The U.S. Finally Has A Real Climate Law. Get Ready For More Pipelines.

The Inflation Reduction Act could spur a boom in carbon-capture technology, and all that CO2 will need somewhere to go.

On a cloudless afternoon last week, Dan Tronchetti stood amid a field of leafy soybeans and struck a scarecrow pose.

The 66-year-old farmer was trying to ward off what he considered an invader.

While his wife, Susan, fixed her camera on him, Tronchetti, wearing a gray Carhartt T-shirt and a red mesh-back hat, held his arms out straight to either side to indicate where a developer wanted to route a pipeline through the 1,500 acres that his family farms in northwest Iowa. He hoped that illustrating just how close to his home the pipeline would run might catch a reporter’s attention.

He rejected Summit Carbon Solutions’ offer of $90,000 for the right to build there last December, but the Ames-based company “would not accept no.” After months of what Tronchetti described as “harassing” calls and emails, the firm asked state regulators last week to seize portions of his land through eminent domain. The last time a controversial pipeline wanted to take private farmland from unwilling sellers, the powerful Iowa Utilities Board approved.

“I wish I would have become a political activist sooner and helped fight the Dakota Access Pipeline,” Tronchetti said by phone. “I think the Iowa Utilities Board is going to try to use that as a precedent.”

Dan Tronchetti, 66, holds his arms out to show where a proposed carbon dioxide pipeline would run through his 1,500-acre farm in Iowa, 60 miles northwest of Des Moines.
Dan Tronchetti, 66, holds his arms out to show where a proposed carbon dioxide pipeline would run through his 1,500-acre farm in Iowa, 60 miles northwest of Des Moines.
Susan Tronchetti

Designed to increase the flow of some of the world’s dirtiest oil, the Dakota Access Pipeline became a poignant symbol of the United States’ failure to enact a serious, long-term national plan to stop adding heat-trapping gasses to the atmosphere. It galvanized a worldwide climate movement.

Six years later, President Joe Biden has signed the first major climate law in U.S. history, opening a $369 billion firehose of federal spending on clean energy and infrastructure that could put the country’s 2030 climate goals in reach. In a twist, its passage may herald Tronchetti’s defeat — and a new era of pipeline construction.

If everything goes right, the Inflation Reduction Act could slash U.S. emissions by 40% below 2005 levels this decade by igniting a boom in solar panels, wind turbines, and carbon capture and sequestration. The latter technology, known as CCS, is designed to reduce planet-heating pollution by filtering it out of smokestacks.

It’s a controversial gambit. Depending on how you see it, CCS either saves us from the emissions of inevitable fossil fuel use, or it guarantees oil, gas and coal a share of the future decarbonized economy. CCS has struggled to work at scale, yet industry groups have at times overstated its capabilities in a bid to stop government policies from boosting non-fossil alternative energy sources.

It’s unclear whether fossil fuel supply chains needed for CCS to be useful will hold firm as the demand for oil, gas and coal falls. And since CCS hardware doesn’t catch all the emissions, communities near polluting plants can expect only partial relief from high rates of asthma and cancer.

To boot, the U.S. may need as much as 30,000 miles of new pipeline — more than all the gas pipelines in California, New York and Pennsylvania combined — to affordably convey the carbon dioxide the new law incentivizes companies to start capturing. As one of three proposed CO2 pipelines currently being debated in the Midwest, the Summit project could deliver 680 of those miles in Iowa alone.

“As we see more interest from project developers, their No. 1 question will be, what do we do with the CO2? Where are we putting it? How are we transporting it?” said Jessie Stolark, a public policy manager at the Carbon Capture Coalition, a consortium of industry, labor unions, and environmental groups. “There is a tremendous interest in the clean-energy sector broadly to build a lot of things.”

The U.S. cannot simply stop using fossil fuels overnight, and many of the African, Asian and Latin American nations that have contributed the least to the carbon mess in the atmosphere are building more oil, gas and coal infrastructure. Proponents of CCS say the technology is a pragmatic, if not ideal, tool that the U.S., as the world’s biggest cumulative emitter, bears responsibility for developing for the rest of the planet. While many experts doubt how useful CCS will be for power generation when solar and wind are so cheap, few see a better option for eliminating the 24% of U.S. emissions that come from factories, refineries and other industrial plants.

“Yes, there were technical challenges to first-of-a-kind projects. Some succeeded, some did not,” said Jesse Jenkins, an assistant professor at Princeton University and the head of the REPEAT Project, which modeled the IRA’s impact on emissions. “The reason the industry didn’t take off is not technical hurdles. It’s the economic case. And this legislation will change that.”

And, though scientists say the world’s first priority must be to stanch the gush of CO2 into the sky, preventing catastrophic global warming will require essentially vacuuming up a lot of the carbon dioxide already circulating in the atmosphere. The same pipelines and underground storage wells needed for CCS would likely play a critical part in that clean-up effort in the coming decades.

No energy infrastructure is immune to not-in-my-backyard opposition — an issue Senate Democrats say a “side deal” to reform federal permitting laws should help address. Passing such legislation will be an uphill battle, especially as progressives seek a bigger role in shaping it.

CCS and its associated pipeline buildout uniquely scramble political lines. Environmentalists have long vilified pipelines – and CCS generally – as emblems of climate destruction. If those same conduits start playing a key role in cutting emissions – still a big if – will the alliances that helped kill projects like the Keystone XL oil pipeline hold?

We will soon find out as the so-called IRA’s generous new subsidies take effect.

Do past perils doom future promises?

Carbon capture and sequestration refers to a host of different processes, but the methods involve using chemical solvents and heat to separate carbon dioxide either from fuel itself before it’s burned or from the flue gas in smokestacks after it’s ignited.

It’s not a new concept. The technology was first developed decades ago, when research first made clear that burning the long-buried remains of ancient plants and animals thickened the Earth’s atmosphere and made it harder for the sun’s heat to escape — a process that, over time, increased the planet’s temperatures and permanently changed weather patterns, freshwater sources and ocean levels.

In this Nov. 16, 2015 photo, employees work next to the gas lines of the Mississippi Power Co. carbon capture power plant in DeKalb, Mississippi.
In this Nov. 16, 2015 photo, employees work next to the gas lines of the Mississippi Power Co. carbon capture power plant in DeKalb, Mississippi.
via Associated Press

At that time, solar panels and wind turbines were expensive. Coal was cheap and generated more than half the United States’ electricity. Coal plant emissions had been a visible problem before. Sulfur dioxide pollution from coal facilities caused acid rain. New hardware to capture sulfur and a federal cap on sulfur emissions drove a dramatic decline in that pollution.

Carbon dioxide has proved a far trickier gas to wrangle. The harmful effects were cumulative and global in nature. And the problem wasn’t just coal. All fossil fuels spewed carbon, not only at power plants, but from automobiles, furnaces and farmland. Nevertheless, the U.S. started pouring money into CCS.

It was a fairly straightforward idea. The problem: Burning the remains of long-dead dinosaurs and prehistoric plants, transferring carbon from the ground to the sky. The solution: Catch the carbon before it enters the sky, and bury it back underground.

But that solution requires energy, expensive hardware, and — if there isn’t a saline aquifer deep beneath the facility itself — pipelines to carry the CO2 to where it can be stored or used for drilling. Why should a company make those investments in a country where dumping carbon waste into the sky costs virtually nothing?

That’s where the government stepped in.

As with any new technology, there were dead-end projects. First proposed in 2006, the Kemper County Energy Facility in Mississippi aimed to generate energy from coal by putting the locally mined fuel through a chemical process that stripped out the carbon and left behind clean-burning hydrogen. Eleven years and $7.5 billion from the Department of Energy later, the utility giant Southern Company abandoned the effort. It partially demolished the gasification equipment last year.

There were also policy incentives too weak to deliver their desired impact. The main federal tool for promoting CCS is the 45Q tax credit, which allows companies to write off every ton of captured carbon. For years, the dollar amounts per ton were too low to make much of a difference. But carbon had value to oil drillers since the liquefied gas can be injected into older wells to extract hard-to-reach crude.

In 2018, Congress increased the 45Q payouts to $35 per ton for CO2 used for drilling, and $50 for carbon that went into storage. But it wasn’t until January 2021 that the Internal Revenue Service issued guidelines for how those credits could be used.

In the meantime, the country’s only remaining commercial CCS-equipped coal plant shut down. As the COVID-19 pandemic ravaged the global economy and sent the price of oil below zero for the first time, the Houston-based utility NRG Energy closed its Petra Nova facility in Texas.

After opening in 2017, the power plant lost 367 operating days to outages ― not unheard of for a first-of-its-kind facility. But rock-bottom oil prices meant that selling captured CO2 for oil drilling could no longer offset the cost of CCS.

“The remarkable thing about Petra Nova is that it was built on time and on budget with limited taxpayer subsidies,” Jenkins said. “What it shows is the risk for utilities and power-plant owners to rely on enhanced oil recovery for their revenues. That’s why I’m not as concerned as some of the environmental advocates are.”

The W.A. Parish power plant on Sept. 5, 2014, in rural Fort Bend County, Texas. The plant was later equipped with a carbon capture and sequestration project known as Petra Nova.
The W.A. Parish power plant on Sept. 5, 2014, in rural Fort Bend County, Texas. The plant was later equipped with a carbon capture and sequestration project known as Petra Nova.
via Associated Press

Combining the $35 credit with revenue from drilling oil at $100 per barrel brought the total price per ton of CO2 to about $58 – well above the flat $50 for storing CO2.

The new law changes that. Using carbon for oil drilling will now be worth a $60 per ton tax credit. If the price per barrel of oil remains at about $100, then the net gain from selling a ton of carbon to an oil driller would be about $73 — well below the $85 available per ton of CO2 that gets stored underground, and that assumes oil prices remain high. If a company is capturing 1 million metric tons of carbon dioxide per year, that’s a $12 million difference.

“It is now more valuable to store CO2 than to use it for enhanced oil recovery,” said Julio Friedmann, a research fellow at Columbia University’s Center for Global Energy Policy. “That was not quite the case in the last bill. It is unambiguously the case now.”

Who will use CCS? It’s complicated.

The federal government’s climate spending has funded its share of boondoggles across the clean-energy spectrum. Right-wing commentators cast the solar startup Solyndra’s 2011 bankruptcy as a scandal, proof of Democrats’ profligate spending on non-fossil energy. But as the global price of solar panels and wind turbines plummeted, it became easy to dismiss CCS as a climate dead end promoted to delay solutions that would actually work.

The industry’s own tactics didn’t help. The Michigan utility DTE Energy donated $1 million through a front group to boost a Lawrence Livermore National Laboratory campaign to promote CCS in California, according to emails published by the Energy and Policy Institute, a watchdog group.

In a New York Times op-ed this week, two former executives from one of the country’s first private CCS startups wrote, “now it’s clear that we were wrong, and that every dollar invested in renewable energy — instead of C.C.S. power — will eliminate far more carbon emissions.”

But that familiar criticism speaks to just one technology — coal plants equipped with CCS — in one sector — power generation, said Jack Andreasen, a carbon-capture expert at the Breakthrough Energy, a policy advocacy group.

“The technology is so much more than that,” he tweeted.

The world had 27 CCS facilities in full operation as of last fall, with four more under construction, and another 102 under development, according to an industry report.

To understand its potential, and limits, it’s important to first consider that capturing CO2 generally requires filtering the gas from other pollutants in a facility smokestack, since those other gases could cause problems in pipelines or wells. In other words, the purer the carbon dioxide coming from a smokestack, the easier it is to capture.

Because of that, the most obvious sector to see a swift CCS boom may be ethanol. Refineries that make the corn-based fuel belch gas that’s about 85% carbon dioxide, making it relatively easy to capture. Analysts say 45Q’s old prices were enough for ethanol plants to break even on CCS. The new, higher payouts could translate into pure profit for “ethanol investors, including the asset manager BlackRock and a private equity venture led by the son of USDA Secretary Tom Vilsack, which are proposing to build thousands of miles of new carbon pipelines through the Midwest conveying carbon from bioethanol refineries into underground fields,” The American Prospect reported last week.

Corn ethanol was first pushed by the U.S. government as a way of reducing dependence on fossil fuels and cutting emissions. But the vast swaths of farmland and fertilizer needed to manufacture the biofuel end up producing 24% higher emissions than equivalent volumes of gasoline, one recent study found. Despite that, corn growers’ political clout in a state whose party primaries set the tone for each presidential election has helped maintain the flow of federal subsidies to the industry.

In an email, Summit Carbon Solutions hailed the IRA’s changes to 45Q as an exceptional bipartisan victory and said its pipeline “will open new economic opportunities for two industries that are critical to the Midwest – ethanol and agriculture.”

“This project is a $4.5 billion total investment that will create more than 11,000 jobs during construction, 1,100 jobs once in operations, and generate tens of millions of dollars in new property taxes to help communities continue to invest in critical local priorities like education, road construction, public safety, health care, and more,” the company said in a statement.

The climate benefits of other CCS deployments are harder to debate.

With the new incentives in place, U.S. firms could be capturing as much as 200 million metric tons of carbon dioxide per year by the end of this decade, according to Princeton’s REPEAT Project study.

The bulk of the tonnage — some 110 million metric tons — would come from industrial manufacturers of steel, cement or hydrogen. Producing those commodities requires loads of heat and energy that solar panels or wind turbines cannot provide. Hydrogen, or fuels like it, may someday be abundant and cheap enough to replace gas and coal. But manufacturing the flammable gas, which emits only water as a byproduct when it’s burned, requires huge amounts of gas or coal, and the jury is still out on whether it can be made with cleanly powered electricity at scale.

The other 90 million metric tons per year in the Princeton analysis would come from coal- or gas-fired power plants. Jenkins admitted, “there’s a lot of uncertainty in this model.”

“The directionally-correct point of the model is that, at $85 a ton, there are economic opportunities in the right locations,” Jenkins said. “Which ones go first, and which sectors, is very hard for us to predict.”

The language in the IRA gives power plants wide leeway to design CCS retrofits. While models show that more deployments should reduce overall costs, the IRA’s boost to renewables means new CCS-equipped plants will still struggle to compete with low-cost solar and wind.

“Yes, there were technical challenges to first-of-a-kind projects. Some succeeded, some did not. The reason the industry didn’t take off is not technical hurdles. It’s the economic case. And this legislation will change that.”

- Jesse Jenkins, assistant professor at Princeton University

“Just based on the economics of clean energy versus retrofitting a plant with carbon capture, we don’t think there’s going to be much, if any, carbon capture in the power sector,” said Robbie Orvis, the senior director of energy policy design at Energy Innovation, a San Francisco consultancy that carried out its own analysis of the IRA’s emissions cuts. “Our assessment shows carbon capture is going to be deployed primarily in the industrial sector.”

Rebecca Dell, a carbon-capture expert and the industrial emissions lead at the San Francisco-based ClimateWorks Foundation, agreed that CCS was unlikely to play a major role in power generation.

“My opinion is always that it’s much easier to justify CCS in certain industrial applications than it is in the power sector,” she said.

On the other hand, Dell said, “if the new 45Q is not used at a wide variety of industrial facilities, then something has gone very seriously wrong.”

In its own analysis of what the IRA would mean for emissions, the Rhodium Group, a New York consultancy, identified enough potential industrial-sector CCS projects to capture a combined 100 million metric tons of CO2 per year over the next decade. But only between 10% and 15% of the industrial projects with a clear case for CCS sit atop good underground storage. As for the rest?

“It’s going to require pipelines,” Dell said.

The U.S. has had a network of CO2 pipelines for years, small enough to avoid any big disasters. At least until 2020.

That year, a CO2 pipeline ruptured in Satartia, Mississippi, spewing a cloud of carbon dioxide that sickened dozens of people in the surrounding area, a HuffPost investigation found in 2021. Since CO2 crowds out the oxygen needed to ignite an engine, the accident disabled vehicles, making it impossible for victims to escape.

An ethanol refinery in Chancellor, South Dakota.
An ethanol refinery in Chancellor, South Dakota.
via Associated Press

In response, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration announced in May it would set new rules and standards for CO2 pipelines. The agency, known as PHMSA, is scheduled to unveil its new proposals later this year.

“Pipelines certainly aren’t easy to build, but there’s a lot of precedent for how long it takes to build and permit one,” said Peter Findlay, the principal CCS analyst at the energy consultancy Wood Mackenzie. “It’s more accepted and easier to predict.”

The hard part, he said, would be permitting permanent storage wells.

It took six years to get the paperwork in order for the country’s first federally permitted CO2 well, located in Illinois. Fossil fuel-producing states could shorten the process. North Dakota and Wyoming already got the green light from the Environmental Protection Agency to exercise “primacy” over permitting CO2 wells, meaning the federal regulators automatically rubber-stamp the state-level approvals. Louisiana is likely next.

Regardless of how many existing factories or power plants start capturing their CO2 emissions — even in a world where fossil fuels phase out faster than anyone thinks possible — those wells will likely be of service. The planet has already warmed by more than 1 degree Celsius above pre-industrial averages, and that’s just the effect of emissions spewed into the atmosphere decades ago. To keep temperatures from climbing another degree or more, which computer models show would be cataclysmic, we need to start pulling that carbon out of the air and burying it.

Trees naturally do this through photosynthesis, so planting more of them and preserving existing forests is key to pulling carbon back underground. Adding certain minerals and crushed rocks to soils, particularly farm fields, shows major promise as another technique, according to a recent study by the University of Southampton. But it’s unlikely those tools alone can remove CO2 at the scale needed.

Policymakers on both sides of the Atlantic are increasingly betting that a different type of carbon-capture technology, known as direct air capture, could deliver measurable CO2 removals at scale. Carbon dioxide mixes evenly into the atmosphere and remains there for centuries. Just as one tiny pinprick can eventually flatten a tire, direct air capture machines could be set up almost anywhere there’s adequate pipeline infrastructure, geological storage and cheap electricity, and start deflating humanity’s carbon bubble.

It’s still a nascent industry, with the first large-scale project coming online just last year in Iceland. But the $12 billion earmarked for carbon capture in last year’s Infrastructure Investment and Jobs Act, better known as the bipartisan infrastructure law, includes money for direct air capture projects. And the IRA mandates that the most lucrative 45Q credits go to carbon removal.

Every ton of carbon a direct air capture plant sells to an oil driller is worth $130. For CO2 stored underground, the maximum reward is now $180.

Fears Over Lungs – And Supply Chains

Leaking pipelines are just one concern. Another is the fact that these facilities don’t always catch all the emissions.

For an existing plant to qualify for the 45Q credit, its CCS equipment will need to be capable of capturing 75% of its annual emissions, which are calculated by averaging the facility’s three highest-emitting years of the past 12 years. For new projects, it’s the same 75% requirement, but ― since something that doesn’t exist has no history of emissions ― the baseline is set at what a plant might produce if it’s in operation six out of every 10 days per year.

The economics of CCS typically work out so the more carbon you capture, the cheaper each metric ton becomes, meaning companies snagging 90% of emissions earn more profit per ton than those only catching 75%. But financial logic has not always guided big polluters’ decisions. And that remaining 25% of emissions adds up, especially for communities living next to smelters, power plants, and refineries, many of which suffer from high rates of asthma and cancer.

“Unfortunately, the weaknesses that are baked into the IRA will create a major imbalance, reversing all the good that this act could be doing for its constituents,” Rafael Mojica, the program director at the Michigan environmental justice group Soulardarity, said in a statement. “Currently it is riddled with concessions to the big carbon-based industries that at present prey on our communities at the expense of their health, both physically and economically.”

Brothers Byron, left, and Angelo Bernard pose outside a house in Reserve, Louisiana, part of what's known as "Cancer Alley." Industrial pollution on this ribbon of land between New Orleans and Baton Rouge puts the mostly African-American residents at nearly 50 times the risk of developing cancer than the national average, according to the Environmental Protection Agency.
Brothers Byron, left, and Angelo Bernard pose outside a house in Reserve, Louisiana, part of what's known as "Cancer Alley." Industrial pollution on this ribbon of land between New Orleans and Baton Rouge puts the mostly African-American residents at nearly 50 times the risk of developing cancer than the national average, according to the Environmental Protection Agency.
EMILY KASK via Getty Images

There’s also a question of whether fossil fuel supply chains can be sustained as the IRA catalyzes a boom in solar, wind and batteries. Energy Innovation’s modeling found that non-fossil investments would slash 24 metric tons of emissions for every 1 ton that new fossil fuel investments generated.

The COVID-19 pandemic and the war in Ukraine showed how sensitive oil and gas prices are to political shocks even when fossil fuels continue to be the primary source of energy. Once demand for fossil fuels starts to fall, there’s no guarantee that the supply chains will remain adequate, even with CCS to justify continued drilling.

“There’s a massive amount of infrastructure across multiple industries — regulated differently, owned differently, with different profit structures and different expertise — that [goes] into the maintenance of fossil fuel supply chains,” said Emily Grubert, an associate professor of sustainable energy policy at the University of Notre Dame.

While models like those Jenkins and Rhodium Group published forecast a future for natural gas plants with carbon capture, “the ability for those types of turbines to get gas right now depends on the existence of infrastructure that is not primarily developed” for that industry, Grubert said.

“It’s not that I’m saying it’s not acceptable or not correct in some way that we might have utility for gas going forward,” she said. “But from a physical infrastructure perspective, what some of these models are showing is not possible.”

The Kemper facility offers one clear example. By 2021, the adjacent coal mine meant to feed fuel to the carbon-capture system sat “covered in grass and has trees starting to grow on top,” according to the trade publication E&E News.

Jenkins said Grubert “makes a good point.”

“It’s very difficult with our current tools to be able to model network effects like that,” he said. “It’s very challenging for various computational reasons.”

But many countries are still building coal-fired plants and looking to develop new oil and gas fields, and it’s unlikely investors in those places will opt to shut those facilities down early for the sake of mitigating a climate crisis their nations did little to create. CCS would be crucial to eliminating those pollution sources, said John Thompson, the technology and markets director at the Clean Air Task Force, an environmental advocacy group.

“We have to show how this technology works. We have to do it safely. We have to do it in ways that are economical. And those practices need to be exported across the globe,” Thompson said. “If we don’t, it’s game over on climate.”

It’s an argument Tronchetti has heard before. But he has more immediate concerns. Constructing the Dakota Access Pipeline compacted the soil in fields so much that farmers are still struggling to grow crops on the land the oil line crosses, The Wall Street Journal reported. If the Summit pipeline burst, Tronchetti fears what would happen to him and to Susan, especially if they couldn’t even drive away to safety. If it’s a climate tradeoff, he said, then what’s the benefit? Will this really make enough of an impact on emissions to make the Tronchetti farm any safer from extreme weather?

“They’re going to use the CO2 to force more crude oil to the surface, they’re going to refine it to use for motor fuels, and we will burn the motor fuels in vehicles on the road that will produce more CO2,” he said. “It just blows my mind that they think the people of the United States are so stupid that we can’t see through their gimmick.”

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