If a recent report from Credit Suisse, the global investment bank managing over $1 trillion in assets, is correct, then the U.S. could become one of the dominant players in a critical aspect of the new sustainable economy.
That's because the U.S., the largest historical emitter of the greenhouse gases that cause global warming, is also one of the ideal places to capture and store all of those greenhouse gases.
In the nitty-gritty details of the report, the firm discusses how the IRA could propel the US towards a low-carbon economy with the building blocks of abundant renewable natural resources, a sustainable clean energy supply chain, and the infrastructure, geologic storage potential, and skilled workforce needed for a low carbon economy. In fact, Credit Suisse writes that the US’ existing fossil fuel framework fuels several key advantages for carbon capture and storage.
The US is home to the world's largest onshore CO2 pipeline network, which together amounts to about 5,000 miles, or 85% of all global CO2 pipelines. This network is led by the hub of Kinder Morgan pipelines in the fossil fuel-rich state of Texas and the 2,000 miles of CO2 pipelines across Iowa that, according to AGWeek, are projected to involve at least 31 ethanol plants, exemplifying a major investment in low carbon fuel.
But, let’s take a step back for a moment and ask: What exactly are CO2 pipelines and how do they impact our progress toward zero emissions, rather than simply low emissions?
A CO2 pipeline is an essential component of carbon capture and storage (CCS) systems, which unlike its counterpart direct air capture (DAC) reduces emissions of CO2 by offsetting the amount industrial facilities – like Iowa’s giant network of ethanol plants – release into the atmosphere.
In Iowa, at least a handful of its 42 ethanol plants employ renewable energy or use biofuels. Iowa’s ethanol industry produces more than 4.1 billion gallons of ethanol annually from more than 1.3 billion bushels of corn. Ethanol itself is a renewable fuel made from various plant materials, like that from Iowa’s golden fields, which are collectively known as “biomass.”
According to the US Department of Energy, more than 98% of US gasoline uses ethanol, which in turn, reduces pollution. This substance also shows up in various other industries like pharmaceutical products, cosmetics, and perfumes.
However, while ethanol is renewable, it’s produced using fossil fuel energy carriers: petroleum, coal, and natural gas. It requires fewer units of fossil fuel than non-renewable fuels to produce gasoline. Bioethanol is the more sustainable choice, as it does not use fossil at all.
But with only one of Iowa’s cast ethanol plants using it, that’s where CO2 pipelines come in to lower the carbon intensity of plants by pumping the CO2 deep underground, and preventing it from ever entering the atmosphere.
The same can be done for other industrial emitters like steel, iron, and cement manufacturing. However, the debate over if CCS only cements our reliance on fossil fuels rages on. While some experts regard it as a savior of the fossil fuel industry, stagnating our carbon-free goals, others regard its potential to lower emissions and decarbonize hard-to-reach industries, as a step toward a net-zero future where we only emit as much as we can capture.
That’s why with the IRA, the US is pouring piles of money into the CCS industry, hundreds of billions of dollars of tax incentives and rebates, with the goal of finally jumpstarting carbon capture, which at present, is not at scale. According to Grist, the IRA also opens the door for a direct pay opinion for capturing CO2.
With a $20 billion annual investment in CCS, IRA projections from Princeton University show that with all these rebates, incentives, and even direct payments, the US could bury one billion metric tons of CO2 by 2030. This is multitudes more than what we’re burying now but remains a fraction of the (at least) hundreds of gigatons we’ll have to bury by 2050 to successfully decarbonize.
Still, it’s a start. And according to Suisse’s report, we are well-positioned to build on it.
The US has by far the most geological CO2 storage potential in the world and has the most discovered (aka de-risked) storage. This potential adds up to 8 trillion tons of CO2 that could one day be buried deep under US soil. Theoretically, this equates to 2,000 times our annual CO2 emissions, as of 2020. When one gigaton is one billion metric tons, we have room to bury at least a significant portion of what we need for full decarbonization.
For comparison, China has just over 500 billion tons of storage, Suisse says, which is less than 50 times its annual emissions rate.
Plus, when it comes to hydrogen storage, the most mature and lowest cost storage option for the world’s lightest (and zero-emission gas) the Texas Gulf Coast, alone is home to three of the four operational salt caverns in the world for hydrogen storage. Combined with US hydrogen infrastructure, which makes up over half of all global hydrogen pipelines, the country is also well positioned to be a leader in hydrogen as an alternative fuel source.
As the world’s largest fossil fuel producer, the report says that the US can leverage skilled workers already harboring the experience and technical expertise for the low carbon transition. Several institutions like the World Resources Institute have outlined clear steps for the US to aid fossil fuel workers in the clean energy transition.
As clean energy jobs are already outnumbering fossil fuels ones, and Big Tech workers are leading the trend into climate tech, the US is primed to fuel a just worker transition. We already have the help of Big Tech leaders like Microsoft, Stripe, and Google, who are forging paths in carbon removal and carbon-free energy spaces.
As the report’s authors write, while the US lags behind in energy transition investments historically, as Europe has invested over double into the transition and climate tech venture funding, the US has three times the climate unicorns as Europe.
Plus, in the realm of geologic storage potential, the US bests the European continent by nearly 15 times. Even in terms of direct air capture, (which is not tied to the fossil fuel industry and removes CO2 from the air and stores it) the US has between 3 and 5.5 the 2020-2030 capacity growth compared to Europe.
The IRA is playing a colossal role in this. As Suisse writes, “With these existing moats as a foundation, the IRA brings the critical economic signals that can unlock investments across many sectors and across the nation.”
With further development of hydrogen and carbon capture and sequestration specifically, the US could unlock other advancements in clean fuels, from ammonia to sustainable aviation, along with direct air capture. It could also advance the DAC and CSS funding opportunity of making carbon into commodities.
“After COP27 concluded in November with mixed outcomes,” James Gifford, Head of Sustainability & Impact Advisory at Credit Suisse said on LinkedIn, “the world may look to the US and the IRA’s climate and energy provisions for ideas.”
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