Federal tax incentives create gold rush for nascent carbon capture projects in Louisiana

Millions of dollars of investments in new carbon capture projects in Louisiana — with more announced this past week — are unwelcome developments to some environmental activists in the state.

“We’ve been trying to fix the oil and gas damage while at the same time trying to push the transition away from it,” said Monique Hardin, director of law for the Deep South Center for Environmental Justice.

“And now we have carbon capture and sequestration to contend with,” added Hardin, who’s group is a member of Louisiana Against False Solutions, a coalition of environmental and watchdog nonprofits fighting the carbon capture projects.

Carbon capture technology, supported by the federal government, the fossil fuel industry and some environmental groups does not yet exist on a meaningful scale. Some climate experts worry the focus on the technology will distract and undermine efforts to phase out fossil fuels. 

About 30 carbon capture projects have been proposed in Louisiana — all of them spurred by federal subsidies and most supercharged with increased incentives in the Inflation Reduction Act intended to address global warming. 

A total of 170 projects have been announced nationwide, with only Texas having as many projects as Louisiana. On Friday, the Department of Energy announced $1.2 billion investment in carbon capture projects in Louisiana and Texas. 

Biden administration directs $1.2B to carbon capture projects in Louisiana, Texas

Environmental justice advocates and other opponents of carbon capture and sequestration say the technology is environmentally and economically risky and encourages the status quo for fossil fuel companies. One oil company CEO said earlier this year that carbon capture will help “preserve our industry over time.” 

The Inflation Reduction Act increased tax credits, called 45Q, to permanently store carbon from $50 per ton to $85 per ton. Directly capturing the carbon from ambient air, like the projects announced this week, earns developers $180 a ton. The law also allows the credit to be paid in cash to developers, which include companies or subsidiaries of Shell, ExxonMobil and Koch.

The technology’s backers include Jennifer Granholm, the U.S. energy secretary, who talked up its potential in a press conference call about the new investment. 

“If we deploy this at scale, this technology can help us make serious headway toward our net zero emissions goals while we are still focused on deploying more clean energy at the same time,” she said. 

“It’s hard to imagine a future where we actually solve climate change without carbon capture,” said John Thompson, markets and technology director at the Clean Air Task Force, which supports carbon capture and tracks project announcements. 

These are new projects that are putting more pollution in the existing communities that are already overburdened.

– Jade Lewis, Center for International Environmental Law

Modeling conducted by the International Energy Agency indicates carbon capture will be necessary to reach net zero by 2050, and backers of the technology say it’s a must for industries including steel, cement and chemicals, where there’s no good substitute for fossil fuels. 

In Louisiana, however, one issue for opponents is that carbon capture is being proposed as a component of brand new facilities for ammonia, hydrogen and biomass, among others, with the products produced at those sites labelled by developers as  “green” or “clean.” 

“What we aren’t seeing is announcements to retrofit refineries or existing ammonia facilities, or other petrochemical facilities. That automatically means we are only seeing net new emissions,” said Logan Atkinson Burke, executive director of the Alliance for Affordable Energy, an energy consumer advocacy group.

Louisiana, with about 1% of the nation’s population, already emits more than 4% of the United States’ greenhouse gas because of its heavy industrial base. A Louisiana greenhouse gas inventory shows new announced projects, if built, are projected to increase global warming emissions from 142 million metric tons (MMT) of carbon dioxide or equivalent, to 243 MMT by 2026. 

More than half of those new emissions will come from the state’s new liquefied natural gas plants and a third from new chemical plants. Only some of those projects plan to have carbon capture. But even if the equipment captures the industry’s promised 95% of carbon emissions, the rest will be released into the atmosphere.

Jessie Stolark, executive director of the Carbon Capture Coalition, a nonpartisan collaboration of more than 100 companies, unions and conservation and environmental policy organizations, says the “vast majority” of carbon capture projects in the nation will be placed on existing facilities. She adds, however, that carbon capture is only economical on the newest and most efficient facilities.  

Louisiana is a locus for carbon capture projects exactly because of its heavy concentration of industry, meaning there’s more opportunity to capture carbon, said David Dismukes, an economic consultant and the former director of Louisiana State University’s Center for Energy Studies, who produced the state’s greenhouse gas inventory.

Support for the technology from the state’s Democratic Gov. John Bel Edwards has helped pave the way for CCS development. 

“I know it is an essential part not just to our climate action plan here in Louisiana to reduce greenhouse gas emissions to net zero by 2050, but really the plans for our country and the world,” Edwards said in December.

Projects in the state can’t proceed until the Environmental Protection Agency gives Louisiana the authority to regulate injections of carbon underground. The EPA has proposed giving that authority to Louisiana’s environmental regulators — a decision met with protest from environmental groups during a three-day hearing in June. A final decision has not yet been issued.

Several of the projects are being built near polluting industries that line the Mississippi River corridor from Baton Rouge to New Orleans known as “Cancer Alley.” 

“These are new projects that are putting more pollution in the existing communities that are already overburdened. It’s a new insult to these communities,” said Jade Woods, an organizer with the Center for International Environmental Law.

Louisiana residents ask state to halt next phase of carbon capture project

Residents around Lake Maurepas unsuccessfully fought the development of carbon capture storage under their lake in court and in the legislature. 

Air Products, which is developing the Maurepas site, hired 25 lobbyists for the past Louisiana legislative session where multiple bills about carbon capture development — most of them restrictive proposals — were introduced. Only one of those measures, to share state revenue from the projects with local communities, passed.  

“One hundred percent of everyone I talk with is opposed to this,” Tangipahoa Parish Councilwoman Kim Coates said about the Lake Maurepas project. Multiple parish councils and local agencies oppose the plan, which so far has involved setting 17,000 explosive charges in the lake to determine its underground geology. But in the end, Coates said, the people who lived around the lake had no say. 

“It was all about putting the money first,” Coates said.

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