Reality Check: Carbon Capture is Another Fossil Fuel Bailout

Industry’s favorite climate ‘solution’ does nothing for climate

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Climate and Energy

Since the Inflation Reduction Act dedicates billions of dollars to supporting carbon capture and sequestration (CCS), it is crucial to understand that this technology has massively overpromised and underperformed, with its only lasting achievement coming in the form of increased oil extraction. 

A new Food & Water Watch fact sheet, “Carbon Capture and Sequestration: Fossil Fuels’ Billion-Dollar Bailout” traces the history of industry-friendly schemes that masquerade as climate solutions. The new fact sheet explains the clear problems with CCS:

Is increasing oil drilling a climate solution?

Currently, the vast majority of captured carbon (about 95 percent) is used for enhanced oil recovery (EOR), which injects CO2 and other chemicals into existing wells to draw out new oil. There are currently more than 119,500 wells that are used to inject CO2 to produce oil. The climate benefits are an illusion: A ton of CO2 produces 2 to 3 barrels of oil when injected; when burned, that oil emits around 1.2 tons of CO2. 

Of the 12 active CCS projects in the United States, only one sequesters the CO2; the rest use it for EOR.

More new money, same old problems?

The additional funding for CCS made available in the IRA follows a distressing pattern. Over a decade ago, the American Recovery and Reinvestment Act (ARRA) dedicated over $3.4 billion for CCS. Just two of the nine large-scale demonstration projects remain operational, and only one of the five commercial power plant projects ever reached operation. That facility – the Petra Nova coal plant – was shuttered after just a few years of intermittent operation. 

There were also billions of dollars in additional carbon capture subsidies in the 2021 Infrastructure Investment and Jobs Act (IIJA). For fossil fuel giants, the attraction of carbon capture is clear: As currently structured, these are government subsidies that keep their polluting infrastructure in place. 

Shoddy Accounting

If technologically possible, carbon capture only makes sense if there is a method to track captured carbon. There is no evidence that is happening. The 45Q carbon capture tax credit – which is being expanded as part of the IRA – has been used by polluters to claim 72 million tons of captured carbon by 2020. But a Treasury Department Inspector General investigation found that the vast majority of the credits had been improperly claimed, without meeting the Environmental Protection Agency’s storage and monitoring requirements.

Nonetheless, the IRA will supercharge this tax credit program, and the modeling that predicts emissions reductions from the new law rely on carbon capture becoming widely adopted and incredibly successful almost immediately. But those rosy predictions are at odds with other projections; the Congressional Budget Office estimates that the changes to the 45Q credit in the IRA will cost only $3.2 billion over 10 years, reflecting between 9 and 13 million metric tons of CO2 captured each year. That is substantially lower than what IRA supporters are suggesting will happen. If CCS technology were to be as widely adopted as some of the IRA’s supporters assume, the costs would run in the hundreds of billions of dollars.

“The only reason to continue subsidizing carbon capture schemes is to please and enrich the fossil fuel industry,” said Food & Water Watch Policy Director Jim Walsh. “Decades of experience show carbon capture is not a viable technology to address the climate crisis and there is no reason to continue subsidizing new failures. The fossil fuel industry is trying to use CCS to rebrand fracking as a clean source of energy, while it continues a legacy of harms to public health, drinking water and our climate.The answer is to stop subsidizing  the fossil fuel industry pollution and make real investments in clean, renewable energy, energy efficiency and electrification.”