Permitting Will Be a Challenge for Emerging Climate Technologies
A recent R Street piece highlighted the currently underappreciated permitting challenges a nascent-but-growing segment of the climate space called carbon dioxide removal (CDR) is likely to encounter. CDR is related to carbon capture utilization and sequestration (CCUS); however, while CCUS relies on point-source capture of emissions and eventual sequestration or utilization, CDR aims to remove CO2 from other sources, such as the atmosphere or the ocean. Both are discovering that the infrastructure they need is not easy to build.
CDR comes in many flavors—some are technology-based, while others utilize natural systems. Two technology-based CDR methods of interest are direct air capture (DAC) and direct ocean capture (DOC), which could be used to achieve widespread technology-based CDR. The advantage is that, within “hard-to-abate” industries, DAC/DOC could offer a cheaper way for companies to pay for removal and achieve a net-zero emission profile. But while we theoretically know we can build these facilities, the practicality of building them at scale in the United States is uncertain despite the billions of dollars in subsidy already pumping into these technologies.
We will examine DOC first, simply because its permitting challenges are more apparent. Coastal infrastructure in the United States is difficult to permit. Much of the land is protected for conservation purposes; coastal facilities are likely to impact the habitat of endangered species; and, as DOC facilities require intake and discharge into bodies of water, they will require permits under the Clean Water Act (CWA). Historically, CWA permits have been subject to politicization in industries like nuclear power and natural gas pipeline construction, which illustrates why state endorsement of such infrastructure is so important. While DOC is likely to face less opposition than pipelines, R Street’s own research on ostensibly popular technologies like wind and solar shows that local opposition to infrastructure is not confined to polluting industries. If residents feel that DOC facilities would inhibit their access to or enjoyment of coastal land, investors in DOC infrastructure may face uphill battles on permitting.
Next, let us look at DAC. Given its lack of associated air pollution and its closed-loop processes for treating atmosphere to remove CO2, DAC faces no immediate permitting challenges. Additionally, because its effectiveness is not contingent upon its location (since CO2 is evenly dispersed in the atmosphere), DAC facilities should easily be able to choose locations that suit them.
The caveat is that both DAC and DOC will likely require pipeline access to transport CO2 to an injection site for geologic sequestration. CO2 pipeline permitting is another complex issue, as CO2’s classification as a natural gas necessitates compliance with pipeline requirements under the Mineral Leasing Act. Additionally, the Federal Energy Regulatory Commission—normally the permitting authority for natural gas pipelines—defers approval of CO2 pipelines to states.
Each state has different rules governing the approval of CO2 pipelines, as well as cost sharing and access. Rules regarding land assemblage and eminent domain also vary by state, making it challenging to permit multi-state CO2 pipelines.
There was optimism years ago for CO2 pipeline expansion in the United States to address climate concerns via CCUS. One study estimated that between 20,000 and 96,000 miles of CO2 pipelines would be needed to achieve carbon neutrality; currently, only about 5,000 miles of CO2 pipelines exist throughout the United States—well below 2015 projections.
Additionally, a Congressional Research Service report found that of the four large CO2 pipelines in development since 2021, not one has been able to secure a permit (with three outright denied).
While CO2 pipelines are hard to build, CDR does have some flexibility. DAC facilities could be built near injection points of existing pipeline, or even at the location where they intend to sequester. DOC has less flexibility because coastal geologic conditions may not be suitable for sequestration.
There are also opportunities to turn CO2 into different compounds with alternative uses or transportation methods. For example, DAC could be used for carbon mineralization or converted into liquid fuel as an “e-fuel.” The caveat is that such methods of converting CO2 into another product tend to be most efficient at higher concentrations (i.e., to turn CO2 into liquid fuel, a dense concentration of CO2 in a pipeline is preferable to the atmospheric concentration).
But despite these challenges, the United States is investing heavily in CDR and CCUS. Annual appropriations for CCUS from the federal government average $5.3 billion, and the 2021 Infrastructure Investment and Jobs Act provided $8.2 billion for CCUS. The 45Q federal tax credit for carbon sequestration is expected to cost $5 billion over the 2023-2027 period. Given public support, the ways in which these technologies could enter the market at scale are worth further consideration.
Achieving broader climate goals through CDR and CCUS will require improved permitting processes that recognize the public benefit of infrastructure. The federal government likely will have to modify its permitting framework for related technologies. This will create more consistent categorical exclusions under the National Environmental Policy Act and require modification of the Mineral Leasing Act to clarify that CO2 pipelines should not be treated the same as natural gas ones. And the federal permitting process for offshore energy and infrastructure should include pathways for CDR.
Considering that an increasing number of climate commitments rely on greater use of CDR and CCUS, it would be wise for policymakers to remove the artificial barriers to their market entry.