Carbon Management Research Initiative
The science and arithmetic of climate change are decisive - we need more paths to progress. Despite dramatic progress in renewable power cost and deployment, greenhouse gas emissions continue to rise. Greenhouse gas reduction in the power sector is not yet on track, while emissions from land-use, heavy industry, and transportation continue to grow alarmingly. Demand for rapid decarbonization has grown as a policy priority, and increasingly financial institutions consider carbon footprint and corporate actions as a core value and potential risk. At the same time, the potential impact of an energy transition on jobs and communities prompts questions about labor, equity, and impacts to communities, as well as the total economic cost. One pathway has emerged as critical to success – large-scale carbon management. This set of technologies and approaches include carbon capture and storage (CCS), converting carbon into products for sale and removing CO2 from the air and oceans. Despite the consensus from scientific, governmental and financial leaders on the essential nature of rapidly deploying these options, many decision-makers have valid questions about the role, scale, market viability, and potential consequences of large-scale carbon management.
What is the Carbon Management Research Initiative?
The Carbon Management Research Initiative (CaMRI) is a new program at the Center on Global Energy Policy that focuses on speeding up decarbonization and reducing the risk and impact of climate change through carbon management. These approaches exist within the complex, competitive and changing landscape of global energy markets, financial institutions, shifting policy imperatives and approaches, and rapidly evolving technologies. The critical reduction of CO2 emissions offered by carbon management will require scholarship, insight, practical and technical options/expertise, and cross-disciplinary collaboration to help map options and actions. CaMRI’s initiative at CGEP seeks to better understand the technical, economic, and policy barriers to market deployment of CCS, CO2 recycling, and CO2 removal. It will delineate and design policy and finance options to overcome these barriers.
The initiative leverages multidisciplinary scholars and technical expertise at Columbia University, including in law, business, science, engineering, finance, public policy and social science. It will also look for partnerships with other academic, research, and public institutions in New York City, New York State, across the U.S. and the globe.
CaMRI provides independent insight and data-driven analysis for private and public sector leaders navigating this new and complex landscape. Specifically, CaMRI works to:
- Identify and assess important technologies and technology pathways for direct management of carbon dioxide.
- Be a source of new ideas and information around the emerging discipline of carbon management as well as the new carbon economy.
- Help provide insight to decision-makers charged with solving vexing public problems involving energy system decarbonization.
CaMRI focuses on U.S. institutions and stakeholders (e.g., federal and state governments or at-risk communities) while examining global actions and opportunities in carbon management. It will help to create foundries for commercial climate solutions, as well as provide insight and analysis to companies, government agencies, journalists, business leaders, and policymakers seeking a deeper understanding of what carbon management can provide economically and practically. We will start this effort with two major studies.
Heavy industry represents 21 percent of greenhouse gas emissions in the United States and globally, yet in the effort to address climate change it receives far less attention than other sectors and emission sources. In some industries, removing carbon is difficult. Cement, glass, steel, petrochemical and fuel production have few options for decarbonization, in part because they require high-quality heat supplies, must operate continuously, and have by-product greenhouse gas emissions from their essential chemistry. With today’s options, these sectors will require significant innovation and financing to reduce their emissions substantially.
There are potentially many ways to provide industrial heat without releasing greenhouse gases: Burning renewable or decarbonized hydrogen; using nuclear fission for heat production; novel solar concentrating approaches; microwave and radio-frequency heating; using biomass; and capturing CO2 emissions post-combustion. Many of these approaches are not well explored from a technical or economic perspective, and few are currently in commercial practice. This report describes:
- Describe current and near-market technology options for decarbonized heat production;
- Examine opportunities for near-term substitution of low-C options into current heating systems;
- Examine potential pathways for longer-term substitution of GHG-generating heat sources;
- Discuss the potential challenges facing near- and long-term substation of fuels, including cost, asset vintage, reliability, and process constraints, and;
- Discuss potential policy mechanisms to encourage low-carbon heat substitution in existing heavy industrial systems.
The U.S. power sector represents 28% of greenhouse gas emissions in the United States. Even as cleaner sources of power come online, existing power plants in the U.S. will likely remain a critical part of power generation until their natural expiration dates. This means that carbon removal technology will be essential to reducing emissions in the sector. Financing and investment is needed to stimulate private investment and deploy new projects more broadly.
New research from the Center on Global Energy Policy analyzes the policy measures needed to close this gap, focusing on privately held power plants fueled by natural gas and coal, which represent about half of the power generation in the U.S..
The paper examines which policies might work to stimulate investment for CCUS projects in the U.S. power sector, including capital incentives and revenue incentives and policies that reduce federal taxes for owners and investors. The authors recommend policies that reward investors rather than owners to remove the incentive to continue doing ‘business as usual’ and make discrete recommendations for direct and indirect policy support -- including production tax credits, enhancements for 45Q, investments in CO2 pipeline infrastructure, and RD&D support.
The paper yields important takeaways for investors and decision makers, including:
- CCUS (carbon capture, utilization, and storage) is among the fastest and cheapest ways to achieve net-zero emissions. Assuming no substantial improvement, the annual cost of capturing 400 million tons of carbon dioxide emitted by the power sector is roughly $40 billion per year over 20 years, shared between the government, ratepayers and taxpayers. Comparatively, recent clean-power policy incentives are more expensive and achieve lower effective volumes of CO2 reduction. For example, the total dollars spent on a policy 45Q tax credit would be ⅙ the amount of the total dollars spent on wind and solar credits with greater carbon returns.
- Creating incentives for CCUS projects owned and operated by private entities would have an outsized impact on emissions reductions, our economy and public health. Incentives focused on decarbonizing this slice of the power sector would decarbonize about half of the power generated in the U.S.
- For CCUS to be a viable pathway for decarbonization, policymakers mustcreate incentives and mandates that overcome investor risks and yield financial returns. This strategy has proven effective in the deployment of utility-scale solar, wind, and replacing coal-powered power plants with gas-powered power plants.
The analysis ultimately finds that a range of policy solutions could expedite carbon removal projects, which would in turn make the technology more affordable and viable for other difficult-to-decarbonize sectors, like steel, cement and chemicals. In the end the authors conclude that there is more than just one solution for financing carbon removal projects -- there needs to be a menu of policy options to stimulate private investment and deploy them more broadly in the power sector.