Get Ready for Carbon Capture’s Second Act

Teri Viswanath

October 19, 2023

Key Points

• The largest climate policy contribution of the Inflation Reduction Act (IRA) will likely be the market incentives tied to carbon capture for high-emitting industries. While competition, replacement and regulation will continue to decarbonize other segments of the economy, the hardest-to-abate industries would see little progress without the significant government support that this legislation provides.
• Now, federal incentives are squarely in the “Goldilocks” range for point-source carbon capture projects. What’s more, IRA also supports greater options for recycling the carbon captured by these projects, opening the door to a circular carbon economy.
• Many high-purity CO2 management projects, such as ethanol and gas processing, appear to be financially attractive today. Over a longer-term horizon, expanded demonstration projects and technology cost declines will accelerate projects with lower-purity CO2 streams, including hard-to-abate industries (steel, cement, and refining) as well as power generation and hydrogen production. This is important, as the high-purity, quick-to-fund projects alone will not put the nation on a net-zero path.
• Just how big could carbon management’s second act prove? New research suggests that IRA could boost carbon capture capacity 13-fold by 2030 – finally legitimizing this technology in a net-zero world.

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