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.
Shelly is a Managing Director in BMO Capital Markets where she leads a global team responsible for the first line of defense including Trade Floor Supervision, Business Unit Compliance, AML Operational Risk & Resilience, Crisis Management, Algorithm & Automation Risk, and ESG Risk. The mandate includes preventing loss due to failure in process, people and systems and ensuring the execution of trading and investment banking businesses in compliance with applicable regulations.
In addition, she is focused on integrating data with machine learning and AI to enhance the way we work and make decisions and to focus on real versus perceived risk. She leverages similar technology applied in a different way to design process and organizational efficiencies, influencing across the organization.
Previously, Shelly was the COO for BMO's US Trading business. She has over 25 years of experience across industries. Prior to joining BMO, she was a global COO at Barclays. She has a unique blend of experience in sell-side M&A, corporate infrastructure, risk and in leading large scale regulatory and business transformations.
Shelly earned an MBA from Columbia Business School, an MS from Johns Hopkins University, and a BS from Penn State University. She holds FINRA Series 7 and 63 licenses. She has regulated and non-profit board experience and currently sits on the board of BMO Europe PLC and BMO Harris Investment Co.
She enjoys hiking, fishing, singing, playing guitar and sports.
Deb Franklin is the co-CEO of PEAK6 InsurTech, the insurance operations and technology subsidiary of PEAK6. PEAK6 uses technology to find a better way of doing things. The company’s first tech-based solution was developed in 1997 to optimize options trading and, over the past two decades, the same formula has been used across a range of industries, asset classes and business stages to consistently deliver superior results. Today, PEAK6 seeks transformational opportunities to provide capital and strategic support to entrepreneurs and forward-thinking businesses, helping to unlock potential and activate what is into what ought to be.
Eric Rosenbloom, CLTC, ChFC®, is Vice President, Wealth Services at Alera Group Wealth Services. For over 30 years, he has counseled individuals, families and businesses about long-term care and how to create and implement customized financial strategies to help enhance and protect their financial security.
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."