When the U.S. Congress passed its omnibus spending and COVID relief bill last month, plenty of people noted that it had a surprising amount for environmentalists to celebrate. Among the topline climate provisions: significant limits on a potent greenhouse gas found in refrigerants, new funds for wind and solar development, and an extension of the 45Q tax credit, which gives companies a tax break for capturing carbon.
There’s no doubt carbon capture is an industry in need of a jump start. If the world is going to meet its goal to keep temperature rise under 2° Celsius compared to preindustrial levels, everyone from the Intergovernmental Panel on Climate Change to the International Energy Agency agrees the world must capture and store much more carbon than we currently do. According to the IEA, we probably need to capture between 10 percent and 20 percent of the roughly 35 billion metric tons of carbon we produce annually if we want to prevent the worst effects of climate change.
Paul Burrin is the Head of Insights and Evangelism, HR and Payroll at Sage.
As a co-founder and managing director of BrandCulture, Eric leads BrandCulture's strategy practice. Across his career, Eric has worked with big and small organizations alike to put their respective best feet forward through strategic branding, naming, print and digital media.
Prior to BrandCulture, Eric served in a variety of client- and agency-side executive positions, including Head of Corporate Affairs and Head of Strategic Marketing for LRN Corporation and Senior Vice President at global branding and interactive media consultancy Siegel + Gale. Earlier, Eric was an attorney with Wilson Sonsini Goodrich & Rosati in Palo Alto, where he specialized in representing technology clients.
Eric is an honors graduate of Harvard Law School, holds Bachelor's and Master's degrees from Stanford University where he was elected to Phi Beta Kappa. He also studied at St. Catherine's College, Oxford and the University of Urbino in Italy.
Jon is a pioneer in wedding the disciplines of strategic branding and culture development united in Shared Purpose. From the time he had the prescience to purchase the domain "BrandCulture.com" back in the last Millennium, Jon cultivated the idea of forming a new kind of agency that integrates brand and organizational development as the flip sides of the same coin. With BrandCulture now in its second decade, Jon takes singular satisfaction in finding that the world has, at long last, come around to his point of view.
Jon has previously held senior strategic and business development roles within Wolfgang Puck, Siegel + Gale, Imagination and Caribiner International, where his clients have included BMW, BEA Systems, Ford, The Coca-Cola Company, Holiday Inn Worldwide, Jiffy Lube, Lexus, Motorola, Philips Electronics and other global organizations.
Jon serves on the board of the Michael Hoefflin Foundation and holds a BS in Finance from the University of Wisconsin La Crosse and an MS in Real Estate and Urban Affairs from J. Mack Robinson College of Business at Georgia State University.
Currently the world captures about 40 million tons a year — a mere tenth of 1 percent of our total annual emissions. The global carbon capture industry is so small, in fact, that the U.S., which has just a dozen commercial facilities working, is its undisputed leader.
There are many reasons why carbon capture hasn’t taken off, but the primary one is that it’s expensive, and for a long time there was no incentive for big emitters such as oil refineries or cement makers to invest in making the technology profitable. In theory, that changed in 2018, when Congress greatly expanded the 45Q tax credit to allow companies to deduct as much as $50 (up from $20) per metric ton of carbon captured and stored permanently underground.
But the expansion came with a catch: It applied only to projects that had begun construction by 2023.
Carbon capture projects are very complicated. According to the Carbon Capture Coalition (CCC), it takes about five years on average just to get permitting to begin construction.
You see the problem. In the two years since 45Q was expanded — with great expectations that it would inspire lots of new projects — none have launched. Brad Crabtree, director of CCC, said several dozen are in the development stage, but many of these are now at risk of being abandoned since COVID has depressed the oil and gas market.
So, Congress stepped in again. Not only did it extend the tax credit out to 2025, the funding bill also added about $2 billion to fund six projects to demonstrate real world operability of innovative new carbon capture technologies. Significantly, two of those are reserved for steel and cement plants, as opposed to utilities, where previous investments have led to big failures. Currently there’s only one steel plant in the world with carbon capture, in Abu Dhabi, and the first cement factory with carbon capture is set to be built in Norway.
What can taxpayers realistically hope to get from their investment? Crabtree said that it will be a good thing if roughly 30 new projects, nearly triple the country’s current capacity, become operational. While that won’t capture nearly enough carbon in the short run, it might be enough to nurture a struggling industry, much the way tax credits in the American Recovery and Reinvestment Act of 2009 helped accelerate wind and solar.
“The whole point of the credit is to prove the technology works and costs can be lowered so a virtuous circle of investing and building can begin,” Crabtree said. “We can then ramp up in 2035."