Energy Excursions

Policy Support Can Drive CCUS Innovation and Deployment

In the pursuit of net zero, the IEA believes we cannot afford to dismiss CCUS as “too expensive”. The organization views CCUS as the only group of technologies that can contribute both to reducing emissions in critical economic sectors and to removing CO2 to balance emissions that cannot be avoided – a balance that is at the heart of net-zero ambitions. In some sectors, including in heavy industry, CCUS is currently the least-cost or only practical option for deep emissions reductions.1IEA. (2021, February 17). Is carbon capture too expensive? International Energy Agency. https://www.iea.org/commentaries/is-carbon-capture-too-expensive

The relative lack of progress in deploying CCUS to date means that many technologies and applications are still at an early stage of commercialization – and therefore at a high point in the cost curve. There is ample potential for cost reductions – the experience of wind and solar highlights what is possible – but the IEA believes that, as with renewable energy, realizing this potential will require strengthened policy support to drive CCUS innovation and deployment.2IEA. (2021, February 17). Is carbon capture too expensive? International Energy Agency. https://www.iea.org/commentaries/is-carbon-capture-too-expensive

The IEA view the economic stimulus packages in response to the Covid‑19‑related economic downturn as a unique opportunity to boost investment in CCUS and support a least-cost pathway to net zero. In their recent special report on CCUS, IEA suggested a number of policy instruments to accelerate progress of CCUS over the next decade:3IEA (2020), CCUS in Clean Energy Transitions, IEA, Paris https://www.iea.org/reports/ccus-in-clean-energy-transitions

  • Grant support (e.g., capital funding for projects)
  • Operational subsidies (e.g., tax credits such as 45Q in the United States)
  • Carbon pricing (e.g., carbon taxes, emissions caps and trading of emissions certificates)
  • Demand-side measures (e.g., rules favoring low-CO2 building materials, tariffs on imported goods to prevent competition from those with higher CO2 and a lower price)
  • CCUS-specific market mechanisms (e.g. tradeable certificates or obligations)
  • Regulatory standards and obligations (e.g., mandates on manufacturers to meet emissions criteria)
  • Risk mitigation measures (e.g., loan guarantees, CO2 liability shared ownership by governments after project closure)
  • Innovation and Research (e.g., U.S. Department of Energy CCUS research and development programs)

Let’s take a look at a few questions below to help you connect the dots between some of the projects, research, and regulatory rules we’ve discussed in this course, and how they relate to these policy instruments to drive CCUS innovation and deployment.

North Dakota regulatory rules pertaining to storage projects and Class VI wells provide for North Dakota to assume CO2 liability 10 years after well closure with the monitoring of the site to be covered by the state’s CO2 Geologic Storage Trust Fund. This is an example of:

Operational subsidies

Incorrect. 

Risk mitigation measures

Correct. 

The state has ownership and is liable for monitoring Class VI wells that have been closed. 

CCUS-specific market mechanisms

Incorrect. 

The 45Q tax credit is used to incentivize carbon capture, by awarding credits based on each tonne of carbon that has been captured for storage or recycling. This is an example of: 

Operational subsidies

Correct. 

Operational subsides include tax credits, such as the 45Q widely used in the United States to incentivize carbon capture. 

Grant support

Incorrect. 

Carbon pricing

Carbon pricing. 

Carbon pricing includes carbon taxes, not tax credits. 

Throughout this course several projects have been discussed such as the Cranfield Project and Illinois Basin (Decatur) Project, both funded by the U.S. Department of Energy. This is an example of: 

Grant support

Incorrect. 

Innovation and Research

Correct. 

The DOE funds CCUS research projects and development programs, such as the Cranfield and Illinois Basin (Decatur) Projects. 

Regulatory standards and obligations

Incorrect. 

TEKS Standards
College Board Units and Topics