[Senate Hearing 116-377]
[From the U.S. Government Publishing Office]
S. Hrg. 116-377
THE DEVELOPMENT AND DEPLOYMENT OF LARGE-
SCALE CARBON DIOXIDE MANAGEMENT TECH-
NOLOGIES IN THE UNITED STATES, INCLUDING T
ECHNOLOGICAL AND NATURAL CARBON RE-
MOVAL, CARBON UTILIZATION, AND CARBON
STORAGE
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HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
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JULY 28, 2020
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[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the
Committee on Energy and Natural Resources
Available via the World Wide Web: http://www.govinfo.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
41-401 WASHINGTON : 2021
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
LISA MURKOWSKI, Alaska, Chairman
JOHN BARRASSO, Wyoming JOE MANCHIN III, West Virginia
JAMES E. RISCH, Idaho RON WYDEN, Oregon
MIKE LEE, Utah MARIA CANTWELL, Washington
STEVE DAINES, Montana BERNARD SANDERS, Vermont
BILL CASSIDY, Louisiana DEBBIE STABENOW, Michigan
CORY GARDNER, Colorado MARTIN HEINRICH, New Mexico
CINDY HYDE-SMITH, Mississippi MAZIE K. HIRONO, Hawaii
MARTHA McSALLY, Arizona ANGUS S. KING, JR., Maine
LAMAR ALEXANDER, Tennessee CATHERINE CORTEZ MASTO, Nevada
JOHN HOEVEN, North Dakota
Brian Hughes, Staff Director
Lucy Murfitt, Chief Counsel
Spencer Nelson, Professional Staff Member
Renae Black, Democratic Staff Director
Sam E. Fowler, Democratic Chief Counsel
Armando Avila, Democratic Senior Professional Staff Member
Luke Bassett, Democratic Professional Staff Member
Darla Ripchensky, Chief Clerk
C O N T E N T S
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OPENING STATEMENTS
Page
Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska.... 1
Manchin III, Hon. Joe, Ranking Member and a U.S. Senator from
West Virginia.................................................. 3
WITNESSES
Moniz, Hon. Ernest J., President and CEO, Energy Futures
Initiative, Inc................................................ 5
Winberg, Hon. Steven E., Assistant Secretary for Fossil Energy,
U.S. Department of Energy...................................... 31
Angielski, Shannon, Executive Director, Carbon Utilization
Research
Council........................................................ 44
Friedmann, Dr. S. Julio, Senior Research Scholar, Center on
Global Energy Policy, Columbia University School of
International and Public Affairs............................... 66
Mackler, Sasha, Energy Project Director, Bipartisan Policy Center 90
Hezir, Hon. Joseph, Principal, Energy Futures Initiative, Inc.... 107
ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED
Angielski, Shannon:
Opening Statement............................................ 44
Written Testimony............................................ 47
Responses to Questions for the Record........................ 290
Friedmann, Dr. S. Julio:
Opening Statement............................................ 66
Written Testimony............................................ 68
Response to Senator King..................................... 118
Responses to Questions for the Record........................ 298
Hezir, Hon. Joseph:
Questions for the Record..................................... 276
(The) John Muir Project:
Letter for the Record........................................ 318
Mackler, Sasha:
Opening Statement............................................ 90
Written Testimony............................................ 92
Responses to Questions for the Record........................ 306
Manchin III, Hon. Joe:
Opening Statement............................................ 3
Moniz, Hon. Ernest J.:
Opening Statement............................................ 5
Written Testimony............................................ 7
Murkowski, Hon. Lisa:
Opening Statement............................................ 1
Westmoreland Mining LLC:
Statement for the Record..................................... 325
Winberg, Hon. Steven E.:
Opening Statement............................................ 31
Written Testimony............................................ 33
Responses to Questions for the Record........................ 278
THE DEVELOPMENT AND DEPLOYMENT OF LARGE-SCALE CARBON DIOXIDE MANAGEMENT
TECHNOLOGIES IN THE UNITED STATES, INCLUDING TECHNOLOGICAL AND NATURAL
CARBON REMOVAL, CARBON UTILIZATION, AND CARBON STORAGE
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TUESDAY, JULY 28, 2020
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The Committee met, pursuant to notice, at 10:08 a.m. in
Room SD-366, Dirksen Senate Office Building, Hon. Lisa
Murkowski, Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI,
U.S. SENATOR FROM ALASKA
The Chairman. Good morning, everyone. The Committee will
come to order as we meet this morning to examine the
development and the deployment of technologies for large-scale
carbon management, such as carbon removal, carbon utilization
and carbon storage. This is something that I have personally
been interested in for quite some time. I have had briefings
over the years, including one very substantive one from one of
our witnesses this morning, our former Secretary, Ernie Moniz.
It is a subject that should captivate us all in terms of the
potential, in terms of just the innovation that we are seeing
take place at multiple different levels. So being able to
explore that this morning is particularly welcome.
We had actually planned to hold this particular hearing
months ago, in March before the COVID-19 pandemic took hold, so
I am glad that we are able to return to it as carbon management
will very likely prove to be an important option for reducing
emissions and the impacts of climate change. Just a few years
ago the concept of carbon removal was really focused on
planting trees. It was not widely seen as a realistic approach
that could be dramatically scaled. I do want to recognize that
Senator Barrasso from this Committee has proposed a technology
prize for direct air capture for over a decade now. He has been
focused on this and has a vision to it as well.
It is now becoming clear that technologies to permanently
remove carbon dioxide from the air and the ocean are not only
real but they are needed and they are certainly worth pursuing.
When coupled with the increased deployment of low- and zero-
emission technologies, carbon removal options can help offset
hard to abate sectors and could eventually even help reduce
atmospheric carbon dioxide levels. To me, this is very, very
exciting. The technologies range from direct air capture
facilities which filter carbon dioxide out of the air to
techniques that combine natural processes like photosynthesis
and the mineralization of rocks while ensuring that carbon
dioxide does not reenter the atmosphere. Another crucial aspect
of large-scale carbon management will be to ensure that the
infrastructure to safely transport and store carbon dioxide is
readily available and affordable.
Some companies are already making initial investments in
carbon removal. Occidental Petroleum is partnering with the
firm, Carbon Engineering, to build a large direct air capture
facility in Texas that can utilize carbon dioxide for enhanced
oil recovery. Other large companies, including Microsoft, have
made significant commitments to invest in carbon removal
technologies to physically offset their current and even
historical emissions. A recent report from the World Resources
Institute estimates that with enough investment across carbon
removal technologies and infrastructure the United States could
remove up to two gigatons of carbon annually by 2050. That is
equivalent to 30 percent of our country's current greenhouse
gas emissions. So it really puts it into context, the scale
that we are talking about. It is also clear that much, much
more research and development will be necessary before a
variety of carbon removal technologies are commercially viable
and able to operate at scale. I am excited to learn more about
the policies that could support them whether it is new research
and development or other approaches.
I would point out that our Committee has already taken
initial steps to support carbon removal technologies. Senator
Manchin's EFFECT Act, which is included in our American Energy
Innovation Act, authorizes R&D programs at the Department of
Energy to make large-scale carbon management a reality,
including programs focused on carbon removal, carbon
utilization and carbon storage. While we will focus on issues
that are solely within our jurisdiction for this hearing, it is
clear that efforts to scale up carbon removal research and
development cross many different agencies. In recognition of
this, based on recommendations from some of our witnesses here
today, I am introducing a new bill with Senator Kyrsten Sinema
which we are calling the CREATE Act. This bill establishes an
Executive Committee at the National Science and Technology
Council to coordinate interagency efforts on carbon removal
research and development. That effort will be crucial as we
look to effectively deploy resources to advance carbon removal
technologies, and I am already looking to build on it with some
other measures.
I am very pleased to welcome a great set of witnesses who
are with us, in person and virtually, to tell us about the
state of large-scale carbon management and what more we can be
doing. I will introduce the panel after Senator Manchin gives
his opening comments, but I do just want to acknowledge and
thank you all for being here, again, at a hearing that I have
been looking forward to for some months now, but really, it
kind of came together late last year when Senator Manchin and I
had an opportunity to meet with Secretary Moniz and really
started to appreciate the immense potential of these
technologies.
Senator Manchin, I turn it over to you.
STATEMENT OF HON. JOE MANCHIN III,
U.S. SENATOR FROM WEST VIRGINIA
Senator Manchin. Thank you, Madam Chairman, for holding
this hearing, and thank all of you for being here and all of
you that are on virtually with us today also.
Climate change is not a theme we have shied away from in
this Committee, in this Congress. I am happy to have such a
distinguished panel before us today to continue the
conversation on climate solutions and to do a deep dive into
the full array of opportunities for carbon dioxide removal. So
I want to thank you, again, for being here.
To frame our conversation today, we first need to agree on
the facts, and I have always said this, ``We are all entitled
to our opinion, we are just not entitled to create our own
facts,'' most importantly that CO2 emissions are not
just coming from the power sector. In fact, in 2018, the
transportation sector accounted for 28 percent of the U.S.
greenhouse gas emissions, the power generation sector was 27
percent, industry was 22 percent, commercial and residential
was 13 percent and agricultural was 10 percent. Those figures
make it clear we can't just be focused on the electric sector
and power plants. We need to be thinking more broadly in
finding solutions across all of these sectors. Concepts like
carbon removal include technologies that capture carbon from a
power plant, but it also includes capturing CO2
right out of the ambient air and engineering natural processes
like mineralization. Direct air capture technology, once
mature, will be able to be deployed anywhere and carbon dioxide
removal will help offset the emissions from all of the sectors
that I just mentioned. This is necessary, a complement to a
work that needs to be done to reduce emissions across the board
in order to achieve global climate goals.
Leaders on climate policy and energy technology have noted
that carbon capture, utilization and sequestration (CCUS) and
CO2 removal are critical technologies needed to
address climate change, and the U.S. is leading on this front,
a position we need to maintain and further advance, including
allocating resources for these important technologies to get
them deployed broadly, both here at home and around the globe.
That is why I introduced the EFFECT Act which I am proud was
incorporated into our bipartisan energy bill, the American
Energy Innovation Act. The EFFECT Act would advance each part
of the carbon capture, utilization and storage, including
direct air capture and other related carbon removal
technologies. Each of these are integrated components and the
bill would focus on enhancing research and development and,
just as importantly, demonstration and deployment for each
piece of the puzzle, and it is backed up with an authorization
of over $5 billion, including authorization for carbon capture
demonstration projects and to establish a direct air capture
test center, to provide testing capabilities for innovative
direct air capture and storage technologies. Now I call these
pieces of the puzzle, because we only realize the full picture
when they are all in place.
Simply capturing the CO2 is not enough and we
have got to do something with it and we have got to be able to
move it. I believe that CO2 is a valuable element
that we can put to good use in harnessing the economic systems
to further bring down cost of addressing climate change.
Scientists at the National Energy Technology Lab (NETL) in
Morgantown, West Virginia, are working on novel ways of using
CO2 as we speak both to extract more value from
carbon dioxide but also to use it as a way to decontaminate PPE
and medical equipment. We are seeing more and more
opportunities for carbon dioxide use from commercial,
industrial and defense purposes, to medical and pharmaceutical
applications. This is where innovation can help the economies
of fossil fuel-rich states like West Virginia while also
helping to address our climate challenge. Capturing and
transforming carbon dioxide that would otherwise be hurting our
environment into valuable products, truly, is a win-win, plain
and simple. It just makes good sense.
I believe the United States can and should be the world
leader in advanced climate solutions. We have the ingenuity to
develop and deploy technologies that can put us on the right
path to meeting our climate objectives while growing our
economy in every state of the union. Given the right tools I
know that we can get this done on the ground just as I saw West
Virginians tackle SOX and NOX and
particulate matter decades ago, and then we can export these
emissions-reducing technologies around the globe because every
country is in need of common solutions. We are all in this
together. It is called ``global'' climate, not ``United
States'' climate. Carbon removal would be a big part of the
solution, and we need to have all of our options available to
us.
I look forward to hearing from our witnesses today where we
have focused our efforts to make that a reality. So thank you,
Chairman Murkowski, I appreciate it.
The Chairman. Thank you, Senator Manchin.
As I mentioned, we have a great panel before us today. We
are joined this morning here, in person, by the Honorable
Steven Winberg. Mr. Winberg is the Assistant Secretary for
Fossil Energy at the U.S. Department of Energy (DOE). We
welcome him.
Online we have a friend to the Committee who has been
before us many times, the Honorable Ernest J. Moniz, who is now
President and CEO of Energy Futures Initiative. We have worked
with him in his former capacity as Secretary of Energy. It is
good to have you with us, Secretary Moniz. The Secretary is
also joined by Joseph Hezir, who is a Principal at Energy
Futures Initiative, and we are going to do a little bit of an
unorthodox situation with our schedule here this morning to
accommodate individuals. Secretary Moniz is going to present
his statement first as he has scheduling concerns, and then Mr.
Hezir will be here and available to answer questions with
regard to the testimony that they have shared from Energy
Futures Initiative.
Ms. Shannon Angielski is with us in person. She is the
Executive Director for the Carbon Utilization Research Council
(CURC). I think I mispronounced it. I believe it is Angielski.
Okay, I will try harder on that one, thank you for being here,
Ms. Angielski.
Online we have Dr. Julio Friedmann, who is from the Center
on Global Energy Policy at Columbia University. We welcome him.
Back here in the Committee room, we have Mr. Sasha Mackler,
who is the Director of the Energy Project at the Bipartisan
Policy Center (BPC). We appreciate your input.
With that, we will go as I have indicated. We will start
first with you, Secretary Moniz. You will provide your
statement and then we will move back here to the Committee room
and have Assistant Secretary Winberg speak.
So welcome back to the Committee. We look forward to your
comments this morning.
Secretary.
STATEMENT OF HON. ERNEST J. MONIZ, PRESIDENT AND CEO, AND THE
HON. JOSEPH HEZIR, PRINCIPAL, ENERGY FUTURES INITIATIVE, INC.
Mr. Moniz. All right, Madam Chair, Ranking Member Manchin,
members of the Committee, I share the pleasure of being back
before you, and thank you for the opportunity to discuss carbon
dioxide removal from the atmosphere and upper oceans. What may
seem like a highly technical subject is, in fact, a central
part of the portfolio needed to address global warming and
provide optionality for mitigating its long-term impact, most
especially in a state like Alaska that is exposed to major
dislocations from a warming Earth. I'll reinforce many of the
themes already put forward by Senators Murkowski and Manchin.
We are moving toward decarbonization of the energy economy
and work generally toward massive reduction of greenhouse gas
emissions across the economy as a whole. Science and
observation provide the motivation. Increasingly, countries,
states and cities are adopting very ambitious goals of net-zero
emissions by mid-century and eventually net-negative emissions.
This will be possible only if negative carbon technologies, in
other words, carbon dioxide removal, or CDR, are deployed at
gigaton-scale. The CDR Innovation Program needs to be
supercharged starting now if we are to have the necessary
optionality in time. The necessity of CDR is highlighted by the
fact that not just the electricity sector, but also the harder
to decarbonize sectors--transportation, industry, buildings,
agriculture--must be addressed. CDR enabled optionality is
especially important for this.
At the Energy Futures Initiative we laid out the research,
development and demonstration program for the next decade. The
cost to the federal RD&D program is just over $10 billion for
this decade. Implementing such a program entails large-scale
deployment over the next decades. The U.S. National Academies
concluded that a ramp-up to 10 gigatons of CDR would be needed
globally by mid-century to cumulatively constrain global
warming. This would compensate for residual emissions that will
be too difficult or expensive to eliminate in the necessary
timeframe and will enable the possibility of eventually
reaching net-negative emissions. The scale is daunting but
possible. If all the removed CO2 were geologically
sequestered in its supercritical phase, the sequestration
industry would be two to three times the scale of today's
global oil production industry. That's why we advocate for a
much broader portfolio of CDR options, including utilization of
CO2 in widely used commodities. We also support
building the carbon sequestration industry now following carbon
capture from concentrated sources such as power plants and
industrial facilities. This can be jump started by the 45Q tax
credit supported by this Committee and other Congressional
colleagues on both sides of the aisle.
There are many approaches to CDR. We bin them into three
major categories: natural, such as afforestation;
technological, like direct air capture; and technologically-
enhanced natural, such as development of new cultivars with
very deep root systems or accelerated weatherization of
minerals like basalt. Our analysis led to a portfolio with 27
different elements as described in detail in my written
statement for the record of this hearing. Considerable
innovation is needed in this decade for economic scale-up by
mid-century. This portfolio calls for participation by ten
federal agencies and especially prominent roles in the
Department of Energy, USDA and NOAA. About 45 percent of the
funding would be assigned to DOE in our analysis.
Achieving effective coordination and portfolio planning and
budgeting in management and evaluation and in reporting to
Congress, the scientific community and the public will be
challenging. Our recommendation is to establish a committee on
large-scale carbon management within the National Science and
Technology Council. The committee would develop a technological
CDR, RD&D strategic plan, oversee task forces for more detailed
RD&D roadmaps, coordinate budget planning and review with OMB,
identify CDR candidate technologies or timely large-scale
demonstration and provide an annual report at Congress. Each of
the lead agencies would organizationally support this all-of-
government initiative. In many parts of the portfolio,
international cooperation through emission innovation would be
effective in advancing our interests.
We have been very encouraged by the Congressional
initiative supporting a major CDR program, the EFFECT Act and
the American Energy Innovation Act and the recent House Select
Committee on Climate Change report support CDR. This
Committee's leadership is very much appreciated and is very
important. The CREATE Act that Chairman Murkowski just
mentioned will be another very important part of establishing a
multiagency effort.
Again, thank you for the opportunity to offer these
thoughts on CDR. My colleagues and I at the Energy Futures
Initiative will be happy to elaborate further on any and all of
the elements needed to advance a robust U.S. CDR program.
Thank you.
[The prepared statement of Mr. Moniz follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Secretary Moniz, and we appreciate
your leadership in this arena. It is appreciated that you have
taken the time to provide this this morning, and we will look
forward to addressing our questions to Mr. Hezir with regards
to your statement.
With that, we will now turn to the Assistant Secretary
Winberg to update us on all the exciting things that are
happening within the Fossil Energy Department over at DOE.
STATEMENT OF HON. STEVEN E. WINBERG, ASSISTANT SECRETARY FOR
FOSSIL ENERGY, U.S. DEPARTMENT OF
ENERGY
Mr. Winberg. Chairman Murkowski, Ranking Member Manchin and
members of the Committee, thank you for the opportunity to
discuss the Department of Energy's work to advance large-scale
carbon management. The Office of Fossil Energy is focused on
R&D to maximize the energy and value that can be responsibly
extracted from fossil energy resources. That R&D includes our
flagship carbon capture, utilization and storage program. The
International Energy Agency (IEA) describes CCUS as a linchpin
technology in the lowest cost transition to a low-carbon
economy. The U.S. continues to be the world leader in
developing CCUS technologies. DOE is committed to advancing
CCUS across the U.S. economy which is why the Department asked
the National Petroleum Council to develop a study outlining the
necessary policy required and investments, both government and
industry, that would be necessary to broadly deploy CCUS over
the next 25 years.
The actions recommended in the report which are consistent
with the CCUS R&D happening at DOE would support major
reductions in carbon dioxide emissions while supporting the
growth of our economy. This year alone DOE has provided roughly
$85 million for five projects through our CarbonSAFE initiative
to develop geological storage sites that can hold a minimum of
50 million metric tons of CO2 from industrial
sources. We also plan to announce up to $46 million for
engineering scale testing of next generation carbon capture
technologies for coal and gas plants as well as engineering
design studies for industrial sources and up to $12 million for
technologies that directly capture CO2 from the
atmosphere--DAC technologies.
We're also conducting R&D on technologies to transform
CO2 into valuable products. At the same time, our
Coal FIRST initiative is developing coal power plant designs
with carbon neutral and even net-negative emissions when coal
and biomass are combined with CCUS. These plants will have the
flexibility that allows them to support our evolving
electricity grid and some will be able to produce hydrogen
which can play a significant role for electricity production,
manufacturing and transportation, especially in heavy duty
vehicles. On average, producing hydrogen from fossil energy
with CCUS is less expensive than production from renewables, so
we're focused on coupling Coal FIRST plants with CCUS
technologies to enable carbon neutral hydrogen production from
fossil fuels. This is in addition to our longstanding hydrogen
R&D portfolio focused on solid oxide fuel cells, gasification
and reforming technologies, hydrogen transport infrastructure,
hydrogen storage and technologies to use hydrogen for
electricity generation, fuels and manufacturing.
Through our ``coal to products'' R&D we're developing
technologies to use coal to produce products including carbon
fiber, roofing tiles, foam products and substitute lumber. This
isn't just theoretical, so I brought along a few examples with
me to show you what we can do.
This is a decking material. This is a carbon foam material
with a carbon fiber base on it. This can be used for fireproof
wall material and aerospace applications. I also have a roofing
tile made out of coal. Can you imagine building a house that is
fireproof? With coal, that will be reality in the not too
distant future.
[Mr. Winberg displays various samples of products made with
coal.]
A recent DOE market analysis concluded that a mature coal
to products manufacturing industry could employ hundreds of
thousands of people and create over $1 billion in products, all
from coal. Our coal R&D to expand coal's value chain is
critical to realizing that potential.
We're also focused on developing a domestic supply of
critical minerals, including rare earths, from coal and coal
byproducts. Our goal is to validate the commercial production
of these minerals. To that end, last month we announced our
intent to provide $122 million to establish coal innovation
centers that will focus on manufacturing products from coal and
developing new methods to extract and process coal-based rare
earths and critical minerals.
Chairman Murkowski, Ranking Member Manchin and members of
the Committee, DOE is advancing clean energy technologies for
carbon utilization and management across all of our energy
resources. We appreciate the Committee's support for our
efforts, and I look forward to answering your questions. Thank
you.
[The prepared statement of Mr. Winberg follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Assistant Secretary. That is a
great update from the Department.
We will now turn to Ms. Shannon Angielski, who is the
Executive Director, again, of the Carbon Utilization Research
Council. Welcome to the Committee.
STATEMENT OF SHANNON ANGIELSKI, EXECUTIVE DIRECTOR, CARBON
UTILIZATION RESEARCH COUNCIL
Ms. Angielski. Thank you, Chairman Murkowski and Ranking
Member Manchin for the invitation to participate in today's
hearing and with my friends on this distinguished panel.
By way of background, the Carbon Utilization Research
Council is an industry coalition focused on technology
solutions for the responsible use of our fossil energy
resources. CURC's members span the entire value chain of the
electric utility industry as well as state, university and
technology research organizations, NGOs and labor unions.
Members of CURC are at the forefront of their industries and
partnering with the Department of Energy, or DOE, to develop
and commercialize technologies that will transform the way the
world uses fossil fuels. The reason we are participating in
this hearing today is because international authorities
recognize that fossil fuels will continue to be used both here
in the U.S. and globally. It is how we manage the carbon
dioxide, or CO2, produced from the use of fossil
fuels that will determine whether we are able to cost-
effectively achieve mid-century emissions reduction goals and
simultaneously enable all nations to prosper and benefit from
economic growth and energy security.
It's already been said that the U.N. modeling shows that
carbon capture, utilization and storage, or CCUS, is a
necessary part of that solution set. In addition, the
International Energy Agency modeled the contributions of
different technologies to meet that mid-century two-degree
scenario, and it shows that CCUS accounts for approximately 100
gigatons of needed global CO2 emissions reductions
by 2060. To put this into perspective, this would be achieved
by the operation of 1,100 carbon capture systems on the
equivalent of 500-megawatt coal-fired units or 3,200 natural
gas combined cycle units which would need to be operating for
the next 30 years.
So why is all of this important? CCUS is an ecosystem of
several distinct processes, as Senator Manchin already pointed
out. If there is one thing I want to leave you with today, it's
to recognize the scale of infrastructure comprising the CCUS
ecosystem, this includes the equipment necessary to capture
CO2, the transport method to move CO2 to
a storage site and the storage facility, whether the captured
CO2 is used for enhanced oil recovery, converted to
other valuable byproducts or stored in a saline reservoir. Many
CO2 sources are not located near a storage reservoir
so much of the CO2 will be transported by pipeline,
but this is nothing new in this country. It's transported daily
throughout the country with over 4,500 miles of pipelines in
operation. However, for CCUS to be successful, it would be
necessary to permit and construct additional pipelines. That's
why legislation has been introduced, a bill sponsored by
Senators Barrasso and Whitehouse, the Utilizing Significant
Emissions with Innovative Technologies (USE IT) Act, that would
ensure CO2 pipelines are eligible for review,
permitting review processes established by the FAST Act of
2015.
The second take-away from my testimony today is that
solutions for large-scale CO2 storage underpin the
entire CCUS value proposition. Without large-scale
CO2 storage, the climate benefit of CCUS, including
direct air capture and bioenergy with carbon capture and
storage, cannot be realized. The good news is that the U.S. is
recognized as a global leader in CO2 storage with a
mature U.S. oil industry and aided by DOE's world class carbon
storage program. The U.S. has stored more than ten and a half
million metric tons of CO2 in saline and other
geologic storage reservoirs to prove out the capability of safe
and effective CO2 storage. The regional carbon
sequestration partnerships and the CarbonSAFE Initiative are
two key components of the DOE program that will enable broad-
scale geologic storage in the U.S.
CURC commends the Committee for advancing legislation that
would support the entire CCUS ecosystem incorporated in the
American Energy Innovation Act (AEIA), the EFFECT Act,
sponsored by Chairman Murkowski and Ranking Member Manchin,
will accelerate improvements to each of the critical components
of CCUS that we have already described. CURC encourages passage
of the AEIA and to continue efforts to conference the USE IT
Act. I also want to point out that the U.S. is already paving
the way for a CCUS industry. Approximately nine power sector
projects are currently in different stages of development
supported through grants provided by DOE. Many of these
projects are being designed as the source of CO2
that will be stored in CarbonSAFE projects, including like
Project Tundra and the North Dakota CarbonSAFE project or the
Basin Electric Dry Fork Station that will be coupled with the
Wyoming CarbonSAFE project. In addition, approximately 14 non-
power projects have been announced that are in various stages
of development and cover other industries that we've already
described. One in particular, the Wabash Valley Resources
project in Indiana, for example, will capture CO2
from their gasification plant and store the CO2 in
the Wabash Valley CarbonSAFE Reservoir. The project will be the
first to produce zero carbon hydrogen from fossil fuels that
will be used to generate electricity and produce hydrogen fuel
for mobility.
There are a few federal policies that I'd like to highlight
that can continue to promote CCUS deployment amidst the COVID-
19 pandemic--two are enhancements to the Section 45Q tax
credits. Many energy project developers do not have tax
liability that enables the developer to benefit from tax
credits and need to employ tax equity structures that create a
revenue stream to the developer in return for tax equity
investments into a partnership. Implementing elective direct
payments would enhance monetization of those tax credits and
allow project developers to elect to receive a direct cash
payment from the Treasury instead of resorting to the tax
equity market. There is precedent for providing this from the
Recovery Act in 2009, but these payments were provided only for
renewable energy projects. The other is that CCUS has only had
a significant financial incentive in place since the passage of
the FUTURE Act in 2018. While stakeholders are encouraged by
the recent issuance of proposed regulations, the IRS did not
propose regulations until June 1 of this year. Extending the
commence construction deadline by another five years will
greatly enhance project deployment, particularly in a post-
pandemic environment. Senators Capito, Whitehouse, Barrasso and
Cramer introduced a bipartisan amendment to the American Energy
Innovation Act to extend 45Q for five years, an effort
supported by CURC.
In closing, CCUS and carbon dioxide removal technologies
have not been deployed at the rate needed to achieve targets
set out by international authorities, and sustained and robust
policy support particularly through legislation like the EFFECT
Act and coupled with Section 45Q tax credits will allow the
U.S. to maintain leadership in carbon management technologies.
Thank you.
[The prepared statement of Ms. Angielski follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Ms. Angielski.
We will now turn to Dr. Julio Friedmann, who is with us
online. Good morning, Dr. Friedmann, welcome.
STATEMENT OF DR. S. JULIO FRIEDMANN, SENIOR RESEARCH SCHOLAR,
CENTER ON GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY SCHOOL OF
INTERNATIONAL AND PUBLIC
AFFAIRS
Dr. Friedmann. My pleasure. It is a delight to be here.
Thank you, Madam Chairman, thank you, Ranking Member Manchin
and thank you to the whole Committee.
Let me start by saying that already there are enormous good
provisions around carbon management and related technologies in
the American Energy Innovation Act, as many have said. These
strong and important provisions include the five demos by 2025,
including two in natural gas plants, those would be the first
in the world. They include additions of CO2 use and
CDR to an innovation plan. They include the clean manufacturing
provisions, reauthorizing ARPA-E for five years. These are all
well worth doing. The provisions within the EFFECT Act, your
leadership is extraordinary and welcome. In other committees,
the Growing Climate Solutions Act, the LEADING Act, CITA,
Carbon Capture Improvement Act, the enhancements to 45Q that
Shannon Angielski just mentioned and, of course, the new CREATE
Act introduced today by Chairman Murkowski. All of these are
part of what we need to do. I cannot underscore enough that we
simply are not where we need to be. We need to take greater
actions and make swifter progress.
You have my detailed testimony and technical appendix. I
want to highlight a few key aspects of it. The most important
is the understanding of what net-zero means as framing. Net-
zero is now the curve we're being graded on. It is the
yardstick of merit, and net-zero is a clarifying concept. For
any climate target of any kind at any stabilization level, any
carbon taken from the earth must be returned to the earth. It
must go back to the geosphere. This means, among other things,
access to subsurface pore volumes as an essential component of
the work. And again, things like the CarbonSAFE program that
was mentioned by Assistant Secretary Winberg help provide that
kind of insight and access.
Net-zero means that any residual emissions must be balanced
by removal, as Secretary Moniz said. It means that reduction of
CO2 emissions and removal of CO2
emissions are complementary but distinct actions and that both
are necessary. The National Academies and the IPCC find that
this must be done at enormous scale, exceeding the size of the
global oil and gas industry today. We are not where we need to
be to make this real. Toward net-zero, carbon management is the
Swiss Army knife. Carbon management is versatile, flexible and,
in many cases, it is the lowest cost option for CO2
removal. We are working at the Center on Global Energy Policy
to make this clear through a set of metrics called levelized
cost of carbon abatement. That report will be coming out
shortly.
But in many markets, for many applications, carbon
management is the fastest and the cheapest pathway forward.
This is particularly true in heavy industry, including steel,
cement, chemicals, for LNG export, for refining. It is simply
the fastest, cheapest way to reduce emissions. It is also the
case for making zero carbon hydrogen, as was mentioned by
Assistant Secretary Winberg. Hydrogen is versatile and can be
used for transportation, for heavy industry, for heating. Zero
carbon hydrogen can be brought online quickly, in partnership
with CCS. In the power sector, we recently did an analysis
showing what kind of policy enhancements are necessary to get
widespread deployment. They build on and move beyond the
National Petroleum Council's recent report. You can find these
at the Center on Global Energy Policy and in affiliation with
Columbia University's new Climate School.
I want to spend the rest of my time talking about
CO2 removal, CDR. This is the climate counterstrike,
and I ask the Committee to think about CO2 removal
as the biggest market of all time. We need all approaches, both
engineered systems which I'm happy to discuss in depth as well
as the work in managed ecosystems. This proof creates a concept
of working lands where the work is done above and below. It's
on the surface and in the subsurface. Direct air capture is the
simplest to scale. Although it is the most expensive today, it
is the one that is best suited to an innovation agenda, and the
Energy Futures Initiative and Rhodium Group recently published
reports on this. Again, access to the pore volume is essential.
I was pleased to hear Ranking Member Manchin discuss carbon
mineralization. The U.S. has enormous reserves and opportunity
and potential for this. Good work for the U.S. Geological
Survey to consider. Bioenergy with CCS, BECCS, the United
States is currently the leader on this worldwide and has
opportunities to grow it and scale it dramatically in
partnership with the U.S. Department of Agriculture. Forests,
soils, also important, also worth pursuing and things within
the purview of this Committee.
I would ask the Committee in closing to consider these as
export opportunities and industrial opportunities for the U.S.
Bringing CCS and CO2 removal solutions to the world
markets is good work that Americans want to take on. With that,
I look forward to your questions and thank you for your
attention.
[The prepared statement of Dr. Friedmann follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Dr. Friedmann, thank you. I appreciate your
analogy here, carbon management is our Swiss Army knife. A good
way to think about it.
We will now turn to Mr. Sasha Mackler, again, with the
Bipartisan Policy Center. Welcome and thank you for the good
work of the Center.
STATEMENT OF SASHA MACKLER, ENERGY PROJECT DIRECTOR, BIPARTISAN
POLICY CENTER
Mr. Mackler. Chairman Murkowski, Ranking Member Manchin and
members of the Committee, thank you for convening this hearing.
It's a pleasure to be part of such a pragmatic solutions-
oriented conversation, and I am delighted to be here this
morning on behalf of the BPC to discuss large-scale carbon
management technologies and the important role that they can
play in a future low carbon energy system. BPC's energy project
has a number of initiatives underway that relate directly to
carbon management. My remarks today will focus mostly on
natural solutions, but my written testimony focuses more
broadly on the full set of options, natural and technological,
that can remove carbon dioxide already in the atmosphere
because it won't be feasible to eliminate all human-caused
sources of greenhouse gases over the next few decades, we need
to develop ways to pull carbon dioxide directly out of the
atmosphere if we're going to successfully achieve net-zero
emissions.
Of course, technologies that reduce or avoid further
emissions, including renewables, nuclear and carbon capture and
storage, must be advanced aggressively together with carbon
dioxide removal options to make the net-zero goal possible. And
there are numerous policies that are required today to bring
these systems to scale. And on that score, I really want to
commend this Committee for its leadership in bringing forward
the bipartisan American Energy Innovation Act which is really
an important piece of legislation that includes many critical
programs that will benefit carbon management. BPC oversees
several efforts, including the American Energy Innovation
Council, the Direct Air Capture Advisory Council and our new
Farm and Forest Carbon Solutions Initiative that are focused on
these issues and on behalf of all of our partners, we look
forward to working with this Committee to help advance the
American Energy Innovation Act and any additional legislation
you develop to advance these nascent industries.
I just also want to say that in addition to my work on
energy policy at BPC, I spent the last decade in the private
sector working first as a developer of carbon capture projects
and then in the biomass energy industry. Through this
experience I can offer a firsthand account, both of the
challenges facing some of these approaches along with the
enormous benefits that can come from deploying them at scale.
Turning next to natural climate solutions, I'd like to make
the following points. When it comes to agriculture and forestry
policy, we like to say that what's good for climate can also be
good for our farms and our forests. While climate change has
been a deeply polarizing issue, especially in rural America,
forestry and agriculture provide a unique opportunity to
protect the climate, support the health of American lands and
contribute to the economic vitality of rural communities. In
fact, we can't solve this problem without the help of our
farmers, our ranchers, our forest landowners and our public
lands managers. Reaching net-zero by 2050 will require active
participation from all of these stakeholders. In the U.S.
forests already sequester the equivalent of about 15 percent of
our national CO2 emissions. Agriculture, while
contributing about 10 percent of U.S. greenhouse gas emissions,
has enormous opportunities to sequester carbon and crop lands
and in grasslands. Importantly, these actions also come with
environmental co-benefits. For example, they make the land more
resilient to extreme weather, to wildfire and other climate-
related impacts.
Policies on natural climate solutions should focus on
incentives and on markets and on technical assistance. This
should be done in ways that encourages the private sector to
invest in these solutions. In addition to value in carbon
storage, policies that bolster markets for sustainable wood
products and provide pragmatic approaches to carbon accounting
should be prioritized as they are critical enablers for capital
to flow into the space. New research programs are important for
developing the information systems and the technologies so that
soils, crops and forests can enhance their carbon uptake. And
finally, restoration and management of our public lands will be
important as we address the risks of climate change. Reducing
the threat of catastrophic wildfires, looking for opportunities
to reforest burned areas and improving the health of our
rangelands are all critical parts of the solution.
In closing, I want to thank this Committee, again, for its
leadership and for the opportunity to testify and to lend the
Bipartisan Policy Center's support to your efforts in
developing large-scale carbon management technologies. Creating
the industries of the future has always been America's
superpower and will be especially critical here as we develop a
strategy for addressing climate change. Carbon management is
one of the best investments that we can make. Thank you.
[The prepared statement of Mr. Mackler follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Mr. Mackler.
We appreciate the contribution from each of you here this
morning. Again, there is so much to talk about here, so I will
just jump in. I will say though, as all of you have talked
about the different areas that we can look to that are
extraordinary opportunities for us, whether it is in the
technologies or as you have ended with, Mr. Mackler, an
emphasis or a recognition that our farms and forests can be
these great carbon sinks as well. None of you have mentioned
our oceans which, of course, occupy about, you know, I don't
know what the percentage is, 70 percent of Planet Earth and
this is an area, I know this is not jurisdictional to this
Committee, but we have been looking into the opportunities that
we find in seaweed and algae and kelp, particularly in Alaska.
It is kind of exciting to think that we have available to us
areas of--there is nothing innovative about kelp or sea grass,
but to think that it can actually help us in how we are to
sequester, accumulate, carbon is kind of exciting. So we are
working on a blue carbon initiative with Senator Whitehouse,
and again, an innovative, making things happen initiative out
there.
I want to start with you, Assistant Secretary Winberg. When
we talk about our ability to innovate our way forward, we
recognize that there are oftentimes barriers that hold us back.
One is opportunity for capital investment. It is just tough in
these innovative areas. The other, and this is something that
we can control a little bit more directly, are some of the
regulatory matters that these innovators, those that are
looking to make a difference here, that they encounter. Are
there some regulatory reforms that you can think of that either
you have been working on within the Department or that could
stimulate more predictable and consistent investment in some of
these technologies that we have been talking about?
Mr. Winberg. Thank you for the question.
I think there are. In addition to the appropriations that
we get that allow us to advance the R&D, and we are making
great strides, the last time I talked to this Committee we were
talking about a notional price of about $60 a ton for
CO2. We are seeing prices now in the $40 range, and
we think we can get down to $30. With respect to policy, the
45Q is so very important and so making sure that the industry
has the time needed to implement or to implement projects that
can take advantage of 45Q, so extending out the sunset date for
45Q, I think, is very important.
And generally, the way I look at policy is carrots work
much better than sticks, and 45Q is one of those carrots that
will incent industry to move forward. Given the COVID-19
situation that we have, the need for an extension, I think,
becomes more acute because companies' balance sheets are not as
strong as they were. Their earning statements aren't as strong
as they were. And so, as they're looking out at their capital
investments, they may delay projects that they would otherwise
do. And so, that's a good reason for extending out the 45Q.
The Chairman. Well, I appreciate you reiterating that. I
think almost all of you have raised 45Q as one of those tools
that we have. You have mentioned some of the good legislation
that we have been working on, the EFFECT Act, we are looking at
the CREATE Act. So there are measures that are out there, but
really highlighting 45Q, I think, is something for us all to be
considering.
Let me ask a question to you, Mr. Hezir, and this is
important for us to recognize that the work that is going on
here is pretty critical, but we also want to know what others
are doing in innovating in these areas. Senator Manchin and I
had an opportunity, I guess it was now a couple years ago,
maybe it was last year. We were at the University of Aberdeen
and had an opportunity to go through a pretty exciting
laboratory in terms of what they are doing to utilize the
CO2 into value-added products. And Assistant
Secretary Winberg, you know, the thought that we are making
decking and roofing. We saw sheetrock when we were there,
building blocks. It is pretty exciting to see.
Mr. Hezir, can you share with us who--what other countries
are really leading in this area that we are looking to for a
little bit of inspiration or collaboration?
Mr. Hezir. Yes, thank you, Senator, I'd be happy to do
that.
In our report last year, we devoted an entire chapter to
discussing international efforts on CDR research. You singled
out Australia and that is, kind of, an interesting country
because they're doing work on CDR mineralization. They're doing
work on geologic sequestration, and they're also doing work on
blue carbon and oceans-related CDR. So they do have a very
broad-based program. But if you look around the world, in
mineralization there's work going on in the Middle East in
Oman, in Iceland, South Africa. A lot of work in DAC is going
on right now in not only the project in Canada but in a number
of European countries, and also in terrestrial and in the
biological and the bioenergy with carbon capture area, the UK
is engaged in a major project. And so, we see a lot of
opportunities for international collaboration and I think, as
Secretary Moniz said, Mission Innovation we see as a potential
platform for expanding that into collaboration in CDR.
One final thing I would just mention. You brought up the
concept of blue carbon, and the European Commission recently
launched a four-year research initiative called OceanNETS
involving six countries and, I think, 14 different
institutions, including a few scientists in the U.S. that's
going to be looking at a variety of oceans-related CDR and that
would be just a wonderful opportunity for U.S. participation.
The Chairman. Great. I appreciate that. We will look into
it.
Senator Manchin.
Senator Manchin. Well thank you so much and all of you for
your expertise here.
A couple things that I was concerned about and this might
be self-serving, but first of all, I was very disappointed
about the Petra Nova plant in Texas. It stopped capturing
carbon early this year due to the economic burden caused by
plummeting oil prices. As we all know, the most common use for
captured CO2 is for enhanced oil recovery.
Unfortunately, such as in my state, we are now seeing
diversifications critical for longevity of the CCUS projects
that we need to ensure that there are ways to create value from
capturing CO2 whether from power plants or from
ambient air. So I would like to hear from the panel about other
impacts of the pandemic on the deployment of CCUS and carbon
removal technologies and what other tools are needed to help
foster innovative valuable carbon utilization methods?
Also, it would be helpful for more widescale deployment in
states that don't have much oil to recover where we can put
this, store this carbon. I am understanding with our saline and
our mines that have been played out, there is a possibility of
a tremendous amount of storage there that we can be putting
CO2 in. So if Mr. Winberg and any of the panelists
want to respond to this.
Mr. Winberg. One of the areas that, I think, we have a bit
of a shortfall here in the United States is the necessary
infrastructure to move CO2. As you point out, not
all areas are geographically or geologically suitable for
CO2 storage.
Senator Manchin. Well, especially those areas such as West
Virginia that basically produce a lot of CO2 because
of the tremendous amount of power plants that we have and this
is not feasible for it to work there unless we have some other
use for it.
Mr. Winberg. Yes, absolutely.
So two thoughts on that. One is building out a
CO2 infrastructure system. Pipelines are becoming
increasingly difficult to build here in the United States, but
that doesn't take away the very real need for a CO2
infrastructure so that we can move this CO2 to where
it's needed to, in effect, commoditize it. And number two is
the research that we have ongoing to find other uses for
CO2 beyond enhanced oil recovery, to turn
CO2 into a feedstock or a commodity to build out
products whether it be fuel or other valuable products. So both
of those are absolutely necessary if we're going to make
significant reductions in CO2 emissions.
Senator Manchin. One thing, if I can. The U.S. Geological
Survey has estimated there is enough geological storage in the
U.S. to store over 3,000 metric gigatons of carbon dioxide
which is over 550 times the carbon dioxide that the U.S. emits
in a year. But despite that vast resource for carbon storage,
some of the regions of the country, like the majority of the
East Coast, have little to no geological storage capability. We
are looking for the most promising, existing solutions for
this.
Yes, ma'am?
Ms. Angielski. Senator Manchin, you know, for those regions
of the country that don't actually, like West Virginia, I mean,
there is some storage potential, but it's a lot more expensive
to store.
Senator Manchin. Yes. Correct.
Ms. Angielski. There's opportunities to look at, also,
offshore opportunities. I know that the East Coast does have
offshore potential, and I think that if we were doing more
exploration there to understand how best to store
CO2 offshore, that would be one opportunity. The
other, as mentioned, CO2 you can convert into
useable products already discussed, but I think that we, DOE's
done a great job at financing projects to look at some of the
research and developments needed. But I would recommend more
increased funding for larger scale and testing at scale. Some
of the challenges associated with CO2 utilization or
conversion is the amount of CO2 that you produce
from a power plant just overwhelms the amount of CO2
that can be converted into the product. So we just need to be
looking at broader scale storage opportunities there and
funding those opportunities.
Senator Manchin. If----
Mr. Mackler. Senator Manchin, if I might respond to your
question?
Senator Manchin. Sure.
Mr. Mackler. With respect to the impacts of COVID on all of
this, it definitely has slowed things down. It has decreased
the tax appetite for a lot of companies as Shannon had said
earlier, this means that things like 45Q are not necessarily
the only or best policy option. I would point you to other
policy options like contracts for differences, rate recovery in
the rate case. New York, for nuclear plants, has created a
zero-emission crediting system, a ZECs, similar to the
renewable RECs system. This is something that could also be
done in the power sector. Interestingly, what we have also seen
during COVID is that investment in CO2 removal has
grown. Investment in CO2 reuse and recycling have
grown. Investors see this as an important aspect of the future
and there's a bit of a land rush into this space. Creating the
policy, framework and the infrastructure, things like
pipelines, to deliver this future is excellent and important
work.
Senator Manchin. Let me just say one thing because my time
has run out. My concern has been this, that basically the
states that have been energy producers and the country has
relied on for quite some time, that they are not left behind.
These people who have done this tremendously hard work all
these years, all they are asking for is an opportunity. So as
we develop these new technologies, I would hope that the tax
credits would be mandated to be used in the areas where the job
loss has come from, from energy. If we are replacing energy
technology, we are moving forward, then those people should
have an opportunity for another life, if you will, and a good
paying job. And there is where we can direct our tax credits to
make sure they are used in areas that had the job losses in
energy production. I would hope everyone would be conscious
about that because it is very difficult, very challenging.
Thank you.
The Chairman. Thank you, Senator Manchin.
Senator Barrasso.
Senator Barrasso. Thank you, Madam Chairman and Ranking
Member Manchin for holding this important hearing this morning.
Thank you all for being here to testify.
The COVID-19 pandemic and economic slowdown has really
offered all of us an opportunity to reflect on the future of
our energy landscape. I would also like to thank the witnesses
who are joining us today because your research and outreach
efforts are critical to informing not just lawmakers but
everyone as we work together to develop policies and strategies
to tackle climate change. Wyoming is a leader in carbon
management. We have the integrated test center in Gillette
where they are holding the competition that, Madam Chairman,
you mentioned the trip, along with Senator Manchin, to
Aberdeen, Scotland, in which I was involved. One of those
researchers we met is now part of the finalist group working in
Gillette, Wyoming, on the prize related to finding better ways
to capture carbon and use it. This is located next to Basin
Electric's Dry Fork Station. Researchers can test scaled up
versions of their carbon capture technology. The University of
Wyoming is dedicated to developing these technologies,
educating the next generation of carbon management leaders and
the Environment and Public Works Committee is going to be
having a hearing in Gillette onsite on this coming up next
month in August.
I have strongly advocated for the research, development and
implementation of carbon capture, utilization and storage, and
Madam Chairman, it makes me think about ten years ago, hard to
believe, but it was ten years ago that you and I introduced the
GEAR Act, 2010, which stood for Greenhouse Gas Emission
Atmospheric Removal Act, to do just exactly what we are talking
about. Then the Chairman of the Committee back at that time was
Senator Jeff Bingaman from New Mexico who co-sponsored with us
and worked on this legislation. So we have been at this for a
while, as you have. Since then, we have worked hard to enact an
expansion of the 45Q tax credit. All of you who have mentioned
that today, my current bill, S. 383, the Utilizing Significant
Emissions with Innovative Technologies Act, the USE IT Act, has
now passed the Senate for the second time as part of the Fiscal
Year 2021 National Defense Authorization Act. Senator Inhofe,
he was a member and former Chairman of the Environment and
Public Works Committee, made sure it was in the bill. So we
look forward to having that as a policy for our nation soon.
It is good to see some old friends back. Secretary Moniz,
good to see you again. You and I have discussed the scale of
carbon capture removal when you testified before the Committee
last year. I think you noted that we have to think about
removing carbon dioxide on a gigaton scale. Mr. Hezir, how
quickly can we scale up current projects to reach, as Dr. Moniz
described, a gigaton level of removal of carbon dioxide?
Mr. Hezir. Senator, thank you for the question.
In our report we had outlined a very rigorous, sort of,
goal-oriented RD&D program that would really deliver the types
of solutions that we need at scale within a ten-year period.
And so, we would see the next decade as really being a decade
of innovation leading into then a period of large-scale
deployment. I think that the pace of the deployment ultimately
will depend upon some combination of what future climate policy
might be as well as future financial incentives. But right now
what we see is the need to really develop the innovation agenda
so that we have the types of solutions that we need that can be
deployed at scale and can be not only that but also the range
of solutions that not only include direct air capture, but also
looking at other pathways like terrestrial and oceans and
mineralization.
Senator Barrasso. This is a question then for all or any of
the witnesses because to achieve this kind of gigaton-scale,
the world's largest CO2 emitters--India, China--they
need to actively engage in carbon removal. What should we be
doing to make sure that China, India and other major, global
economies are serious about using large-scale carbon removal
technologies? And anyone who wants to jump in on that can do
that.
Yes?
Mr. Mackler. Thank you for the question, Senator.
What I would encourage the Committee to think about as we
think about large-scale carbon removal is that there are a
portfolio of technologies available today, or in the pipeline,
that will be available at some point in the future and the
leadership of the United States in helping to advance all of
that will really pay dividends to us as we look at the export
market going forward. And there are things that we can do
today, when, especially when it comes to natural sinks to
enhance those natural sinks by developing technologies and
creating markets so that the best practices and those
advancements can go into the marketplace as we develop the more
technological solutions like direct air capture and that will,
and the scale will come from the innovation program being
coupled with the right policy frameworks that can create the
business models so that private capital can invest and actually
deploy these technologies. And at that point, that's when we
will have shown the technologies work and can then export them
to the world.
Senator Barrasso. Thank you.
Mr. Secretary, I see you have removed your mask.
Mr. Winberg. I think there are a number of forums that
we're working in already, the carbon sequestration leadership
forum, the CEM and those are international organizations, some
working with IEA, some that are separate from IEA, but those
are the opportunities where we can promote the U.S. technology
because again, Senator, the U.S. is leading in the carbon
capture space. The Integrated Test Center is just a spectacular
site for small-scale testing of these capture technologies
where, again, we're on the path to reduce the cost down to $30
a ton, per metric ton. Nobody else in the world is where we are
with respect to developing these capture technologies, getting
them commercialized and especially getting the cost down.
So I think that there are a lot of opportunities for us to
take that technology and export it to other countries, and we
are doing that through these forums that I mentioned.
Senator Barrasso. Thank you, Madam Chairman.
The Chairman. Thank you, Senator Barrasso.
Let's turn to Senator Heinrich.
Senator Heinrich. Thank you, Chairman, and I want to thank
you and the Ranking Member for having this hearing. It really
is long overdue. A lot of work has been occurring in this space
and now it is starting to really break into the news and into
the popular imagination. I think we have an opportunity where
there is a lot of interest on both sides of the aisle to really
push this forward.
My first question is to Mr. Hezir. There is now a growing
consensus that we are going to need to remove carbon dioxide
from the atmosphere because of how long we have delayed
addressing carbon pollution, and we know that there are
chemical technologies today that are proven that do this but
they are all relatively expensive, quite expensive, compared to
where we need them to be. How do we balance that portfolio of
potential chemical processes, make sure we treat them fairly,
but at the same time provide tools to, as rapidly as possible,
drive that proven science down the cost curve the way that we
have seen technologies like solar, distributed generation
driven down the cost curve?
Mr. Hezir. Yes, Senator, you're absolutely right. There are
a variety of chemical methods starting out with some of them
being borrowed from, you know, long experience in the
petrochemical industry. In our report one of the things that we
identified as the very early on opportunity for DOE is to start
off by really doing a comprehensive technoeconomic assessment
of the various alternatives out there and by doing so by
including funding some of the operating and data collection
costs from some of the existing pilot scale projects, but then,
as a principal research priority should be focused on the
objective of cost reduction.
And there's three areas in our report that we identify that
we thought were critical. One was the development of better
sorbents, the second one was materials and structures for
carbon capture systems, and then the third one is in
manufacturing, being able to create engineered systems that can
be manufactured at mass scale. And particularly in the first
two areas, sorbents and materials, are areas where the national
laboratories, in particular, can be extremely helpful in
identifying innovative approaches for both of those.
Dr. Friedmann. Senator, if I could add quickly to this?
The thing--there are companies out there that deliver
carbon capture solutions, direct air capture, in particular.
The thing they need is customers. More than anything else, to
get down the cost curve, we need to deploy. And in this context
the government has always been the first purchaser of clean
energy. They bought solar panels.
Senator Heinrich. Yes.
Dr. Friedmann. They bought windmills. They bought fuel
cells. They bought batteries for military applications, for
aerospace applications, for federal buildings. I would
encourage the Committee to consider the government directly
procuring direct air capture services.
Senator Heinrich. That is a great point.
I want to go on to hydrogen. We have heard a fair bit today
about making hydrogen from fossil fuel sources, but if you look
at the news right now and if you just follow the energy news,
you are seeing an enormous amount of investment in renewable
hydrogen, even though there is a cost increment. So you are
seeing NextEra make an announcement in Florida for a $65
million pilot solared hydrogen plant. You sre seeing Iberdrola
investing in Spain. You are seeing Air Products and Chemicals
investing in a plant in Saudi Arabia. Why is there an apparent
disconnect where making hydrogen from fossil sources is cheaper
today but clearly industry thinks that it may not be tomorrow
because we are seeing a really substantial amount of investment
in renewable hydrogen, green hydrogen directly from renewable
sources?
Mr. Winberg, you look like you want to answer that.
Mr. Winberg. There is a lot of press these days about the
so-called green hydrogen, but the fact of the matter is at
about----
Senator Heinrich. You said so-called. Why do you say so-
called?
Mr. Winberg. I say so-called because with steam methane
reforming using natural gas and CCUS, you can get 95 percent
carbon capture and that's been given the color code of blue,
but it's pretty clean hydrogen. You can also use coal with
biomass and some waste plastics and municipal solid waste with
CCUS and then you're not----
Senator Heinrich. But obviously industry thinks that is not
where we are going. I mean, if you just look at where the
investment is headed. What do they know that you are missing?
Mr. Winberg. I don't think----
Dr. Friedmann. Senator?
Mr. Winberg. I don't think that I'm missing anything,
Senator. I think there's a lot of press coverage on the so-
called green hydrogen, but again, the fact is that we are
continuing to produce the vast majority of methane around the
world with natural gas and there are opportunities----
Senator Heinrich. You mean hydrogen, not----
Mr. Winberg. I'm sorry, hydrogen from methane.
Senator Heinrich. Yes. They do produce a lot of methane.
That is what we are trying to get away from.
Mr. Winberg. Well, I don't know if it was Freudian but it's
methane produced, or hydrogen produced from methane. What we
haven't attached to that is CCUS, but we have one project and
it's Air Products and they are producing blue hydrogen.
Senator Heinrich. Air Products is also investing in
renewable hydrogen in Saudi Arabia, but my point is simply that
I think we should have some of those voices at the table
because they obviously are keyed into a trend that I think we
should all be aware of.
The Chairman. Thank you, Senator Heinrich.
Let's now turn to Senator Daines.
Senator Daines. Thank you, Chair Murkowski.
Montana is uniquely situated to lead the nation in carbon
capture. We have the largest reserve of recoverable coal. We
have large-scale coal plants like the Colstrip Power Plant. We
have easy access to geological storage and the potential use of
carbon for enhanced oil recovery. We really check all the boxes
in Montana.
However, unfortunately and due to extreme litigation,
Colstrip Units 1 and 2 were forced to close earlier than
planned. We are also seeing an early closure of a coal plant in
Sidney, Montana, on the eastern side of our state. Both sites
could be perfect locations for DOE investment, specifically for
a large-scale, DOE-funded CCUS demonstration project. The
workforce is there. Transmission capacity, which is a very
important component of all this, is there. It is already built,
and the community is ready. All that is needed is for DOE to
come out and work with Montanans to get this funding flowing.
Assistant Secretary Winberg, DOE has a number of different
funding streams for CCUS from beginning stage feasibility and
engineering studies to full-scale demonstration projects. As I
mentioned earlier, Montana and, specifically, the Colstrip
Power Plant are prime areas for DOE investment. Could you
provide an update on what funding opportunities would be
available and how we might get this money out to a place like
Colstrip?
Mr. Winberg. Yes, Senator, I'd be happy to and thank you.
So DOE did, we supported a CCUS study at the Colstrip Power
Plant. We are also moving forward very quickly with our Coal
FIRST program and so, I think there are opportunities for
plants like Colstrip to host a Coal FIRST power plant which may
very well produce hydrogen, might produce electricity, might
produce both. And I think there's also an opportunity for
Colstrip to avail themselves of the much talked about 45Q.
There are a lot of developers out there that are looking at a
variety of facilities to install CCUS to avail themselves of
the 45Q tax credit, and I think Colstrip is uniquely situated
to avail themselves of that.
Senator Daines. So it is a huge issue for us in Montana,
not only as Colstrip providing a lot of good high-paying jobs,
it is an incredible part of our tax base there for Montana to
support our education systems and basic government services,
not to mention it provides baseload for the grid, very, very
important. My request would be, would you commit to working
with me and Montanans to find ways that DOE could invest in
communities like Colstrip?
Mr. Winberg. Absolutely, yes, sir.
Senator Daines. Secretary Winberg, you know the 45Q tax
credit is essential for companies to invest in and build CCUS
technology. However, we have been waiting for years, it has
been years, for finalized guidance and rules from Treasury. DOE
has been intimately involved with Treasury on this guidance but
we need a finalized rule. On May 28th, Treasury and IRS
released proposed regulations. That is an important step,
increasing certainty for companies investing in this
technology, but these are large investments into--they need
this certainty. However, these rules are subject to change or
being revoked until they are, this is the important word,
finalized. Could you give me an update on the release of a
final rule and can you commit to me that DOE will work to get
all those involved to get this done this year?
Mr. Winberg. I'd be happy to give you an update, sir.
The 45Q is out for comment. It closes on Monday and then I
am quite confident that DOE will be working with the Internal
Revenue Service as we have during this entire 2+-year period,
working with them on the final rulemaking that will then
provide the necessary guidance for the CCUS projects. And I can
commit to you that we will do everything that we can to assist
IRS not only to make sure that the rule accommodates projects,
but does it as expeditiously as possible.
Senator Daines. Yes, we need this finalized as quickly as
possible. Thank you.
Mr. Winberg. Yes, sir.
Senator Daines. Last question, Mr. Winberg.
DOE also administers a number of loan and guarantee
programs, including the Advanced Fossil Energy Program, the
Renewable and Efficient Energy Program and the Tribal Energy
Program. It is my understanding that a large amount of the
lending potential still remains unused. These programs seem to
be a perfect fit to help companies that want to invest in CCUS,
but they are struggling for capital, particularly during this
COVID-19 pandemic. What do we need to do to get more of these
loans out the door?
Mr. Winberg. Well, I think first and foremost they have to
be financeable projects and then they have to go through the
phase requirement. I can tell you that the Secretary of Energy,
Secretary Brouillette, committed and asked for a formal review
of the program requirements to see what could be done to
expedite the program. And sir, I know that that is underway.
But we have been working with the Loan Program Office on a
number of fossil energy projects and it is, a lot of times the
hang-up is that they are not yet bankable projects and that
creates some challenges.
Senator Daines. Mr. Winberg, I am out of time. Thanks for
your answer.
The Chairman. Thank you, Senator Daines.
Senator King.
Senator King. Thank you, Madam Chair, and thank you for
holding this hearing. I want to state at the outset that I
think this is an incredibly important issue. We have these
tremendous fossil fuel resources in this country, the problem
is CO2 and so, to the extent we can find solutions
to that problem, it would be good for the society, good for the
climate, good for the planet.
Mr. Hezir, the issue, it seems to me, is cost. As Senator
Heinrich mentioned, solar and battery technology has diminished
significantly in cost, dramatically in the case of solar over
the last 15 or 20 years. The question I have is, is it
realistic to expect that kind of downward cost curve in carbon
capture or carbon removal? I am going to differentiate between
those in a minute, but are we chasing something that is
feasible and reasonable to chase or is this economically
impossible?
Mr. Hezir. Yes, Senator.
I think it varies across the technology so obviously we
know from experience that some of the chemically-based
technologies, there are opportunities for innovation there and
there's also opportunities for learning by doing, deployment at
scale that can help with the economics there. So we do think
that there are opportunities to bring down the cost there. I do
want to just quickly add a comment on Senator Heinrich's
question with respect to hydrogen. And there, I think that,
clearly, I think that the industry is looking at the
combination of innovation in electrolyzer technology as being
also an opportunity for significant cost reduction. And when
you compare that with cheap electricity such as one cent per
kilowatt-hour solar, you can ultimately drive down the cost--of
green hydrogen.
Senator King. The idea----
Dr. Friedmann. Senator King?
Senator King. Yes, yes.
Dr. Friedmann. If I could add to your question, we have
seen the cost of CCS drop 50 percent in the past ten years.
We're going to see it drop again, 50 percent in the next five
to ten years and again after that. We are nowhere close to the
engineering or thermodynamic limits of cost reduction. And the
best way to get it forward is to create incentives for
deployment and to get learning by doing in the market.
Senator King. And by continued support for research and
innovation.
Dr. Friedmann. Absolutely essential. That makes it faster.
It accelerates our pathway to cost reduction and
decarbonization.
Senator King. As an old energy guy in the energy business,
I think in terms of cost per kilowatt-hour. Can anybody give me
a figure on what $30 per ton of CC equals in per kilowatt-hour?
Dr. Friedmann. I can give you those answers, but it varies
a lot by plant type, by heat rate, by all these other kinds of
things.
Senator King. Sure.
Dr. Friedmann. A good way to think about it is on the order
of one and a half cents per kilowatt-hour for a coal--for a
kilowatt-hour that's about what it would be on a gas plant.
Retrofitted would be closer to two cents for a coal plant
retrofit.
Senator King. And that is at current cost, not projected
hoped-for cost, is that correct?
Dr. Friedmann. No, that's at $30 which is what you said, so
at $30 cost. Sixty-dollar cost it's more like two and a half
cents, which is what it is today.
Senator King. Okay.
Dr. Friedmann. But I would recommend that you think about
this not just from the power sector. If you think about it in
terms of dollars per ton steel made, or petrochemical
production or hydrogen, it is way, way cheaper than every other
option.
Senator King. Other than that one cent solar power you
mentioned.
Dr. Friedmann. Even at one cent solar power, you're talking
about a 25 percent capacity factor. In order for green hydrogen
in the United States to be the same cost as blue hydrogen in
the United States, it needs to be a half cent per kilowatt-hour
at 25 percent capacity factor or it needs to be three cents a
kilowatt-hour, 90 percent of the time.
Senator King. So the tradeoff would be the capital cost to
develop excess solar capacity that could be used for hydrogen
production----
Dr. Friedmann. That's an important part of it, yes.
Senator King. ----as a kind of battery.
Dr. Friedmann. That's one way to go, yes. And if you're
thinking about power markets, that's a good thing to do. If
you're thinking, though, about the infrastructure required for
that, just providing U.S. steel with hydrogen made from green
hydrogen, you'd need a 50 percent increase in the U.S. grid.
There's just a lot that needs to be done.
Senator King. I understand.
Give me an idea of the cost differential between carbon
removal and air capture. It is significant, is it not?
Dr. Friedmann. Right. So today direct air capture is about
$450 a ton. That's the cheapest plant that's operating. In
2025, we expect the first million-ton-per-year plant to be
operating. I expect that will come in below $200 a ton, and by
2030, I expect it will be cheaper than $150 a ton.
Senator King. And what is the price of capture?
Dr. Friedmann. That's the all-in cost capture,
transportation and storage from direct air capture. By
comparison----
Senator King. I am sorry, what is removal?
Dr. Friedmann. That is removal.
Senator King. I am looking for the differential between
removal and capture.
Dr. Friedmann. So the costs that I just gave you were for
direct air capture. So that would be by 2030, maybe $150 a ton.
For point-source capture, probably on the order of $30 a ton.
Senator King. That is a 2030 estimate, that $30 a ton? That
is the goal.
Dr. Friedmann. Correct.
I would say though that cash for clunkers is $400 a ton.
What we pay for ethanol today is $500 a ton. The EV subsidies
are $600 to $1,400 a ton. We already pay for this stuff.
Senator King. Got it.
Thank you. If you could follow up with the Committee with
some of that analysis, the financial analysis, now, 2025, 2030
estimated, I think that would be very helpful.
Thank you.
Dr. Friedmann. I would be eager to do so.
Senator King. Thank you.
[Information regarding financial analysis of carbon removal
and direct air capture follow.]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
The Chairman. Thank you, Senator King and Dr. Friedmann, we
look forward to that information.
Let's now turn to Senator Cassidy, who is with us online.
Senator Cassidy. Thank you all. It has been a very
stimulating conversation.
Now Dr. Friedmann, that kind of analysis in terms of the
subsidy we are currently getting as opposed to the subsidy that
would be required is, again, very enlightening. You had
mentioned, obviously we have to sequester once we withdraw it,
however we withdraw it. Now Louisiana has a lot of Class 6
wells that could be used for this. We have other advantages as
well. And so, I say, what can the Federal Government do for
Class 6 wells and CO2 pipelines to make sure that
the permitting is done in a timely manner, understanding the
capital deployment depends upon that regulatory certainty?
Dr. Friedmann. So let me say that the Gulf of Mexico,
including Louisiana, is the Saudi Arabia of pore volume. It is
the best global resource for storing CO2 anywhere.
It is a terrific natural resource the United States should take
the opportunity to maximize. In that, access to the subsurface
is the most important piece. In a place like Canada or Saudi
Arabia, the government owns the pore volume. That is not the
case in the United States. So federal lands are places where
the United States owns the pore volume. State lands are places
where states own the pore volume. Getting access to the pore
volume is actually the rate-limiting step. After that, in terms
of the permitting, say for Class 6 wells, as you asked, it is
worth revisiting the current requirements around Class 6. I
spent a lot of time working on this under Secretary Moniz at
the Department of Energy and we worked closely with the EPA to
think about how to streamline and improve the Class 6 process.
The most important thing we need to do right now, number
one task, get more people. At the EPA today there is a half a
person to permit Class 6 wells.
Senator Cassidy. That is not good.
Dr. Friedmann. There is not even one full-time employee,
no. So one of the things they could do is hire more people and
train them, not just at the EPA headquarters but also in the
regional offices. So for Region 4, in Louisiana, getting more
people familiar with how to permit these wells would be good.
Senator Cassidy. Okay.
Now, secondly, let me just ask because I think I know that
for direct air capture, a humid environment is a better
environment and I am sitting there thinking that is another
reason why the Gulf Coast, of course, Louisiana in particular,
would be a wonderful place for this investment because not only
do you have the wells in which you could sequester and the
industry located from which you could offload, but you also
have the humid environment. Any thoughts about that?
Dr. Friedmann. Sure----
Ms. Angielski. Senator Cassidy, if I could?
Senator Cassidy. Sure.
Ms. Angielski. I would love to just share thoughts about
that because the other aspect of this that we don't talk enough
about is that the oil and gas industry expertise is going to be
essential for CCUS industry to actually be catalyzed in this
country. And we were talking about the effects of the pandemic
and, of course, prior to that the oil industry was finding
itself in distress for a variety of global issues. You have the
expertise and the geology, the perfect geology in your State of
Louisiana for this to be not necessarily a pivot or a
transition, but a perfect opportunity for maintaining jobs from
the oil and gas industry, but transitioning those jobs into a
carbon capture industry. We can't do it without their ability
to site and build and construct pipelines as well as inject
CO2 in injection wells. So I think that this is a
really unique opportunity for the State of Louisiana to
capitalize on.
Senator Cassidy. I agree with that. By the way, I discussed
this with geologists. We already have our geology mapped. He
said those wells don't work, they are too shallow. These wells
work because they go so deeply. A lot of the work that would be
required has already been done. So I am with you entirely on
that.
Now, that said, the economic challenge, Dr. Friedmann, you
mentioned that we are already paying for this, the subsidy that
would be required from the Federal Government, we are already--
you mentioned for ethanol it is $500 per metric ton or $600 and
that direct air capture would be $400. Is that the all-in
price, not just the capture, but the sequestration as well?
Dr. Friedmann. So this is why we look at these things from
a levelized cost of carbon abatement perspective. It has to
have real capital costs, it has to have real operating costs
and it needs to compare at an equal level. If you do that,
direct air capture is already cheaper than sustainable aviation
fuels today, like already cheaper, and it is well below the
cost of all kinds of incentives that we provide for clean
energy.
Senator Cassidy. And that is an all-in, that----
Dr. Friedmann. All-in costs, yes.
And I want to be clear about this, those other incentives
are extremely important and valuable. I'm not throwing shade at
those other things. We want the EV incentives. We want solar
rooftop incentives. We want all these things, but the cost in
dollars per ton for those incentives in many markets exceeds
the cost of direct air capture today.
Senator Cassidy. Okay, well, thank you. I yield back.
The Chairman. There were a lot who wanted to jump in on
this. I saw Mr. Mackler wanted to dive in, Assistant Secretary,
even Senator King. So we can continue this, although I do want
to go to Senator Cortez Masto, but Senator King, if you wanted
to----
Senator King. No, no, that is okay.
The Chairman. Okay, all right.
Let's go to Senator Cortez Masto online.
Senator Cortez Masto. Thank you. And to the Chair and
Ranking Member, thank you and the panelists. This is a
fantastic conversation that we need to have in this country.
Let me jump back to a little bit on the workforce piece,
because we have all been talking about CDR technology.
Sometimes I think that scares people that there will not be
jobs for the future, there will not be opportunities to take
advantage of this new technology and what we need to do to not
only transition existing jobs, but for our workforce
development as well. So I would like to open it up to the panel
and maybe Dr. Friedmann, start with you. Can you talk a little
bit more about the workforce piece and what we should be doing
here to continue to not only ensure that the jobs are available
for the future but educating our workforce and particularly the
existing workforce that they might already have the skills that
are transferable to this new technology?
Dr. Friedmann. Thank you.
Three very quick points. First of all, chemical engineers,
roughnecks, boilermakers and steel union makers, organized
labor, these people already have a lot of the skills we need.
So creating the industry for them to move into is part of the
task. Second of all, we do need new human capital. It's exactly
why Columbia University is creating the Climate School. We need
to get those kinds of things up and running.
I would point you to two other reports that are relevant to
this, one of them is the recent Rhodium Group report I mention
in my testimony that suggests that hundreds of thousands of
jobs are waiting for us just in direct air capture alone. In my
testimony I also point out the same thing is true for forests.
The same thing is true for soils. The same thing is true for
carbon mineralization. There are hundreds of thousands of jobs
out there. The final report I'd like to point you to is
actually one that Joe Hezir had an important role in managing--
the Energy Futures Initiative--wrote about, every year they
write about the jobs in the clean energy industry that have
begun to look at this topic and look to Joe.
Mr. Hezir. Thank you, Senator, if I could just jump in on
that. Thank you, Julio.
I just want to add one other thing in addition to our work
on the job survey. We've also, Secretary Moniz and President
Richard Trumka, entered into an MOU back in April to set up the
Labor Energy Partnership, and as part of that program we are
doing more of a deeper dive on identifying job opportunities as
part of the energy transition. And carbon capture and
sequestration is one of the ten priority areas that we identify
and as Dr. Friedmann said, the workers currently in the oil and
gas industry really have the, kind of, the skill base to really
move directly into carbon capture and storage opportunities,
including in the various infrastructure. And so we're looking
to identify, not only to quantify that, but also identify
policies and programs that would help accelerate that effort.
Mr. Mackler. Yes, Senator, if I might also jump in on this
one?
If we take a step back and look at carbon removal writ
large, we see that there's, you know, as we've emphasized
throughout this hearing, there are a number of different
approaches that we can take to remove CO2 from the
atmosphere and really when it comes to the arithmetic, we need
to be doing it all. And the good news is that when it comes to
the more nature-based solutions, forestry and agriculture in
particular, those are labor intensive activities. And so we can
actually start doing carbon removal today, scale it up on the
natural solution side of things and put a lot of people back to
work very quickly. As we build out the more advanced
technologies like direct air capture and even biomass with CCS,
which, by the way, is less technologically sophisticated than
direct air capture, it's using technologies that are already
available today and we can start to deploy those technologies
using skills and expertise from the power sector that exist
today to start removing CO2 from those facilities as
we build out the technologies that do the more broad scale,
direct air capture at some point in the future.
Senator Cortez Masto. Thank you. Thank you. I notice my
time is running low. I will submit the rest of my questions for
the record.
Thank you, again, for this incredible conversation.
The Chairman. Thank you, Senator Cortez Masto.
I am checking to see if Senator Hoeven, excuse me, Senator
Gardner would be next. I know he was going to be coming on
virtually. We have also had votes started, so he may have gone
to do that first and also Senator Hoeven, I think, was going to
go to the vote first.
So if I don't see their faces pop up, I am going to come
back to questions here.
When I first had the opportunity to ask questions, I kind
of teed up the issue of blue carbon but didn't really give
anybody much of an opportunity to elaborate on the benefits of
coastal blue carbon removal options. So let me ask you, Dr.
Friedmann, you have taken a look at this. Any comments on that
that you might want to share with the Committee?
Dr. Friedmann. Yes, and having grown up in the ocean state
along with Senator Whitehouse, we've got a lot to say about
this. Blue carbon is a real thing. It's a real opportunity.
Most people think about it as coastal mangroves and in places
like Florida that's a real undertaking and would provide
resilience, would provide adaptation, buffering for coastal
storms, all these kinds of benefits. But it is not restricted
to that. It also includes things like kelp and in my own work
we've been dealing with a number of companies that are seeking
to expand and grow kelp in novel ways. The innovation is quite
impressive and we can see opportunities to get hundreds of
millions of tons or possibly more of CO2 removal
through kelp cultivation and either conversion or destruction.
The National Academies wrote about this in depth. It was a
section of the Energy Futures Initiative report as well. The--
I'm glad that this is starting to gain people's interest. We
need to stimulate and support the innovation and the
industrialization of blue carbon.
The Chairman. Well, thanks for that and you have, several
have mentioned different places to be looking for that level of
expertise, but we will certainly come back and circle in with
you and your folks.
Let me ask about the CCUS export potential. I liked the
exchange that was had, prompted from the comments from the
Senator from Louisiana, and a recognition there that what they
have in Louisiana is truly a national asset and you are lucky
to be blessed with both the geology as well as the humidity, I
guess. I did not appreciate the humidity part of it. But about
85 percent of all global carbon dioxide emissions come from
outside the country. We have talked about that demand for coal-
fired power generation growing across much of Asia. So as we
look to how we can make CCUS deployment a priority, I think we
have an opportunity as a nation here to become the global
supplier for some of these critical technologies. So how do you
see our role, and I would turn to you, Assistant Secretary
Winberg. How do you see our role in helping to facilitate that
more broadly, because I do think it is an important part of the
recognition that it can't just be the advancements in one
country that are going to turn the tide here?
Mr. Winberg. Yeah, well, thank you for the question and you
were exactly correct, the rest of the world is going to
continue using fossil energy whether it's coal or oil or
natural gas and that's why we have moved forward quickly on the
Coal FIRST program because it offers the opportunity to, for
what I think of as 21st century coal. Right now, the Chinese
own the space in power generation, coal-fired power generation.
We have an opportunity to take technology and springboard over
what the Chinese are building which is basically 1970s vintage
technology that we built and then they now have improved
slightly, but they're selling it around the world to countries
that have coal under their feet and they're going to continue
using that coal.
But with the Coal FIRST program, we can move into power
generation and we can move into hydrogen production because
these countries also, as they build out their transport sector,
may not do it the same way as developed countries. They may
move more swiftly into hydrogen. And so there's an opportunity
there to take our technology, using their natural resources
that are under their feet, and produce zero-emitting power
generation and zero-emitting hydrogen and perhaps even net-
negative hydrogen and net-negative electricity. And they can
use that hydrogen in the transportation sector as well as the
industrial sector. So I think there are opportunities for us,
and we're availing ourselves of that.
The Chairman. Well, it is that kind of leadership that, I
think, really will make that difference and that has been
mentioned here, not only by you, coming from the Department of
Energy, but others as well.
Senator Cantwell, we have had a fabulous discussion this
morning on what is going on with the innovation, the
technology, the leadership, the opportunity in so many
different areas. So you are up.
Senator Cantwell. Great, well, thank you for that.
I wonder if two questions have been brought up. One,
methane and what we need to do to stop more methane flaring and
the use of natural lands as a way to reduce CO2.
Obviously Alaska is a great example of helping us to reduce
CO2, but I don't know if that was addressed so far
today.
The Chairman. We did----
Dr. Friedmann. Senator, if I might start the conversation.
Senator Cantwell. I know the Secretary was with us but
left, former Secretary, is that right? So----
The Chairman. Yes.
Mr. Mackler. Yeah, thanks for the question, Senator.
My name is Sasha Mackler, and I work for the Bipartisan
Policy Center and we are doing a variety of things with respect
to carbon removal and we also have a farm and forest natural
climate solutions initiative that we're launching. So we're
very much engaged in this issue of lands and how they can
become a sink for CO2 over time. And we have had
some discussion----
Senator Cantwell. What compensates people for that?
Mr. Mackler. Well, so, the development of markets for
carbon storage in forests and in agricultural soils will be
critical to actually encouraging the best practices and the
development of the technologies and the flow of private capital
into these activities which will be key. And so there are a
number of things happening today that are beginning to
stimulate activity in these areas, but more is needed,
particularly on the measuring, the monitoring, the verification
side of things and the establishment of credible accounting
standards so that private companies, for example, know what
they're investing in and they're pragmatic enough that they can
be, you know, they can enable simple transactions.
Senator Cantwell. So you don't think we have any price
points today?
Mr. Mackler. In terms of the cost of storage? I mean, we--
--
Senator Cantwell. Or value.
Mr. Mackler. Yeah, I mean----
Senator Cantwell. Value as a solution juxtaposed to some--I
mean, obviously when we are talking about technology, we kind
of know what the development cycle looks like, the investment,
the return that people might get, but has somebody put a price
as to how that relates to how lands----
Mr. Mackler. Sure, so there are things happening today in
forests and in soils with respect to carbon offsets and we,
kind of, know that those, they start at around $10 per ton and
they go up from there. So there are, there's certainly activity
in the offset market in soils and in forests, carbon storage.
Senator Cantwell. So $10 right now.
Mr. Mackler. Well, so that's, yeah, that's, sort of the
beginning price. It depends on what activity you're looking
for. But and then as you do more sophisticated activities and
as you move from natural lands in the agricultural, the sort of
the most simple to execute to some of the more complex, more
labor intensive things, like forest restoration, those become
more expensive, but they have a number of other co-benefits,
for example, wildfire management, that are really, you know,
quite vital to the local areas.
Senator Cantwell. Yes, well, we definitely got very
aggressive about that for that very, one of the reasons you
just mentioned.
Mr. Mackler. Yeah.
Senator Cantwell. So----
Mr. Mackler. Yeah.
Senator Cantwell. And what about methane? We obviously
tried very hard to get the Administration to understand that
this is one of the lowest hanging fruits that you could deal
with, and yet we still have methane flaring beyond what we
should. What are your thoughts there?
Mr. Mackler. Well, it's, it is an enormous issue and it's
one that, you know, the good news is the technology exists to
really control methane upstream and we really need to just
figure it out. And I know the industry is working hard on this
as well as, you know, my colleagues in the NGO community, as
well as the Federal Government. We see signals that the cost of
managing upstream methane emissions are manageable, and we also
see some progress in the deployment of those technologies. As
the regulatory frameworks get sharper and as the customers of
natural gas in the utility industry or the direct customers
start to account for the upstream burden of methane leakage in
what they're looking to purchase, I think there's a big
opportunity to start to cut those emissions out of our supply
chain, but there's a lot of work that needs to be done there,
no doubt about it.
Senator Cantwell. But you consider it a low-hanging fruit
that the applications we could do today and the reduction we
could do today?
Mr. Mackler. For the leakage and flaring of methane, I
think that's absolutely true. The technologies exist. We just
need to deploy them.
Senator Cantwell. Thank you. Thank you, Madam Chair.
Dr. Friedmann. Right, Senator, I would add to Sasha's
comments. We've written a lot about this at the Center on
Global Energy Policy. Rob Kleinberg has done a lot of work on
the specifics of the technology, the cost, the opportunity size
and we've done this in partnership with EDF. Happy to answer
questions on the record as you ask.
Senator Cantwell. Thank you.
The Chairman. Thank you, Senator Cantwell.
Let's go to Senator Gardner, online. Welcome.
Senator Gardner. Thank you very much, Madam Chair.
Mr. Hezir, both you and Secretary Moniz, both from your
time at the Department of Energy, know how critical our
national labs are across the country, obviously Colorado, home
to the National Renewable Energy Laboratory which houses the
Wind Technology Center, solar electric and fuel cell vehicles,
smart homes, buildings, they have it all. In Colorado, NREL has
a robust economic impact. The University of Colorado recently
assessed that NREL had an economic impact of about $875 million
in Colorado, $1.4 billion nationwide in Fiscal Year 2019 alone.
And over the last several years, in fact, one of the things I
am most proud of since I came to the Senate is that I have been
able to help increase NREL's funding by nearly 50 percent over
the last several years.
I know you would agree that NREL is instrumental in this
effort, talking about carbon capture, utilization and storage
today as one of the many low-carbon technical options. But as
the nation moves toward developing advanced clean energy
systems, renewable energy will play a key role toward reaching
that goal as well. My question is for you, Mr. Hezir. With the
integration of high amounts of renewable energy proving more
viable than previously thought and thanks to DOE and NREL's
leadership in advancing this, how would carbon capture,
utilization and sequestration fit an international portfolio of
clean energy solutions and how does it, along with renewables
and nuclear, fit into an all-of-the-above energy strategy and
what can our labs, academia and industry do to help advance
these low-carbon solutions?
Mr. Hezir. Thank you for the question.
We, obviously when Secretary Moniz was at the Department,
advancing the work of the national laboratories was a major
priority and not only that, he was instrumental in forming the
Office of Technology Transitions, an office that was set up to
actually accelerate the movement of new inventions and new
innovation to laboratories into the marketplace. The current
Administration now has picked up on it--invest in CDR--a major
project----
The Chairman. Mr. Hezir?
[Distorted sounds coming through WebEx feed.]
The Chairman. Mr. Hezir, can you hear me?
Mr. Hezir. ----landscape.
The Chairman. Okay.
Mr. Hezir. And as part of that study we came up with
criteria and some recommendations about, really, technology
areas with breakthrough potential and clearly, CCUS and CDR
were on the short list for that. And so, earlier in the hearing
today we did talk about opportunities for innovation,
particularly in direct air capture and some of the other
technologies that involve innovations in materials, innovations
in sorbents and things like that, areas of strengths for the
national laboratories.
And I would just add one final point that is relative to
NREL and the other national laboratories, one of the other
things that we did at the Department was to encourage more
cross-cutting research initiatives across the laboratories. And
I think the one that's been the most successful has been in the
grid modernization initiative for which NREL was a major, was
one of the co-leaders really, and we would think that we would
like to see something like that occur as well in the areas of
CCS and CDR.
Senator Gardner. Thank you, Mr. Hezir.
I know we are in the middle of a vote, so I don't want to
go over time here. I would just point this out. I mentioned
that we have increased funding at NREL by over 50 percent over,
well, nearly 50 percent over the last several years, and I
would note that the U.S. spends about 2.7 percent of its gross
domestic product on research and development, but China is
close behind us at 2 percent. In 2018, for the first time in
fact, China actually surpassed Europe, the EU, in spending for
research, spending $8 billion while the U.S. led by just a hair
at $8.2 billion. So we have a lot more work to do in this
space. We passed legislation in the American Innovation and
Competitiveness Act a couple years ago, we are funding NREL, we
have increased funding for NIH and others, but we have more
work to do so that we can--this leadership because imagine if
that next great breakthrough is somewhere else, all of those
jobs go with it if it is not here in the United States. Thank
you very much for your leadership.
Madam Chair, I will yield back.
The Chairman. Thank you, Senator Gardner.
Senator Hoeven is on the line and will ask the next
question and also the last question. Senator Hoeven, if I can
ask you, at the conclusion of your remarks, you can adjourn the
Committee virtually for us, if you will so that I can go vote.
Our 30 minutes is up.
But before I leave and turn it over to Senator Hoeven, I
want to thank all of our witnesses, those of you who have
traveled to be here in the office and those who are here
virtually, thank you for your endorsement. I think each and
every one of you spoke to the benefits of our energy bill, the
American Energy Innovation Act. You have been positive about
some of the legislative efforts that we have here, the EFFECT
Act, the CREATE Act and we are working on more and reminded us
of the benefits of the 45Q. So some good reminders here today,
but I think the thing that I am leaving with, with the most
inspiration is just the wide array of technologies that we are
looking at, the innovation that we are looking at and just the
momentum that we are seeing when we speak about various ways to
deal with carbon and carbon removal technologies. So thank you
for joining the Committee.
Senator Hoeven, you can have more than five minutes if you
want. The clock is yours, so thank you.
Senator Hoeven [presiding]. Thank you, Madam Chairman, I
appreciate it very much and thanks for holding this hearing. I
will certainly be happy to adjourn the meeting once finished
here with questions for the witnesses. I want to thank the
witnesses for being here as well, and I will start with
Assistant Secretary Winberg.
Thank you, Secretary Winberg, for all your work on the
whole gamut of energy issues there at the Department of Energy.
I also appreciate you coming out to North Dakota to see what we
are doing in North Dakota. My first question to you is, you
know, you have been part of and you have worked very hard to
get the 45Q regulatory guidelines in place, and that is very
important, so that not only coal-fired electric plants but
ethanol plants and others can utilize that 45Q tax credit. But
my first question is what else can we do to enhance that tax
credit so that we can really get these power plants capturing
and sequestering CO2 and do it on an economical,
viable basis.
Mr. Winberg. Senator Hoeven, thank you for the question.
I think there are a couple things that can be done. First
of all, extending out the 45Q tax credit, I think, is extremely
important because a lot of these companies have been teed up,
ready to go for the last two years waiting on the 45Q
finalization from the IRS. And of course, in the midst of this
time or during this time period, COVID has hit our country
quite hard and has had a profound, profoundly negative impact
on balance sheets and income statements. So allowing companies
to--extending out the timeframe for the 45Q will create some
flexibilities for these companies that are in very much a
recovery mode.
Number two, we need to take a really hard look at how long
it's taking to permit a variety of CCUS projects and we have
CCUS projects with capture systems and also, as you well know,
pipeline systems and getting permits for the capture system and
the pipeline system and even for the wells, the injection
wells, is just an incredibly long period of time and especially
if you're doing a project that has commercial ramifications and
implication to your bottom line, those long permitting times
are just unsustainable. So I think that's a key to all of these
across the CCUS value chain, shortening down the permitting
times and then increasing 45Q, the length of time to utilize it
so that these companies can, indeed, install these technologies
and demonstrate to the world that they're commercially viable.
Ms. Angielski. Senator Hoeven, could I just add to the
enhancements? This is Shannon from CURC.
Senator Hoeven. Yes, please do.
Ms. Angielski. In my testimony I point out the fact that--
also for the reasons that Steve mentioned with the recovery and
pandemic--currently, taxpayers have to go out to the tax equity
market to try to get tax equity investment in the 45Q, and CCS
projects has fully monetized the 45Q tax credits. Allowing a
taxpayer to elect for what we term direct payment, which would
be a direct cash payment from Treasury, as an alternative to
resorting to the tax equity markets is another way of actually
trying to bring more value of the 45Q tax credits into a
project and get financing and it opens up the capital markets
for that. So that's something that we've been an advocate for
in trying to see if we could make a statutory or legislative
change here in Congress.
Senator Hoeven. So you would say then that it would be very
important to have the direct pay option as well as the tax
credit option, correct?
Ms. Angielski. Well, we didn't want to eliminate the tax
equity option at the moment, but I think the value would be in
the direct cash payment and likely probably see more taxpayers
elect for that as opposed to resorting to the tax equity
market. Part of the reason for that might be in coming out of a
recovery or going into recovery as it's still questionable how
much tax liability even those big investment firms are going to
have in the out years in order to actually be able to take
advantage of tax equity structures. So I think it's really
critical that we move forward with a direct cash payment option
in this Congress but not close out any of the other options
that are currently on the books.
Senator Hoeven. Thank you, I agree.
Dr. Friedmann, I am going to ask you two things. That same
point which she just made, I want you to give me your opinion
in regard to that direct pay option, but also I want to know if
you have any other policy proposals that would bring 45Q in
line with, you know, value wise with existing, other existing
renewable tax credits. So if you could, kind of, touch on
those--45Q direct payment but then also other ideas to
enhance--increase its value, you know, more in line with what
we would see in CCUS.
Dr. Friedmann. Thank you, Senator, absolutely.
First of all, I agree with Shannon. Under Section 1603,
Direct Payment is an option that was done during the 2009
stimulus for a bunch of renewable tax credits. We should create
that optionality under 45Q given the current economic crisis as
well. I also agree with prior testimony that we need to extend
the timeline out at least five years in order to get more
companies accepting and pursuing this option. That certainty is
important.
Our Center recently published an analysis in April on what
it would take to enhance 45Q to get power sector uptake. We
looked at coal plants and gas plants. We looked at utility
ownership and we looked at merchants. And basically, to get
uptake from utility-scale coal plants, something like $60 a ton
gets you pretty close for saline aquifer storage. For gas
plants if it's owned by a utility, it's more like $80 a ton or
$85 a ton and for merchant plants, it's more like $110 a ton.
People should realize though that the wind production tax
credit at various times and in various context has ranged
between $60 and $120 a ton. So this kind of incentive is well
in line with other subsidies and incentives that we've provided
in the past.
Senator Hoeven. Thank you, Doctor. I think that is a very
important point you just made. I appreciate it very much.
Secretary Winberg, I would like to come back to you on
those issues, direct pay and relative incentive--and get your,
kind of, follow-up comment on that and then I want to shift for
just a minute to the strategic petroleum issue.
Mr. Winberg. I'm sorry, Senator, could you repeat the first
one? You broke up a little bit.
Senator Hoeven. Sure.
I would like you to comment both in terms of your opinion
on the direct pay option for--45Q and its importance that we
should have that and then again, as Dr. Friedmann mentioned
getting that incentive to the range that the----
Mr. Winberg. Okay, sir, that's a very simple response from
me. Yes, I do. We need to create more optionality for these
developers and whether it's a utility or an independent power
producer, the value that we have on the 45Q tax credit will
work for some but not for a lot. So if we're looking for broad-
scale deployment of CCUS, we need to have flexibility in how
they can avail themselves of the 45Q credit as well as the
value that goes to them for the capture system.
Senator Hoeven. Thank you.
Is the Department continuing to advocate for authorizations
as well as CCS funding through putting more oil in the
Strategic Petroleum Reserve?
Mr. Winberg. Yes sir, we are. We have asked Congress for $3
billion. As you know, we opened up--we didn't get the $3
billion in the first round of stimulus--so we opened up the
SPRO and we are storing oil for private sectors, but we still
have available sufficient capacity in the SPRO to purchase oil
and put a number of oil field workers back to work producing
that oil and storing it in the SPRO and then at a point in the
future, Congress can have us sell that oil and we think that it
will be a significant return on investment to the taxpayer
because we'll be selling that oil at a considerably higher
price than what we would buy it for.
Senator Hoeven. Yes, I really appreciate that point.
I do have one more question for you, Secretary, and that is
on CarbonSAFE. Are you continuing to prioritize funding for
CarbonSAFE and moving, advancing it, continuing to get your
dollars out to those power plants that are undertaking that
effort because that is critical in terms of enabling them to
strip off that CO2----
Mr. Winberg. Yeah, thank you for that. It's a great
question. The CarbonSAFE program is a very necessary part of
the carbon value chain. So we recently have five Phase III
projects. One of them is the North Dakota CarbonSAFE Phase III
project which is the University of North Dakota and EERC.
That's a $25 million program that we have and we have four
others as well moving into that Phase III. We also have other
projects in Phase I and Phase II development. So we're very
active in that and looking forward to moving those projects to
the point where we actually create a sequestration field and
each one will be at least 50 million metric tons that will
allow a number of CCUS projects to inject CO2 into
those CarbonSAFE projects. So we're very much active in that
and looking forward to continuing that work.
Senator Hoeven. All right.
Mr. Hezir, I just want to express to you I truly enjoyed
working with former Secretary Ernie Moniz when he was the
Secretary of Energy. A true gentleman, obviously extremely
knowledgeable with a tremendous record, but what a gentleman
and if you would tell him I appreciate all the times he was out
in our state and just give him my very best, if you would.
Mr. Hezir. I will do so.
Senator Hoeven. All right, sir, thank you.
To all of the witnesses, thank you very much, we appreciate
it, appreciate your time, appreciate your testimony today. With
that, this hearing is adjourned. Thank you.
[Whereupon, at 12:08 p.m. the hearing was adjourned.]
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