Out of masterresource
By Robert Bradley Jr – March 7, 2023
“ExxonMobil wants more: an ‘initial’ increase in the tax credit to around $100 per tonne (up from $85) and an extended entitlement period to 30 years (up from 12 years). And ‘Provide a $10 billion grant to support Houston infrastructure development…’”
“Carbon capture and storage is a ‘loss leader’ for ExxonMobil to officially greenwash. For the Biden administration, CCS is a bribe that puts pressure on the largest energy company.”
Yesterday’s post detailed ExxonMobil’s abandonment of its biofuel (algae) venture, which after more than a decade of effort and hundreds of millions of dollars in investments has been completely uneconomical. But the company’s Low-Carbon Solutions business has something much bigger in the works: carbon capture and storage (CCS), touted as “providing industrial solutions needed to reduce emissions during the energy transition.” (Ouch! ExxonMobil is advocating “the energy transition” away from its main products oil and gas.)
CC&S has a free market side, one that uses CO2 to improve oil recovery. This worked for decades, no taxpayer or US Department of Energy needed. But today’s initiative doesn’t put the CO2 to work, it buries it underground to no longer be used, with a lot of taxpayer and shareholder money. A feel-good engineering achievement that destroys values instead of creating them, from a consumer/economic point of view.
Subsidies for CC&S go back to the US Recovery and Reinvestment Act of 2009.  Various laws and IRS interpretations then resulted in a tax credit of up to $45 per ton. Not enough, ExxonMobil and other rent-seekers complained. The Biden administration stepped in with the ExxonMobil-backed Inflation Reduction Act of 2022. Tim Mullaney wrote in ESG Impact:
The key to the sudden flood of [CC&S] Activity is the inflation mitigation law…. The law increased an existing carbon capture tax credit from $45 to $85 per tonne, Goldman said, saving the Exxon/CF/Enlink project up to $80 million a year. Credits for captured carbon used underground to boost production of more fossil fuels are lower at $60 per ton.
But ExxonMobil now wants more: an “initial” increase in the tax credit to about $100 a ton (up from $85) and an extended mining period to 30 years (up from 12). And “Provide a $10 billion grant to support Houston’s infrastructure development by expanding current US Department of Energy programs beyond research, development, and demonstration (RD&D).”
Here’s the pitch from Erik Oswald, ExxonMobil’s vice president of strategy and advocacy, Low Carbon Solutions (founded April 2022):
- Policies that were enacted when carbon capture and storage technology was in its infancy are now outdated and need to be adjusted. For example, the federal government has regulations for extracting oil and natural gas from underground, but none for injecting CO2 far underground for safe and permanent storage.
- Politicians should support project development to encourage investment. Funding available under the federal carbon capture and storage tax credit should be expanded to provide similar support as other low-carbon technologies such as wind and solar. The rules should be adjusted to reflect the long planning and construction phases of carbon capture and storage projects.
- Governments can provide financial support to build the necessary shared infrastructure, such as B. pipelines to support. As with other transport infrastructure, such as highways, incentives such as direct loans, loan guarantees and credit support can provide crucial support for the development of large-scale carbon capture and storage.
And ExxonMobil’s outlined agenda in CC&S:
Improving CCS Production Tax Credit (45Q) for Non-EOR (Enhanced Oil Recovery)
- Increase in value from the current $85 to approximately $100 per ton
- Extend the funding period from the current 12 years to 30 years
- Eliminate the deadline for the start of construction
Ensure government approval for CO2 storage
- In particular, allow offshore storage of CO2 from sources other than coal
- Authorize the Bureau of Ocean Energy Management to issue leases, rights of way and pore spaces
- Clarify that the US Environmental Protection Agency has the authority to allow CO2 injections into underwater formations
Providing financial support for the CCS infrastructure
- Provided a $10 billion grant to support Houston’s infrastructure development by expanding current US Department of Energy programs beyond research, development and demonstration (RD&D).
- Expanding the US Department of Energy’s Title XVI program to include large-scale deployment of existing CCS technologies
- Modify TIFIA (Transportation Infrastructure Finance and Innovation Act) to add CCS projects or create a CCS specific program
ExxonMobil states, “We captured more total carbon than any other company — 120 million tons — which is about 40 percent of all anthropogenic carbon that has ever been captured.” increase oil production. It is the political stuff that is contentious on both sides of the political debate.
Carbon capture and storage is a loss leader for ExxonMobil when it comes to official greenwashing. For the Biden administration, CCS is a bribe that puts pressure on the largest energy company. The good news is elsewhere, most notably in CEO Darren Woods’ announcement that ExxonMobil will ramp up oil and gas production as far as the eye can see.
ExxonMobil has committed $15 billion to CCS through 2027, with the prospect of more. Some of these may be postponed due to opposition or reduced subsidies. Perhaps some revenue can be recouped if EOR can bring oil revenue. But it’s the taxpayer who is hanging Big Oil on the hook in this case. And XOM investors have some tough questions to ask at the next AGM on May 25, 2023.
 The 2009 Act subsidized CC&S as follows:
Investment in CO2 capture and sequestration.
One strategy to limit greenhouse gas emissions is to prevent the carbon released by burning fossil fuels from entering the atmosphere. The Recovery Act provided $2.1 billion to support initiatives ranging from characterization of the carbon sequestration potential of geological formations to cost-sharing agreements to demonstrate advanced carbon capture and storage technologies for coal, including:
Petra Nova – WA Parish Post-Combustion CCS Sequestration Project: DOE provided $163 million in financial assistance through the Clean Coal Power Initiative (CCPI) Round 3, which includes Recovery Act funds. The Petra Nova project, a joint venture between NRG Energy and JX Nippon Oil & Gas Exploration, will be the first large-scale post-combustion carbon capture retrofit project in the United States
When complete, the energy technology project will capture approximately 1.4 million tons of carbon dioxide (CO2) annually from an existing coal-fired power plant in Texas, and the captured CO2 will then be used to produce additional, hard-to-reach oil from a previously depleted field 80 miles away. The construction work is expected to be completed in early 2017 and solvent tanks, absorber sections and the combined heat and power plant are already in place.
Archer Daniels Midland (ADM) Industrial CCS Project: DOE awarded ADM $141 million for the Illinois Industrial Carbon Capture and Storage project, which demonstrates an integrated system for capturing carbon dioxide from an ethanol production facility and sequestering it deep underground. ADM completed construction of the project and began operations in 2015. It will discharge an estimated 900,000 tons of carbon dioxide per year into the Mt. Simon Sandstone Reservoir – one of the largest and finest saline aquifers in the world.
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