National Petroleum Council calls for sharp increase in carbon capture subsidies

Dive Brief:

The National Petroleum Council (NPC) on Thursday approved a report calling for steep expansions to subsidies for carbon capture.
NPC's report was requested by U.S. Secretary of Energy Rick Perry, and more than 300 participants were involved in its creation. The advisory council said two-thirds of those work outside the oil and natural gas industry.
Subsidies for commercial carbon capture, use, and storage (CCUS) are currently as high as $50/tonne of captured carbon thanks to a law President Donald Trump signed in 2018. The NPC report recommends raising that to $90/tonne within the next 15 years and $110/tonne in the next 25 years.

Dive Insight:

Increased carbon capture would reduce emissions and create jobs, but is still a tough sell for some environmental advocates committed to reducing the use of fossil fuels.

The Natural Resources Defense Council opposed the 2018 law, arguing the captured carbon would be used for enhanced oil production, which "would conflict with the need to reduce our dependence on [fossil] fuels," the group said in a blog post at the time.

Despite concerns, carbon capture draws bipartisan support. The law Trump signed last year extended and expanded the 45Q tax credit, and now the NPC report calls for a 20-fold increase in CCUS capacity in the United States, from 25 million tonnes per annum (Mtpa) today, up to about 500 Mtpa within 25 years.

Reaching that level "will require substantially increased support driven by national policies," NPC Chair Greg Armstrong wrote in a letter submitting the report.

"Achieving this objective will promote economic growth, create domestic jobs, protect the environment, and enhance energy security for the United States," Armstrong wrote.

NPC approved a draft report, but some changes are still possible. According to the draft, CCUS "will be an essential element in the portfolio of solutions needed to take on this dual challenge of supplying energy while addressing the risks of climate change."

Conservative think tank ClearPath said the NPC report is "just the latest of many proof points of the broad benefits carbon capture delivers, and the diverse coalitions that have mobilized around it."

Bob Perciasepe, president of the Center for Climate and Energy Solutions, in a statement called CCUS an "essential tool in the climate solutions toolbox."

"The NPC study wisely drew from a wide range of experts in an effort to provide policymakers and the public with real-world estimates of the cost of deployment and suggest policy drivers needed to close the cost gap," Perciasepe said.

There are efforts to expand CCUS — but also resistance. In June, the Senate included carbon capture legislation in the National Defense Authorization Act, but it was removed this week following concern from lawmakers in the House.

The American Petroleum Institute, in a statement on the NPC report, called for lawmakers to expand carbon capture support.

"The natural gas and oil industry continues to drive emissions to their lowest levels in a generation, and as this study shows, we can build on this progress by fostering collaboration between the private and public sectors and advancing CCUS research and development," said API President and CEO Mike Sommers. "We urge Congress to make bipartisan CCUS legislation a priority and support innovative efforts to reduce emissions and achieve environmental progress."