America’s Oil and Gas Industry: Seizing the Low-Carbon Opportunity

For the third consecutive year, ClearPath partnered with the American Petroleum Institute (API) at New York Climate Week showcasing the cutting-edge clean technologies needed to reduce energy emissions across the U.S. economy. With the expertise and engineering know-how needed for clean energy innovation and deployment, the oil and gas industry is seizing the opportunity to lead emissions reductions at a global scale. 

The Carbon Innovation Forum convened senior government officials, energy executives, project developers, technology startups, investors and thought leaders. The forum focused on creating market demand for low-carbon solutions, such as carbon capture utilization and storage (CCUS), carbon dioxide removal (CDR), low-carbon materials like hydrogen and concrete, and the need for streamlined permitting to unlock energy infrastructure build-out.

From Left to Right: ClearPath CEO Jeremy Harrell; DOE Deputy Under Secretary Leslie Biddle

Leveraging America’s Energy Advantage

The world is using more energy than ever before, and with new technologies like artificial intelligence (AI) and advanced computing, demand for clean, reliable power is set to soar. In 2020, the information and communication technology sector, including data centers, networks and user devices, consumed about 915 terawatt hours of electricity, which is four to six percent of global electricity that year. Electricity consumption from data centers, AI, and the cryptocurrency sector is projected to double by 2026. 

As global demand for clean, affordable and reliable energy continues to grow, so does the opportunity and need for American energy leadership. We know America’s lawmakers and energy producers are up to the task. With continued innovation, American-produced products, including natural gas will facilitate lower emissions and bolster global energy security. A great example of this is liquefied natural gas (LNG). Thanks to its abundant supply of natural gas and novel technology innovation, the U.S. is the largest producer of this valuable resource and exporter of LNG in the world.

The U.S. is also a leader in the research and development (R&D) of key low-carbon technologies like CCUS, direct air capture (DAC), and hydrogen. The R&D was catalyzed by the Energy Act of 2020 and the bipartisan Infrastructure Investment and Jobs Act (IIJA) of 2021, which infused nearly $12 billion into carbon management programs and $8 billion for Regional Clean Hydrogen Hubs. These policy wins will support the U.S. energy sector as a global leader in clean energy and technology deployment.

Let America Build

Natural gas, CCUS, DAC, hydrogen, methane monitoring and nuclear are all needed to achieve deep decarbonization in various sectors, such as manufacturing and electricity generation. According to the Intergovernmental Panel on Climate Change (IPCC), for any low-carbon scenario, we need every tool in our toolbox to meaningfully reduce emissions across the economy. 

Status of Class VI Primacy in the U.S.

States with Class VI primacy have a track record of permitting carbon dioxide sequestration sites years faster than the EPA.

CCUS has the potential to provide 14 percent of the global emissions reductions required by 2050, but the current capture capacity of operational projects is a fraction of what is needed. Similarly, CDR solutions are managing just shy of 100 thousand tons of carbon – accounting for only 0.001 percent of carbon removal required. With around 200 CCUS projects in various stages of development, around 150 clean hydrogen projects under development and two major DAC facilities in operation, innovators have begun demonstrating these technologies, and the rapid scale-up of these clean energy projects is the next step. To ensure the successful commercialization of these technologies and reach net zero by 2050, modernized permitting, demand-pull mechanisms, predictable, growth-oriented markets, and public-private collaboration are crucial. 

CCUS can provide 14% of the Global emissions reductions needed by 2050 and is critical
for reducing emissions in difficult-to-decarbonize sectors. What’s needed to achieve this?

Participants at the forum voted permitting to be the top policy opportunity to generate demand and scale up CCUS projects more rapidly.

As CCUS and DAC move along the deployment curve, supporting infrastructure will be needed to further deploy and commercialize these technologies. This includes developing carbon storage sites for the permanent storage of carbon dioxide in geologic formations and the build-out of pipeline infrastructure – a vital link in the carbon management value chain. Highlighted during the Carbon Innovation Forum, eliminating red tape and streamlining permitting are critical and will help give project developers the predictability they need to get steel in the ground. 

Economy-wide decarbonization will also require increased demand for low-carbon products like cement, steel, and chemicals, and CDR solutions. This event emphasized how new and existing demand-side mechanisms can play an important role in promoting the scale-up of these markets. 

America’s largest energy producers, utilities, agriculture companies, financial institutions and other leaders are integrating a suite of clean technologies into their long-term business strategies. To seize this low-carbon opportunity and leverage America’s energy advantage, the Carbon Innovation Forum underscored the importance of building our energy infrastructure and deploying policy tools that incentivize the scale-up of low-carbon solutions on a global scale. 

From Left to Right: Arjun Murti; Molly Laegeler; James Schaefer; Andrew Stinson; and Mark Gebbia

Thanks to our speakers: Rostin Behnam, Chairman, Commodity Futures Trading Commission (CFTC); Leslie Biddle, Deputy Under Secretary for Commercialization and Finance, U.S. Department of Energy; Marisa Buchanan, Senior Vice President – Low Carbon Solutions, bp trading & shipping; Kelly Coppola, Upstream Unconventional Issues and Advocacy Manager, ExxonMobil; Kerry Duggan, Founder and CEO, SustainabiliD; Fredrik Ekström, Chairman, Nasdaq Stockholm and Puro.earth; Allister Furey, CEO and Co-Founder, Sylvera; Mark Gebbia, Vice President for Environmental and Permitting, Williams; Leia Guccione, Managing Director, RMI/Hydrogen Demand Initiative (H2DI); Amy Harder, Executive Editor, Cipher News; Jeremy Harrell, CEO, ClearPath; Michael Johnson, Vice Chairman of Investment Banking, J.P. Morgan; Molly Laegeler, Vice President of Strategy & Sustainability, Chevron; Michael Leitch, Senior Technical Lead, XPRIZE Carbon Removal; Sonrisa Lucero, Special Advisor for Stakeholder Engagement, U.S. Department of Energy; Joseph Majkut, Director of Energy Security and Climate Change Program, Center for Strategic and International Studies; Arjun Murti, Partner, Veriten; Aaron Padilla, Vice President of Corporate Policy, API; James Schaefer, Senior Managing Director, Guggenheim Securities Investment Banking; and Andrew Stinson, Managing Director – Head of Americas ESG Funding Solutions, Bank of America.

Please note this event adhered to Chatham House Rule.

Transforming U.S. Manufacturing through $6 Billion in Industrial Demos Funding

Background on the Industrial Demonstrations Program

The industrial sector, including cement, steel and chemical manufacturing, produces the building blocks of society. Industrial products are everywhere: in buildings, the roads you travel on and the products the U.S. uses daily. However, the industrial sector is a major source of U.S. emissions and is poised to be the largest emitting source by 2035. 

In March 2024, the Department of Energy (DOE) launched the most significant industrial decarbonization program to date, announcing $6 billion in funding for 33 selected projects across 20 states under the Industrial Demonstrations Program (IDP). The IDP provides federal grants to demonstrations of industrial decarbonization across heavy industrial sectors. It was authorized by the Clean Industrial Technology Act (CITA) as part of the Energy Act of 2020. The Infrastructure Investment and Jobs Act (IIJA) and 2022 tax law provided the funding to DOE’s Office of Clean Energy Demonstrations (OCED) to oversee implementation.

This blog will highlight how these awards can kickstart a clean industrial revolution to reduce emissions while strengthening American manufacturing.

Topline highlights

Sectoral Breakdown of Demo Funding and CO2 Emissions Avoided Annually

Map of Selected Projects

Project Deep Dive

ClearPath wants to highlight four projects that showcase transformative technologies. 

Cleveland-Cliffs Steel Corporation (Middletown, Ohio)

American steelmaker Cleveland-Cliffs was selected for up to $500 million in federal funding to replace a blast furnace with a hydrogen-ready direct reduced iron (DRI) furnace and two electric melting furnaces. Hydrogen replaces coal as the ingredient that transforms iron ore into iron. 

Through this demonstration, Cleveland-Cliffs is decarbonizing the iron-making process, the largest emissions source in the iron and steel sector, responsible for 50% of all emissions. The Middletown demo will avoid more than one million metric tons of emissions annually, creating 170 permanent and 1,200 construction jobs while preserving the existing workforce. 

The Middletown demo is one of the first large-scale demonstrations of integrated hydrogen-based steelmaking in the U.S., testing a decarbonization pathway that can be replicated across the remaining 13 blast furnaces in the U.S. 

Heidelberg Materials US Inc. (Mitchell, Indiana)

Heidelberg has been selected for up to $500 million in federal funding to construct and operate an integrated cement carbon capture and storage (CCS) facility in Mitchell, IN. The facility will capture at least 95 percent of emissions from one of the nation’s largest cement plants, avoiding two million metric tons of emissions annually while creating 20-25 permanent jobs and 1,000 construction jobs. 

Mitchell will be the U.S.’ first commercial-scale cement CCS facility, providing a template for the rest of the cement industry to decarbonize. Demonstrating cement CCS is critical because numerous industry and DOE roadmaps have identified CCS as a key cement decarbonization lever, contributing to over 30 percent of total emissions reduction. CCS is essential because Portland cement will remain an indispensable material, and ~60% of emissions are produced by chemical processes that cannot be reduced by using a clean fuel or energy source. 

Sublime Systems (Holyoke, Massachusetts) and Brimstone (location TBA)

The demo program awarded federal funding to two U.S. cement innovators: $86.9 million to Sublime Systems and up to $189 million to Brimstone, creating nearly 200 permanent jobs and 450 construction jobs. 

Both companies use novel production processes and non-limestone-based inputs to produce materials with nearly zero emissions that have been certified and passed industry standards. 

The demo awards will build first-of-a-kind commercial facilities for both approaches, a necessary step to de-risk these technologies for investors and the construction industry. These awards can move the needle on cement decarbonization by demonstrating one of the few pathways to reach net-zero emissions and position the U.S. as a leader in next-generation cement production. 

The Significance of the Industrial Demonstrations Program

Strengthens American manufacturing: The demonstration program selections prove public sector investments can commercialize innovative technologies. This follows the bipartisan Energy Act’s and IIJA’s success in stimulating generational investment in increasing U.S. competitiveness and onshoring critical elements of the manufacturing supply chain. For example, Cleveland-Cliffs was also selected to expand clean manufacturing at the only facility that produces transformer-grade steel, helping resolve a nationwide transformer shortage in the medium term. 

Incentivizes first-movers: These awards represent tangible investments in first-of-a-kind facilities that deploy technologies such as CCS and hydrogen in the industrial sector. Achieving net-zero industrial emissions is impossible without proving and scaling up these technologies. Therefore, public sector funding is crucial to de-risk investments that can provide a blueprint for other facilities to decarbonize.

Invests in transformative technologies: On average, the portfolio yielded a 77% reduction in emissions, highlighting how the funding selections have chosen transformative technologies and projects that can significantly reduce emissions. 

Highlights the importance of funding early-stage RD&D: Six projects, totaling up to $775 million in industrial demonstration funding, use technologies incubated early at the Advanced Research Projects – Energy (ARPA-E). Their inclusion highlights how goal-oriented investments in early-stage clean energy RD&D turn into a success story to strengthen U.S. manufacturing.

Conclusion

This is just the first step: While an important milestone, these industrial demonstration selections only avoid 14 million tons of emissions annually, driving only a one percent reduction in U.S. industrial emissions. Additional funding is needed to stimulate private sector investment for meaningful emissions reduction. 

The DOE should proactively remove permitting barriers: The federal government should expedite permitting for the selected projects. Currently, onerous permitting under the National Environmental Policy Act (NEPA) can delay putting steel in the ground. As a recent ClearPath report recommended, the DOE should extend its categorical exclusion for R&D projects to these demo projects ensuring rapid deployment.

A clean industrial revolution may be around the corner: The industrial demonstrations program proves that targeted clean energy innovation policy can help American industry pioneer a clean industrial revolution and reduce emissions, allowing America to lead.

Clean Energy Innovation Academy Brings Congressional Staff to Cleveland, Ohio

Steel is the backbone of America’s economy, and is a necessary material for critical infrastructure like roads, bridges, buildings, and appliances. It is a useful, and impactful metal; however, its production accounts for eight percent of total global emissions. But here in the U.S., we actually produce the cleanest steel of the top seven steel-producing countries.

So that’s why Cleveland, Ohio was a perfect stop for ClearPath’s Clean Energy Innovation Academy (CEIA). CEIA, launched in 2020, is an ongoing educational series for Congressional staff focused on conservative clean energy and industrial technology and policy.

We were excited to bring a delegation of seven Congressional staff members to Cleveland this year. The delegation consisted of professional staff who work for Members of Congress on the House Ways and Means, House Appropriations, and House Science, Space, and Technology Committees, as well as Committee Professional Staff Members from the House Energy and Commerce, and House Science, Space, and Technology Committees.

These staff joined us to expand their understanding of how U.S. companies are reducing emissions in the industrial sector, and the opportunities to further ensure that the United States leads the world in affordable, low-emissions materials, like steel, cement, and concrete.

“This trip offered a new perspective on how America produces the cleanest steel in the world and the exciting opportunities to further decarbonize the industrial sector. We’re excited to get to work on the Hill to advance policies that encourage domestic production of steel, where Americans will benefit from more jobs, cleaner products, and lower prices.”
– Emily Henn, Legislative Director for Rep. Carol Miller (R-WV)

Cleveland-Cliffs’ Cleveland Works Steel Facility

Cleveland is home to the Cleveland-Cliffs Cleveland Works steel facility, a site known for its low-emissions steelmaking processes and U.S.-based manufacturing capabilities. According to the company, Cleveland Works is recognized as one of the most productive integrated facilities in the world for completing the entire process of steelmaking, from smelting iron ore to the finished rolled product. This facility supplies steel that is used in everyday products, such as the roll cages in vehicles. Directly employing more than 2,000 workers and hundreds of contractors, this facility is an economic anchor for the city.

Cleveland-Cliffs is also well-known for its dedication to low-emissions practices, producing steel well below the global carbon intensity of blast furnace-basic oxygen furnace (BF-BOF) steel. Their emissions reduction success relies on readily-available technologies such as using hot briquetted iron (HBI) in existing blast furnaces, which reduces emissions from producing new iron, and replacing pulverized coal with natural gas in their furnaces.

Cleveland Cliffs is committed to forward-looking investments that reduce their emissions and maintain global competitiveness. Take the newly operational plant in Toledo, Ohio for example. It uses natural gas to produce hot briquetted iron (HBI) through the direct reduced iron (DRI) process, which lowers steel emissions by 50% without compromising product reliability. This facility can adopt up to 70% clean hydrogen with marginal retooling to further reduce emissions and avoid resourcing from countries like China. Another example includes a carbon capture and sequestration (CCS) project at their facility in Burns Harbor, Indiana, which aims to capture and sequester 2.8 million tons of CO2 per year, a massive emissions reduction effort.

Front Row L to R: Emily Johnson, Sarah Alexander, Dana Faught, Mallory Shaevsky, Ivy English, Amanda Sollazzo
Back Row: Ray Phillips, Luke Bolar, Steve Hansen, Chase Hite, Niko McMurray, Rafae Ghani, Dillyn Carpenter, Emily Henn, Danny Hartl, Jeremy Harrell

By seeing literal “steel in the ground” projects at Cleveland-Cliffs’ Cleveland Works steel facility, Congressional staff learned about industrial decarbonization efforts underway through a tour of the steelmaking process including how molten steel is shaped into finished products and treated with chemicals for better strength, helping them to better understand steel production processes and new innovations to produce it cleaner.

Following the tour, the staff attended dinner with Dr. Mark Peters, the Executive Vice President for National Laboratory Management and Operations at Battelle, who previously served as the Lab Director at Idaho National Lab. The dinner discussion focused on how National Labs play a vital role in research, development, and deployment efforts and how public-private partnerships can be utilized to spur innovation.

The delegation returned to D.C. with a concrete understanding of how companies are starting to successfully produce low-emissions industrial materials and the areas of opportunity to ensure the U.S. is a global leader in industrial manufacturing, all while reducing global emissions. ClearPath looks forward to continuing its Clean Energy Innovation Academy in 2024!

America’s Next Revolution: Clean Industrial

Industrial emissions are set to be the top source of emissions by 2030, surpassing the power and transportation sectors. Globally, industrial emissions are 40 percent, but it’s hardly talked about here in our nation’s capital.

ClearPath, in partnership with Clean Air Task Force (CATF), hosted the Clean Industrial Summit at the National Press Club to start bringing more attention to this growing challenge.

Top thought leaders, project developers, innovators, and lawmakers came together on Wednesday July 19, 2023, to discuss the exciting opportunities to ensure America’s next industrial revolution arrives — leading the world in decarbonization.

(Pictured right) U.S. Sen. Shelley Moore Capito (R-WV) shared her role on the Senate Environment and Public Works Committee to build bipartisan consensus on clean energy and industrial policy.

The event kicked off with the U.S. Department of Energy (DOE) Under Secretary for Infrastructure David Crane joining CATF’s U.S. Advocacy and Policy Director Lindsey Griffith for a fireside chat detailing DOE’s approach to decarbonization and highlighting DOE’s upcoming “liftoff” reports on the path forward for industrial decarbonization.

The first panel, “The Unsuspecting Leaders Decarbonizing America — Steel, Cement, Concrete, and Asphalt,” featured incumbent industry leaders who shared their efforts in decreasing U.S. emissions. The panel highlighted how recently passed legislation (the Energy Act of 2020, the Bipartisan Infrastructure Law of 2021, and the Steel Upgrading Partnerships and Emissions Reduction Act (SUPER) Act) has catalyzed investments in industrial decarbonization while stressing that future policy support is still needed to accelerate R&D of next-generation technology.

Pictured L to R: Xan Fishman, Director of Energy Policy and Carbon Management, Bipartisan Policy Center; Melissa Carey, Head of Climate, ESG Policy and Government Affairs, Holcim; Kevin Dempsey, President and CEO, American Iron and Steel Institute (AISI); Jerae Carlson, Senior VP of Sustainability, Communications & Public Affairs, Cemex USA; and Eunice Heath, Senior VP and Chief Sustainability Officer, CRH.

U.S. Senators Shelley Moore Capito (R-WV), Chris Coons (D-DE), and Thom Tillis (R-NC) highlighted industrial innovation and bipartisan opportunities for policy.

“I think this is an important time to bring everyone together to talk about emissions and the environment, and make these solutions bipartisan because they’re the most long lasting and have the greatest likelihood of actually seeing the light at the end of the tunnel,”  said Sen. Capito.

Sen. Capito also discussed the need to improve project permitting stating, “If we are going to make our industrial sources as clean as we can, we have to get the permitting right.”

“Allowing America to lead will result in a cleaner environment with massive reductions in global emissions and cost, as well as help the economy,”  said Sen. Tillis. “One of the biggest global environmental policies we can all get behind is bringing more manufacturing and more energy production back to the United States.”

The second panel covered “Breakthrough Technologies Leading America’s Industrial Decarbonization.” Steel, cement, concrete, and asphalt are some of the toughest industries to decarbonize as emissions are inherent in their manufacturing processes. Leaders of innovative companies spoke on the groundbreaking technologies they are developing.

Pictured L to R: Brad Townsend, Vice President, Policy and Outreach, Center for Climate and Energy Solutions (C2ES); Leah Ellis, CEO, Sublime Systems; Cody Finke, CEO, Brimstone; and Tom Dower, VP of Public Policy, LanzaTech.

The final panel of the summit, “Decarbonizing the Main Source of Industrial Emissions: Industrial Process Heat” consisted of a discussion involving different companies’ strategies to produce heat in new, cleaner ways.

(Pictured right) Abigail Regitsky, Senior Manager, U.S. Policy and Advocacy, Breakthrough Energy moderated questions between Andrew Ponec, CEO, Antora Energy; Brandon MacDonald, Director of Product, Via Separations; and Ben Reinke, VP of Global Business Development, X-energy.

The panel covered the contribution of high-temperature heat and steam to overall industrial emissions. In fact, industrial heat comprises 40% of total industrial emissions, or roughly 10% of total global carbon dioxide emissions.

It’s clear from this event that American innovators are actively combating the challenges of industrial emissions by leading a new revolution of innovation — producing cleaner industrial products like steel, cement, concrete, asphalt, chemicals and industrial heat.

– Mary Kozeny, a summer external affairs intern for ClearPath, and rising Junior at Boston College, contributed to this blog.

ClearPath Leads Congressional Delegation to Houston, TX

As the world increasingly turns towards clean energy solutions, the demand for carbon capture technology will only continue to grow. Fortunately, America has been abundantly blessed with vast natural resources — and the technology to make energy reliable, affordable, and clean.

With a long history of innovation and expertise in the energy sector, Houston is the perfect place to showcase recent advances in clean energy development. Home to one of the largest petrochemical manufacturing complexes in the United States and positioned to leverage the state’s robust energy workforce, the city has been and will continue to be a major energy hub. But it’s Houston’s commitment to cutting-edge carbon capture technology that sets it apart.

With that in mind, ClearPath brought a delegation of Members of Congress and Congressional staff to visit the energy capital of the world, Houston, Texas, to engage with key industry stakeholders and visit steel-in-the-ground projects.

The delegation included Members of Congress and Congressional staff from key Congressional committees that have jurisdiction over energy issues.

The delegation included:

During their time in the Houston region, the delegation met with dozens of clean industry leaders and innovators, including keynote speakers Jane Stricker, SVP, Energy Transitions and Executive Director, Houston Energy Transition Initiative; and Michael Avery, President and General Manager for Direct Air Capture (DAC), North America, 1PointFive – an Oxy subsidiary.

The theme of the trip was clear – we need to modernize permitting in America. Far too often, companies are ready to invest but are being held back by lengthy and overly onerous regulatory processes. Improving the efficiency of the permitting process will make U.S. energy more reliable and get more projects built.

Notably, ClearPath returned to NET Power, the world’s first supercritical carbon dioxide power plant. This technology has the ability to capture almost 100% of the emissions generated from reliable energy sources. The captured CO2 is then directed back underground, where it can be safely stored.

Pictured above: The Congressional Delegation visited NET Power in LaPorte, TX.

The delegation also had the opportunity to visit Linde’s Clear Lake HyCO Plant in Pasadena, Texas, to learn how one of the pioneers of clean hydrogen production plans to scale up its operations through strategic partnerships in the region.

Pictured above (L to R): Jeremy Harrell, Chief Strategy Officer, ClearPath; Congressman John Curtis (R-UT); Congressman Chuck Edwards (R-NC);
Congressman Brian Babin (R-TX); Dan Yankowski, President of Linde Gases, North America; Jay Faison, Founder, ClearPath;
and Congressman David Rouzer (R-NC) at Linde’s Clear Lake HyCO Plant.

“Houston is one of the fine examples of how American innovation moves us toward clean energy solutions,” said Rep. John Curtis (R-UT). “This visit is a great reminder of how our friends in the fossil fuel industry can lower emissions while providing affordable, reliable, clean, and safe energy to power our homes and industry.”

“To reduce carbon emissions while maintaining energy security, American technology must lead the way,” said Rep. Chuck Edwards (R-NC).

Texas is on the brink of an exciting chapter in its energy story, one that promises to revolutionize the industry and make U.S. energy cleaner, reliable, and more secure. As the energy capital of the world, Houston is leading the charge in developing and commercializing carbon capture technologies and is positioning the state to play a major role in the future of clean energy. We look forward to continuing to partner with the delegation to continue to build upon this exciting momentum, while also making America resource independent and keeping energy affordable.

A Road to Lower Emissions, Paved With Cement and Concrete Innovation

To reduce emissions, let’s return manufacturing to the U.S., where environmental standards are tougher than in places like China. U.S. industrial manufacturing is nearly 28% cleaner than our competitors, like China. In fact, the U.S. has some of the cleanest technologies and industrial processes in the world, and we continue to lead the world in innovation. But, today much of the world is relying on products including cement and concrete produced in China. Returning manufacturing capabilities back home will reduce dependence on higher emissions producers, advance domestic innovation that reduces raw material and resource needs, and provide clean and affordable solutions. This cascading effect will enhance the international export of U.S. innovations to bring down global emissions.

Cement and concrete are essential for products that are used in the daily lives of people across the world. They are used in everything from roads and highways to buildings and more. However, the cement and concrete industry is also seen as one of the most difficult to decarbonize sectors of our economy due to the carbon dioxide emissions released. By 2030, the industrial sector is poised to become the highest emitting sector in the U.S. economy, passing the energy and transportation sectors. For perspective, if cement emissions were equivalent to a country, it would be the third largest emitter in the world, accounting for about eight percent of the world’s total carbon emissions.

Innovations in cement and concrete productions are the answer for the U.S. to achieve emissions reductions within the industrial sector. The good news is that Congress has started to express significant interest in industrial decarbonization. Recently enacted legislation such as the bipartisan Investment in Infrastructure and Jobs Act (IIJA) of 2021 and the 2022 tax package provided over $6 billion to the Department of Energy (DOE) for industrial decarbonization demonstration programs within the Office of Clean Energy Demonstration for the Advanced Industrial Facilities Deployment Program.

Some innovators have noticed this opportunity and are already working to develop new, low-emissions cement technologies. California-based company Brimstone is making cement from carbon-free calcium silicate rock instead of carbon-heavy limestone, through carbon mineralization, — which makes their cement carbon-negative. Biomason, a company based in North Carolina, is also eliminating emissions from traditional cement by using biotechnology to grow “biocement,” an alternative to traditional cement.

Proper direction from Congress to effectively deploy over $6 billion in DOE funds is needed to ensure innovations with high-decarbonization and low-cost potential are prioritized. Here are three potential ways public policy can ensure Congressional funds are spent wisely.

Currently, many local construction codes follow traditional standards, which use specifications that originated decades ago when cement and concrete quality was not as robust as it is today. Due to advances in cement and concrete manufacturing, there’s more “stuff” in our mixtures than there needs to be. For example, the National Ready Mixed Concrete Association (NRMCA) noted that 85% of concrete specifications include unnecessary restrictions on supplementary cementitious materials (SCM). NRMCA also found other similar material requirements, which results in poorer concrete quality, undue emissions, and unnecessarily high costs.

However, there are alternatives to these traditional standards. According to the Department of Transportation (DOT), performance-based specifications are specifications that describe the desired levels of fundamental engineering properties that are predictors of performance. In other words, the fundamental engineering properties, such as how strong the material is, can be used to predict how the concrete will perform in real world conditions, such as in traffic or in different weather. However, performance-based standards aren’t yet widely adopted across states.

Adopting performance-based standards can help reduce energy use, water use, and emissions. They also send market signals to encourage investments in clean cement and concrete technologies, such as carbon capture, the use of alternative fuels and feedstocks like hydrogen, and innovative, emissions-free cement manufacturing like Biomason’s and Brimstone’s processes. Finally, updating to a performance-based standard will allow the deployment of new and efficient mixtures unlocking an untapped market for major concrete producers like Holcim and CEMEX, who have these modern cement and concrete mixtures ready to deploy.

Like baking a cake, you could use your grandmother’s secret recipe to impress all your guests (a performance-based standard) or store-bought cake mix just to get the job done (traditional standards).

Bringing American industry back without imposing fees and additional costs is necessary if we want to ensure an uninterrupted supply chain and decarbonization of the global concrete industry. Establishing clear RD&D efforts within DOE can prioritize public-private partnerships, and support the adoption of modernized construction codes. These first steps will allow America the opportunity to reemerge at the forefront of the industrial economy, and lead the world in industrial decarbonization.

Industrial Carbon Capture Jump Started in 2022

The combination of new policies and over $100 billion amount of private equity investments in 2022 has marked a new era in America’s industrial innovation characterized by decarbonization. In the past year alone, at least 15 project announcements across industrial subsectors have been made. This deployment of carbon capture utilization or sequestration will total 1,600 million metric tons of carbon dioxide (MMT CO2) per year.

We recently published one of ClearPath’s signature annual reports, “Clear Path to a Clean Energy Future 2022”: tracking America’s power sector, clean technology, and policy trends. This latest edition had three key findings:

This report, however, did not cover one of the difficult-to-decarbonize sectors — industrial. Annual emissions from the industrial sector are expected to exceed those of the power sector by mid-century in America. And, global projections likewise depict the absolute and percentage share of industrial emissions rising in the future.

Most experts agree that industrial emissions reductions will need innovation-focused policy and investment in the near term to greatly reduce the cost of solutions.

An All of the Above Approach to Industrial Emissions Reduction

Figure 1. Adapted from the IPCC ARG6 Working Group 3 Chapter on Industry. This graphic illustrates the different levers and their potential for a role in driving industrial emissions to net zero.

In the short term, industrial decarbonization will depend on the ability to deploy technologies such as Antora Energy’s thermal energy storage, which provide clean electricity and heat or improve the energy efficiency of industrial processes, such as through electrification or systems-level energy management optimization. Long-term, significant investments in innovation and deployment of technologies like carbon capture and the production of alternative fuels like hydrogen will be paramount to achieving significant emission reductions.

The 117th Congress set the Watermark for Industrial Decarbonization Policy

Industrial decarbonization policy on innovation significantly lags behind other sectors, namely power and transportation, in the volume of targeted investments in innovation and other decarbonization-focused policies. However, over the past two years, a number of bipartisan bills have initiated progress. The Energy Act of 2020 (EAct 2020) included several new authorizations for the U.S. Department of Energy (DOE) to support low-carbon industrial manufacturing and carbon capture projects. This was quickly followed by the passage of the bipartisan Infrastructure Investment and Jobs Act (IIJA), which appropriated over $12 billion to fund these programs. Additional bipartisan industrial decarbonization came in the CHIPS and Science Act that invested $52 billion across numerous sectors and products critical to balancing industrial decarbonization and America’s competitiveness. A prime example is the Steel Upgrading Partnerships and Emissions Reduction (SUPER) Act, which established DOE’s first low-emissions steel research and development program.

Finally, the 2022 partisan reconciliation package, called the Inflation Reduction Act (IRA), includes numerous individual tax incentive provisions and programs that were originally introduced on a bipartisan basis to tackle industrial emissions. Among these, is the carbon capture and sequestration tax credit (45Q) which increased the credit amount across applications, decreased the plant size eligibility thresholds and extended the commence construction deadline to the end of 2032.

Modeling Assumptions

Rhodium Group modeled ClearPath-designed scenarios to understand the magnitude of the impact of current policy on future total carbon capture capacity installed and carbon captured out to 2050 across several industrial subsectors: ammonia, cement, ethanol, hydrogen, iron/steel, natural gas processing, and refineries.

Energy market uncertainty and turmoil driven by inflation from the COVID-19 economic recovery have been further roiled by Russia’s invasion of Ukraine. To understand how energy market volatility impacts the path to a clean energy system, Rhodium Group designed a separate set of fuel price inputs to assess the same policy assumptions. The four scenarios in this analysis are outlined in Table 1.

Table 1. Scenario assumptions were developed by ClearPath and modeled by Rhodium Group.

Results

The economic viability of carbon capture technology is not homogenous across subsectors and at current costs, carbon capture adoption in industrial applications is driven by policy support and is minimally impacted by natural gas prices.

The 2021-Reference, Central, and Volatile scenarios project carbon capture deployment under the previous 45Q tax credit requiring facilities to commence construction before 2026. These findings revealed that carbon capture adoption in the industrial sector ends with the expiration of the credit such that there is no increase past 2030. The Central and Volatile scenarios captured the same total amount of carbon dioxide, 72 million metric tons, but with slight differences across subsectors. Ultimately this represents 1 million metric tons of carbon dioxide (MMT CO2) less the 2021-Reference scenario from our inaugural report. This difference can be attributed to the higher fuel price assumptions, particularly in the near term, for natural gas from this year’s modeling.

Installed Carbon Capture Capacity by Sub-Sector in 2030

Figure 2. Total Installed Industrial Carbon Capture Capacity in million metric tons CO2 (MMT CO2) in 2030.

Notably, the Central and Volatile scenarios projected carbon capture to be installed in hydrogen, a subsector that our previous analysis did not observe any deployment to occur. Funding for hydrogen demonstration programs allocated by the bipartisan IIJA drives the deployment of carbon capture for hydrogen production not observed in last year’s results.

The enhanced value and expanded scope of the 45Q tax credit is projected to increase the economic viability of carbon capture across industrial applications, accelerating its deployment, see Figure 3.

Installed Carbon Capture Capacity by Sub-Sector

Figure 3. Total Installed Industrial Carbon Capture Capacity in million metric tons CO2 (MMT CO2).

By 2030, the enhanced 45Q tax credit drives an additional 25 MMT of capture capacity under the Central+IRA scenario compared to the Central scenario. By 2040, this expands to an additional 160 MMT CO2 installed capture capacity, or the equivalent of U.S. emissions from natural gas systems and the production of cement, iron/steel, and petroleum in 2019. Significantly, expanded policy support for carbon capture unlocks new deployment opportunities in the cement, refinery, and iron/steel sub-sectors. The Central+IRA scenario projected an additional 3 MMT CO2 capture capacity deployed by 2030 and 10 MMT CO2 more by 2040 compared to the Volatile+IRA scenario.

This projected installed capture capacity across the industrial sector will approach one gigaton of captured CO2 by 2050, see Figure 4. Both Central+IRA and Volatile+IRA scenarios lead to nearly triple the cumulative volume of captured carbon by 2050 compared to the baseline cases, respectively.

Cumulative Net Captured CO2 from Industrial

Figure 4. Cumulative net captured CO2 accounts for the utilization factor at a given plant, plus reduces gross captured CO2 to account for emissions attributable to gas and power use for the capture process itself. Volatile captures 1 to 2 MMT more CO2 than 2022-Reference across the projection period.

Conclusions

The industrial sector encompasses a vast array of energy-intensive processes and is the fastest growing source of emissions in the U.S. Therefore, low-carbon innovative solutions that don’t compromise productivity are essential.

The suite of new or enhanced federal programs, investments, and incentives have demonstrably jump-started industrial decarbonization: nearly half a gigaton of captured carbon projected by 2040 under various price assumptions. Bipartisan legislation authorized billions across multiple new programs targeting basic research in, and demonstration of, cutting-edge, pre-commercial industrial decarbonization technologies. As a result of strengthened policy support, new industrial subsectors – cement, refining, and iron/steel – could economically deploy carbon capture for the first time in this analysis.

2022 has marked a new era in industrialization that jump-starts America’s innovation engine to create and commercialize low-carbon products and processes. Decarbonization policies for this trade-exposed sector should now focus on preserving economic competitiveness while also promoting American-led innovation that can be deployed globally to tackle the largest sources of future emissions.

5 Climate Policies for the 118th Congress

The story of American energy is one of innovation. And today, we’re in the middle of a true revolution that the 118th Congress has an opportunity to capitalize on.

America has reduced its total carbon dioxide emissions by more than any country in the last 20 years. And it’s largely due to American innovations in the power sector — where the U.S. is producing higher performing, lower emissions technologies to regenerate the world. That doesn’t mean we should slow down.

By 2030, the industrial sector will be the largest emitting sector of our economy. This means many of the same types of technology breakthroughs we’ve seen in advanced nuclear and energy storage will be needed in the various pathways that could tackle industrial sector emissions.

But, if we don’t get our public policy right, these technologies will be built in China or Russia instead of at home.

The rest of the world’s population is growing faster than ours, which has led to more power and industrial activity, and more emissions as they buy higher emitting technology from China and Russia.

But what if we didn’t accept that? Of course, the world needs energy… but what if it were all clean? And why can’t America be the leader?

ClearPath has outlined five big areas where conservative clean energy policy can lead to more American innovation, reduce global emissions, make energy more affordable, and strengthen our economy.

1. Implementation of the big 4 energy bills

The past five years have yielded some of the most significant bipartisan innovation and climate policies in our nation’s history, dramatically impacting expected annual public and private sector investment in energy infrastructure.

Annual Capital Investment in Energy Supply Related Infrastructure

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In November 2021, Congress enacted the bipartisan Infrastructure Investment and Jobs Act (IIJA), which funded a wide-range of clean energy demonstration programs, including carbon capture, direct air capture, energy storage, geothermal, hydrogen, and industrial. The IIJA built on many of the technology moonshots authorized in the Energy Act of 2020, which Congress passed and then-President Trump signed into law.

In August 2022, Congress also passed the CHIPS and Science Act, a bill that got significant attention for its support of the U.S. semiconductor industry, but also included big bipartisan wins to bolster scientific research and bolster American manufacturing and strengthen supply chains. This included the House Science Committee’s bipartisan modernization of the Department of Energy’s Office of Science, and an ambitious steel sector decarbonization initiative.

Congress also amended existing tax credits and established additional new incentives for clean energy. While the process that led to their enactment was partisan, for years Republicans and Democrats worked together to mainstream proposals to incentivize investment in nascent technologies, bolster the 45Q carbon capture credit to accelerate U.S. deployments, and support new and existing American nuclear generation.

The Administration is already in the process of implementing these bills. With constructive Congressional oversight and productive input from the private sector, we should have a huge head start getting new clean energy projects built and keeping America in the lead.

2. Continue support for federal energy innovation

Investing in key federal programs that advance new clean energy technologies across sectors of the economy must continue, particularly in key areas that were not prioritized in recent bipartisan legislation.

Innovation and creating jobs is part of who we are as Americans. And thanks to exciting new American technology, research at the Department of Energy, and strong bipartisan policies, we are building an amazing new suite of technologies from advanced nuclear, carbon capture for fossil energy and industrial complexes, long-duration energy storage, enhanced geothermal, and so much more.

Now, we need to move full steam ahead to get these incredible American innovations to market. One urgent example, is in advanced nuclear fuels, where the U.S. and our allies could wind up reliant on Russia if we fail to scale up domestic production capacity.

3. Enact permitting reform

Given the passage of the bipartisan Energy Act of 2020, IIJA and CHIPS and Science and other financial support in the annual appropriations process from the previous Congress, the United States will have a lot of clean energy projects ready for deployment soon.

But, simply throwing money at new technologies will not necessarily make them a reality. We need regulatory reforms that maximize deployment of clean technologies.

Right now, it takes 10 years to permit an off-shore wind farm, five years to certify a nuclear reactor design, and six years to issue a permit necessary to store billions of tons of captured CO2. That’s not good enough. Our energy innovators and project developers need more certainty and a smoother path to be able to build. We’ve heard a lot of great ideas on how to modernize and reform America’s outdated permitting process — and the best part is, we can do this all while maintaining the strongest environmental standards to protect our communities.

4. Further America’s industrial competitiveness

As I mentioned, industrial emissions are set to be the top source of emissions by 2030, surpassing the electric power and transportation sectors. The good news is America is already leading by producing cleaner industrial products than other countries around the globe. While Chinese steel is the third dirtiest in the world, American steel is among the cleanest in the world, with the second lowest CO2-intensity of any country.

One of the biggest global climate policies we can all get behind is bringing more manufacturing and more energy production back to the United States because our environmental standards are superior.

There are also exciting new R&D developments happening in steel, cement, and concrete. Policies to help get those clean industrial technologies to market will maximize America’s carbon advantage.

5. Grow U.S. clean energy exports, trade, and investment abroad

All of these policies will continue to bring down America’s carbon emissions. We must also enable U.S. leadership in GLOBAL emissions reductions.

China’s Belt and Road Initiative – their commitment to global infrastructure finance and development to tie together a huge swatch of the developing world – is immensely outpacing all U.S. export credit and development finance activity. That’s led to massive amounts of new, unmitigated Chinese coal technologies being built around the world.

China and Russia are also currently building more nuclear reactors than the U.S. There is an array of new and advanced American designs, but Russia currently accounts for about two-thirds of reactor exports worldwide.

Meanwhile, our export credit agencies are lagging far behind. The Program on China and Transformational Exports at the Exim Bank only authorizes a specific additional focus on renewable technology and energy storage.

The program does not focus U.S. export credit on technologies that could offer a real like-for-like substitute to subcritical coal plants, e.g., nuclear technology or natural gas with carbon capture. So, because we have not provided realistic alternatives, these nations are naturally choosing cheap Chinese coal technology.

An absolute no-regrets policy shift would be to expand the energy programs at places like Exim and the Development Finance Corporation to include all clean energy sources — like nuclear, natural gas and coal with carbon capture, and enhanced geothermal – so we put all clean energy technologies on the same footing and enable more financing options for key technologies.

There is a path to success that makes solving the climate challenge possible, and faster. We will continue to develop and advance policies that accelerate breakthrough innovations to reduce emissions in the energy and industrial sectors.

America’s economy is the strongest on the planet. And if we allow our free-market advantage to work, we will lead on lowering emissions, lowering costs, and America will win.

Recommendations for Implementing the Largest Clean Energy Investment Programs in U.S. History

In November 2021, Congress enacted the bipartisan Infrastructure Investment and Jobs Act (IIJA), which funded a wide-range of clean energy demonstration programs, including carbon capture, direct air capture, energy storage, geothermal, hydrogen, and industrial. The IIJA built on many of the authorizations in the Energy Act of 2020, which Congress passed and then-President Trump signed into law.

Now that Congress has allocated the funding, it is important for DOE to implement the IIJA demonstration programs consistent with Congressional direction and maximize the impact of taxpayer resources. DOE’s track record of funding large-scale demonstration projects is mixed, but the Department can increase the chances of success by adhering to principles of responsible program management, including rigorous merit review standards and adopting a milestone-based approach, so that projects with the most technical merit get funded.

As DOE prepares to issue funding opportunities in the coming weeks and months, ClearPath has developed a series of memos with recommendations for implementing the IIJA demonstration projects. Each of these memos includes similar principles related to rigorous milestones and responsible stewardship, but each also includes unique recommendations tailored to specific technologies. Brief summaries are included below.

Carbon Capture, Utilization, and Storage (CCUS) Demonstration Program

Read the memo by Jena Lococo

The IIJA included nearly $12 billion for CCUS programs, with nearly $2.54 billion for a demonstration program authorized by the Energy Act. DOE should fund projects with the lowest technical risk and highest potential to deliver on time and on budget. Projects should be large enough to demonstrate on a commercial scale, but not so large that the complexities from scaling up from pilot testing are unclear. DOE should also ensure projects have stable revenue streams and offtake agreements. Finally, the federal government should expedite permitting under the National Environmental Policy Act (NEPA) and EPA’s Underground Injection Control Class VI requirements.

Carbon Dioxide Infrastructure Finance and Innovation Act (CIFIA) Program

Read the memo by Grant Cummings

In the IIJA, Congress appropriated $2.1 billion for the CIFIA program to support the buildout of infrastructure to transport CO2 from where it is captured to where it can be utilized or securely sequestered underground. In addition to this funding, the IIJA allows eligible proposals to take advantage of a secured loan of up to 80% of the project cost. DOE should prioritize geographically diverse projects and be mindful of infrastructure routes already identified by project developers. The federal government should also modernize the NEPA process and couple CIFIA projects with other CCUS programs supported within the IIJA to ensure the deployment of critical CO2 infrastructure.

Direct Air Capture Hubs

Read the memo by Savita Bowman

The IIJA provides $3.5 billion for four regional Direct Air Capture (DAC) hubs, each with the capacity to capture 1 million metric tons (MMt) of CO2 annually. In selecting hub locations, DOE should leverage existing infrastructure and consider co-locating with DOE’s hydrogen hubs and CCUS demonstration sites to leverage pipeline infrastructure. DOE should also set clear timelines and milestones, including ensuring that projects have secured or are working to secure an offtake agreement for their captured CO2 at the time of application.

Energy Storage Demonstration Programs

Read the memo by Alex Fitzsimmons

The IIJA included $505 million for energy storage demonstration projects that were authorized by the Energy Act. DOE should prioritize a diverse portfolio of long-duration, grid-scale energy storage technologies capable of achieving DOE’s performance goals under the Energy Storage Grand Challenge and Storage Shot. Moreover, DOE should develop energy storage technologies that can be manufactured in the U.S. and exported globally, advance technologies that strengthen U.S. energy security and do not depend on supply chains controlled by foreign adversaries, and leverage synergies with other IIJA demonstration programs.

Enhanced Geothermal Systems (EGS) Demonstration Program

Read the memo by Alex Fitzsimmons

The IIJA included $84M for EGS demonstration projects from FY22 to FY25, as authorized by the Energy Act. The Energy Act directed DOE to fund four geothermal demonstration projects for power production or direct use, utilizing diverse geologic settings and development techniques. As such, DOE should prioritize technology diversity, geographic diversity, and use case diversity. DOE should also adopt a milestone-based approach and coordinate with DOE’s new Office of Clean Energy Demonstrations (OCED), as there are several other programs under OCED for which geothermal is eligible to compete for funding.

Industrial Demonstration Program

Read the memo by Alex Fitzsimmons

The IIJA included $500 million for industrial emissions reduction demonstration projects that were authorized by the Energy Act. In the Energy Act, Congress directed DOE to focus on a wide range of industrial processes and technologies, with an emphasis on heavy industrial sectors such as iron and steel, cement and concrete, and chemicals. As such, DOE should focus on developing a demonstration program that is both sector-specific and technology-inclusive. DOE should prioritize investments in heavy industrial sub-sectors, leverage synergies with related DOE demonstration programs, and coordinate the demonstration program with the Advanced Manufacturing Office’s (AMO) proposed Manufacturing USA Institute.

Regional Clean Hydrogen Hub Program

Read the memo by Natalie Houghtalen

The IIJA included multiple hydrogen provisions, including $1 billion for a Clean Hydrogen Electrolysis Program, $500 million for a Clean Hydrogen Manufacturing program, and $8 billion for Regional Clean Hydrogen Hubs. Regarding the hydrogen hubs, DOE should consider awarding more than four hubs (the statutory minimum), pursue a multi-solicitation and milestone-based approach, clarify the role of the DOE National Laboratories, establish thoughtful and realistic deadlines, prioritize projects that focus on multi-sector integration and match hydrogen production with end use, and co-locate the fossil-based hydrogen hubs with the IIJA CCS projects.

Conclusion

Congress’ bipartisan IIJA demonstration programs represent an unprecedented opportunity to scale and de-risk emerging clean energy technologies. With thoughtful implementation that focuses on maximizing the impact of taxpayer resources and upholding the principles of responsible project selection and management, DOE can help position the U.S. to build cleaner faster and lead the world in the commercialization, manufacturing, and export of clean energy for decades to come.

Now or Never: The Urgent Need for Ambitious Climate Action

U.S. House Committee on Science, Space, and Technology

Below is my testimony before the U.S. House Committee on Science, Space, and Technology, entitled “Now or Never: The Urgent Need for Ambitious Climate Action” on April 28, 2022.

Watch Jeremy’s Opening Remarks

Good morning Chairwoman Johnson, Ranking Member Lucas, and Members of the Committee. My name is Jeremy Harrell, and I am the Chief Strategy Officer of ClearPath.

ClearPath is a 501(c)(3) organization whose mission is to develop and advance policies that accelerate breakthrough innovations that reduce emissions in the energy and industrial sectors. We develop cutting-edge policy solutions on clean energy and industrial innovation, and we collaborate with public and private sector stakeholders on innovations in nuclear energy, carbon capture, hydropower, natural gas, geothermal, energy storage, carbon dioxide removal, and heavy industry to enable private-sector deployment of critical technologies. An important note: we are supported by philanthropy, not industry.

Thank you for the opportunity to testify today and for holding this important hearing. Climate change is an urgent challenge that merits significant action at every level of government and the private sector. The recent Intergovernmental Panel on Climate Change (IPCC) reports demonstrate the ramifications of insufficient action and the opportunity before us if the public and private sector partner to expeditiously deploy low-emissions technologies. Working Groups One and Two showed that climate change is occurring, is driven largely by global industrial activity, and that reaching net-zero emissions will be needed to avoid the impacts of climate change.

The most recent installment of Working Group Three considers the most effective ways to reduce and potentially reverse emissions going forward. The IPCC makes several key findings stressing that the world is not deploying existing clean energy technologies fast enough, and the world is not investing enough into the technologies needed to go all the way to net-zero.

The United States is in a unique position to lead global action while creating jobs in new industries, reasserting America’s global technology and resources leadership over Russia and China, and driving down global emissions. Technological innovation, the American entrepreneurial spirit, and targeted free market incentives have made the United States one of the most carbon efficient economies in the world.

There are countless examples across the energy and industrial sectors. A recent life cycle analysis conducted by the Department of Energy’s (DOE’s) National Energy Technology Laboratory on U.S. liquefied natural gas (LNG) exports shows that American LNG can be up to 30% cleaner than Russian natural gas. While Chinese steel is the third dirtiest in the world, American steel is among the cleanest in the world, with the second lowest CO2-intensity of any country. Emissions from mining support services in China, including many minerals required for deploying clean energy at scale, are over 5 times higher than if those activities were conducted in the United States.

The ongoing aggression by Russia underscores the need for the United States to both be energy secure and provide our allies access to technologies and resources they need to reduce their reliance on adversarial nations while reducing emissions. For example, nearly 50 countries have markets for advanced nuclear power, a potential ~$360 billion per year market opportunity, but Russia currently accounts for about two-thirds of reactor exports worldwide. It is essential that the array of innovative new American nuclear technologies nearing commercialization accelerate towards the global market. The United States can also be a highly competitive exporter of clean hydrogen to meet supply gaps in both the European Union and Japan. The U.S. has both a cost and energy security advantage relative to our Russian, Middle Eastern, and Australian competitors when exporting hydrogen produced from natural gas with a high rate of carbon capture. This is due to abundant U.S. gas supplies and current policy, like the 45Q carbon capture utilization and storage (CCUS) tax credit, which has no international equivalent.

The House Science, Space, and Technology Committee is uniquely positioned to drive new clean energy technology forward through investments in American ingenuity and research. I would like to highlight past strategies that have worked and the immediate steps that must be taken to both innovate and deploy at scale.

Most recently, your landmark bipartisan Energy Act of 2020 laid the blueprint for essential demonstration programs in a number of the areas highlighted by the International Energy Agency (IEA), the IPCC, and most other global energy and climate experts. This Committee continues to be critically important in developing policies that support new clean energy technologies to reduce emissions and grow the economy.

With this in mind, I will discuss four key priorities this Committee should keep in mind as it continues to lead on clean energy innovation:

The Role of Innovation in Reducing Emissions

Past investments in innovation, often led by this Committee, have paid off. Solar, wind, natural gas, and battery costs have fallen precipitously over the last decade. These technologies each contribute to reducing emissions, and none of them would be as cost-effective today if it were not for investments made by the United States over the last 50 years.

Take solar for example. In 2011, the U.S. The Department of Energy (DOE) launched the SunShot Initiative in partnership with industry and think tanks with the goal of reducing the costs of solar energy by 75 percent, allowing solar to compete at large scale with other forms of energy. The program was funded to support the development, commercialization, and manufacturing of advanced solar energy technologies. It was a smashing success: the cost of utility-scale solar was down from $0.28 per kilowatt-hour in 2010 to $0.06 per kilowatt-hour in 2017, achieving the 2020 SunShot goal three years ahead of schedule. Global solar demand has skyrocketed in part due to efforts like SunShot that reduced the cost of wide deployment.

And with the ongoing crisis in Ukraine, it goes without saying how important clean American natural gas is today, both domestically and to our allies around the world. There is no better example of how the public and private sectors can work together on clean energy innovation than the shale gas boom in America.

In the 1980s, Texas entrepreneur George Mitchell figured out how to break up shale rocks to release the natural gas stuck inside. This process, called hydraulic fracturing, initially got off the ground with support from DOE, which cost-shared R&D and demonstrations in the 1970s and 1990s, as well as tax credits from the 1980s to early 2000s.
These DOE projects included demos of hydraulic fracturing, horizontal drilling, 3-D seismic imaging, diamond headed drill-bits, and, ultimately, combined-cycle natural gas turbines. These now produce 24/7 reliable power that was more affordable than anything else on the U.S. grid over the past decade. Both this early stage investment, and the production tax credit, together more than $10B, expired as the technology matured.

Now we have a $100 billion annual shale gas market in America — not a bad return on investment. Continued investment in innovative technologies like carbon capture will further reduce the emissions profile of American-produced natural gas. Several companies are aggressively pursuing these technologies and 45Q will play an important role in meeting the innovation needs. Given the projected increase in global demand for natural gas, American-produced natural gas will be important to both facilitating lower emissions and improving global energy security.

Natural gas, solar, wind, and energy efficiency technologies have led to a 40 percent reduction in power sector emissions in the U.S. in the last 15 years, while GDP has grown more than 60 percent. This demonstrates the value of innovation for both the environment and the economy. But, more innovation is needed. While the costs of mitigation have come down in the previously mentioned areas, many of the technological solutions we need by 2050 are still too expensive to be commercially cost-effective in the near term. This is a clear place where government investment is warranted, and U.S. firms are well-positioned to lead.

The good news is that we know where to focus our efforts going forward. The report highlights several technology gaps for further innovation support that the United States is uniquely positioned to help solve. These gaps include methods for reducing emissions from heavy industry, carbon capture and carbon dioxide removal technologies, and clean hydrogen applications.

New frontiers in energy innovation are quickly emerging. One crucial technology area is clean hydrogen. Under the right circumstances, clean hydrogen produced from renewables, nuclear, or fossil energy with CCS can play a key role in reducing emissions in the industrial, transportation, and power sectors. The IPCC agrees, with the primary low carbon scenarios all including a significant energy-sector role for H2. Between the $8 billion in funding for clean hydrogen hubs provided to the DOE in the Infrastructure Investment and Jobs Act (IIJA), the 45Q tax credit, and the need for balancing excess renewable power, a number of new clean hydrogen production facilities are being established. Investments today will present immense domestic and international opportunities.

And the actions we take over the next decade are essential to quickly deploying those technologies in a cost-effective way. Every scenario that successfully reaches net-zero on a timeline sufficient to avoid significant impacts requires accelerated clean energy deployment through 2070. It is crucial to simultaneously deploy cost-effective solutions today while supporting R&D for the technologies needed tomorrow. Additionally, obstacles must be removed to allow clean energy projects to be permitted faster.

Accelerating these technologies will require robust public-private financing efforts. The last year has been an exciting time for clean energy startups and technological innovation — at least here in the U.S. BloombergNEF estimates that venture capital and private equity invested more than $53 billion in climate-related technologies. Corporate net-zero commitments were followed by more than $23 billion in corporate venture funds invested in businesses in the climate-technology sector. Deals were cut, MOUs were signed, and project partnerships were solidified that lay the foundation for an array of first-of-kind technology deployments eyeing mid-2020 operations. That’s all positive development, but it still is too low for the scale required to achieve deep emissions reductions by mid-century.

The question is how to drive down the cost of lower-emissions technology in a way that can help stimulate institutional and private capital in industrialized and nonindustrialized countries and to build those technologies at the pace required to meet the challenge. If these new technologies are developed, produced and commercialized here in the United States, our workforce will greatly benefit and American-made technology will help decarbonize those developing nations.

Implementing the Energy Act of 2020

As you know, one of the biggest advancements in clean energy and climate policy in over a decade is the monumental Energy Act of 2020. Thanks to the leadership of Chairwoman Eddie Bernice Johnson (D-TX), Ranking Member Frank Lucas (R-OK), and other advocates on this Committee, the United States has a wholly bipartisan, clean energy innovation roadmap that helps accelerate technology breakthroughs needed to meet emissions reduction goals.

The Energy Act modernized and refocused DOE’s research and development programs on the most pressing technology challenges — scaling up clean energy technologies like advanced nuclear, long-duration energy storage, carbon capture, and enhanced geothermal. Crucially, across all these technologies, DOE is now empowered to launch the most aggressive commercial scale technology demonstration program in U.S. history. The bill sets up a moonshot of more than 20 full commercial scale demos by the mid-2020s.

While you all know this bill well, I wanted to highlight five big successes from the Energy Act of 2020 that were led by Science Space & Technology Committee members.

First, the Energy Act repurposed the DOE Office of Fossil Energy to focus on carbon capture, utilization and storage technologies, and it authorized a comprehensive carbon capture R&D program, including six, large, first-of-a-kind demonstrations for natural gas, coal, and industrial facilities. In addition, it starts serious research and demonstration on carbon removal technologies via creative X-prizes on removing carbon dioxide from the atmosphere. Specifically, it included the following two bills:

These policies, combined with the recent enhancements to the 45Q carbon capture utilization and storage credit, have furthered United States global leadership in the development of CCUS and driven dramatic project growth. 2021 was the largest single-year increase in the global pipeline, and the United States led the way with nearly half of the more than 70 new project announcements.

Second, it aims to reinvigorate advanced nuclear energy by formally authorizing the moonshot Advanced Reactor Demonstration Program (ARDP) and part of the Nuclear Energy Leadership Act (NELA). Moreover, advanced nuclear reactors cannot run without advanced fuel – which is why the Energy Act also creates a temporary program to develop a domestic supply chain to produce High-Assay Low-Enriched Uranium (HALEU), which is required by most advanced reactors under development today but is only commercially available from Russia, an option which is no longer tenable.

These policies were particularly important given that there are several new American nuclear energy technologies approaching commercialization that are smaller, pair flexibly with renewable energy, and are walk-away safe. Nearly 10 new advanced reactor licenses, from American entrepreneurs like Oklo, X-energy, TerraPower, Ultra Safe Nuclear Corporation, General Electric Hitachi, Kairos Power, and NuScale could come before the Nuclear Regulatory Commission (NRC) by 2025. All these companies are looking at building their reactors domestically over the next decade. Accelerating U.S. fuel security and driving down the cost of key components bolsters their ability to contribute to near-term reduction efforts.

Third, the Energy Act of 2020 establishes a comprehensive grid-scale storage demonstration program, effectively authorizing the Energy Storage Grand Challenge that former Energy Secretary Dan Brouillette launched at DOE and that now Secretary Jennifer Granholm has continued – along with a joint initiative with the Department of Defense (DOD) to develop long-duration storage technologies and a program to provide technical assistance to rural and municipal electric utilities. The bill also authorized the Better Energy Storage Technology (BEST) Act to reorient the federal grid-scale storage research, development, and demonstration program around ambitious technology goals necessary to facilitate important breakthroughs for the grid of the future. Related private sector growth has followed. In 2021, the U.S. built more than 3.5 GW of energy storage, which was more than double the amount installed in 2020. Notably, the Pacific Northwest National Laboratory broke ground on the Grid Storage Launchpad test facility on April 21 in Washington, a state of the art user facility to catalyze new grid-scale storage solutions.

Fourth, it includes significant provisions like the Advanced Geothermal Innovation Leadership (AGILE) Act for advanced always-on renewables like geothermal energy, including programs to demonstrate technologies to enable geothermal anywhere. There are exciting opportunities to transfer technologies from the oil and gas industry and demonstrate the co-production of critical minerals with geothermal energy. Since late 2019, 12 new geothermal power purchase agreements (PPAs) have been signed and companies have nearly 60 active developing projects and prospects across nine U.S. states. Meanwhile, California’s recent order for 1,000MW of geothermal power to enhance grid reliability by 2026 could dramatically increase the scale of geothermal development.14It represents a huge opportunity, and we were excited to see the Department launch the new cutting-edge technology demonstration program authorized by this Committee’s good work just last week.

Fifth, the bill includes The Clean Industrial Technologies Act (CITA), which starts a comprehensive crosscutting clean industrial technologies R&D program to lower the cost of cleaner materials and manufacturing processes, especially for energy-intensive industrial sub-sectors such as steel, cement, and chemicals. As industrial emissions represent a growing share of global emissions, it is increasingly important to develop cost-effective technologies to reduce emissions in heavy industrial sectors. Fortunately, U.S. industries tend to be among the cleanest in the world, which is a competitive advantage we should leverage in the trade-exposed manufacturing sector.

In addition, the Energy Act of 2020 contains significant reauthorizations for solar and wind, critical minerals, grid modernization, the DOE’s Office of Technology Transitions, ARPA-E, and much more.

All of those policies and technological advancements are only as useful as implementation. The passage of the Infrastructure Investment and Jobs Act (IIJA) infused over $20 billion into the deployment of this road map. A few examples of what the IIJA included:

Importantly, if implemented correctly, these investments will be used to develop significant projects across the nation. It is important this Committee exercise its oversight authority over the next 18 months to ensure the Department is adhering to the deadlines directed by Congress while constructing programs that catalyze breakthroughs in these key clean technology focus areas.

Building Cleaner Faster

As we reimagine our energy and industrial systems using exciting new technologies, permitting modernizations must keep pace. The transition will require tens of thousands of miles of new pipelines carrying hydrogen and captured carbon dioxide from power plants and industrial facilities, new transmission infrastructure to carry electricity around an increasingly electrified country, and new nuclear reactors and power plants sited everywhere. This will be the largest continental construction project in history.

But there is a huge obstacle. Every single one of these clean infrastructure projects will need permits — often dozens of them — at the federal, state and local levels. A report issued by CEQ in June 2020 showed that the average environmental impact statement (EIS) took 4.5 years to complete, with one quarter taking upwards of 6 years. This timeline poses a significant risk to being able to reach the decarbonization goals recommended by the IPCC.

Given our shared goals, the federal government should be working with project developers at every level on permitting projects, not against them. Yet, the policies being put in place right now are restricting development. Just last week, the Council on Environmental Quality finalized its Phase 1 process on the National Environmental Policy Act Implementing Regulations Revisions. This rulemaking restored regulatory provisions from the pre-2020 NEPA regulations, which will open the door to more litigation, create interagency conflict, and cause undue delays and costs to critical clean energy projects. Not to mention the Federal Energy Regulatory Commission’s Draft Policy Statement released earlier this year that proposes sweeping changes to the evaluation of climate impacts from natural gas infrastructure. If we can’t build natural gas pipelines, how will we ever build CO2 and hydrogen pipelines?

We should set a big, bold goal to modernize regulations, improve the bureaucratic process, and build projects in less than two years. There are some common-sense measures that could be taken that would drive towards that goal.

Future reforms should prioritize projects that significantly reduce emissions, encourage siting of projects in areas that will minimize environmental impact and maximize economic benefit, such as brownfield sites, and accelerate legal dispute resolution. This can all be done without compromising environmental stewardship or the public’s opportunity to be involved.

Making the permitting process more efficient and eliminating unnecessary regulatory hurdles can both ensure stewardship of taxpayer resources and scale clean energy rapidly.

Expanding the Roadmap from Clean Energy to Further Innovation

There are two areas that the IPCC report, the International Energy Agency’s NetZero by 2050 report, and countless other analyses have clearly concluded are essential, and that this Committee could tackle: one, innovations for heavy industrial processes like steel, cement, concrete and chemicals; and two, greatly expanding technologies for carbon dioxide removal.

Industrial Sector

In 2020, emissions from industrial facilities were roughly as high as those from power plants, or 24% of all U.S. emissions. For the very first time, industrial emissions were neck and neck with the power sector, and it is likely that industrial emissions will remain higher than power sector emissions going forward. By 2030, industrial facilities are expected to be the top source of U.S. emissions, exceeding those from power plants and vehicles.

ClearPath’s guiding focus in the power sector is that achieving meaningful emissions reductions emissions will require cleaner and more affordable technologies. The same goes for the industrial sector. Let me explain.

First, we need more RD&D. There are already some policies we could build from, like the Clean Industrial Technology Act, which was included in the Energy Act of 2020. In addition, there is legislation that Congress should pass. Committee Members Anthony Gonzalez (R-OH) and Conor Lamb (D-PA) authored The Steel Upgrading Partnerships and Emissions Reduction (SUPER) Act, which is moving forward as part of the U.S. House’s America COMPETES Act of 2022. The SUPER Act strengthens the competitiveness of American manufacturing by developing technologies to reduce emissions of conventional steelmaking. Similar legislation could be adopted for cement and concrete.

We also need to create conditions for U.S. manufacturers to thrive. Some industries operate on very low margins and face immense international competition. We cannot disadvantage American industry by saddling them with extra compliance costs or more expensive technologies that drive manufacturing overseas. And more importantly, we should focus on returning manufacturing to the U.S., where production is more efficient and environmental performance is far superior to places like China or Russia. For example, two-thirds of U.S. steel is already produced using recycled steel and an all-electric process – and new processes are being demonstrated that make high-grade steel. American steel has the second lowest CO2-intensity of any country, and investors are clear they want clean and affordable steel. America can lead the steel industry to meet that demand.

However, many industries need heat at high-temperatures and intensities and largely cannot be electrified with renewable energy. It is also important to note that many American producers have recently built manufacturing plants that will remain in operation for decades, meaning it’s unrealistic to expect the industrial sector to fully decarbonize by mid-century. Similar to how the U.S. scaled up natural gas and solar power or how it is working to commercialize energy storage and advanced nuclear with the Grid Storage Launchpad and Advanced Reactor Demonstration Program, we can apply our talents for creating market-driven goals to commercialize innovative technologies that will reduce industrial sector emissions.

Carbon Dioxide Removal

Even with all of the exciting innovations, nearly all projections rely on some degree of carbon dioxide removal (CDR) to accelerate emissions reductions and offset residual emissions, like in difficult-to-decarbonize sectors like heavy industry. Long term, there will likely need to be removal of prior emissions to bring total emissions to be net-negative. According to analysis conducted by the National Academy of Sciences and the IPCC, the United States will likely need to remove about 2 gigatons of carbon dioxide every year by mid-century to reach net-zero — that’s about 30% of U.S. 2017 greenhouse gas emissions. Globally, carbon removal could be more than 10 gigatons of carbon dioxide per year by 2050 with an additional removal capacity up to 20 GtCO2 per year by 2100.

Robust policy support is required, but policymakers are not starting from scratch here either. The bipartisan infrastructure bill included $3.5 billion to build direct air capture “hubs,” as well as over $100 million in funding for the Energy Act’s direct air capture prize competition.

There’s more that can be done to expand on the great carbon removal efforts in the Energy Act. One critical area is research and development into hybrid carbon removal technologies that combine the best attributes of natural and technological solutions.

There are policy ideas to build off of the Energy Act of 2020 by authorizing the first comprehensive federal carbon removal research and development program, and the IIJA, which invested $3.6 billion in direct air capture.

If the scope of DOE’s carbon removal and storage technology program was expanded, creating a path for DOE to research and evaluate the feasibility of a diverse portfolio of CDR and storage pathways, we would be able to quantify the net impact of various solutions rather than relying on the success of one specific technology. Carbon removal innovation, beyond traditional tree planting, is currently in its infancy; therefore, if investments are constrained to only a handful of recognized opportunities, then the most competitive and cost-effective CDR technologies may never be realized. One method would be to establish a pilot reverse auction purchasing program to accelerate carbon removal market commercialization.

We are seeing exciting private sector investments from the technology sector and the oil and gas sector. In recent years, companies with carbon reduction goals have invested more than $3 billion into carbon removal technologies. For example, Oxy Low Carbon Ventures has a planned direct air capture plant in Texas that could pull 500,000 tons of carbon dioxide out of the air annually. And just this month, a major investment spearheaded by finance company Stripe will put $925 million toward carbon dioxide (CDR) removal efforts. Stripe’s Frontier fund, backed by tech companies including Alphabet, Meta, and Shopify, will support the scaling up of CDR startups and reduce the cost of CO2 offsets.

Conclusion

This Committee has been at the forefront of Congressional efforts on clean energy innovation for many years. Importantly, you have an incredible record of bipartisanship marked by the enactment of the Energy of 2020.

ClearPath greatly appreciates what this Committee has accomplished, and we look forward to supporting your efforts in the months ahead.

Thank you again for this opportunity, and I look forward to the discussion.