Heemang Parmar

For years now, the United States has had the technology to capture carbon dioxide from smokestacks before the planet-heating gas enters the atmosphere. But carbon capture and storage hardware proved so expensive and clunky that one of the only ways to make a so-called CCS investment pencil out was to sell the CO2 to oil drillers, who inject the supercooled gas into wells to get at hard-to-reach crude.

As a result, 73% of 43 million tons of carbon diverted from smokestacks worldwide last year ended up producing more oil, counteracting any real climate benefits the CCS could have had. By comparison, just 20% of that pollution wound up in underground storage aquifers, where it makes the biggest difference in terms of emissions.

By 2030, however, those numbers are set to reverse. Thanks in large part to President Joe Biden’s landmark federal climate law, just 20% of carbon is forecast to go to oil drilling, while 66% is destined for underground storage, according to a new study from the energy consultancy BloombergNEF. Another 12% will likely be used in other industries, such as chemical production or soda carbonation.

Attempts at transforming carbon dioxide from a freely-dumped waste product into a valued commodity have hitherto failed. Congress started incentivizing carbon capture with a tax credit known as 45Q in 2008, but set the payout per ton of CO2 too low. Federal lawmakers tried fixing the problem in 2018 by raising the price to $35 per ton for CO2 used in oil drilling, and $50 per ton for carbon stored underground. But it took the Internal Revenue Service until January 2021 to issue guidelines for how those credits could be used.

And even then, it made more sense in many cases to sell CO2 for oil drilling. With oil prices at $100 per barrel, the sale of CO2 plus a $35 credit would equal out to $58 per ton, well above the flat $50 earned for storing the gas.

Under the newly passed Inflation Reduction Act, selling captured carbon to an oil driller is now worth $60 per ton. Combined with revenues from $100-per-barrel oil, that ton of CO2 could net $73. But the federal government will now let polluters write $85 off their taxes for every ton of CO2 stored underground: a $12 million difference for a company that might capture 1 million tons of CO2 every year.

CCS is cheapest at facilities whose flue gas is pure carbon dioxide, meaning that only a few industries — such as natural gas processing or the production of corn into ethanol fuel — really benefited from the old payouts. Under the higher credits, manufacturers of steel, cement and petrochemicals can make money off carbon capture installations.

The dramatic shift over the next eight years will come as the world deploys six times as much CCS equipment as exists today, with the potential to capture 279 million tons of carbon dioxide per year.

On its own, that surge will do little to change the trajectory of global warming, covering just 0.6% of today’s emissions and taking place overwhelmingly in rich nations, with the U.S. dominating nearly half the market, and the United Kingdom and Canada trailing with 14% and 9% of global capacity for capturing carbon dioxide, respectively.

But researchers say it’s a necessary first step toward bringing down costs for poorer countries with faster-growing emissions, where carbon capture can make the biggest global impact.

“It’s still the usual suspects as far as 2030,” said Julia Attwood, the head of sustainable materials at BNEF. “But once those countries have built a lot of capacity and lowered the cost for everybody, that’s when you’ll see countries like China and others in Southeast Asia following.”

Still, it’s a controversial gambit. After two decades of high-profile failed attempts to commercialize CCS, environmentalists have largely written the technology off as a fig leaf fossil fuel that producers use to justify continued investments in oil and gas production.

But experts say there are few alternatives for decarbonizing heavy industries, and this first wave of infrastructure could also spur companies to not only capture and transport carbon from polluting plants but actually start cleaning up CO2 spewed long ago. Removing carbon from the atmosphere, where it can circulate for centuries, is needed to reduce the damage the last three centuries of fossil-fuel-based industrialization have wrought.

While trees naturally suck up CO2 through photosynthesis and certain soil techniques could also help, the need for measurable, increased carbon removal is driving investments in what’s known as direct air capture, a type of carbon capture that essentially vacuums CO2 from the sky. Under the new 45Q tax credit, the federal government will pay between $130 and $180 per ton of carbon dioxide removed via direct air capture.

“We think the U.S. is now the best place in the world to do direct air capture given the subsidies that are available and the potential transport and storage that could be coming online,” Attwood said.

Transportation and storage remain major bottlenecks. The U.S. has a small, aging network of highly pressurized pipelines to ship CO2 around. New pipelines are being proposed, with the first set expected to break ground in the Midwest as a way to ship carbon dioxide from ethanol facilities to storage wells.

Earlier this month, the federal government started taking applications for up to $2 billion in loans for CO2 transportation projects. But opposition is growing, fueled by fears of the health risks CO2 leaks pose and concern federal regulators aren’t up to the task of ensuring their safety.

The federal permitting process for the first well to permanently store CO2, meanwhile, took more than half a decade to complete. At least two states now have approval to complete their own permitting without a separate federal process. But a faster, more efficient procedure that wins over local communities will be needed to make a bigger dent in emissions.

“We need to permit projects,” said Julio Friedmann, a leading carbon capture researcher and former Department of Energy appointee who reviewed the BNEF findings for HuffPost but did not participate in the study. “That means doing a good job in equity and justice. It means listening to concerns of communities that will host projects. And that means agencies in the state and federal governments working hard to get to yes.”

The planet has already warmed, on average, 1.1 degrees Celsius. To avoid another disastrous half a degree of heating or more, Friedmann said, “frankly, we need to be more aggressive in our deployment of CCS.”