United States
US government policies on industrial decarbonisation
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Net zero target
Addressing the climate crisis requires scaling existing solutions, while investing in innovation to develop additional solutions, enabling multiple pathways to reach global net zero emissions. The US has established an economy-wide target of reducing its net greenhouse gas emissions by 50-52% below 2005 levels, by 2030. US climate policies and regulations demonstrate its commitment to the creation of quality work and jobs as an integral part of its efforts to combat climate change.
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Further information: US NDC; The long-term strategy of US; 2030 GHG Target
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Key climate policies
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The Bipartisan Infrastructure Law (2021)
The Bipartisan Infrastructure Law (BIL) aims to tackle the climate crisis and advance environmental justice. The law includes more than $62 billion for the US Department of Energy (DOE) to deliver a more equitable clean energy future for the American people and includes over $10 billion for carbon capture, direct air capture, and industrial emission reduction.
In December 2021, DOE established a new Office of Clean Energy Demonstrations to oversee the $21.5 billion in BIL funding for clean energy demonstration projects using innovative technologies such as clean hydrogen, carbon capture, grid-scale energy storage, and advanced nuclear reactors.
The law earmarks:
- $2.54 billion for the Carbon Capture Demonstration Projects Program
- $2.1 billion for the Carbon Dioxide Transportation Infrastructure Finance and Innovation Program
- $937 million for the Carbon Capture Large-Scale Pilot Programs
- $310 million for the Carbon Utilization Program
- $500 million for the Clean Energy Demonstration Program on Current and Former Mine Land including fossil-fuelled electricity generation with carbon capture, utilization, and sequestration
Further information: Bipartisan Infrastructure Law
Inflation Reduction Act (2022)
The most significant climate legislation in US history, the Inflation Reduction Act (IRA) will fundamentally alter the carbon capture landscape. With $369 billion allocated for clean energy and climate change mitigation initiatives, the IRA is expected to reduce America’s greenhouse gas emissions (GHG) by around 40%, compared to 2005-levels.
The bill will support the production of clean hydrogen. The size of the credit scales with the amount of emissions reductions, achieving a maximum of $3/kg-H2 for a project with near zero emissions.
The bill’s CCUS funding will:
- Substantially increase the amount of 45Q credits for domestic CCUS projects
- Make it easier for CCUS projects to qualify for 45Q credits
- Provide significant new avenues for monetising 45Q credits
- Extend the deadline to begin construction on 45Q credit-eligible projects from 2026 to 2033
Further information: Inflation Reduction Act, Leading the way: America boosts industrial carbon capture
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Carbon pricing
Regional Greenhouse Gas Initiative
The Regional Greenhouse Gas Initiative (RGGI) is the first market-based, cap-and-invest regional initiative in the US. Within the RGGI states, fossil-fuel-fired electric power generators with a capacity of 25 megawatts or greater ('regulated sources') are required to hold allowances equal to their CO2 emissions over a three-year control period. It is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, Vermont, and Virginia to cap and reduce power sector CO2 emissions.
RGGI is composed of individual CO2 Budget Trading Programs in each participating state.
Further information: RGGI
California Cap-and-Trade Program
The Cap-and-Trade Program is a key element of California’s strategy to reduce GHG emissions. It complements other measures to ensure that California cost-effectively meets its goals for GHG emissions reductions. This regulation creates a powerful economic incentive for significant investment in cleaner, more efficient technologies. The California Cap-and-Trade Program (45Q) began operation in 2012 and the program applies to emissions that cover approximately 80% of the state’s GHG emissions.
Further information: Cap-and-Trade Program
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Hydrogen strategy
$9.5 billion in hydrogen funding in Infrastructure Law
- DOE establishes BIL’s $9.5 billion clean hydrogen initiatives.
- Public input is needed on new hydrogen hubs, clean hydrogen manufacturing programs to decarbonize industry, and transportation sectors.
- Clean hydrogen is crucial to DOE’s strategy for achieving President Biden’s goal of a 100% clean electrical grid by 2035 and net zero carbon emissions by 2050.
Further information: Bipartisan Infrastructure Law
$8 billion towards developing four clean hydrogen hubs
- BIL authorizes and appropriates $8.0 billion over the five years encompassing fiscal years 2022 through 2026 for the development of at least 6-10 H2Hubs that:
- Aid achievement of the clean hydrogen production standard.
- Demonstrate the production, processing, delivery, storage, and end use of clean hydrogen.
- Facilitate the development of a national clean hydrogen network.
- CCS is an integral part of the US Hydrogen strategy and at least one of the hubs will use fossil fuels as a feedstock along with CCS.
Further information: Hydrogen Program Plan, US DOE Funding Opportunity Announcement
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Other policies
The US Environmental Protection Agency has recently proposed new regulations which would require all large fossil fuel power plants to either use carbon capture technology by 2035, or to deploy low carbon Hydrogen to achieve equivalent emissions carbon by 2038. While likely to be subject to legal challenge, if implemented the regulations will provide a further incentive for deployment of carbon capture technology.
Funding
Recent CCUS funding
$6 billion in March 2023 to reduce GHG emissions in energy-intensive industrial subsectors
On Mar. 8, 2023, the U.S. DOE issued a Funding Opportunity Announcement (FOA) for approximately $6 billion to significantly reduce greenhouse gas emissions in energy-intensive industrial subsectors through transformational, commercial-scale demonstration projects. This funding opportunity has three topic areas:
- Near-Net-Zero facility building projects
- Facility-level large installations and overhaul retrofits
- System upgrades and retrofits for critical unit operations or single process lines within existing facilities
OCED expects to make up to 55 awards between $35-500M each with a minimum of a 50% cost-sharing from the awardees.
Further information: Funding Opportunity
$10 billion between 2022-2025 under the Bipartisan Infrastructure Law declared in July 2022
The US DOE’s first $2.54 billion investment from BIL funds the Carbon Capture Demonstration Projects Program and Carbon Dioxide Transport / Front-End Engineering Design (FEED) Program.
These two programs will advance carbon capture demonstration projects and expand regional pipeline networks to transport CO2 for permanent geologic storage or conversion into valued end uses, such as construction materials. The six facilities employing integrated CCS demonstration systems will be:
- Two projects designed to capture CO2 from a coal electric generation facility
- Two projects designed to capture CO2 from a natural gas electric generation facility and
- Two projects designed to capture CO2 from an industrial facility not purposed for electric generation (AOI-3).
These programs aim to catalyse investments in clean energy and advance President Biden’s goal of a net zero GHG emissions economy by 2050 while creating good-paying jobs and economic opportunities.
Opening Date: OCED plans to issue the FOA in the August/September 2022 timeframe
Further information: Funding Opportunity
$937m for Carbon Capture large-scale pilot programs
Further information: Carbon capture large scale pilot programs
$2.5bn for six projects through the Carbon Capture Demonstration Program
Further information: Carbon Capture Demonstration Projects Program
Wider industrial decarbonisation funding opportunities
$369 billion towards climate change in the proposed Inflation Reduction Act 2022
The IRA 2022 dedicates $369 billion to fight climate change. CCUS would see a major boost in 45Q credits with $3.2 billion dedicated to CCUS tax credits and enhancements made to 45Q.
Further information: Inflation Reduction Act
$62 billion to deliver a more equitable clean energy future in Bipartisan Infrastructure Law
The BIL includes more than $62 billion for the US DOE to deliver a more equitable clean energy future for the American people.
Further information: Bipartisan Infrastructure Law
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