What’s likely to survive from Biden’s climate law? The controversial stuff. todayheadline

Dig down about a mile or two in parts of the United States and you’ll start to see the remains of an ancient ocean. The shells of long dead sea creatures are compressed into white limestone, surrounding brine aquifers with a higher salt content than the Atlantic Ocean. 

Last summer, ExxonMobil sponsored week-long camps to teach grade school students from Texas, Louisiana, and Mississippi about the virtues of these aquifers, specifically their ability to serve as carbon capture and sequestration wells, where oil, gas, and heavy industry can bury harmful emissions deep underground. In one exercise, students were given 20 minutes to build a model reservoir out of vegetable oil, Play-Doh, pasta, and uncooked beans. Whoever could keep the most vegetable oil (meant to represent liquified carbon dioxide) in their aquifer, won. 

This kind of down-home carbon capture boosterism is a relatively new development for the oil and gas giant. Over recent years, ExxonMobil and other fossil fuel companies have spent millions lobbying for government support of what they see as industry-friendly green technology, most prominently carbon capture and storage, which many scientists and environmental activists have argued is ineffective and distracts from eliminating fossil fuel operations in the first place. According to Exxon’s website, it’s evidence that they are leading “the biggest energy transition in history.” 

Now that Congress has turned its attention to rolling back government spending on renewable energy, it appears that most of the climate “solutions” being left off the chopping block are the ones favored by carbon-intensive companies like Exxon. Corporate tax breaks for carbon capture and storage, for instance, were one of the few things left untouched when House Republicans passed a budget bill on May 22 that effectively gutted the Inflation Reduction Act, or IRA, the Biden administration’s signature climate legislation. What remained of the IRA’s clean energy tax credits were incentives for nuclear, so-called clean fuels like ethanol, and carbon capture. When the IRA was passed in 2022, there was immediate backlash against the provisions for carbon capture. 

“Essentially, we, the taxpayers, are subsidizing a private sewer system for oil and gas,” said Sandra Steingraber, a senior scientist at the nonprofit Science and Environmental Health Network.

The tax credits for nuclear power plants, which produce energy without emitting greenhouse gases, are meant to spur what President Donald Trump hopes will be an “energy renaissance,” bolstered by a flurry of pro-nuclear executive orders he issued a day after the budget bill cleared the House. Projects will be able to use the tax credits if they begin construction by 2031; wind and solar companies, however, will lose access to tax credits unless they begin construction within 60 days of Trump signing the bill, and are fully up and running by 2028.

That the carbon capture tax credit was never in danger of being revoked is a testament to its importance to the oil and gas industry, said Jim Walsh, the policy director at the nonprofit Food and Water Watch. “The major beneficiaries of these tax credits are oil and gas companies and big agricultural interests.” 

The carbon capture tax credit was first established in 2008, but the subsidies were more than doubled when it was tacked on to the IRA in order to get former Senator Joe Manchin of West Virginia’s vote. Companies now receive $60 for every ton of CO2 captured and used to drive oil out of the ground (a process known as “enhanced oil recovery”) and up to $85 for a ton of CO2 that is permanently stored. As roughly 60 percent of captured C02 in the United States is used for enhanced oil recovery, detractors see the tax credit as something of a devil’s bargain, a provision that props up an industry at taxpayer expense. 

How much carbon is actually captured by these projects is also a matter of debate. The tax credit requires companies that claim it to self-report how much CO2 they inject to the Internal Revenue Service. The Environmental Protection Agency, meanwhile, is in charge of tracking leaks. There are tax penalties if captured carbon ends up leaking, but those penalties only apply if the leaks occur in the first 3 years after injection. Holding companies accountable is made more complicated by the fact that tax returns are confidential, and Walsh cautions that there is very little communication between the EPA and the IRS. Oversight is “very, very minimal,” added Anika Juhn, an energy data analyst at the Institute for Energy Economics and Financial Analysis, a research firm.

“You can keep some really played out oil fields going for a long time, and you can get the public to pay for it,” said Carolyn Raffensberger, the executive director of the Science and Environmental Health Network, explaining the potential impact of the budget bill. “So the argument is, ‘This is a win for the climate, it’s a win for energy dominance.’ [But] it’s really a budget buster with no guardrails at all.” 

Existing carbon-capture facilities have been plagued by technical and financial issues. The country’s first commercial carbon capture plant in Decatur, Illinois, sprung two leaks last year directly under Lake Decatur, which is the town’s main source of drinking water. When concentrated CO2 hits water it turns into carbonic acid, which then leaches heavy metals from rocks within the aquifer and poisons the water. Although a certain level of public health concerns come with many emerging technologies, critics point out that all of this risk is being taken for a technology that has not been proven to work at scale, and may actually increase emissions by incentivizing more oil and gas production. It could also strain the existing electrical grid — outfitting a natural gas or coal plant with carbon capture equipment can suck up about 15 to 25 percent of the plant’s power. 

The tax credits exist “to pollute and confuse people,” said Mark Jacobsen, a professor of civil and environmental engineering at Stanford University, who has argued that there is essentially no reasonable use for carbon capture. They “increase people’s [energy] costs and do nothing for the climate.”

But the technology does have its defenders among scientists. The 2022 report from the Intergovernmental Panel on Climate Change called an increase in carbon capture technology “unavoidable” if countries  want to reach net-zero emissions. Jessie Stolark, the executive director of the Carbon Capture Coalition, an umbrella organization of fossil fuel companies, unions, and environmental groups, contends that arguments like Jacobsen’s unnecessarily set the technology against renewables. “We need all the solutions in the toolkit,” she said. “We’re not saying don’t deploy these other technologies. We see this very much as a complementary and supportive piece in the broader decarbonization toolkit.” 

Stolark said that carbon capture didn’t make it out of the budget process entirely unscathed, as the bill specified that companies could no longer sell carbon capture tax credits. So-called “transferability” — the ability to sell these tax credits on the open market — has been invaluable to small energy startups that have struggled to secure financing in their early stages, according to Stolark. The Carbon Capture Coalition is urging lawmakers to restore transferability now that the bill has moved from the House to the Senate.

Still, the kinds of companies likely to claim carbon capture tax credits — often major players in oil and gas, ammonia, steel, and other heavy industries — are less likely to rely on transferability than more modest companies (often providers of renewable energy), whose smaller tax bills makes it harder for them to realize the value of their respective tax credits. 

“A lot of the factories, the power plants, the industrial facilities deploying within the next ten years or so, are expected to be these really big [facilities] with the big tax burdens,” said Dan O’Brien, a senior modeling analyst at Energy Innovations, a clean energy think tank based in San Francisco. “They’re not the type of smaller producers — like small solar companies — that are reliant on transferability in order to monetize the tax credit.” 

To some observers, keeping the carbon capture credit looks like a flagrant giveaway to the oil and gas industry. Juhn estimated that the credit could end up costing taxpayers more than $800 billion by 2040. Given the House bill’s aggressive cuts to social programs like Medicaid and the Supplemental Nutrition Assistance Program, Juhn finds the carbon capture credit offensive. “When we look at these other programs, where we’re nickel and diming benefits to folks that could really use them, what does that mean? It’s gross.”