historically disadvantaged communities directly benefit from investments, cleaner air, and emissions reductions associated with DAC technology adoption.
Buy Clean procurement aims to reduce carbon emissions by focusing on incentives and requirements for lower-carbon infrastructure and building materials. This policy approach uses the carbon intensity of materials, or the lifecycle GHG emissions involved in their production or use, as a key criterion for procurement decisions for publicly funded projects. Buy Clean sets allowable carbon-intensity performance thresholds that decrease over time. This encourages the disclosure of emissions data via environmental product declarations (EPDs), creates a market for low-GHG materials, often lowers financing costs, and reduces harmful emissions from manufacturing.
Rapid, Large Scale Deployment
Carbon pricing, whether through a carbon tax or a cap-and-trade system, could help to sustain deployment of carbon capture (alongside continued improvements in cost and performance)) by raising the relative cost of manufacturing and power-generation facilities that lack carbon capture. Carbon pricing policies must include equity considerations to ensure that communities of color and historically disadvantaged communities see direct benefits. Design elements requiring on-site GHG reductions and reductions in air pollution should be included in any carbon pricing measures. Such measures should also include competitiveness protections such as border-adjustment tariffs and carbon price exemptions for exported goods. In the manufacturing sector, carbon pricing can also be coupled with other deployment policies such as a clean product standard to potentially achieve deeper levels of decarbonization.
Clean Product Standard
A clean product standard (CPS) is a technology neutral approach to reduce emissions from the manufacturing of industrial products. In this approach, the government sets a target for the GHG intensity of a set of basic manufactured products and allows flexibility in how to meet that target—including the potential to trade with other producers. A CPS would create cost-effective and market-based systems to drive down the average GHG intensity of key manufactured goods like steel or cement.
A CPS offers an alternative or complementary approach to a carbon price for the industrial sector.
Technology-Neutral Deployment Tax Credit
Tax credits have already successfully enabled the deployment of clean energy technologies—especially wind and solar power. Likewise, a technology-neutral refundable tax credit can drive deployment of carbon capture at manufacturing facilities.
Technology-neutral deployment tax credits offer an alternative to a CPS or carbon pricing. This mechanism is less economically efficient than a carbon price or a CPS and would be more effective if paired with regulatory carbon pollution standards to ensure emissions reductions.
Carbon Pollution Controls
An alternative to carbon pricing or a CPS is the establishment of controls on carbon pollution from fossil-fueled manufacturing facilities. Such regulations could be applied to both new and existing facilities through authority granted by the Clean Air Act. This efficacy of this policy approach could be further enhanced by pairing it with a technology-neutral tax credit.
Federal Infrastructure Spending for CO2 Pipelines
Scaling carbon capture technology deployment will require a commensurate scaling of CO2 pipelines to transport captured CO2 to sites for utilization or storage. Congress can support this need by ensuring that investment in CO2 pipelines is part of any major federal infrastructure package it advances. Congress could consider federal investment in CO2 pipelines through a range of programs and funding mechanisms, including making federal loans or loan guarantees available to pipeline developers. It could also consider direct investments or grants to supplement existing private investments in pipeline development, particularly for the most critical trunk pipelines that could enable high CO2 throughput.