In recent weeks, carbon management has found itself in the spotlight — for reasons both encouraging and concerning for its proponents.
On May 28, the Department of Energy unveiled the semifinalists for a new funding competition for carbon removal and storage companies, as well as a plan to buy over $30 million in carbon credits from the eventual winners. The same day, President Biden also announced new policies aimed at bolstering the larger voluntary carbon credit market.
These moves follow Biden’s much larger investments in carbon removal last year: $1.2 billion to fund two direct-air capture facilities in Texas and Louisiana, as well as nearly a billion to fund carbon storage and transport.
It’s not all good news for the sector, however. The week before the DOE’s announcement, the trade group Edison Electric Institute joined a coalition of utilities to sue the EPA over new federal requirements to use carbon capture technologies in their power plants. The plaintiffs argue that the tech isn’t ready for wide-scale deployment.
In this week’s episode, we consider whether these various forms of carbon management — from removal to capture and storage — are on a pathway to scalability, and whether industry resistance will slow their advancement.
The show wraps up with the hosts’ rapid-fire hot takes in “The Mark-up.”
Subscribe to Latitude Media’s newsletter to get weekly updates on tech, markets, policy, and deals across clean energy and climate tech.
Transcript
Julia Pyper: Emily, how did your first Fox News panel go?
Emily Domenech: I got some feedback that I needed to get bigger hair, but otherwise I think it went pretty well. I should have gone for the blowout.
Julia Pyper: Get more hairspray.
Welcome to Political Climate. I’m Julia Pyper. Carbon management is in the spotlight for reasons both encouraging and concerning for its proponents. On May 28th, the Department of Energy unveiled the semifinalists for a new funding competition for carbon removal and storage companies, as well as the department’s plan to buy over $30 million in carbon credits from the eventual winners. The same day, president Biden also unveiled new policies that aim to guide and bolster the larger voluntary carbon credit market. These moves follow Biden’s much larger investments in carbon removal last year, $1.2 billion to fund two direct air capture facilities in Texas and Louisiana, as well as nearly a billion dollars to fund carbon storage and transport.
It’s not all good news for carbon management though. The week before the Department of Energy’s announcement on May 23rd, a trade group joined a coalition of utility providers to sue the EPA over new federal requirements to use carbon capture technologies at their power plants. The plaintiffs argued that tech isn’t ready for wide-scale deployment. In today’s episode, is the carbon capture and removal market ready to scale or will industry resistance slow advancement? Then we’ll end the show with our rapid-fire segment, the Markup. That’s all coming up on Political Climate.
I’m joined by my co-hosts, Brandon Hurlbut and Emily Domenech. Brandon served as chief of staff in President Obama’s energy department and went on to found Boundary Stone Partners and Overture VC. Hey Brandon.
Brandon Hurlbut: Hey Julia.
Julia Pyper: Emily served as Senior Energy Advisor to Speakers of the House, Kevin McCarthy and Mike Johnson, and is now a senior Vice President at Boundary Stone. Hey Emily.
Emily Domenech: Hey Julia. How’s it going?
Julia Pyper: It’s good. It’s busy days. I feel like everyone’s trying to get everything done before they take some holidays over the summer and it’s wild times.
Emily Domenech: Yeah. Always busy times in Washington.
Julia Pyper: All right, let’s get into it. So we’re talking carbon management on this episode and folks will probably know that large-scale carbon capture really launched way back in the nineties. Projects since then though have struggled to gain momentum. They’ve had trouble finding customers and even more trouble scaling up enough to actually make a measurable dent in global emissions. Carbon capture and utilization and storage, or CCUS, has actually captured only 0.1% of global emissions to date. But there’s a new generation of carbon removal companies that are stripping heat trapping gases directly from the atmosphere and the government’s now pushing hard to help them grow. To be clear, carbon dioxide removal is different from CCUS. CCUS is a way to reduce emissions directly at the source from say, a power plant or industrial facility using various technologies, whereas carbon removal is focused on taking existing CO₂ out of the atmosphere through a range of different approaches.
This includes familiar things like tree restoration and newer things like direct air capture and carbon mineralization where the natural process is sort of sped up to remove the CO₂. There is now broad scientific consensus that keeping emissions below dangerous levels will require carbon removal along with deep emissions cuts, and that was somewhat of a controversial issue for some time. So let’s dig into some of the latest developments. There’s been a lot of industry optimism around the Department of Energy’s new competition called the Carbon Dioxide Removal Purchase Pilot Prize, which is funded by the bipartisan infrastructure law. So even though each of the two dozen semi-finalist companies only receive a total of $1.2 million, or $50,000 each, the government will also buy over $30 million of credits from the eventual winners in an effort to help kickstart the market. Now, I just want to reiterate that this project in particular represents a drop in the bucket compared to the over $2 billion that Biden has pumped into carbon management during his term so far.
The companies chosen as semi-finalists in this DOE prize cover a range of carbon removal methods from conventional direct air capture and biomass to enhance rock weathering. Giana Amador who leads the Carbon Removal Alliance and spoke to Latitude Media’s Maeve Allsup about the competition, gave a really upbeat assessment of this. Her quote was, “If the government can become a primary purchaser of carbon removal, lowering costs, driving out risk, raising the bar for quality, then private sector buyers become a bona fide revenue source for carbon removal companies.” Alluding there to the whole carbon credits and carbon market element of this where there’s an actual exchange of the credits to drive further investments and bring capital into the actual carbon removal solutions.
“So combined,” she added, “The market can become large enough to sustain a gigaton scale.” So again, we’re talking about a small prize here, but with the intent of really catalyzing this broader carbon removal market and a broader ecosystem around it for purchasing credits and decarbonizing the economy. So first off here, maybe I’ll go to you first, Brandon, what’s your take on Amador’s optimistic outlook here? Is this DOE prize the start of something big in this carbon removal space? Again, separating that out from the CCUS world.
Brandon Hurlbut: I think there’s two things that are really important there, Julia. Number one, it is the first time that the U.S. government is purchasing these credits, so it’s using their procurement power to do that. Number two, there’s a great history of the United States using that procurement power to unlock innovation. We did this with airlines. The U.S. government was an early customer for Boeing to unlock that market. Same thing with semiconductors. So I think we’re trying to do the same thing here to spur this market because it really needs to happen to solve climate.
Julia Pyper: Interesting. Emily, what’s your top line takeaway?
Emily Domenech: So I’ll say I’m cautiously optimistic by the prize structure. I think that’s always an interesting way to look to bring new technologies to market. But I am a little skeptical about the government sort of setting itself up as the primary purchaser for CO₂ because I think at the end of the day, unlike some of the times we’ve been in the past where we’ve had that procurement arm of Department of Defense buying things to help spur an industry, this is sort of standing up a market from scratch for something that DOE doesn’t really have a use for this CO2 yet.
Brandon Hurlbut: But I know if it’s trying to be the primary purchaser, it’s the initial purchaser.
Emily Domenech: Yeah. And I think it’s more just that it’s a little bit different than what we see in the defense space, whereas the Defense Department had a actual use for the things it was buying in the past when we sort of developed these markets. You talked about semiconductors and airlines and things like that where they had a direct use for it. I think here it’s just a little bit of a question of how does that market grow? What’s it look like? So cautiously optimistic, but I think there’s more work to be done here for sure.
Brandon Hurlbut: Julia, I want to add too that there’s some sanity to these climate policies, when you think about the bipartisan infrastructure law, the Inflation Reduction Act and the CHIPS Act altogether, they provide a ton of incentives to accelerate the technologies that we have to clean up the grid and run that grid off of clean electricity. That’s 75% of the emissions. But these industrial emissions and then there’s enough carbon in the atmosphere already that we have to take some out. And on those latter two, we don’t know the technologies that will work necessarily or scale yet. So the government is playing an active role like we did in the Recovery Act, trying different methods, trying different technologies to see what will stick on industrial emission reductions and removing carbon from the atmosphere.
Julia Pyper: I think it’s worth noting, I think UN, I don’t know if they changed their position or at least came out acknowledging that there would indeed need to be some form of carbon removal to meet the international climate goals. We can’t get there without it. Whereas I think that concerns some folks that it would take the pressure off of emissions reductions through things like clean energy and other measures if we just say, oh, let’s fall back on removal if it works, if and when it works. But I think there’s now broad acknowledgement you need it all, frankly, which is a big shift even in the environmental community. Because I’m not sure they were that supportive of this concept initially.
I do think it’s worth taking a moment on something Emily was talking about of, okay, you collect the carbon through these various means at the point source or through carbon removal of existing CO2 in the atmosphere, but then you got to do something with it. And I feel like we see an announcement about one of those pieces of the puzzle, but then the storage and the transport, that’s a whole other piece of the puzzle that has to be addressed in tandem. What are we hoping to see happen?
Emily Domenech: Yeah, so I think that the reality is the only way any of this stuff works in the longterm is if there’s a real market for carbon and a use for carbon on the backend. Right now, the only thing that’s really a cost-effective way to utilize carbon on the background is through enhanced oil recovery or sometimes fertilizer production. Those are the only markets that exist.
Brandon Hurlbut: What about hydrogen?
Emily Domenech: That’s certainly one that I think is growing, but it’s not one at this point. So what I would say is I would love to see the administration focus a little bit more on that early stage R&D on the utilization part of CCUS, it’s carbon capture, utilization and storage. So lots of times we think about the infrastructure that’s needed to store it in the ground or to move it via pipeline. All of those things have real significant permitting problems and those are the problems we’re going to have to address.
But at the end of the day, the best way to see a market grow beyond sort of this kickstart that DOE is trying to do through this prize competition, is figuring out ways to turn carbon into a commodity. That might be through concrete, it might be through other building materials, it might be through hydrogen production. There’s a lot of different avenues that we can explore and that’s part of what DOE has looked at in the past in their carbon hubs and in other ways to sort of turn that byproduct into something that’s actually a profitable commodity. I think that’s the long-term play to make CCUS and direct air capture actually work in a private market.
Julia Pyper: And then there’s that layer on top of the actual carbon credit markets which are separated from the physical carbon I think in most cases, right? You’re sending a price signal to buy a credit affiliated with the removal, but as I understand it, there’s no requirement for something to be done with that carbon as part of purchasing the credit.
Emily Domenech: I think we have to think of these as sort of two step separate challenges. Lots of times when we’re purchasing, we see companies purchasing carbon credits. They’re doing it because they’re trying to offset their current emissions, so they want to offset that through investments. These carbon credits are used to do better forest management. They’re used to plant trees. They’re used to sequester carbon in biobased pellets that can be planted in the ground and help with agriculture production. They’re invested in precision agriculture that helps us reduce emissions from other sources. They’re not necessarily saying we’re going to reduce our emissions. They’re saying we’re going to spend money to offset those emissions through reductions elsewhere in the economy. That’s often where that credit market comes in. For the more classic, like how do we capture carbon from, say, industrial emissions or use direct air capture to balance out industrial emissions.
In those cases, you’re capturing carbon and you either need to be able to build a pipeline or utilize it on site, or you need to be able to put it in some kind of transport vehicle and put it somewhere in a rock formation in the ground. What they do in enhanced oil recovery is they use that CO₂ to get to oil and gas that’s really difficult to reach by using it to essentially balance out the fracking process. So that means it’s a commodity they need to use on the back end. So I think those are sort of two separate areas where we’re trying to accomplish the same goal, which is to reduce the CO₂ in the atmosphere. When we talk about investing in this space, I think two things that the Biden administration could really do better is, one, to try to make it easier to permit pipelines to move CO₂.
That’s probably going to mean permitting reform that helps pipelines for natural gas too, and that’s going to be something where the federal government is going to have to step in over some of these states that really don’t want to build pipelines for some reason. The second piece is figuring out ways to speed up the backlog of the Class VI wells, which is the type of well that the EPA gives a permit to to store carbon in the ground. As of right now, we have four federal EPA permitted wells that exist and 11 state permitted wells. The backlog at the EPA is 130 class VI permits that are waiting for review by the agency. We’re never going to build out an entire industry that looks to capture and store carbon if we can’t put it anywhere.
Julia Pyper: I want to ask sort of about the politics wrapped around this. Emily, you’ve been in the rooms where I’m sure this was coming up at the highest levels on the Republican side. What is the GOP take on maybe something like this competition? What would this kind of DOE prize move signal you think for those who support this sector? I guess the bigger question is, is there support on the GOP side for carbon management writ large? Let me just add that the bipartisan infrastructure law, I believe included more than 12 billion in funding for carbon management. That includes for commercial deployment, large-scale demonstrations. You alluded to some of the hubs and other activities that enable the deployment of carbon capture removal, transport utilization and storage. Given it was in the bipartisan infrastructure law, does that mean there is support on the GOP side?
Emily Domenech: So actually I think you can go way further back than just the bipartisan infrastructure law. There’s been really long-standing support from Republicans for carbon capture technologies both on the R&D side at the Department of Energy and on the tax side. In fact, some of the earlier versions of 45Q and the expansions that were included in the IRA were actually originally written by Republicans and sponsored by Republicans in Congress. It’s one of the places where there’s some bipartisan agreement. And under the Trump presidency, they extended 45Q and passed laws to streamline the CCS projects and pipelines over the course of that administration.
So I think we’ve seen pretty consistent bipartisan support, and then there’s also pretty long-standing support for these kinds of prize competitions at the Department of Energy that are designed to really drive that early stage, exciting, innovative work. I’m a little more skeptical about the resilience of the off take market if we don’t see real private sector investment and engagement, but I think part of the prize that the DOE put out here is designed to get private sector partners to participate as well. So I don’t think you’ll get a lot of kickback from Republicans on these kinds of policies because it’s sort of in line with things we’ve supported in the past.
Julia Pyper: How would you describe the why around the Republican engagement on this?
Emily Domenech: I think some of it is that we see it as something that’s absolutely necessary to keep our grid reliable and to keep using fossil fuels, right? So if you want to see the sort of resilient base load power that we use and are accustomed to in this country continue, then things like CCS are going to be necessary in the long term. I also think there’s some interesting places of, again, to go back to utilizing CO₂, I think about there are super critical CO₂ gas plants like NetPower that’s being built in Texas, which uses CO₂ in its turbine design. So they’re trying to create these closed loop systems so they can use natural gas and have essentially zero emission power plants. That stuff is exciting. It’s using resources we have here in the United States, but still meeting the goals of the environmental community to reduce global emissions. That’s the kind of stuff that I think we see as things that not just work here in the United States but potentially can work globally.
Julia Pyper: You mentioned the 45Q tax credit. Just for a little more context there. It was originally created in the Energy Improvement Extension Act of 2008. It was enhanced in 2018. Then was expanded further as part of the Inflation Reduction Act where the price was increased, as I understand it, to $85 for every ton of carbon captured and permanently stored in geological formation specifically. I think that’s up from $50. And then there was a higher $180 per ton tax credit for direct air capture. So again, kind of continuing to move the needle to incentivize these types of solutions. Can you tell us a little bit about the technologies out there? Again, we’re kind of flipping a little bit between the point source capture for those power plants and industrial facilities. Then there’s carbon removal, again, directly removing from the atmosphere. Are there some technologies you’re excited about?
Brandon Hurlbut: Yes. Overture is invested in a couple of different companies that are doing this, and there’s significant agricultural benefits as well. So there’s a lot of win-wins. An example is Climate Robotics, one of the semifinalists. They’re taking ag waste. So you have a tractor trailer and they have this device that they attach to it, and as the ag waste is produced and kicked up into this device, it pyrolysis it into biochar and then immediately drops the biochar back into the soil.
And it does two things. One, the biochar is a great fertilizer, so it increases crop yields and can be a cost-effective way of just having fertilizer. So on its own, it’s economical just for the soil benefits, but that biochar can then suck the carbon out of the atmosphere and you can create this offset that you talked about and sell the offset. We’re seeing this with graphite as well. They’re able to take woody biomass, so discarded timber that they don’t know what to do with. They can buy that, wrap it up into these bricks, store it in the ground and remove carbon that way as well. Crush up rocks, put it in the soil. That’s what Ion is doing. There’s a lot of great things happening out there that also have these twin agricultural benefits as well.
Julia Pyper: That’s awesome. Since this DOE prize came out, they had challenged the private sector to step up as well and participate in purchasing the credits, right? Again, trying to incentivize the technological solutions. And so Google already did step up and saying that they would be the first to join DOE’s carbon removal challenge with the $35 million pledge to purchase carbon removal credits. So I do want to get into the carbon markets in more detail.
The last question on more of the technology itself and the concept of carbon management and removal, there’s been some critics, you talked about how the environmental community has, I think at least the climate scientist community has more come around to accepting or acknowledging that we need carbon removal as one of the tools in the toolkit here, but there is also some pushback. So there was a critical op-ed published in the Hill recently by Robert Bullard of The Bullard Center for Environmental and Climate Justice and Steve Ellis, president of Taxpayers for Common Sense.
And they described carbon capture as, “The antithesis of environmental justice.” The two argue that the 45Q tax credit, which companies can claim for each metric ton of sequestered carbon has been rife with fraudulent credits. And I know there’s other views on the fact that allowing power plants to continue to emit still has local impacts on the communities that live next to them. So even if you’re removing it at a separate location and time for climate purposes, there still are other emissions happening in and around those facilities. How do you grapple with that? Brandon, starting with you.
Brandon Hurlbut: It’s true at the point source, as you mentioned, you may capture the CO₂, but there are other pollutants that are not being captured and released into these communities. And they would argue that they always suffer first and worst. It’s always their trade-off.
Julia Pyper: And then there’s the potential for fraud potentially of not actually removing the carbon because we’re still kind of setting up the systems for tracking. Emily, do you have thoughts on the fraud element, the quality of this market?
Emily Domenech: Just to take a step back, I read this op-ed, and I think it sounds like every other liberal idealist who thinks we can just turn off oil and gas tomorrow and the economy will be fine, but that’s not how markets or physics work, and it’s not how our economy works. We aren’t shutting down these plants anytime soon, and we aren’t going to move entirely to EVs tomorrow. So that means we need to be thinking about ways, if we care about emissions, if we care not just about emissions here in the United States, but we care about global emissions, we need to think realistically about options like CCS and direct air capture to be able to maintain our economic growth. It has to be part of the mix. So I kind of rolled my eyes at this because it feels like the kind of thing that you would say if you were imagining a perfect world where you could just make everything run off sunshine and rainbows tomorrow.
Brandon Hurlbut: What about unicorns and panda bears?
Emily Domenech: Maybe that’ll work.
Julia Pyper: Okay, let’s switch gears a little bit. We’ve already talked a bit about the carbon credit markets themselves, and so in an effort to get to this more perfect world, on May 28th, Biden announced new policies and principles to help beef up the voluntary carbon credit markets. Again, this is different from the mandatory markets that Brandon referenced a moment ago. This is really where the private sector players along with governments and other actors can send the right price signals and help companies engage so they can offset their own emissions. But you need a market to do that, and you need a way to prove that it’s actually working, that it’s actually resulting in sending a price signal to remove the carbon and actually, as Emily pointed out earlier, do something with it.
So for listeners who aren’t familiar, the carbon credit market works by allowing companies to buy credits from companies that remove carbon to offset their own emissions. It has largely been met with skepticism. Axios recently described the carbon credit market as, quote, “Sketchy and stunted,” in part due to lack of quality control, whether the credits actually translate to less emissions.
In January 2023, The Guardian published an explosive article accusing Vera, the world’s premier certifier of carbon credits, of grossly overstating the emissions reductions associated with its avoid deforestation credits, which sent a chill across the sector. Was sort of parking the deforestation side that the sort of natural solutions, and we’re talking more about the technologies here. I think it still stands that the carbon credits need to be valid and proven in some manner. Currently, companies purchase around $2 billion in voluntary carbon credits annually, but that figure could rise dramatically in the coming years as different companies and entities seek to meet their climate goals.
So Biden’s new policies aim to strengthen the market and its efficacy by requiring evidence of real measurable emissions reductions and ensuring that buyers prioritize and investing in decarbonizing their own supply chains before they access the credits. The White House is not working alone. There are several global initiatives already underway to make unregulated markets more transparent and effective, but it fits into this larger body of work of actually trying to make these voluntary credit markets effective. It can’t be a coincidence that Biden announced this policy at the same time as that Department of Energy competition we talked about. Is there a connection between the two, do you think, Emily?
Emily Domenech: I think they’re absolutely connected. But the one thing I would note here is that voluntary carbon markets aren’t new. In fact, USDA stood up a third-party verifier system for carbon credits under the bipartisan Growing Climate Solutions law, which is a bill I worked on during my time in the speaker’s office. There’s also been lots of efforts on forest management and wildfire management designed to help us figure out better ways to reduce emissions from those kinds of natural causes. I also think carbon offsets generally get a bad rap, but what we need to help that is that better science and transparency to solve that problem. The one, I think challenge here, and this is a challenge for any administration, is establishing transparency metrics without giving the federal government something that looks like a regulatory structure because you won’t get stakeholders like farmers, ranchers and foresters who are going to be the ones honestly sequestering this carbon through many of these markets, they won’t participate if they’re worried that those practices are going to eventually be mandated down the line.
Brandon Hurlbut: I have a question for you on that. Right now it’s voluntary. Can it truly scale if it remains voluntary or do you think the government will actually run this market at some point? Is that possible with Republicans?
Emily Domenech: I do not think Republicans will support a mandatory carbon market run by the federal government because I think you’ll immediately get distrust from, again, those communities who you need to participate to help actually sequester carbon on the back end. They’ll be very skeptical about establishing a structure that feels like they’re going to get a huge costly mandate dropped in their lap. I do think though, that there’s long history of these voluntary programs, particularly at USDA really being effective and helping the American farmer. We’ve increased our productivity by over 300% and reduced emissions at the same time over the last 15 years. That’s a really cool fact that happened without a bunch of mandates on the agriculture sector. It happened because they were incentives for people to participate in some of these voluntary markets. So I think people tend to write off voluntary participation, but there’s a lot of social pressure on particularly, we talk about these big companies like Google who want to come and participate. They want to be a part of these markets.
Brandon Hurlbut: Do you think there’s a huge market behind these early adopters like Google, Microsoft, Amazon?
Emily Domenech: I think it depends on what the costs are. We like to think about how do markets work here in the United States in this insulated way, but we don’t deal with global emissions if we have solutions that cost so much, they only get used in the richest countries in the world. It only works if we figure out ways to do this in a cost-effective way that is better for everyone involved in the supply chain. So that’s part of why I always lean towards these. How do we bring the cost curve down so that a China or an India or a developing country actually wants to pursue these technologies too?
Julia Pyper: Wouldn’t more players in the market bring the cost down? We would have more solutions out there, more options, more off-takers. In theory that would be a way to lower the costs.
Emily Domenech: Potentially, and I think that’s what they’re trying to do here is they’re trying to say, hey, look, we’re going to give some transparency and data to people who want to purchase credits. We’re going to validate some of these people participating in these voluntary markets so that you know you’re really getting something real for your money. So you can go back to your investors and say, this was a good investment. It makes sense for us. Because again, we talk about this all the time. There are industries that are going to be incredibly difficult to decarbonize even if we had all the money in the world. So that means offsets are going to have to be a part of the discussion.
Brandon Hurlbut: Julia, one thing I’m encouraged by, as you see with some of these companies I mentioned the costs are coming down from $1,000 per ton to $100 per ton. But the thing that makes me worried is you have these companies that will buy these offsets right now, but what happens when an ultimate recession happens? Are companies who then have to cut costs, are they still going to buy these voluntary credits, which is just an expense?
Julia Pyper: Let’s turn to our final segment. On May 23rd, the Edison Electric Institute, a trade group representing utilities, joined over a dozen of their members to sue the EPA on the grounds of the Biden administration’s new policy requiring power plants to capture 90% of their emissions by 2032 is not feasible. Edison CEO, Dan Brouillette, who folks will remember as Department of Energy secretary under the Trump administration, he summed up the group’s position in a statement, quote, “Throughout the rulemaking process, we repeatedly raised concerns that CCS is not ready for full scale industry-wide deployment, nor is there sufficient time to permit, finance and build the infrastructure needed for compliance by 2032.” Emily, let’s go to you first. Why do you think the Edison Electric Institute and utility companies are suing?
Emily Domenech: So I think this is, we talked about this a little bit when we talked about in our regulatory episode that it’s a really common theme in these rulemakings where we’re setting a pretty aspirational goal down the line and we’re not sure if we can meet it. And these, frankly, utilities are looking at their power mix and they’re concerned that they’re going to need to be able to meet a technology standard that simply doesn’t exist today. It doesn’t mean that this technology isn’t exciting or that it couldn’t grow or that it couldn’t reach a commercial scale in the future. It means that, frankly, it doesn’t really matter whether I think it can work now or Brouillette thinks it can work now or you think it would work now, the way the law is written is it has to be the best system of emissions reduction and it has to be commercially available.
And so what EEI and other utilities are arguing is that we’re just not quite ready for a rule making of this scope yet. They make a big point in their filing to the court and in their public statements about it that they want to invest in CCS and they want to continue to use it and they want to continue to grow its market. They just don’t think it’s quite ready for this regulatory hammer that’s established in this rule.
Julia Pyper: Brandon, what’s your takeaway? You talked a moment ago about the potential need for some kind of mandate, some kind of framework on the policy side to actually complement voluntary actions. Do you think though we need to give industry a little more time to get up to speed before there is some kind of mandate?
Brandon Hurlbut: I’ll give you two learnings I had from my time in the U.S. government. First, when I met with all these utilities while I was chief of staff, so many of them told me that the grid could only handle 12% renewables, couldn’t handle more. We know now that that is totally false. So there’s a history of utilities saying we can’t do this thing, but they actually can.
And then two, I would say some of the things that we funded out of the Recovery Act really scaled, solar, wind, lithium ion batteries, LED lights. Some of the other investments or regulatory standards that we made on things like biofuels and carbon capture and sequestration, we put hundreds of millions of dollars in recovery act into that technology, and it hasn’t really taken off. And so I do think the non-liberal side of me sometimes wonders like, okay, what is the appropriate amount of time you need to invest, how much money can you put into a technology if it’s not scaling or the private sectors isn’t picking it up, you have to make some hard decisions about when you decide that that’s not feasible. It can’t stand on its own ultimately.
Emily Domenech: Yeah, and I think just to come back around on that too, if Congress wanted to change the laws to say that the EPA can mandate technologies that are not commercially available, they could, but they haven’t, and that’s not how the Clean Air Act is structured, and that’s the argument that EEI is making here. The other thing, to your point, Brandon, about how much money do we spend before we give up on something or say we need to move on or tack in another direction? I think we have to also recognize these regulatory burdens that make it difficult for these technologies to succeed. Part of why CCS is difficult is because you do have to build pipelines and geologic storage and you have to invest in the R&D that finds those sort of real uses for CO₂ in the long term, not just the technology to capture it from the power plant, you need a whole market.
It’s part of why it’s been challenging for hydrogen too. You need this whole market and infrastructure in order for this industry to take off. It’s way bigger than one discrete technology, and that’s why it’s challenging, and it’s why frankly, the utilities have every right based on the law to say, hey, look, we like CCS and we want to invest in it, and we’re growing it, but it doesn’t exist at a single commercial scale power plan. The last thing I’ll say on this too is that if we end up closing power plants because they can’t meet this regulatory standard, that just means we’re offshoring our manufacturing to China or India or someone who doesn’t even care about noxious pollutants much less CO2. So we have to think about the global picture when we put these rules in place.
Julia Pyper: What happened with those carbon capture projects of years past? Some of them got really big headlines, and I’m not sure how many of them did work. Brandon, do you remember from your years? Or is there something more to learn from that? That’s just part of the build it, fail, learn, move forward that we need to actually be more bold about doing in this country?
Brandon Hurlbut: Yeah, you look at some of the solar things we did like concentrated solar thermal where you had all these mirrors in a big tower and those things are still producing electricity, but it didn’t take off. Different technologies for solar did. There are some of those plants. I remember Futurgen, there’s a lot of things that we funded that got built, and I don’t know the status, but I know that they haven’t been replicated. The private sector has not picked it up. You have not seen the cost declines where it can stand on its own.
Emily Domenech: Yeah, I would add, and Brandon and I have agreed on some of these things where it’s like, hey, look, we had to make choices to close down projects because they weren’t successful. I think in the past, and to take it full circle to where we started our conversation, I love seeing DOE do discrete prize competitions where they’re investing in a lot of small, new, innovative things that are really unique and special, and maybe one of them is going to take off. Oftentimes when the federal government makes massive investments in one big project, it’s had challenges because it’s had big cost overruns. We see it with nuclear, we see it with these big fossil plants. We’ve seen it with renewable stuff. It has happened over and over again. I think that’s part of why we didn’t see those CCS projects take off early coming out of the Obama administration spending on them because we tried to go too big too soon. I think a more disparate, more technologically diverse carbon capture market has way more chances for success, and that’s what we’re starting to see today.
Julia Pyper: Well, I think that’s a perfect segue to the markup. At the end of each episode, Emily, Brandon and I each bring a story, anecdote or observation to discuss and debate. Let’s see what we’ve got this time. Brandon, I think I always end with you, so I’m going to mix it up and have you go first.
Brandon Hurlbut: Okay. My markup article today is in The Atlantic, and it was written by Brian Deese, former NEC Chair for President Biden, and my good friend. The title of his article is, The Next Front In the War Against Climate Change. The genesis of the piece is about do we have the right regulatory system to unlock the technologies that we need to solve climate? I would like to spend a lot of time going forward on this pod talking about this issue and bringing on some great guests to help us learn with our listeners because I think we have so many technologies that we need to solve this issue. They are at cost parity. We have the incentives in these historic policies to accelerate their deployment, but do we have the system? Because it’s a very antiquated system, it’s built on a model from last century, and that’s what Brian’s talking about in this piece.
He says, “The 20th century utility model doesn’t encourage innovation. Instead, it defaults towards simply building more fossil fuel burning plants.” And so we have these eight electricity markets, 3,200 utilities, many of them monopolies. We have 50 different public utility commissions. Is that the system that’s really going to solve climate or do we need to have a more streamlined system and different approach? And so kick it over to you guys, but I want to spend a lot of time on this going forward.
Emily Domenech: I’ll just say I love seeing Brian Deese want to talk about what is essentially not just grid reform, but permitting reform. And I wish he’d wanted to work with us more on it when he was in the White House because it was super frustrating to sit across from someone who I knew understood this issue, but we couldn’t seem to get as much done as I thought that we should. I think when it comes to looking at the ways that are to improve how our markets work and ways to increase innovation, you have to start with permitting reform. And if we can’t do permitting reform, we’re certainly not going to change the way the entire U.S. grid operates. But I agree with you. I think it’s something we need to work on.
Julia Pyper: I think it’s all in the how, right? What does that look like? When you have local issues, some of these solutions need to have community input. People want to have a sense of partnership in the infrastructure going in their community. They want to feel heard.
Brandon Hurlbut: That doesn’t mean that they’re not heard. It just means there might be one regulator instead of 50 different regulators. It could be more federal involvement, but with one traffic cop, like one set of rules, one market, like we have one FAA.
Emily Domenech: The FAA passes on much of its implementation to its very, very, very local airports.
Brandon Hurlbut: That’s fine.
Emily Domenech: So I think that is where you run into problems with this federalized concept.
Brandon Hurlbut: To be continued.
Emily Domenech: More to come.
Julia Pyper: Emily, over to you.
Emily Domenech: Okay. So for my markup, I want to take a moment to say that I did get this from Brandon’s staff, so it’s not entirely me being sassy, but I just wanted to highlight the announcement from the Sunrise Movement that they would be withholding their endorsement from President Biden. In a quote they gave to Axios, they said, quote, “Biden is shooting himself in the foot. His actions on fossil fuel and Gaza mean he’s not going to get the celebration he’s looking for from environmentally conscious voters.” So building off our conversation from last week, does this mean that Biden can’t lock up progressive activists even with this big sweeping agenda? And my take is it gives a lot of opportunity for folks who want to talk about other parts of the climate discussion, but I’m curious what you think about it.
Brandon Hurlbut: Who in my staff gave that to you because I need to go fire them. Just kidding.
Emily Domenech: It was in the Slack. You got to check the Slack sometimes, man.
Brandon Hurlbut: God, no, no, no, no. Yeah. Obviously there’s been a lot of tension on this. I’m on the board. And it’s no secret. You see it in the polling. Biden is having some challenges with young people. Some of it is just because, look, on the board, they see me as super old. For them, Joe Biden is like a dinosaur. And so there is this massive generation gap, and the Sunrise played a crucial role in getting these historic climate policies passed. We are so much further along than we would’ve been without Sunrise. I’m very proud of the work that they have done. They are trying to thread this needle of being against Trump, but their membership is right now with this issue in the Middle East and Gaza.
There are some challenges, and I’m not saying that they’re going to not endorse, they’re not endorsing right now. They didn’t endorse last time, and they still turned out three and a half million young people who most of them probably voted for Joe Biden. So it’s interesting to be a part of it. I learned so much from them. There is this generational gap. Youth, they’re idealistic and they want purity. They want it to be the way it should be. And then you have old guys like me, talking about sometimes there are some things that are just the way it is. And I think it’s illustrative of in this election, the one thing everybody can agree on is they want another choice.
And so I think there’s this idealism still hanging out there like is there something else? But I think as we get to the fall and people realize there is no third option. It is going to be Joe Biden or Donald Trump. And hopefully that will move some numbers because I still think that there’s this thing out there that like, wait, we can’t really be stuck with both of these guys, are we?
Julia Pyper: I do also just want to add purely conveying what the Sunrise movement followed up on saying, look, we didn’t support Joe Biden in the last election, but that didn’t stop them from contacting 3.5 million unique young voters, and it won’t stop us in 2024 either. We’re planning a massive youth voter turnout program in swing states, stay tuned. They also did a lot of down ballot work in the last election with literally millions of calls and texts and postcards for down ballot races as well. So they seem to say that they want to be engaged, but they’re withholding that endorsement for other political reasons to get the president’s attention.
Well, I’ll round it out here with a really quick one. My markup is to note that we have surpassed 5 million solar installations in the United States. That’s across all types of solar projects, but the vast majority of them, 97 plus percent are on the residential side, of course, more individual buildings. That is a sector that I work in. And it’s just a really nice milestone. I think there’s going to be, with any industry that continues to scale, some ups and downs. It’s not like we can expect exponential growth every single quarter, but that’s just an amazing thing to take a beat and think about. There are millions and millions of happy customers who have more control of their power, who are saving on their energy bills, who are deploying things like energy storage to help the grid. And I just think a super exciting area, like the power of individuals to play a role in these solutions, I think is real. Doesn’t solve all the problems, we need systems change, et cetera. But I think that’s a really awesome moment to celebrate. So America.
Emily Domenech: I saw that announcement and the thing that stuck out to me was that 13% of residential solar that was installed last year included energy storage, and I think that’s absolutely critical to making this something that works for a broader swath of the American people. It needs to be something that you can use when you need it.
Julia Pyper: Well, that’s it for this show. Political Climate is a co-production of Latitude Media and Boundary Stone Partners. Max Savage-Levenson is our producer. Sean Marquand is our technical director. Steven Lacey is our executive editor. You can get all of our show notes and transcripts at latitudemedia.com, and if you want to talk to us about a specific topic, please email us at [email protected]. Please feel free to help spread the word about political climate on LinkedIn, X and beyond. I’m Julia Pyper. We’ll catch you in two weeks.
