Last week, a bipartisan group of lawmakers in the House and Senate unveiled a landmark bill that would invest billions of dollars in CO2 transport and storage infrastructure. The Storing CO2 and Lowering Emissions (SCALE) Act, introduced by Sens. Chris Coons (D-Del) and Bill Cassidy (R-LA) and Reps Marc Veasey (D-TX) and David McKinley (R-W.Va.), authorizes $4.9 billion in spending over five years for the development of CO2 transport and storage infrastructure to boost investment in carbon capture utilization and sequestration (CCUS) projects.
CCUS has a critical role in reducing CO2 emissions from the power sector and key industrial sectors such as steel, cement, plastics, and fertilizers. The Net-Zero America report led by Princeton University researchers estimates that meeting mid-century emissions targets will require sequestering between 1 to 1.7 billion metric tons of CO2 per year, with CCUS installed at over 1,000 facilities. A critical component of scaling CCUS technology to this level is building a robust network of CO2 pipelines that are capable of moving captured CO2 from industrial facilities to geologic storage hubs. The same report from Princeton estimates that enabling the CCUS industry to reach these levels will require building roughly 110,000 km of new CO2 pipeline infrastructure, orders of magnitude more than the 8,500 km currently built. Despite the fact that CO2 transport infrastructure is an integral component of a carbon management market, deployment of CO2 infrastructure faces critical barriers that have limited its development.
Cost is the primary obstacle to building large pipelines connecting industrial and power plant CO2 sources to sequestration sites. While the 45Q tax credits offer some incentive to retrofit sites with CCUS technology, it is not enough to also fund major CO2 infrastructure developments. There is also a chicken-and-egg challenge, whereby plans to build CO2 transportation infrastructure will help incentivize CCUS projects to be built. Still, in order for investors to put capital into building CO2 infrastructure, there must also be a pipeline of CCUS projects that will use this transport infrastructure. Federal support is needed to overcome these critical barriers to building a robust carbon management market.
The SCALE act looks to address these barriers through new federal loan and grant programs. Key components of the bill include:
- The establishment of the CO2 Infrastructure Finance and Innovation Act (CIFIA) program to finance shared CO2 transport infrastructure. The CIFIA program is modeled after existing programs for highway and waterway infrastructure development. It offers low-interest loans for CO2 transport infrastructure, and grants to develop CO2 pipeline capacity.
- Authorizes the Department of Energy (DOE) to provide grants to states and municipalities for procurement of carbon utilization products for infrastructure projects
- Authorizes funding for a cost-sharing program through the DOE for the development of commercial geologic storage sites
- Authorizes increased funding for the EPA for permitting Class VI CO2 storage wells and provides grants for states to establish their own Class VI permitting programs to streamline the CO2 storage process.
While the 45Q tax credit has helped pave the way for the U.S. to be a leader in the carbon capture industry–with over half of large-scale CCS projects operating currently in the U.S.– cementing this status requires investing in the transport and storage infrastructure that is the backbone to any carbon management market. Policymakers have advocated federal support to overcome the barriers inhibiting CO2 transportation infrastructure in the past. For example, Rep. Brian Fitzpatrick’s Market Choice Act, introduced in the 116th Congress, provides federal grants to develop CO2 pipeline capacity, financed through revenue generated from an economy-wide carbon price. While a carbon price with a dedicated stream of revenue allocated towards clean energy infrastructure is the most cost-effective way of reducing economy-wide GHG emissions, the SCALE Act would make progress on the clean energy transition in the near-term. At the same time, it would smooth the path for more ambitious climate policy, such as a carbon price, in the future.
The SCALE Act builds on the 45Q credits and previous efforts to incentivize the development of CO2 and transport and storage infrastructure and firmly places the U.S. on the path to becoming a global leader in carbon management.