[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
SOLVING THE CLIMATE CRISIS: REDUCING INDUSTRIAL EMISSIONS THROUGH U.S.
INNOVATION
=======================================================================
HEARING
BEFORE THE
SELECT COMMITTEE ON THE
CLIMATE CRISIS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
FIRST SESSION
__________
HEARING HELD
SEPTEMBER 26, 2019
__________
Serial No. 116-10
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
www.govinfo.gov
Printed for the use of the Select Committee on the Climate Crisis
__________
U.S. GOVERNMENT PUBLISHING OFFICE
38-473 WASHINGTON : 2020
--------------------------------------------------------------------------------------
SELECT COMMITTEE ON THE CLIMATE CRISIS
One Hundred Sixteenth Congress
KATHY CASTOR, Florida, Chair
BEN RAY LUJAN, New Mexico GARRET GRAVES, Louisiana,
SUZANNE BONAMICI, Oregon Ranking Member
JULIA BROWNLEY, California MORGAN GRIFFITH, Virginia
JARED HUFFMAN, California GARY PALMER, Alabama
A. DONALD McEACHIN, Virginia BUDDY CARTER, Georgia
MIKE LEVIN, California CAROL MILLER, West Virginia
SEAN CASTEN, Illinois KELLY ARMSTRONG, North Dakota
JOE NEGUSE, Colorado
----------
Ana Unruh Cohen, Majority Staff Director
Marty Hall, Minority Staff Director
climatecrisishouse.gov
C O N T E N T S
STATEMENTS OF MEMBERS OF CONGRESS
Page
Hon. Kathy Castor, a Representative in Congress from the State of
Florida, and Chair, Select Committee on the Climate Crisis:
Opening Statement.............................................. 1
Prepared Statement............................................. 3
Hon. Garrett Graves, a Representative in Congress from the State
of Louisiana, and Ranking Member, Select Committee on the
Climate Crisis:
Opening Statement.............................................. 3
WITNESSES
David Gardiner, President, David Gardiner and Associates
Oral Statement................................................. 7
Prepared Statement............................................. 9
Jeremy Gregory, Executive Director, MIT Concrete Sustainability
Hub on behalf of Portland Cement Association
Oral Statement................................................. 12
Prepared Statement............................................. 14
Brad Crabtree, Vice President of Carbon Management, Great Plains
Institute on behalf of the Carbon Capture Coalition
Oral Statement................................................. 30
Prepared Statement............................................. 32
Cate Hight, Principal of Industry and Heavy Transport, Rocky
Mountain Institute
Oral Statement................................................. 37
Prepared Statement............................................. 39
SUBMISSIONS FOR THE RECORD
Article by Bill Gates, ``Here's a question you should ask about
every climate change plan,'' submitted for the record by Hon.
Garret Graves.................................................. 4
Report, Federal Policy Blueprint, submitted for the record by
Hon. Kathy Castor.............................................. 37
Letter from United Steelworkers, submitted for the record by Hon.
Kathy Castor................................................... 60
Letter from the American Forest & Paper Association, submitted
for the record by Hon. Kathy Castor............................ 63
APPENDIX
Questions for the Record from Hon. Kathy Castor to David Gardiner 65
Questions for the Record from Hon. Sean Casten to David Gardiner. 72
Questions for the Record from Hon. Kathy Castor to Jeremy Gregory 74
Questions for the Record from Hon. Kathy Castor to Brad Crabtree. 75
Questions for the Record from Hon. Kathy Castor to Cate Hight.... 80
SOLVING THE CLIMATE CRISIS: REDUCING INDUSTRIAL EMISSIONS THROUGH U.S.
INNOVATION
----------
THURSDAY, SEPTEMBER 26, 2019
House of Representatives,
Select Committee on the Climate Crisis,
Washington, DC.
The committee met, pursuant to call, at 2:07 p.m., in Room
HVC-210, Capitol Visitor Center, Hon. Kathy Castor [chairwoman
of the committee] presiding.
Present: Representatives Castor, Bonamici, Brownley,
Casten, Neguse, Graves, Griffith, Palmer, Carter, Miller, and
Armstrong.
Ms. Castor. The committee will come to order.
Without objection, the chair is authorized to declare a
recess of the committee at any time.
Welcome to our witnesses. Today we will discuss reducing
emissions in the industrial sector. Welcome to the--one of the
most exciting hearings on the Hill today. We will focus on the
technological opportunities and the policies needed to spur
American innovation in addressing this global challenge.
I now recognize myself for 5 minutes for an opening
statement.
I would like to start off by just acknowledging that it has
been a very busy week for climate action. Kicking things off
last Friday, young people and adults all across the world
united for the Global Climate Strike. And here in Washington,
D.C., and in the communities we represent back home, we were
humbled to witness our own American student activists lead the
March for Climate Action.
And starting earlier this week, world leaders gathered in
New York City for the Climate Action Summit to call for urgent
action to reduce carbon pollution and meet the goals of the
International Paris Climate Agreement.
President Trump was, unfortunately, absent from the Climate
Action Summit.
But while I was there for just a day or two, I saw American
businesses, local community leaders and representatives, and a
whole host of folks representing our country and working
towards the goals of the Paris Agreement.
And I view our job on this committee as trying to fill the
policy void left at the national level by the President.
To meet the goals of the Paris Agreement, to limit warming
as much as we can, to 1.5 degrees Celsius, we will have to
reduce emissions from every sector in the economy. Our
committee has heard from experts on how to reduce pollution
from the power and transportation sectors, both of which have
received the most attention from policymakers at the State and
Federal levels.
But today we are here to tackle the industrial sector. This
is the sector we count on to make raw materials, like steel and
cement, for our buildings and infrastructure. It is the sector
that makes fertilizer to grow our food, and the metals,
plastics, and chemicals that go into the products we use every
day. It is responsible for more than $3 trillion of U.S. GDP
and almost 20 million jobs.
Industry also contributes nearly 30 percent of U.S.
greenhouse gas emissions.
Many industrial processes use large amounts of energy and
require high temperature process heat that cannot be
electrified. Some industries release carbon dioxide from
chemical reactions in the production process, which cannot be
avoided. This makes industry one of the most difficult sectors
to decarbonize.
Difficult, but not impossible.
As our panelists today will share, we already have tools at
our disposal to reduce emissions from this sector and others
are promising. Industrial efficiency technologies, like
combined heat and power and waste heat to power, are already
commercially available but require high upfront capital costs
to implement.
Carbon capture of industrial carbon dioxide streams is
being demonstrated around the world but is far from being
widely deployed. Technologies like low-carbon cement and
concrete and renewable hydrogen for industrial energy and
feedstocks have great potential but need further development to
be cost effective.
To reach the scale of deployment at the speed to limit
warming to 1.5 degrees, we must put policies in place to
incentivize all stages of research, development, demonstration,
and deployment of these technologies.
And that is where we come in. As we craft policies for this
sector, we must consider any potential impacts on production
and on employment. Many industrial products are globally traded
commodities, which means they are very sensitive to cost
increases.
Well-designed policies can reduce emissions while
maintaining U.S. competitiveness and preventing offshoring of
family-sustaining industrial jobs in the United States. We do
not have to choose between reducing emissions and maintaining a
robust industrial sector. I am confident that American
innovation, coupled with smart policies, will be the key.
At this time, I would recognize the ranking member, Mr.
Graves, for 5 minutes.
[The statement of Ms. Castor follows:]
Opening Statement (As Prepared for Delivery)
Chair Kathy Castor
Select Committee on the Climate Crisis
Hearing on ``Solving the Climate Crisis: Reducing Industrial Emissions
Through U.S. Innovation''
September 26, 2019
It's been a busy week for climate action. Kicking things off last
Friday, young people and adults around the world united for the global
climate strike. Here in DC, I was humbled to witness our own young
activists lead the march for climate action.
On Monday, world leaders gathered in New York to call for urgent
action to reduce carbon pollution and meet the goals of the Paris
Climate Agreement. President Trump was notably absent from the lineup.
Our job on this committee is to try to fill the policy void left at
the national level by the president.
To meet the goals of the Paris Agreement to limit warming as much
as we can to 1.5 degrees Celsius, we will have to reduce emissions from
every sector of the economy. Our committee has heard from experts on
how to reduce pollution from the power and transportation sectors, both
of which have received the most attention from policymakers at the
state and federal levels.
Today, we're here to tackle the industrial sector. This is the
sector we count on to make raw materials--like steel and cement--for
our buildings and infrastructure. It's the sector that makes the
fertilizer to grow our food and the metals, plastics, and chemicals
that go into the products we use every day. It's responsible for more
than $3 trillion of U.S. GDP and almost 20 million jobs.
Industry also contributes nearly 30% of U.S. greenhouse gas
emissions. Many industrial processes use large amounts of energy and
require high temperature process heat that cannot be electrified. Some
industries release carbon dioxide from chemical reactions in the
production process, which cannot be avoided. This makes industry one of
the most difficult sectors to decarbonize.
Difficult, but not impossible.
As our panelists today will share, we already have tools at our
disposal to reduce emissions from this sector, and others are
promising. Industrial efficiency technologies, like combined heat and
power and waste heat to power, are already commercially available but
require high upfront capital costs to implement. Carbon capture of
industrial carbon dioxide streams is being demonstrated around the
world but is far from being widely deployed. Technologies like low-
carbon cement and concrete and renewable hydrogen for industrial energy
and feedstocks have great potential but need further development to be
cost effective.
To reach the scale of deployment at the speed needed to limit
warming to 1.5 degrees, we must put policies in place to incentivize
all stages of research, development, demonstration, and deployment of
these technologies. That's where we come in.
As we craft policies for this sector, we must consider any
potential impacts on production and employment. Many industrial
products are globally-traded commodities, which means they are very
sensitive to cost increases. Well-designed policies can reduce
emissions while maintaining U.S. competitiveness and preventing off-
shoring of family-sustaining industrial jobs in the United States.
We do not have to choose between reducing emissions and maintaining
a robust industrial sector. I am confident that American innovation,
coupled with smart policies, will be the key.
Mr. Graves. Thank you, Madam Chair.
This whole time I sit here, I have been talking. I don't
think you listened to anything I say. But you just said some
great words in there. I want to make note that you talked about
the role of incentives, you talked about considering employment
impacts and economic impacts.
And importantly, and perhaps most importantly, you
discussed how the wrong policies could result in offshoring or
leakage of emissions to other countries. And I do very much
appreciate your recognition. I think those are important, very
important factors that we need to be working together on as we
move forward.
Thank you for holding this hearing today.
And I want to thank all of the witnesses for being here.
Looking forward to your testimony.
Madam Chair, as we look back over the last several years in
the United States and the emissions reduction profile that we
have been able to experience in the United States, it has
resulted in, in some cases, in emissions increases by other
countries.
As we have discussed, if we squeeze the balloon in the
United States, sometimes that pops out in other areas and you
see greater global emissions, greater global emissions, not a
reduction, as a result of inappropriate policies in the United
States that are not smart, that are not well thought out, are
not considering the global environment that we are operating
in.
I have mentioned numerous times in this committee, and I am
going to say it every single time: For every one ton of
emissions we have had in the United States, China has increased
their emissions by four tons. That is not a global win. It is
not.
And for us to continue to look only myopically, only in a
vacuum at the United States, that is not a global greenhouse
gas emissions strategy, that is not a global climate change
strategy. It is one that will have very little impact, if any,
on the United States and on the globe, because it will result
in greater greenhouse gas emissions for the globe, which
doesn't turn that trend, bend that curve that we are all
seeking to bend or change.
Madam Chair, I want to ask, submit for the record, this is
an August 27 document that Bill Gates wrote. And here is a
question you should ask about every climate change plan, and I
am going to read one line he has here at the end where he says,
``I am optimistic about all these areas of innovation,
especially if we couple progress in these areas with smart
public policies.''
Companies need the right incentives--you see that, Bill
Gates is quoting you--incentives to phase out old polluting
factories and adopt these new approaches.
I think it is a really good, really good--I don't know if
this is an op-ed or what this was--but it is a very good
document. Again, I ask that this be included in the record.
Ms. Castor. Without objection.
[The information follows:]
Submission for the Record
Representative Garret Graves
Select Committee on the Climate Crisis
September 26, 2019
Here's a Question You Should Ask About Every Climate Change Plan
(By Bill Gates,\1\ August 27, 2019)
---------------------------------------------------------------------------
\1\ https://www.gatesnotes.com/Books/Sustainable-Materials-With-
Both-Eyes-Open.
---------------------------------------------------------------------------
I get to learn about lots of different plans for dealing with
climate change. It's part of my job--climate change is the focus of my
work with the investment fund Breakthrough Energy Ventures \2\--but
it's just as likely to come up over dinner with friends or at a
backyard barbecue. (In Seattle, we get outside as often as we can
during the summer, since we know how often it'll be raining once fall
comes.)
---------------------------------------------------------------------------
\2\ http://www.b-t.energy/ventures/.
---------------------------------------------------------------------------
Whenever I hear an idea for what we can do to keep global warming
in check--whether it's over a conference table or a cheeseburger--I
always ask this question: ``What's your plan for steel?''
I know it sounds like an odd thing to say, but it opens the door to
an important subject that deserves a lot more attention in any
conversation about climate change. Making steel and other materials--
such as cement, plastic, glass, aluminum, and paper--is the third
biggest contributor of greenhouse gases, behind agriculture \3\ and
making electricity \4\. It's responsible for a fifth of all emissions.
And these emissions will be some of the hardest to get rid of: these
materials are everywhere in our lives, and we don't yet have any proven
breakthroughs that will give us affordable zero-carbon versions of
them. If we're going to get to zero carbon emissions overall\5\, we
have a lot of inventing to do.
---------------------------------------------------------------------------
\3\ https://www.gatesnotes.com/Energy/We-should-discuss-soil-as-
much-as-coal.
\4\ https://www.gatesnotes.com/Energy/A-critical-step-to-reduce-
climate-change.
\5\ https://www.gatesnotes.com/Energy/My-plan-for-fighting-climate-
change.
---------------------------------------------------------------------------
This video features one company with an idea about how to make
steel without coal. (I'm an investor in Breakthrough Energy
Ventures\6\, which in turn has invested in this company.)
---------------------------------------------------------------------------
\6\ http://www.b-t.energy/ventures/.
---------------------------------------------------------------------------
Steel, cement, and plastic are so pervasive in modern life that it
can be easy to take them for granted. The first two are the main reason
our buildings and bridges are so sturdy and last so long. Steel--cheap,
strong, and infinitely recyclable--also goes into shingles, household
appliances, canned goods, and computers. Concrete--rust-resistant, rot-
proof, and non-flammable--can be made dense enough to absorb radiation
or light enough to float on water.
The 520 floating bridge \7\ near my house sits on 77 concrete
pontoons, each weighing thousands of pounds. In his book Making the
Modern World\8\, Vaclav Smil estimates that America's interstate
highway system contains about 730 million tons of concrete in the
driving lanes alone. (People sometimes use the terms cement and
concrete interchangeably, but they're not the same thing. You make
cement first, and then you mix it with sand, water, and gravel to make
concrete.)
---------------------------------------------------------------------------
\7\ https://en.wikipedia.org/wiki/Evergreen_Point_Floating_Bridge.
\8\ https://www.gatesnotes.com/Books/Making-the-Modern-World.
---------------------------------------------------------------------------
As for plastics, they have a bad reputation these days--and it's
true that the amount piling up in the oceans is problematic. But they
also do a lot of good. For example, you can thank plastics for making
that fuel-efficient car you drive so light; they account for as much as
half of the car's total volume, but only 10 percent of its weight!
So how do we cut down on emissions from all the steel, cement, and
plastic we're making? One way is to use less of all these materials.
There are definitely steps we should take to use less by recycling more
and increasing efficiency. But that won't be enough to offset the fact
that the world's population is growing and getting richer; as the
middle class expands, so will our use of materials.
In a sense, that's good news, because it means more people will be
living in sturdy houses and apartment buildings and driving on paved
roads. But it's bad news for the climate. Take Africa, for example: Its
emissions from making concrete are projected to quadruple by 2050.
Emissions from steel could go up even more, because the continent uses
so little now.
If using less isn't really a viable option, could we make things
without emitting carbon in the first place? That is, in fact, what
we'll need to do--but there are several challenges. First, these
industries require a lot of electricity, which today is often generated
using fossil fuels. Second, the processes also require a lot of heat
(as in thousands of degrees Fahrenheit) and fossil fuels are often the
cheapest way to create that heat.
Finally--and this might be the toughest challenge of all--
manufacturing some of these products involves chemical reactions that
emit greenhouse gases. For example, to make cement, you start with
limestone, which contains calcium, carbon, and oxygen. You only want
the calcium, so you burn the limestone in a furnace along with some
other materials. You end up with the calcium you want, plus a byproduct
you don't want: carbon dioxide. It's a chemical reaction, and there's
no way around it.
All three are tough challenges, but don't despair. Scientists and
entrepreneurs are trying to solve these problems and help make zero-
carbon materials that will be affordable around the world. Here are a
few of the innovative approaches that I'm especially excited about
(note that I have investments in two of these companies, Boston Metal
and TerraPower):
Carbon capture. The idea here is to suck greenhouse
gases out of the air. I think this is probably the approach
we'll have to take with cement; rather than making it without
emissions, we'll remove the emissions before they can do any
damage. There are two basic approaches: One is to grab the
greenhouse gases right where they're created, such as at a
cement plant (that's called carbon capture); the other is to
pull them from the atmosphere, after they've dispersed. That's
called direct-air capture, and it's a big technical challenge
that various companies are trying to solve. Mosaic
Materials\9\, for example, is developing new nano-materials
that could make direct-air capture much more efficient and
cost-effective. And government policies that create financial
incentives to use carbon-removal technology--like federal tax
credits that were passed in 2018--will help us deploy it
faster.
---------------------------------------------------------------------------
\9\ http://mosaicmaterials.com/.
---------------------------------------------------------------------------
Electrification. We may be able to replace fossil
fuels with electricity in some industrial processes. For
example, as you saw if you watched the video above, Boston
Metal \10\ is working on a way to make steel using electricity
instead of coal, and to make it just as strong and cheap. Of
course, electrification only helps reduce emissions if it uses
clean power, which is another reason why it's so important to
get zero-carbon electricity\11\.
---------------------------------------------------------------------------
\10\ https://www.bostonmetal.com/.
\11\ https://www.gatesnotes.com/Energy/A-critical-step-to-reduce-
climate-change.
---------------------------------------------------------------------------
Fuel switching. Some industrial processes can't
easily be electrified because they require too much heat. One
possible alternative is to get the heat from a next-generation
nuclear plant. (As I've mentioned before, a company that I
helped start, TerraPower\12\, uses an approach called a
traveling wave reactor that is safe, prevents proliferation,
and creates very little waste.) We also might be able to get
the heat using hydrogen fuels, which can be made using clean
electricity and don't emit any carbon when they're burned.
Hydrogen fuels exist today, but they're expensive to make and
transport, so companies are trying to drive the cost down and
make hydrogen fuels available at scale. The Swedish steelmaker
SSAB plans to build the world's first fossil fuel-free steel
plant powered by hydrogen\13\, which will be running as a pilot
project next year. ThyssenKrupp \14\ and ArcelorMittal \15\
also recently announced projects in this area.
---------------------------------------------------------------------------
\12\ https://terrapower.com/.
\13\ https://www.economist.com/technology-quarterly/2018/11/29/how-
to-get-the-carbon-out-of-industry.
\14\ https://www.thyssenkrupp-steel.com/en/newsroom/press-releases/
press-release-110080.html.
\15\ https://corporate.arcelormittal.com/news-and-media/news/2019/
mar/28-03-2019.
---------------------------------------------------------------------------
Recycling. On its own, recycling steel, cement, and
plastic won't be nearly enough to eliminate greenhouse gas
emissions, but it will help. The best book I've read on
recycling--yes, I've read more than one!--is called Sustainable
Materials With Both Eyes Open, and I highly recommend it\16\.
---------------------------------------------------------------------------
\16\ https://www.gatesnotes.com/Books/Sustainable-Materials-With-
Both-Eyes-Open.
---------------------------------------------------------------------------
I'm optimistic about all these areas of innovation--especially if
we couple progress in these areas with smart public policies. Companies
need the right incentives to phase out old polluting factories and
adopt these new approaches. If all of these pieces come together, we
will have a climate-friendly plan for steel, as well as cement,
plastic, and the other materials that make modern life possible.
Mr. Graves. Thank you.
And it is a very, very practical approach. He talks
specifically about concrete, about plastics, and other sectors.
But there is no question that cement plays a very important
role in our infrastructure and the resiliency of this Nation.
It is going to continue to. You can look at the emissions
profile as we import all of this cement from other countries,
particularly China, and look at the emissions profile there
versus in the United States.
We need to continue making investments in carbon capture,
storage, utilization, and other technologies that complement--
in fact, I believe as Bill Gates notes in his letter--that
complement some of the domestic resources that we have in the
United States in industries, because simply offshoring these
industries to other countries does not provide a global
solution.
So with that, I want to thank you again for hosting the
hearing.
And looking forward to hearing from you all. And thanks for
being here.
Yield back.
Ms. Castor. Thank you.
Well, without objection, members who wish to enter opening
statements into the record may have 5 business days to do so.
Now I want to welcome our witnesses.
David Gardiner is president of his own environmental
consulting firm, David Gardiner and Associates, which focuses
on climate change and clean energy issues. The firm coordinates
the Combined Heat and Power Alliance and the Renewable Thermal
Collaborative.
Prior to founding DGA, Mr. Gardiner served in the Clinton
administration as executive director of the White House Climate
Change Task Force and as assistant administrator for policy at
the Environmental Protection Agency.
Dr. Jeremy Gregory is executive director of the MIT
Concrete Sustainability Hub. Dr. Gregory is an engineer who
studies the economic and environmental implications of
materials, their recycling and recovery systems. The CSHub at
MIT was established with grants from the Portland Cement
Association.
Brad Crabtree is vice president of the Carbon Management
Program at the Great Plains Institute and director of the
Carbon Capture Coalition. The coalition is a national
partnership of more than 70 companies, labor unions, and
environmental, clean energy, and agricultural organizations
that support the adoption and deployment of carbon capture
technologies.
And Ms. Cate Hight is a principal at Rocky Mountain
Institute where she leads the institute's efforts to reduce
methane emissions from the global oil and gas industry. Before
joining RMI, Ms. Hight spent 10 years at the Environmental
Protection Agency, where she managed the oil and gas program of
the Global Methane Initiative.
Welcome to all of you.
Without objection, the witnesses' written testimony will be
made part of the record.
With that, Mr. Gardiner, you are recognized for 5 minutes.
STATEMENTS OF MR. DAVID GARDINER, PRESIDENT, DAVID GARDINER AND
ASSOCIATES; DR. JEREMY GREGORY, EXECUTIVE DIRECTOR, MIT
CONCRETE SUSTAINABILITY HUB, ON BEHALF OF PORTLAND CEMENT
ASSOCIATION; MR. BRAD CRABTREE, VICE PRESIDENT, CARBON
MANAGEMENT, GREAT PLAINS INSTITUTE, ON BEHALF OF THE CARBON
CAPTURE COALITION; AND MS. CATE HIGHT, PRINCIPAL, INDUSTRY AND
HEAVY TRANSPORT, ROCKY MOUNTAIN INSTITUTE
STATEMENT OF DAVID GARDINER
Mr. Gardiner. Thank you, Chair Castor.
And thank you, members of the committee. It is great to be
here.
I would urge this committee to focus on three key points.
First, as you indicated in your opening remarks, the
biggest challenge in reducing industrial emissions comes from
the energy to produce heat used in the manufacturing process.
Globally, industrial heat makes up two-thirds of industrial
energy demand and almost one-fifth of global energy
consumption; 90 percent of this heat is produced using carbon-
emitting fuels.
Emissions from heat are concentrated in eight energy-
intensive basic sectors: steel, chemicals, cement, pulp and
paper, aluminum, glass, food, and oil refining. Climate
solutions must include approaches to reduce emissions
associated with heat production while also making those
industries more competitive.
Second, we can and should make America's factories more
efficient through the use of efficiency technologies such as
combined heat and power, CHP, and waste heat to power, WHP.
Because they use heat, which would otherwise be wasted, these
technologies can make manufacturers more competitive by
reducing energy costs while also cutting emissions.
By harnessing that heat with industrial efficiency, in
combination with CHP and WHP, America's manufacturers can cut
carbon emissions in an amount equal to that emitted by 46 coal-
fired power plants, while saving their own businesses $298
billion between now and 2030.
The Department of Energy has identified nearly 241
gigawatts of remaining CHP technical potential, an amount equal
to 480 conventional power plants, with the greatest
opportunities in the chemicals, petroleum refining, food,
paper, and primary metal sectors.
But CHP and WHP face economic and financial, regulatory and
informational barriers to their deployment. To help make
manufacturers more competitive, we need a variety of policies
to move them forward, many of which already enjoy bipartisan
support. These include tax, energy infrastructure, regulatory,
information, and industrial efficiency policies.
Third, the committee should recommend policies which
accelerate the development and deployment of renewable heat
technologies. These technologies have received little attention
in discussions of how to reduce emissions and have been called
the sleeping giant of renewable energy.
Today, only 10 percent of global heat production is powered
with renewable energy. So there is clearly a very large
opportunity to scale that up.
Renewable heat sources include renewable natural gas, which
is produced from agricultural and food wastes, wastewater
treatment plants and landfills, biomass, under the right
circumstances, renewable hydrogen and electrification, solar
thermal, and geothermal.
In March, the Renewable Thermal Collaborative issued a
renewable energy buyers statement calling on market players and
policymakers, such as all of you, to accelerate the deployment
of cost-effective renewable thermal technologies. Leading
industrial companies, such as Cargill, Clif Bar, Chemours,
General Motors, HP, L'Oreal, Mars, Proctor and Gamble, and
Stonyfield signed the statement.
To meet their own corporate commitments to reduce carbon
emissions, they need cost-effective and sustainable renewable
thermal technologies. Like combined heat to power and waste
heat to power, these technology face supply, market, and policy
barriers. The signers believe we should follow a path similar
to that of renewable electricity markets where steady
technology innovation and improvement have made wind and solar
cost effective and the preferred choice in many markets.
The challenge is that few countries, including the United
States, have done much. More than 120 countries have policies
to promote renewable electricity, but only about 40 have
specific policies for renewable heat, most of which are located
in the European Union.
So in conclusion, I would just urge the committee to focus
real attention on the greenhouse gas emissions associated with
producing heat. Step one is to accelerate energy efficient
measures like combined heat and power and waste heat to power,
and step two is to focus on the innovation of renewable thermal
technologies.
There are opportunities to advance these objectives with
the support of industry and from Members of both parties, and
we should seize them.
Thank you.
[The statement of Mr. Gardiner follows:]
Testimony of David Gardiner, President, David Gardiner and Associates
and Executive Director, The Combined Heat and Power Alliance, Before
the House Select Committee on the Climate Crisis, Solving the Climate
Crisis: Reducing Industrial Emissions Through U.S. Innovation,
September 26, 2019
Good morning. I am David Gardiner, President of David Gardiner and
Associates, a strategic consulting firm focused on climate, clean
energy and sustainability. I am also Executive Director of the Combined
Heat and Power Alliance (``the Alliance''), a coalition of business,
labor, contractor, and non-profit organizations, who share the vision
that Combined Heat and Power (CHP) and Waste Heat to Power (WHP) can
make America's manufacturers and other businesses more competitive,
reduce energy costs, enhance grid reliability and reduce carbon
emissions.\1\ Companies like Cargill, GM, Kimberly-Clark, L'Oreal,
Mars, P&G, and Stonyfield, are working with my firm, the Center for
Climate and Energy Solutions and the World Wildlife Fund to scale up
renewable heating and cooling at their facilities as part of the
Renewable Thermal Collaborative.
---------------------------------------------------------------------------
\1\ Until September 17, 2019, the Combined Heat and Power Alliance
was known as the Alliance for Industrial Efficiency.
---------------------------------------------------------------------------
The industrial sector is a large source of carbon dioxide and other
greenhouse gas emissions and there is widespread recognition in
America's manufacturing sector of the need to reduce their emissions. A
2018 report from the Alliance examined the public clean energy goals of
160 of the nation's largest industrial companies with a combined 2,100
manufacturing facilities in the United States. It found that seventy-
nine percent of these manufacturers in the United States have
established ambitious public goals to reduce their greenhouse gas
emissions. Those companies need our help and support to ensure they can
meet those emission reduction targets and become more competitive in
global markets.
Much of these industrial emissions result from the energy used to
produce heat for the manufacturing production process. Across the
globe, industrial heat makes up two-thirds of industrial energy demand
and almost one-fifth of total energy consumption. These emissions are
concentrated in eight energy-intensive basic material manufacturing
sectors--steel, chemicals, cement, pulp and paper, aluminum, glass,
food, and oil refining--which produce more than 77 percent of global
industrial emissions. Climate solutions must include approaches to
reduce emissions associated with heat production, while also making
those industries more competitive.
Make Industrial Processes More Efficient with CHP and WHP
The first step in addressing these emissions is to make industrial
processes more efficient through the use of technologies such as CHP
and WHP. CHP uses a single fuel source to generate both heat and
electricity. As a result, it is twice as energy efficient and has half
the emissions of the average power plant and it can deliver both the
electricity and heat which industrial companies need to power their
plants. WHP captures industrial waste heat and uses it to generate
electricity with no additional fuel and no incremental emissions.
Because they use heat which would otherwise be wasted, CHP and WHP
can make manufacturers more competitive by reducing energy costs while
also cutting emissions. Our own analysis shows that by using industrial
efficiency and CHP and WHP, manufacturers can cut carbon emissions by
174.5 million short tons in 2030--equal to the emissions from 46 coal-
fired power plants--while saving businesses $298 billion from avoided
electricity purchases.\2\ The top 10 states in which these energy
efficiency improvements would produce the greatest total carbon
emission reductions and many of the cost savings are Texas, Ohio,
Illinois, Indiana, Pennsylvania, Kentucky, Michigan, California,
Georgia, and Alabama.
---------------------------------------------------------------------------
\2\ Alliance for Industrial Efficiency, State Ranking of Potential
Carbon Dioxide Emission Reductions through Industrial Energy
Efficiency, September 2016. https://chpalliance.org/resources/state-
industrial-efficiency-ranking/.
---------------------------------------------------------------------------
Moreover, CHP can provide overall energy and carbon dioxide savings
on par with comparably sized solar photovoltaics (PV), wind, Natural
Gas Combined Cycle (NGCC), and at a capital cost that is lower than
solar and wind and on par with NGCC, according to the Department of
Energy (DOE) and the Environmental Protection Agency (EPA).\3\
---------------------------------------------------------------------------
\3\ U.S. DOE, EPA, Combined Heat and Power: A Clean Energy
Solution, August 2012 https://www.epa.gov/sites/production/files/2015-
07/documents/combined_heat_and_power_a_clean_
energy_solution.pdf.
---------------------------------------------------------------------------
CHP systems can also run on renewable fuels, such as biomass (e.g.,
forest and crop residues, wood waste, food processing residue) or
biogas (e.g., manure biogas, wastewater treatment biogas, landfill
gas), which can lower GHG emissions even further.
CHP is also accelerating the deployment in microgrids of other
renewable technologies, such as solar. A microgrid is a local energy
grid that can disconnect from the traditional grid and operate on its
own during grid outages. CHP provides 39% of the energy in existing
microgrids and offer important reliability benefits when the solar
power may not be working.\4\
---------------------------------------------------------------------------
\4\ U.S. Department of Energy, Jun. 17, 2014, ``How Microgrids
Work'' (https://bit.ly/2nFsiSP).
---------------------------------------------------------------------------
In addition, because CHP and WHP produce energy onsite at
manufacturing facilities, they also can make industrial plants more
resilient in the wake of extreme weather events. This ability to come
back online, when the electricity grid is not operating, is a
significant advantage for industries such as chemicals and petroleum
refining, which are highly concentrated on the hurricane-prone Gulf
Coast.
Today, CHP produces approximately 9 percent of U.S. electricity,
but the potential is much greater. CHP could produce 20 percent of all
electricity by 2030, according to DOE's Oak Ridge National
Laboratory.\5\ DOE has identified nearly 241 GW of remaining CHP
technical potential capacity, an amount equal to 480 conventional power
plants. The chemicals, petroleum refining, food, paper and primary
metals industrial sectors have the greatest potential for CHP
installation and to cut emissions while increasing competitiveness,
according to DOE.\6\
---------------------------------------------------------------------------
\5\ Oak Ridge National Laboratory, Combined Heat and Power:
Effective Energy Solutions for a Sustainable Future, December 2008.
https://info.ornl.gov/sites/publications/files/Pub13655.pdf.
\6\ U.S. DOE, Combined Heat and Power Technical Potential in the
United States, March 2016. https://www.energy.gov/sites/prod/files/
2016/04/f30/CHP%20Technical%20Potential%20Study %203-31-
2016%20Final.pdf.
---------------------------------------------------------------------------
Unfortunately, CHP and WHP face economic and financial, regulatory
and informational barriers to their deployment, according to DOE.\7\
CHP requires a significant upfront capital investment, forcing it to
compete with other industrial company priorities for limited investment
capital. The business model of a utility can reduce its interest in
promoting industrial CHP projects. States may adopt policies, such as
burdensome standby rates, which discriminate against CHP, or fail to
account for its resilience, cost savings and emission reduction
benefits. Potential hosts, utilities and policymakers are often unaware
of the benefits of CHP and WHP.
---------------------------------------------------------------------------
\7\ U.S. DOE, barriers report, 2015. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_6%20Report_signed_v2.pdf.
---------------------------------------------------------------------------
Make American Manufacturers Clean and More Competitive with CHP and WHP
Policies
To drive the emission reductions and increased competitiveness
which CHP and WHP can deliver to America's manufacturers, the Combined
Heat and Power Alliance recommends Congress adopt policies which can
overcome these barriers. In particular, we urge Congress to enact:
Tax--There are several tax policy measures that
would support greater adoption of CHP and WHP, and ensure their
contribution to greenhouse gas emission reduction is recognized
in the marketplace.
(HR 2283 and S 2289) Renewable Energy
Extension Act which would extend the section 48
investment tax credit for CHP for five years, and
(S.2283) The Waste Heat to Power Investment Tax Credit
Act which would add WHP to the section 48 tax credit.
(S 1288) Clean Energy for America Act
which is a technology neutral clean energy tax credit
that accounts for both the thermal and electric energy
that CHP systems generate when determining a system's
overall greenhouse gas reduction benefit.
Finally, Congress should consider
boosting the value of the investment tax credit for CHP
to incentivize wider adoption, especially in non-
traditional markets such as light manufacturing and
multifamily housing.
Energy Infrastructure--(HR 2741) The Leading
Infrastructure for Tomorrow's (LIFT) America Act proposes
several grid modernization and resiliency programs that
encourage the use of onsite energy generation resources like
CHP.
Section 31101--Authorizes $515 million
per year (2020-2024) for a grant program to support
state, local, and tribal governments in their efforts
to employ ``resiliency related technologies,'' like
CHP, to harden their electric grids and protect
critical infrastructure.
Section 31201--Authorizes $200 million
per year (2020-2024) for a financial assistance program
to support grid modernization partnership projects and
allow greater customer based electric generation.
Sections 33301-33304--Establishes
several programs to support distributed energy systems,
including CHP and WHP. These include the creation of a
revolving loan fund to support states, tribes, higher
education institutions and utilities distributed energy
deployment projects, and a technical assistance and
grant program to assist nonprofit and profit entities
with site identification, evaluation, engineering, and
design of distributed energy systems.
Regulatory--Regulatory policies promoting clean
energy should allow CHP and WHP fair and equal access to energy
markets.
(HR 2597 and S 1359) Clean Energy
Standard Act which credits the greenhouse gas reduction
benefits of CHP.
Encourage states to establish standby
rate and interconnection policies that allow CHP and
WHP deployment, and technical assistance grants. The
Heat Efficiency through Applied Technology (HEAT) Act
introduced by Senator Shaheen in 2017 proposed
establishing model best practices states could use to
address regulatory barriers to CHP and WHP deployment.
Recognize WHP as a renewable energy for
purposes of federal electricity purchases (H.R. 8,
114th Congress, sec. 3115).
Information--(HR 1480 and S 2425) CHP Support Act
which would continue to provide information to manufacturers
about the benefits of CHP and WHP by reauthorizing the
Department of Energy's Technical Assistance Partnerships
(TAPs). Congress should continue to provide appropriations for
this program.
Industrial Efficiency Policies--Congress should also
enact policies that focus the federal government on broad
strategies to encourage energy efficiency in the industrial
sector such as the Energy Savings and Industrial
Competitiveness Act (H.R. 3962, S. 2137), and Smart
Manufacturing Leadership Act (H.R. 1633, S. 715).
Develop Cost-Effective and Sustainable Renewable Thermal Technologies
The second approach to reducing emissions from the energy used to
produce heat used in the manufacturing process is to accelerate the
development and deployment of renewable heat sources. This is an area
which has received little attention in discussions of how to reduce the
emissions which cause climate change. Indeed, the International Energy
Agency (IEA) has called renewable heating and cooling ``the sleeping
giant'' of renewable energy.\8\ IEA has also found that only 10 percent
of global heat production is powered with renewable energy, with the
remaining 90 percent from carbon emitting fuel sources.\9\
---------------------------------------------------------------------------
\8\ International Energy Agency, Waking the Sleeping Giant,
February 2015, http://iea-retd.org/wp-content/uploads/2015/02/RES-H-
NEXT.pdf.
\9\ International Energy Agency (IEA), 2014, Heating without Global
Warming, https://bit.ly/2jj4mCy.
---------------------------------------------------------------------------
Renewable heat sources include Renewable Natural Gas (produced from
agricultural and food wastes, wastewater treatment and landfills),
biomass (under the right circumstances), renewable hydrogen and
electrification, solar thermal, and geothermal.
Over the long term, the Energy Transmission Commission, for
example, recommends using three renewable technologies to address
industrial emissions, especially for heat production--biomass,
electrification, and hydrogen.\10\ In the short-term, however, the best
approach is to advance a broad range of renewable thermal technologies
and let markets determine the best outcomes.
---------------------------------------------------------------------------
\10\ Energy Transitions Commission, Mission Possible: Reaching Net-
Zero Carbon Emissions from Harder-To-Abate Sector by Mid-Century,
November 2018. http://www.energy-transitions.org/sites/default/files/
ETC_MissionPossible_FullReport.pdf.
---------------------------------------------------------------------------
In March, the Renewable Thermal Collaborative issued a Renewable
Energy Buyers Statement calling on market players and policy makers to
accelerate the deployment of cost-effective renewable thermal
technologies. Leading industrial companies such as Cargill, Clif Bar,
Chemours, GM, HP, L'Oreal, Mars, Procter & Gamble, and Stonyfield
signed the statement.\11\ They note that renewable thermal technologies
are needed as they meet their own corporate commitments to reduce
carbon emissions and that these technologies face many barriers. They
believe we should follow a path similar to that of the renewable
electricity market, where steady technology innovation and improvement
has made wind and solar cost-effective and the preferred choice in many
markets. Renewable thermal energy will benefit from a similar approach
to develop innovative new technologies and deploy market-ready ones. As
they note in their statement, this ``may include development of new
technologies, innovation and efficiency improvements in existing
technologies, and research and deployment support from the national
government''.
---------------------------------------------------------------------------
\11\ Renewable Thermal Buyers Statement, https://
www.renewablethermal.org/buyers-statement/.
---------------------------------------------------------------------------
These technologies face supply, market, and policy barriers, as
outlined in a 2018 report to the Renewable Thermal Collaborative from
my firm.\12\ Renewable thermal technologies have few supporting
policies, especially when compared to renewable electricity. According
to the IEA, more than 120 countries in all world regions have
introduced policies designed to promote renewable electricity, whereas
only around 40 have specific policies for renewable heat, most of which
are within the European Union.\13\
---------------------------------------------------------------------------
\12\ David Gardiner and Associates, A Landscape Review of the
Global Renewable Heating and Cooling Market, July 2018, https://
www.renewablethermal.org/a-landscape-review-of-the-global-renewable-
heating-and-cooling-market/.
\13\ International Energy Agency (IEA), 2014, Heating without
Global Warming, https://bit.ly/2jj4mCy.
---------------------------------------------------------------------------
Conclusion
In conclusion, the Committee should focus significant attention on
reducing the greenhouse emissions associated with producing heat. The
first step is to accelerate energy efficiency measures, such as CHP and
WHP, and the second is to focus on innovation of renewable thermal
technologies. Many of the approaches to accelerate energy efficiency,
CHP and WHP enjoy bipartisan support and Congress should move them
forward quickly.
Ms. Castor. Thank you very much.
Dr. Gregory, you are recognized for 5 minutes.
STATEMENT OF JEREMY GREGORY
Mr. Gregory. Good afternoon, Chairwoman Castor, Ranking
Member Graves, and members of the Select Committee. I am
pleased to be here on behalf of the Massachusetts Institute of
Technology's Concrete Sustainability Hub and the Portland
Cement Association to talk about concrete's role in a
sustainable low carbon economy and how Congress and the cement
and concrete industries can work together to achieve this goal.
I am the executive director of the MIT CSHub, a dedicated
interdisciplinary team of researchers working on science,
engineering, and economics for the built environment since
2009. PCA is the premier organization serving America's cement
manufacturers.
Since the CSHub is jointly funded by the cement and
concrete industries by PCA and the Education Foundation for the
National Ready Mixed Concrete Association, our research teams
regularly interact with companies in this arena and also
stakeholders who are involved in decisions related to concrete,
such as architects, engineers, and contractors.
In my testimony today, I would like to provide the
committee with some key actions related to the cement and
concrete industries that will accelerate us on the path to
sustainability in the industrial manufacturing sector.
For background, cement is the powdery substance that is
mixed with water and aggregates to make concrete. If you didn't
realize there was a difference between cement and concrete, you
can join my entire extended family in that esteemed club.
Although cement and concrete have different manufacturing
processes and emissions profiles, they are inherently linked as
an end-use building material whose use impacts other emissions,
such as building energy consumption or vehicle fuel consumption
on pavements.
In addition, exposed concrete sequesters CO2 over its
lifetime in a naturally occurring chemical process. Thus it is
important to consider the embodied emissions for these
materials in the context of their full lifecycle and their
potential to naturally sequester carbon.
Furthermore, concrete is the most used building material in
the world for a reason: It is a relatively low-cost and low-
environmental footprint material that provides critical
functionality for buildings and infrastructure. It is necessary
to meet societal goals for sustainable development.
There are four actions that can be taken to catalyze
innovation in low-carbon cement and concrete.
The first action is reducing regulatory barriers to cement
plant energy efficiency improvements and use of alternative
fuels that are less carbon intensive than conventional fuels,
such as biomass and waste materials. New Source Review and the
Clean Air Act serve important functions, but they can be
adapted to encourage reductions in cement production CO2
emissions.
The second action is to support research and investment
into the use of carbon capture utilization and storage
technologies for the cement industry. Cement production is
unique from most other industrial processes in that it has
emissions associated with energy generation and the production
process. Thus, even if zero or low carbon fuels can be used,
emissions will still be a fundamental part of the process. As a
consequence, CCUS is necessary to meet deep decarbonization
goals, and pilot programs in the cement industry are underway
across the world.
Fortunately, there are several companies that are
demonstrating how captured carbon may be used to produce
binders and aggregates, thereby enabling circularity for these
emissions. However, cost is a significant barrier to
implementation of carbon capture technologies at cement plants,
in terms of capital costs, and the adoption of carbon utilizing
materials, in terms of higher product cost in the building
material marketplace. Thus, there are significant opportunities
for Congress to provide targeted CCUS research, development,
and deployment funding that is specific to the cement sector
and incentives for adoption of innovative technologies and
materials.
The third action is to encourage measurement of the
environmental footprint of concrete. The public sector uses
approximately 45 percent of cement in the U.S. and thus can
play a role in asking producers to report the CO2 emissions
associated with the concrete used in those projects. What gets
measured matters. This will help to increase competition for
the use of low-carbon cement and concrete, many of which are
available today.
The final action is to encourage adoption of performance-
based standards. Increasing the adoption of alternative binders
will require overcoming the risk aversion of engineers
specifying concrete. Engineers typically rely on prescriptive-
based specification that detail the types and limits of
materials that can be used in concrete mixtures.
In addition, there is a significant burden of proof to
demonstrate that new low carbon materials will meet long-term
structural and durability requirements. Supporting a shift to
performance-based specifications for concrete would spur
innovation in the design of low-carbon concrete mixtures.
Sponsoring research on the long-term structural and durability
performance of concretes using blended or alternative cements
will help to mitigate perceived risks by engineers.
As you can see, there are steps Congress, industry, and
academia can take together that would ensure the continued role
of cement and concrete in sustainable development.
Ms. Chairwoman and members of the committee, we are ready
to work with you to pursue the path toward the goal of a clean
and sustainable economy together.
Thank you.
[The statement of Dr. Gregory follows:]
Testimony for the Congress of the United States House of
Representatives Select Committee on the Climate Crisis hearing on
``Solving the Climate Crisis: Reducing Industrial Emissions Through
U.S. Innovation'', September 26, 2019, Presented by Jeremy Gregory,
PhD, Research Scientist, Department of Civil and Environmental
Engineering, Executive Director, Concrete Sustainability Hub,
Massachusetts Institute of Technology, On behalf of the Portland Cement
Association
Good afternoon Chairwoman Castor, Ranking Member Graves, and
esteemed Members of the House Select Committee on the Climate Crisis. I
am pleased to be here on behalf of the Massachusetts Institute of
Technology's (MIT) Concrete Sustainability Hub (CSHub) and the Portland
Cement Association (PCA) to talk about concrete's role in a sustainable
low-carbon economy and how Congress and the cement and concrete
industries can work together to address emissions from the industrial
manufacturing sector and advance our nation's climate reduction goals.
I am Executive Director of the MIT Concrete Sustainability Hub, a
dedicated interdisciplinary team of researchers from several
departments across MIT working on concrete, buildings, and
infrastructure science, engineering, and economics since 2009. The MIT
CSHub brings together leaders from academia, industry, and government
to develop breakthroughs using a holistic approach that will achieve
durable and sustainable homes, buildings, and infrastructure in ever
more demanding environments.
We conduct our research with the support of the Ready Mixed
Concrete Research and Education Foundation and the Portland Cement
Association (PCA). PCA is the premier advocacy, policy, research,
education, and market intelligence organization serving America's
cement manufacturers. PCA members represent 92 percent of the United
States' cement production capacity and have distribution facilities in
every state in the continental U.S. Cement and concrete product
manufacturing, directly and indirectly, employs approximately 610,000
people in our country, and our collective industries contribute over
$125 billion to our economy (see details in Figure 1). Portland cement
is the fundamental ingredient in concrete. The Association promotes
safety, sustainability, and innovation in all aspects of construction;
fosters continuous improvement in cement manufacturing and
distribution; and promotes economic growth and sound infrastructure
investment. PCA also works hand in hand with our partner associations
and companies advancing the interests and sustainability of concrete
building materials and products through the North American Concrete
Alliance (NACA).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
In my testimony today, I would like to leave the Committee with
five fundamental points about the path to sustainability in the
industrial manufacturing sector through the lens of the cement and
concrete industries.
First, while cement and concrete are separate and distinct
materials, with different manufacturing processes and emissions
profiles, they are inherently linked as an end-use building material
and should be measured in the context of that end-use sustainability
profile. Cement and concrete building materials (CCBMs), like steel,
wood, glass, and other building materials, should be considered in
terms of their embodied carbon across their full life cycle--from
materials sourcing and manufacturing, to productive use, reuse,
recycling, or disposal. Anything less than a life cycle approach
creates a shell game where carbon emissions just shift from one part of
the economy to another, or one nation to another, without solving the
global challenge of climate change.
Second, CCBMs are and will continue to be critical and
irreplaceable building materials for our national economy, providing
sustainable, resilient, safe, and energy-efficient building solutions
for the development and maintenance of our nation's infrastructure and
built environment. When considered across their full life cycle, CCBMs
provide comparable if not superior performance in terms of embodied
carbon, resilience, safety, and climate adaptability when compared
against other building materials.
Third, CCBM manufacturers are committed to working with
policymakers, environmental scientists and engineers, builders, and
customers to improve their sustainability and carbon intensity while
maintaining the performance characteristics and value that have made
CCBMs so important to our economy. CCBM manufacturers already invested
billions of dollars to upgrade manufacturing facilities and processes,
increase the fuel and energy efficiency of the manufacturing process,
and reduce carbon and other air, waste, and water emissions. Where
allowed under federal and state regulations, many of our manufacturers
have looked for opportunities to incorporate lower-carbon alternative
fuels like used tires, biomass, and other non-hazardous secondary
materials into the manufacturing process.
Fourth, the CCBM industry faces unique challenges in building upon
these initial sustainability efforts. With respect to fuel-related
emissions, most of the opportunities for energy efficiency improvements
for cement plants have been leveraged, and those remaining are often
prohibitively expensive with limited impact. Federal and state
regulations discourage the use of many lower-carbon alternative fuel
sources, treating non-hazardous secondary materials like non-recyclable
paper, plastic, and fibers as dangerous wastes, and cement
manufacturers as incinerators. Many cement facilities cannot even
transition from coal to lower-carbon natural gas due to the lack of
natural gas pipelines and delivery infrastructure.
But fuel emissions are only part of the emissions reduction
challenge. Cement manufacturers face a heretofore unsolved basic
chemical fact of life--the industrial process for manufacturing cement
from limestone results in the chemical release of carbon dioxide. No
level of investment in additional energy efficiency technology or
alternative fuels will address these process emissions, which
constitute the majority of the cement industry's emissions. Only
innovation and new technologies for carbon capture, transport, use,
and/or storage will address these emissions, and these technologies are
still years, if not decades away from plant-scale deployment in the
cement industry. Bringing these technologies to market will require
billions of dollars of additional investment in research, development,
pilot scale testing, and infrastructure.
Fifth, any national carbon reduction strategy will need to
recognize the economic realities of today's global market economy.
Cement is a fungible global commodity, and domestic cement
manufacturers are price takers rather than price makers, with limited
ability to pass additional costs on to customers who can easily switch
to lower-cost, often higher carbon imported cement. Domestic cement
manufacturers cannot compete in a global market against foreign
importers and countries who are not doing their fair share to reduce
emissions. If the U.S. is to maintain a healthy domestic cement
industry and the jobs and contributions to the domestic economy it
provides, policymakers will need to address the risk of trade leakage
head on. Policymakers in the EU, Canada, and California have recognized
the need to protect energy-intensive trade exposed industries from
trade leakage, and Congress needs to provide for a level competitive
playing field for cement, concrete, and other industrial manufacturers.
With these facts in mind, the concrete and cement industries will
need help from Congress to do their part. Congress can start by
reducing the barriers manufacturers face to taking early action:
reform and streamline federal and state permitting
regulations under the Clean Air Act's New Source Review program
to update facilities with more energy efficient manufacturing
equipment;
reform federal air and waste laws to treat non-
hazardous secondary materials like non-recyclable paper,
plastic, and fibers as fuel sources, not just waste products
destined for landfills;
expedite the permitting process for energy
infrastructure projects, including pipelines to transport
natural gas and other lower-carbon fuels to cement plants; and
perhaps most important, provide dedicated funding
for research, development, and deployment of commercial scale
carbon capture, transport, use, and storage technologies needed
to manage industrial process emissions and other hard-to-abate
emissions from industrial manufacturing.
The remainder of this document provides background on CCBMs and
opportunities, barriers, and solutions for enabling low-carbon pathways
in the sector.
1 Background on concrete and cement
1.1 Concrete is critical for sustainable development
Concrete plays a critical role in achieving societal goals for
sustainable development. It is required for nearly all aspects of our
built environment including buildings, pavements, bridges, dams, and
other forms of infrastructure. Infrastructure is required to achieve
all 17 of the United Nation's sustainable development goals.\1\ As
growth in urban and suburban areas of the US significantly outpaces
growth in rural areas (13%, 16%, and 3%, respectively since 2000),\2\
demand for buildings and infrastructure will increase to meet the needs
of migration and immigration. Calls for increased housing to address
affordable housing shortages and more resilient buildings and
infrastructure to mitigate the impacts of natural disasters will also
lead to increased construction using concrete. While this development
is inevitable, it is possible to make it sustainable.
1.2 Concrete is the most used building material in the world
Concrete's critical role in our built environment is manifest in
how much it is used. Figure 2 shows global production (per capita) of
common building materials.\3\ Production volumes for cement, the
binding agent in concrete, are nearly three times as much as steel, and
concrete production is approximately seven times as much as cement (as
shown in the chart). This significant consumption means it is also
important to address when setting industrial emission targets.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.3 Concrete is a mixture that usually includes cement as a binder
Concrete is made using five basic ingredients: coarse aggregates
(gravel), fine aggregates (sand), binder (including cement), water, and
admixtures (chemicals that can change concrete properties). These can
be combined in infinite ways to meet performance requirements including
strength, stiffness, density, constructability, and durability. When
the binder is mixed with water it hardens to create a paste that keeps
the aggregates in place.
There are numerous types of binders that can be used in concrete,
as shown in Figure 3. Some are based on materials that can be mined and
transformed into binders, whereas others are derived from waste
materials. The most common binder used is portland cement (the name
derives from the type of mineral first mined from the Isle of Portland
in the UK when the process was developed in the 1800s). Portland cement
is primarily made using limestone, which is abundantly available all
over the world, can be produced within tight and reliable
specifications, and has been used extensively for over 150 years,
thereby making it the preferred binder for producing concrete.
Alternative binders to portland cement are referred to as supplementary
cementitious materials (SCMs). These include naturally occurring
materials, such as natural pozzolans or calcined clays, and waste
materials, such as fly ash from coal fired power plants, granulated
slag from steel production, and more recently ground post-consumer
glass. Availability and composition of SCMs can vary significantly, and
they can have a different impact on the performance of concrete than
portland cement.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.4 Cement production has energy and process-related emissions
The cement production process is shown in Figure 4 \4\. Limestone
and other raw materials are mined and then go through a series of
treatment steps before entering the kiln (step 6), which requires
significant amounts of energy to maintain at 1,450 +C (these are
referred to as energy or thermal emissions). The limestone is
transformed into clinker in the kiln in a process called calcination
that emits carbon dioxide (these are referred to as process emissions).
The clinker may be blended with other cementitious binders and then
ground to create the final cement product.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Production of conventional portland cement in the US emits about 1
kg of carbon dioxide for every kg of cement produced \5\. As shown in
Figure 5, approximately 50% of these emissions are from the calcination
process, and 40% are from thermal or energy generation processes
(maintaining the kiln at 1,450 +C).
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.5 Cement drives concrete's environmental impact
Figure 6 shows that by mass, concrete is primarily made up of
aggregates. However, the greenhouse gas emissions (which are
predominantly carbon dioxide) are from the cement. The aggregates have
very low environmental footprint because they are simply mined from
quarries without further transformation.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.6 Concrete and cement are low-impact materials
On a per unit weight basis, concrete and cement have low embodied
carbon dioxide and energy footprints (i.e., emissions and energy
associated with production). Figure 7 compares these measures with
those of other industrial materials \7\. Concrete's environmental
footprint is so much lower than other materials because it is primarily
made from aggregates, which, as noted above, have a low environmental
footprint. While cement has significant process and energy emissions,
they are smaller than those of other materials such as metals.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.7 Cement emissions constitute approximately 1% of US greenhouse gas
emissions
Estimating greenhouse gas (GHG) emissions from cement production is
difficult because it requires tracking both process and energy-derived
emissions, and energy-derived emissions are rarely tracked for a
specific industrial sector. For example, the most reputable
quantitative estimate of global cement emissions as a fraction of all
emissions has been done by the PBL Netherlands Environmental Agency
\8\. They stated that process emissions contributed ``to about 4% of
the total global emissions in 2015'' (pg. 64). To estimate total cement
emissions, they state: ``Fuel combustion emissions of CO2 related to
cement production are of approximately the same level, so, in total,
cement production accounts for roughly 8% of global CO2 emissions.''
(pg. 64-5) Their study details how they estimated cement emissions but
does not describe how total GHG emissions are estimated. Thus, the 8%
figure is an approximation.
Estimating US cement GHG emissions can be done using the US EPA's
GHG inventory \9\. Process-derived emissions from cement production
were 40.3 MMT CO2 Eq. (million metric tons carbon dioxide equivalent)
in 2017, out of 6,456.7 MMT CO2 Eq., or approximately 0.6%. The
inventory does not quantify energy-related emissions from cement
production, so we are forced to use a similar approximation to the PBL
study that energy and process-derived emissions are the same. This
would make total cement industry emissions approximately 1.2% of total
US GHG emissions in 2017.
1.8 The US produces a small fraction of the world's cement
China produces more than half of the world's cement, as shown in
Figure 8 \6\ \8\. The US produced approximately 2% of global cement in
2015, compared to China's 58%, India's 7%, and the EU's 4% \8\. Thus,
while it is important to strive to lower emissions from US cement
production, it is also important to consider that the US has lower
production than China, India, and the EU.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
1.9 Different standards and practices for cement production worldwide
present opportunities for leakage
It is basic economics that in a global market for a commodity
product like cement, managing the costs of production is critical to
ensuring the continued competitiveness of domestically-manufactured
products. Facilities that can produce, ship, and deliver cement to
customers at a competitive cost will flourish. Those that cannot
maintain cost-competitiveness will fail.
These costs are determined in large part by the design and
operating practices of the manufacturing facilities where cement is
produced. While every cement manufacturing plant is different, the
basic steps in the manufacturing process are the same. Costs of
production are not, however, particularly with respect to compliance
costs imposed by government entities. Government policies that impose
additional costs on manufacturers have a direct impact on the global
competitiveness of manufacturers and the risk of trade and carbon
leakage.
This is particularly the case for the cement industry for several
key reasons:
The energy intensive nature of the manufacturing
process, combined with the significant process emissions
resulting from the conversion of limestone to cement makes the
cement industry particularly vulnerable to policies that
increase the cost to manage carbon emissions.
U.S. cement manufacturers have limited ability to
cost-effectively reduce GHG emissions and, therefore, to
minimize compliance costs through investments in direct
abatement.
U.S. cement manufacturers have limited ability to
pass through compliance costs to customers without a
significant loss in market share.
Due to this unique combination of features, carbon pricing is
likely to result in significant leakage in the U.S. cement industry
unless countervailing measures are applied.
To illustrate this challenge, PCA estimates that given a carbon
price of $40 per metric ton, the U.S. cement industry would experience
an operating cost increase of more than $2.6 billion per year,
representing roughly 50% of the U.S. cement industry's value added
($5.0 billion) and 30% of its total shipments ($8.7 billion) in 2016.
Such increases could easily increase the cost of producing cement by
more than $30 per ton, making domestic cement uncompetitive in many
markets served by imports.
As Congress develops a comprehensive federal climate policy for
U.S. manufacturers, this lesson in ``economics 101'' should be front
and center as a consideration. Any comprehensive climate policy that
imposes increased operating, compliance, or research and development
costs on cement manufacture must include measures to address the risk
of leakage from imported products.
2 Opportunities to lower carbon dioxide emissions of cement production
2.1 There are four primary levers for reducing cement production
carbon dioxide emissions
The World Business Council on Sustainable Development (WBCSD) and
the International Energy Agency's (IEA) Cement Sustainability
Initiative (CSI) produced a technology roadmap for the cement sector in
2018 \10\. They identified four carbon reduction levers:
Improving energy efficiency in the cement plant.
Switching to alternative fuels that are less carbon
intensive than conventional fuels, such as biomass and waste
materials.
Reducing the clinker to cement ratio by increasing
the use of blended materials (including some of the
aforementioned SCMs, among others) in the production of blended
cements.
Use emerging technologies to capture carbon and use,
store, or sequester it, including in the production of new
building materials.
The first three levers are already being used by the cement
industry in the US and beyond.
2.2 The US cement industry has made significant efforts to improve
energy efficiency and use of alternative fuels
U.S. cement manufacturers continue to invest billions of dollars in
technologies to increase the energy efficiency of their plants and
reduce carbon emissions associated with the cement manufacturing
process. Duke University evaluated the improvement in the cement
industry's energy performance over a 10-year period and found that:
energy intensity improved 13 percent, the energy performance of the
industry's least efficient plants changed most dramatically, total
source energy savings were 60.5 trillion Btu annually, and
environmental savings were 1.5 million metric tons of energy-related
carbon emissions \11\. As a result, today's plants are far more fuel
efficient than a generation ago, in many cases approaching the maximum
levels of fuel efficiency technically feasible.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Another key opportunity to reduce fuel emissions is to increase the
use of lower carbon alternative fuels. Secondary materials like post-
industrial, post-commercial, post-consumer paper, plastic, and other
materials have tremendous energy value, providing a cost-effective and
sustainable alternative to traditional fossil fuels. The cement
industry has a long history of safe and efficient use of alternative
fuels, ranging from used tires and biomass to a wide variety of
secondary and waste materials. The high operating temperature and long
residence times in the kiln make cement kilns extremely efficient at
combusting any fuel source with high heating value while maintaining
emissions at or below the levels from traditional fossil fuels. For the
cement industry, secondary materials that would otherwise have little
market value are valuable commodities, offering a cost-effective and
environmentally sustainable alternative to traditional fossil fuels.
While these efforts are important, there is much more to be done.
Today, alternative fuels make up only about 15 percent of the fuel used
by domestic cement manufacturers, compared to more than 36 percent in
the European Union, including as high as 60 percent in Germany. Legal
and regulatory barriers to alternative fuels use prevent the U.S. from
having similar alternative fuels utilization rates to Europe.
The CCBM industry faces unique challenges in building upon these
initial sustainability efforts. With respect to fuel-related emissions,
most of the low-hanging fruit opportunities for energy efficiency
improvements for cement plants have been leveraged, and those remaining
are often prohibitively expensive with limited impact. Further
improvements will also require cooperation by federal and state
regulators that determine, through their regulations and permitting
programs, whether and when facilities can adopt lower-carbon
technologies, facility improvements, operations, and fuels.
2.3 Blended cements are available today
Portland limestone cement (PLC) is an example of a blended cement
that is readily available from cement manufacturers. It is made by
blending limestone with clinker (Step 8 of Figure 4). The limestone
replaces clinker in the cement and therefore, has lower carbon dioxide
emissions per unit weight of cement produced.
PLC has been used in Europe for over fifty years \12\. Current
European standards allow for up to 35% replacement of cement with
limestone, whereas in the US and Canada the limit is 15%. Studies have
shown that PLC has nearly the same performance as ordinary portland
cement (OPC) \12\, but with a 10% reduction in carbon dioxide emissions
from production (assuming 15% replacement) \13\. Costs of PLC are
similar to OPC, as is its performance. Given, the lower environmental
footprint, it would appear to be a strong candidate for increased use.
However, PLC is approximately 1% of all cement produced in the US (all
types of blended cements make up less than 3% of all cement produced in
the US) \14\. This is primarily due to an unwillingness of concrete
specifiers (such as engineers) to choose PLC over OPC, which has a
longer history of use.
2.4 The technology roadmap for the global cement industry identifies
emissions reductions required to meet global targets
CSI's 2018 technology roadmap \10\ evaluated the required emissions
reductions in the global cement industry required to meet a 2 +C
climate scenario (2DS--maximum of 2 +C global temperature increase), as
well as a beyond 2 +C scenario (B2DS--lower than 2 +C global
temperature increase). They used a reference technology scenario (RTS)
that assumed relatively flat direct carbon dioxide emissions until the
year 2050 despite increases in cement production. This reference
scenario assumes continued progress to reduce emissions associated with
cement production at current rates.
As shown in Figure 10, the 2DS represents a 24% reduction in direct
carbon dioxide emissions from the RTS by 2050. The B2DS represents an
additional 45% reduction in direct carbon dioxide emissions over the
2DS.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Lowering emissions requires a combination of the four levers
mentioned in Section 2.1, as illustrated in Figure 11. Carbon capture
technologies contribute 48% of cumulative emissions reductions,
followed by use of blended cements (reduction of clinker to cement
ratio) at 37%. There are fewer opportunities to improve thermal energy
efficiency in cement plants or switch to alternative fuels.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
The CSI roadmap includes estimates of global investments required
to meet both the RTS and 2DS (Figure 12). $107 billion to $127 billion
are estimated cumulative investments to meet the RTS globally by 2050
(24-28% increase over no action), and an additional $176 billion to
$244 billion required to meet the 2DS (32-43% increase over RTS). No
investment estimates are available for the US.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
3 Opportunities to lower carbon dioxide emissions of concrete
The majority of concrete's environmental footprint derives from the
footprint of the materials in the concrete, rather than the production
of the concrete, which primarily involves mixing (materials represented
95% of the GHG emissions in the case shown in Figure 6). Thus, use of
low-carbon (i.e., low carbon dioxide footprint) constituent materials
is the primary mechanism for lowering carbon dioxide emissions of
concrete. There are three main categories of low-carbon constituent
materials.
3.1 Blended cements
Blended cements, such as portland limestone cement, were described
in Section 2.3 and are currently produced by cement manufacturers. They
make use of many of the same SCMs used in concrete such as fly ash and
blast furnace slags (described in Section 1.3). Production of blended
cements varies significantly worldwide depending on demand, which is
primarily influenced by historical practices for producing concrete,
although availability of SCMs is a factor as well (e.g., China and
India have significant availability of fly ash from coal fired power
plants). There is currently limited demand for blended cements in the
US--they make up less than 3% of all cement produced in the US.\ 14\
3.2 Supplementary cementitious materials
SCMs are used more extensively in the US in concrete than in
cement. Conventional SCMs include fly ash and blast furnace slag,
although other alternatives exist that are used more commonly in other
parts of the world including silica fume, natural pozzolans, calcined
clays, vegetable ash. More recently, binders made from ground post-
consumer glass have become commercially available at small scales.
Availability, chemical composition, performance, and cost often
determine whether SCMs are used in concrete.
3.3 Cement, aggregate, and concrete made from captured carbon dioxide
The process of mineralization involves exposing minerals to carbon
dioxide to create a carbonate mineral. It is a natural process that
took place over millions of years to create the limestone used in the
production of cement. More recently it has been proposed as a form of
carbon capture and utilization (CCU) to create materials that can be
used in concrete production. This includes the production of binders,
aggregates, and concrete (i.e., carbon dioxide is used in the mixing
process) using carbon captured from industrial sources, potentially
including cement plants. Several companies have been created over the
past decade in an attempt to commercialize mineralization for building
products \15\. There is significant variation in the degree to which
they make use of carbon dioxide. Most of the companies are in a start-
up phase with demonstration plants or small production volumes, but
several of them have products currently being used in construction
projects. In some cases, the technologies can only be used to make
concrete blocks in production facilities (as opposed to cast-in-place
concrete on job sites) because of the requirements to control the
mixing of carbon dioxide with minerals. As such, this limits their
application to cases where concrete blocks can be used (such as
buildings).
3.4 Considerations for the use of low-carbon constituent materials
It is important to note that substitution of these low-carbon
constituent materials for conventional materials in a concrete mixture
will not necessarily result in the same performance (strength,
stiffness, constructability, durability) of the concrete mixture.
Designing a concrete mixture to meet performance targets can be a
complicated process that involves trade-offs of many factors that vary
depending on the constituents being used. Furthermore, specifications
for concrete often limit the use of blended cements or SCMs \16\. Thus,
requirements for substitutions of conventional materials for low-carbon
alternatives are not straightforward and may not be feasible for many
situations.
4 Importance of a life cycle perspective in evaluating environmental
impacts of buildings and infrastructure using concrete
The true environmental impact of concrete can only truly be
evaluated using a life cycle perspective that encompasses its
application in buildings and infrastructure. For example, a life cycle
assessment of several building types conducted by our team at MIT has
shown that embodied environmental impacts of buildings (associated with
material production and building construction) are at most 10% of the
total life cycle greenhouse gas emissions (Figure 13); energy use
represents the vast majority of environmental impacts \17\.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Similarly, the life cycle impacts of pavements are dominated by the
use phase, which includes excess fuel consumption of vehicles due to
roughness or deflection in the pavements (which leads to additional
energy dissipation in the vehicle).\18\ In the case of the urban
interstate pavements in Figure 14, materials and construction make up
only 26% of the life cycle GHG emissions.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Finally, concrete naturally absorbs carbon dioxide over its
lifetime as part of a chemical process called carbonation, which is the
reverse of the calcination process that leads to process emissions in
the production of cement. A study estimated that 4.5 gigatons of carbon
dioxide has been sequestered in carbonating cement materials worldwide
from 1930 to 2013, offsetting 43% of process CO2 emissions
(Figure 15) \19\. Hence, there is significant potential to use cement
and concrete as a carbon sink in the future.
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Thus, while it is important to seek opportunities to lower embodied
emissions in the built environment, it is also important to consider
the impact that materials and design choices have on life cycle
impacts, particularly if they can enable emissions reductions (e.g.,
through reduced building energy consumption or lower excess fuel
consumption) and carbon uptake.
5 Barriers to adoption of low-carbon solutions
5.1 Regulations prohibit increased use of alternative fuels in cement
plants
Federal policies often discourage rather than embrace the use of
secondary materials as fuel in the industrial sector. The industry's
use of alternative fuels falls under two environmental laws
administered by the U.S. Environmental Protection Agency (EPA), the
Clean Air Act (CAA), and the Resource Conservation and Recovery Act
(RCRA). The CAA addresses ambient air quality and emissions from
manufacturers, power plants, and motor vehicles. RCRA governs the
management of solid waste and the generation, transport, and disposal
of hazardous materials.
In recent years, narrow judicial and regulatory interpretations of
RCRA, the CAA, and EPA regulations have discouraged the use of non-
hazardous secondary materials and wastes as fuels, treating these
materials as dangerous wastes, and facilities using them as
incinerators. These policies are contrary to basic science and public
policy, discouraging the productive conservation and recovery of
resources and increasing the use of emissions-intensive fossil fuels.
EPA recognized this fact in 2011 and issued a regulation known as
the Non-Hazardous Secondary Materials (NHSM) Rule, intended to allow
for secondary materials to be used for energy recovery if they met
specific legitimacy criteria. In theory, the rule provided a way to
distinguish between true waste materials with little to no value as
fuel and those material streams that, traditionally discarded as a
waste, could now be put to far more productive use as alternative
fuels. In practice, the rule has become yet another roadblock to sound
energy and materials recovery policy.
Manufacturers face a costly and time-intensive process to prove, on
a case-by-case basis, why commonly landfilled materials such as
unrecycled plastics, paper, fabrics/fibers, and other secondary
materials should qualify for treatment as fuels, despite their
demonstrably lower greenhouse gas and other air emissions and
comparable heat value. The result is predictable. While alternative
fuels make up an average of 36 percent of the fuel used to manufacture
cement in the European Union (60 percent in Germany), it constitutes
only 15 percent of the domestic cement industry's fuel portfolio.
5.2 New Source Review and other permitting processes discourage energy
efficiency and carbon capture improvements and critical
infrastructure
One of the common-sense strategies for any industry to reduce GHG
emissions is to maintain and improve the operational efficiency of its
facilities over time. Unfortunately, the current Clean Air Act New
Source Review program, as interpreted by the courts and some prior
administrations, actually penalizes companies for increasing the
efficiency of its facilities. This forces companies to reject upgrades
and investments. To address these process emissions and further reduce
industry GHG emissions, manufacturers will need to install carbon
reduction and carbon capture, use, and storage (CCUS) technologies,
other technological advances developed in the future, and implement
process improvements. Under the NSR program, such investments would
face the same permitting and regulatory barriers that new facilities
would face, particularly where the addition of new emissions control
technology for one pollutant has a negative impact on the emissions
profile for another. Congress should revise the NSR process to
encourage, rather than discourage, investments in energy efficiency and
carbon capture, use and storage technologies.
Other energy improvements require investment in infrastructure,
like pipelines and distribution networks. Cement kilns operate 24 hours
per day and almost 365 days per year, and have historically used fossil
fuels, such as coal and petroleum coke, due to the need for plentiful
fuel supplies that can easily be stored and are in plentiful supply. In
recent years, the cement industry has used more natural gas to reduce
GHG and other air emissions. According to the PCA's Labor and Energy
Survey, from 2011 to 2016 the industry increased natural gas use from
3.9% to 15.5% of its fuel use, displacing higher carbon fuels like coal
and petroleum coke and, as a result, lowering GHG emissions. Natural
gas use at cement plants could be further increased if pipelines and
related infrastructure were in place to supply these plants.
Unfortunately, the permitting process under NEPA, the Clean Water Act,
and state standards is preventing many industries from taking advantage
of natural gas by preventing or delaying the necessary supply
infrastructure. Congress should reform the infrastructure permitting
process for badly needed energy infrastructure.
5.3 There is limited room for additional energy efficiency
improvements in cement plants
The heat energy required to heat raw materials to the temperatures
needed to trigger calcination makes cement manufacturing an inherently
energy-intensive process. As noted in Section 2.2, the cement industry
has invested significantly to increase the energy efficiency of its
kilns, grinding equipment, and other operations. Moving forward, the
industry will face increasing challenges in squeezing additional
efficiency improvements out of its operations.
Further increases in efficiency improvements in cement
manufacturing are not on the horizon without a revolutionary
advancement in a completely new technology. The industry's efficiency
is already close to the theoretical maximum. Martin Schneider, a cement
processing expert has noted, ``Taking into account all process-
integrated measures, thermal process efficiency [in cement
manufacturing] reaches values above 80% of the theoretical maximum.''
\20\ That level of thermal process efficiency is unparalleled.
Any marginal increases in efficiency that could be gained,
including technologies such as waste heat recovery, require additional
energy. The basic laws of thermodynamics dictate that it takes energy
to save energy; there is no free lunch. That additional energy
increases the carbon footprint of a cement plant, making each
additional joule of energy efficiency that much more difficult to gain.
This explains why the CSI technology roadmap shows thermal energy
efficiency gains as having the smallest opportunity for carbon dioxide
emissions reductions (Figure 11 in Section 2.4).
5.4 Increased cost of low-carbon cement and concrete products
Publicly available data on prices of low-carbon cement and concrete
products relative to conventional products is not available. However,
anecdotal evidence suggests that there are usually cost premiums for
the low-carbon products. Although one would expect there to be
increased demand for these products in a place like Europe where a
carbon cap and trade system exists, that has so far not been the case.
Furthermore, there is at least one case of an American start-up company
that created a binder using a mineralization process but never achieved
commercial success and had to pivot to other applications \15\. The
highly cost-conscious nature of the construction industry will likely
make this a key barrier for some time.
5.5 Risk aversion of engineers specifying concrete
Given the high stakes involved in structures that use concrete, it
is understandable that civil engineers specifying concrete mixtures
would be risk averse. Engineers typically rely on prescriptive-based
specifications that detail the types and limits of materials that can
be used in concrete mixtures. Following such specifications helps to
mitigate risk for them and the concrete producers because they can
point to the specifications in case there are unforeseen problems. They
also prefer to rely on the use of constituent materials that have been
used in the past because of their perceived familiarity with
performance. The downside of this practice is that it often limits the
use of low-carbon materials, either explicitly or implicitly \16\. As
such, prescriptive specifications inhibit opportunities for innovative
concrete mixtures that make use of low-carbon materials, included
blended cements and SCMs that are available for use today. In addition,
there is a significant burden of proof to demonstrate that new low-
carbon materials will meet long-term structural and durability
requirements.
6 Solutions to enable a low-carbon cement and concrete industry
6.1 Promote adoption of energy efficiency technologies for new and
retrofit cement plants
As noted in Section 5.3, it is possible to make energy efficiency
improvements in cement plants, but they will require more than a simple
federal mandate. Industry will have to partner with government to
identify promising new energy efficiency technologies and make the
investments in research, development, and deployment to bring them to
market.
6.2 Encourage and facilitate increased use of alternative fuels in
cement plants
There is a step the Committee could take today to reduce greenhouse
gas emissions: provide manufacturers with enhanced flexibility to
expand their use of alternative fuels. Congress can and should address
this issue as a simple and early first step by amending the definitions
of ``Recovered Materials'' and ``Recovered Resources'' within RCRA to
distinguish them from solid waste. A core mandate of the Resource
Conservation and Recovery Act is to conserve and recover national
resources. To do so, it must start by clearly recognizing that
materials with energy value are truly ``resources,'' not waste.
In the interim, the Committee should urge EPA to revise the NHSM
Rule, implementing guidance, and interpretations to limit the
processing requirements for ``discarded'' materials to those activities
necessary to create useful fuel. EPA should not impose processing
requirements that add costs to fuel use without materially improving
the fuel value or the emissions associated with its use. Finally,
Congress should urge EPA to act on PCA's pending petition to provide a
categorical exemption for the use of nonrecycled paper, plastics,
fiber, and fabrics as fuel, based on the extensive data already
provided to EPA.
6.3 Encourage and facilitate use of blended cements
As noted in Section 2.3, several blended cements are produced in
the US today, including portland limestone cement and other blended
cements that make use of SCMs, but there is limited demand for them,
most likely due to risk aversion of engineers specifying concrete. The
adoption of performance-based specifications (described below in
Section 6.5) would make it easier to use such cements. In addition,
sponsoring research on the long-term structural and durability
performance of concretes using blended cements will help to mitigate
perceived risk by engineers.
6.4 Support development and deployment of emerging and innovative low-
carbon technologies for cement production including carbon
capture, storage, and utilization
With at least half of the cement industry's greenhouse gas
emissions resulting from the chemical conversion of limestone and other
ingredients into clinker, any long-term carbon reduction strategy for
the cement manufacturing industry will require significant advances in
carbon capture, use, distribution, and storage (CCUS) technologies.
But while many promising technologies are under development
domestically and overseas, few have reached the commercial stage of
development, and most of the research and all of the federal funding
has focused on the energy sector (power, oil, gas), not industrial
sector solutions. This is an important point because, if the US is
going to develop a long-term strategy to reduce carbon emissions from
the industrial sector, policymakers must realize there is no one-size-
fits-all solution to capturing, transporting, and using or storing
carbon emissions. Industrial sources face different and far more
complex technical challenges and operating conditions in adopting
carbon capture, use, and sequestration technologies.
In short, successful commercialization and deployment of any
broadly-applied CCUS carbon mitigation strategy will require targeted
funding and financial incentives to move the technology from the
demonstration and pilot stage to commercial-scale use--particularly
within the industrial sector.
Potential policy mechanisms that can help accelerate these
technologies include:
Provided targeted CCS research, development, and
deployment funding for the cement sector.
Use long-term and predictable tax policy to
incentivize R&D and rapid investment in carbon capture,
distribution, use, and storage technologies and infrastructure.
Reward early investment and adoption in new
technologies.
6.5 Support deployment of performance-based specifications for
concrete to spur innovation in concrete mixtures
In contrast to prescriptive-based specifications, performance-based
specifications define performance targets for concrete (strength,
stiffness, constructability, durability) with minimal limitations on
the constituent materials that may be used \21\. This enables
significant opportunities to spur innovation in concrete mixtures by
enabling use of low-carbon materials \22\. Although performance-based
specifications have been proposed for over two decades, there has been
limited adoption within the architecture, engineering, and construction
community, most likely due to a preference for using materials and
practices that have been used in the past. A shift in paradigm to
performance-based specifications will require encouragement and
incentives.
references
1. Thacker, S. et al. Infrastructure for sustainable development.
Nat. Sustain. 2, 324-331 (2019).
2. Parker, K. et al. What Unites and Divides Urban, Suburban and
Rural Communities. (2018).
3. Monteiro, P. J. M., Miller, S. A. & Horvath, A. Towards
sustainable concrete. Nat. Mater. 16, 698-699 (2017).
4. International Energy Agency. Cement Technology Roadmap 2009.
(2009). doi:978-3-940388-47-6
5. Portland Cement Association. Portland Cements Environmental
Product Declaration. (2016).
6. Rodgers, L. Climate change: The massive CO2 emitter
you may not know about. BBC News (2018).
7. Barcelo, L., Kline, J., Walenta, G. & Gartner, E. Cement and
carbon emissions. Mater. Struct. 47, 1055-1065 (2014).
8. Olivier, J. G. J., Janssens-Maenhout, G., Muntean, M. & Peters,
J. A. H. W. Trends in global CO2 emissions: 2016 Report.
(2016).
9.United States Environmental Protection Agency. Inventory of US
Greenhouse Gas Sources and Sinks: 1990-2017. (2019).
10. International Energy Agency. Technology Roadmap--Low-Carbon
Transition in the Cement Industry. (2018).
11. Boyd, G. & Zhang, G. Measuring Improvement in the Energy
Performance of the U . S . Cement Industry. (2011).
12. Tennis, P. D., Thomas, M. D. A. & Weiss, W. J. State-of-the-Art
Report on Use of Limestone in Cements at Levels of up to 15%. (2011).
13. Bushi, L. & Meil, J. An Environmental Life Cycle Assessment of
Portland-Limestone and Ordinary Portland Cements in Concrete. (2014).
14. Tennis, P. D. US Production of Portland-Limestone Cements--2012
through 2018. (2019).
15. Collins, C. Recasting Cement: The Race to Decarbonize Concrete.
Medium (2019).
16. Obla, K. H. & Lobo, C. L. Prescriptive Specifications: A
Reality Check. Concrete International 29-31 (2015).
17. Ochsendorf, J. et al. Methods, Impacts, and Opportunities in
the Concrete Building Life Cycle. Res. Rep. R11-01, Concr. Sustain.
Hub, Dep. Civ. Environ. Eng. Massachusetts Inst. Technol. 119 (2011).
18. Xu, X., Akbarian, M., Gregory, J. & Kirchain, R. Role of the
use phase and pavement-vehicle interaction in comparative pavement life
cycle assessment as a function of context. J. Clean. Prod. 230, 1156-
1164 (2019).
19. Xi, F. et al. Substantial global carbon uptake by cement
carbonation. Nat. Geosci. 9, 880-883 (2016).
20. Schneider, M. Process technology for efficient and sustainable
cement production. Cem. Concr. Res. 78, 14-23 (2015).
21. National Ready Mixed Concrete Association. Guide Performance-
Based Specification for Concrete Materials. (2012).
22. Lemay, L., Lobo, C. & Obla, K. Sustainable concrete: The role
of performance-based specifications. in Structures Congress 2013:
Bridging Your Passion with Your Profession--Proceedings of the 2013
Structures Congress 2693-2704 (2013).
Ms. Castor. Thank you very much.
Mr. Crabtree, you are recognized for 5 minutes.
STATEMENT OF BRAD CRABTREE
Mr. Crabtree. Chair Castor, Ranking Member Graves, members
of the select committee, thank you for inviting me to testify.
I also want to recognize my fellow North Dakotan,
Congressman Armstrong. Good to see you.
I am vice president for carbon management at the Great
Plains Institute, and I am here today in my capacity as
director of the Carbon Capture Coalition.
The 70 industry, labor, and environmental members of the
Carbon Capture Coalition are dedicated to a common goal:
economy-wide deployment of carbon capture to reduce emissions,
support domestic energy and industrial production, and protect
and create high-wage jobs.
Economy-wide deployment of carbon capture is indispensable
to reducing industrial emissions and to meeting midcentury
climate goals.
In March, coalition members urged this committee to include
carbon capture research, development, and commercial deployment
as an essential component of a broader strategy to decarbonize
power generation in key industrial sectors by midcentury. Their
letter cited IEA and IPCC modelling to underscore that carbon
capture is not optional but essential from a climate
perspective.
Industrial sectors, it has been noted, are responsible for
roughly one-third of U.S. global greenhouse gas emissions. Many
sources of industrial carbon emissions are inherent to the
chemistry of industrial processes themselves. They often have
few, if any, alternative options beyond carbon capture to
reduce those process emissions.
Industries such as refining, steel, cement, chemicals, and
others are central to modern life. They provide high-wage jobs
to millions of Americans, and they support the economic and
social fabric of our Nation. Yet their low-margin, trade-
exposed commodity businesses are vulnerable to increases in
costs due to emissions reductions. Fortunately, Federal policy
can reduce these costs while avoiding plant closures and the
offshoring of jobs and livelihoods.
We also start from a strong foundation of American
technology leadership. Successful large-scale carbon capture
and storage began in 1972 in west Texas, and the U.S. now has
12 commercial-scale facilities capturing over 25 million tons
of CO2 every year from industrial sources. Roughly
5,000 miles of existing CO2 pipelines in 11 States
transport that CO2 from where it is captured to
where it can be stored.
We are also now seeing growing innovation and investment in
technologies to produce fuels, chemicals, building products,
and advanced materials from captured carbon. This will create
new markets for industrial emissions of CO2 and its
precursor, carbon monoxide.
Important innovation is also occurring overseas. Earlier
this month, a U.S. delegation, coordinated by the Great Plains
Institute, traveled to the United Arab Emirates, where Emirates
Steel has the first, the world's first and only large-scale
carbon capture project in that sector.
We also visited Belgium, where ArcelorMittal is partnering
with U.S. technology firm LanzaTech on a project that will
produce just over 20 million gallons of ethanol from steel
plant carbon monoxide emissions.
Federal policy has a crucial role to play in helping to
sustain American leadership and innovation in building this new
carbon economy. The coalition commends Congress for last year's
passage of landmark bipartisan legislation to reform and expand
the section 45Q tax credit for geologic storage and for the
beneficial use of captured carbon. We need to build on this
important first step.
Toward that end, the Carbon Capture Coalition recently
released a Federal Policy Blueprint recommending Federal
financial incentives and other policies to complement 45Q in
achieving economy-wide deployment of carbon capture, transport,
use, removal, and geologic storage.
The Blueprint reflects a consensus of the over 70
companies, unions, and NGOs that are participating in the
coalition, something of a rarity in Washington right now.
Coalition participants recognize that a whole portfolio of
policies has supported the successful development and
commercial scale-up of wind, solar, and other low and zero
carbon technologies. Economy-wide deployment of carbon capture
will require a comparable policy portfolio.
My written testimony outlines many of the Blueprint's
specific policy recommendations, and it is also submitted into
the record.
In summary, the coalition's policy recommendations fall
into four major categories: ensuring effective implementation
of the 45Q tax credit by Treasury and other agencies to make
sure that the tax credit provides the expected certainty and
financial flexibility; providing additional Federal incentives
to enhance and complement 45Q to help more carbon capture
transport, use, removal, and storage projects to achieve
financial feasibility; making the development and financing of
CO2 transport networks a key component of broader
national infrastructure policy; and finally, expanding and
retooling Federal funding for research, development,
demonstration, and deployment to make sure that the next
generation of innovative technologies that will lower costs and
improve performance make it to the marketplace.
In conclusion, economy-wide deployment of carbon capture is
not optional if we are to decarbonize industry and achieve
climate goals while avoiding the offshoring of jobs. We must
build on the nearly 50 years of successful experience in this
country with large-scale industrial carbon capture and learn
from successful policy precedents in other areas and go on to
implement a comprehensive policy portfolio that helps put our
Nation on a path toward midcentury decarbonization.
Thank you again for the opportunity to testify.
[The statement of Mr. Crabtree follows:]
Testimony of Mr. Brad Crabtree, Director, Carbon Capture Coalition,
Before the House Select Committee on the Climate Crisis, September 26,
2019
Chairwoman Castor, Ranking Member Graves, and Members of the Select
Committee, thank you for inviting me to testify. My name is Brad
Crabtree, and I am Vice President for Carbon Management at the Great
Plains Institute. I am here today in my capacity as Director of the
Carbon Capture Coalition, a national partnership (https://
carboncapturecoalition.org/about-us/) of over 70 energy, industrial and
technology companies, labor unions, and environmental, clean energy and
agricultural organizations.
My testimony will address:
the essential role that carbon capture must play in
managing industrial carbon emissions to meet midcentury climate
goals;
existing examples of U.S. and global technology
innovation and leadership; and
key elements of a U.S. federal policy framework
needed to achieve deployment of carbon capture technologies in
key carbon-intensive industrial sectors.
Carbon Capture is Essential to Managing Industrial Emissions to Meet
Midcentury Climate Goals
The Carbon Capture Coalition was established in 2011 to help
realize the full potential of carbon capture as a national strategy for
reducing carbon emissions, supporting domestic energy and industrial
production, and protecting and creating high-wage jobs. The Coalition's
members have forged an alliance of unprecedented diversity in the
context of U.S. federal energy and climate policy, and they are
dedicated to achieving a common goal: economywide deployment of carbon
capture from industrial facilities, power plants, and ambient air.
Economywide deployment of carbon capture is indispensable to
reducing industrial emissions. In March, the Coalition's industry,
labor and NGO participants submitted a joint letter to this Committee
and other committees of jurisdiction urging Congress ``to include
carbon capture research, development, and commercial deployment as an
essential component of a broader strategy to decarbonize power
generation and key industry sectors by midcentury.''
In their letter, Coalition participants pointed to modeling by the
International Energy Agency (IEA) and the Intergovernmental Panel on
Climate Change (IPCC) that illustrates the critical role carbon capture
must play in industrial decarbonization to meet climate goals. For
example, in its modeling of scenarios for limiting warming to 2+
Celsius, the IEA found that carbon capture must contribute 14 percent
of cumulative emissions reductions by midcentury and 20 percent
annually by 2050, with 45 percent of those reductions coming from
industrial sources.
Capture from industrial facilities is not optional from a climate
perspective. Industrial sources constitute roughly one third of global
and domestic carbon emissions. While a range of measures can be taken
to decarbonize energy inputs into industrial production (including
carbon capture in power generation and reforming natural gas to produce
hydrogen), many sources of carbon emissions are inherent to the
chemistry of industrial processes themselves, which often have few, if
any, alternative mitigation options available beyond carbon capture.
Figure 1 highlights the significance of process emissions as a
component of broader industrial emissions from refining, pulp and
paper, chemicals, cement and lime, and iron and steel production.
[GRAPHIC] [TIFF OMITTED] T8473A.016
The outputs of these and other industries are central to modern
life, underpinning the livelihoods of millions of Americans and
contribute to the economic and social stability of entire communities
and regions across our nation. Industrial production and associated
energy production and manufacturing support a high-skill, high-wage
jobs base, yet these sectors' low-margin, trade-exposed commodity
businesses leave them vulnerable to increases in costs incurred to
reduce emissions. Deployment of carbon capture technologies, coupled
with appropriate financial incentives and other policies to reduce
costs and buy down risk, can enable the decarbonization and continued
operation of existing industrial facilities, while avoiding their
closure and the offshoring of jobs and livelihoods.
U.S. and global technology innovation and leadership
To underscore the challenge before us, over half of global
industrial carbon emissions come from just three sectors--steel, cement
and basic chemicals--and over half of those three industries' emissions
are process emissions unrelated to energy inputs. Yet, there is only
one large-scale commercial carbon capture facility operating in the
world today in these three industries, and that is a steel plant in the
United Arab Emirates.
Fortunately, carbon capture works, and we have a strong foundation
of American technology leadership on which to build as we embark on
strategies and policies to reduce industrial carbon emissions while
sustaining our country's high-wage jobs base. Currently, there are 23
large-scale carbon capture and storage facilities operating in the
world today, capturing nearly 40 million metric tons of CO2
annually. Ten of those large-scale facilities are located in the U.S.
In terms of industrial carbon capture, there are 12 operating
commercial-scale facilities in the U.S. that capture CO2
from a variety of industrial sources. They have a combined annual
capture capacity of just over 25 million metric tons. The transport,
use and geologic storage of that CO2 is enabled by roughly
5,000 miles of existing CO2 pipelines in 11 states.
Successful commercial and operational experience with large-scale
industrial carbon capture with geologic storage dates back to 1972 in
the U.S., when oil companies in West Texas first began capturing
CO2 from natural gas processing for use in enhanced oil
recovery. Next, industrial carbon capture expanded to gasification for
fertilizer and substitute natural gas production, followed by capture
from fermentation at ethanol plants. Finally, large-scale commercial
carbon capture from refinery hydrogen production came on line earlier
in this decade.
These successful examples of commercial carbon capture represent
higher purity industrial sources of CO2 with lower costs of
capture. These ``low-hanging fruit'' for industrial decarbonization
include fermentation in ethanol production, gas processing,
gasification and natural gas reformation for hydrogen production, all
of which produce relatively pure streams of CO2. Their costs
of CO2 capture and compression are now within range of the
newly revamped federal Section 45Q tax credit. A key remaining
deployment need for these sectors is federal support for financing
additional infrastructure to transport the CO2 from where it
is captured to where it can be stored or put to beneficial use.
A second tier of industrial processes produce lower-purity streams
of CO2, and these include cement, catalytic cracking in
refining, and steel production. These lower purity sources have seen
little or no commercial-scale deployment of capture technology because
of their higher capture costs. To varying degrees, they will need
additional federal policy support for early commercial demonstration to
complement the existing 45Q tax credit to reach financial feasibility.
In addition to effective demonstration of capture technologies,
commercial markets and uses of captured industrial CO2 in
the U.S. have expanded over time as well. Until this decade, most
CO2 captured from industrial sources was utilized and
geologically stored through enhanced oil recovery, with some
CO2 destined for food and beverage, dry ice and other high-
value niche markets. In 2017, Archer Daniels Midland began large-scale
storage of CO2 from ethanol production in a saline geologic
formation, a geologic storage pathway anticipated to grow significantly
now that the 45Q tax credit provides $50 per metric ton for saline
storage over $35 per ton for CO2 stored through EOR. Looking
ahead, rapidly growing interest and investment in the development and
commercialization of different technology pathways to produce fuels,
chemicals, building products, advanced materials and other beneficial
products from captured carbon will create new markets for industrial
emissions of carbon dioxide and its precursor carbon monoxide. To build
upon the well-established pathway of CO2 use and geologic
storage through CO2-enhanced oil recovery, it is critical
that federal policy prioritize further development and commercial
deployment of large-scale saline geologic storage and creation of new
markets for captured carbon through stepped up R&D into beneficial uses
of both CO2 and CO.
American industry, labor and NGO leaders and federal and state
officials are also learning from technology innovation overseas for
application here at home. Earlier this month, a U.S. delegation
coordinated by the Great Plains Institute traveled to the United Arab
Emirates, where Emirates Steel began capturing 800,000 metric tons
annually of CO2 since 2016, and to Belgium, where
ArcelorMittal is partnering with U.S. technology firm LanzaTech to
construct a facility that will use microbes to transform waste carbon
monoxide emissions captured from steel production into 17.5 million
gallons of ethanol annually.
These successful examples of industrial carbon capture, coupled
with emerging innovation in carbon utilization technologies and
business models, are spurring the interest of U.S. companies,
entrepreneurs and investors in a circular industrial economy in which
waste carbon dioxide and carbon monoxide emissions become a source of
economic value and part of the climate solution.
A robust federal policy framework is needed to sustain U.S. leadership
and achieve economy wide deployment of carbon capture in key
carbon-intensive industrial sectors
Federal policy has a critical role to play in helping to sustain
American leadership and innovation in building this new carbon economy.
Congress is to be commended for bipartisan passage last year of the
FUTURE Act, a landmark reform and expansion of the Section 45Q tax
credit for geologic storage and beneficial use of carbon captured from
industrial facilities, power plants and ambient air.
To build on this cornerstone federal policy, the Carbon Capture
Coalition released a Federal Policy Blueprint (https://
carboncapturecoalition.org/wp-content/uploads/2019/05/BluePrint-
Compressed.pdf) to Congress earlier this year, recommending federal
financial incentives and other policies to complement the 45Q credit in
driving private investment, and spurring innovation and cost reductions
sufficient to achieve economywide deployment of carbon capture. The
Coalition defines economywide deployment as advancing a critical mass
of commercial-scale projects in key industrial sectors and power
generation between now and 2030 to enable the scaling of the technology
by midcentury to reach decarbonization goals. It's worth noting that
the Blueprint reflects a consensus of the over 70 companies, unions and
NGOs participating in the Coalition--a rarity on matters of federal
energy, industrial and climate policy.
In crafting the Blueprint, Coalition participants recognized that
an array of federal policies have supported the development and
commercial scale-up of wind, solar and other low and zero-carbon
technologies in the marketplace and that economywide deployment of
carbon capture will require a comparable portfolio of policies. Toward
that end, the Coalition recommends a package of federal policies that
spans the full value chain of carbon capture, transport, use, removal
and geologic storage.
The Carbon Capture Coalition's strategic vision for future policy
action is to:
Ensure effective implementation of 45Q by the U.S.
Treasury to provide the investment certainty and business model
flexibility intended by Congress;
Provide additional federal incentives to complement,
expand and build upon 45Q in financing carbon capture,
utilization, removal and storage projects;
Incorporate carbon capture, transport, utilization,
removal and storage into broader national infrastructure
policy; and
Expand, retool and prioritize federal funding for
research, development, demonstration and deployment (RDD&D) of
the next generation of carbon capture, utilization, removal and
geologic storage technologies and practices.
Economywide deployment of carbon capture will require federal
legislative and administrative action in the following areas:
Investment Certainty
Effective implementation of the 45Q tax credit is crucial to
providing the financial certainty and flexibility needed to leverage
the private investment in projects sought by Congress. In particular, a
longer time horizon for federal policy is needed to support early
commercial-scale demonstrations of essential carbon capture technology
in the most carbon-intensive industrial sectors, given long lead times
needed to develop, permit, finance and construct such projects. The
Coalition welcomes recent signals from the Treasury Department that the
Internal Revenue Service (IRS) is now prioritizing completion of
guidance to implement the 45Q tax credit, but significant concerns
remain that hundreds of millions and perhaps billions of dollars in
private capital remain on the sidelines as project developers and
investors have waited 19 months for clarity from Treasury and the IRS.
Key Policy Priorities
Lawmakers should extend the commence construction
window for 45Q beyond the end of 2023 given Treasury delays on
guidance and to send a signal of long-term policy continuity to
project developers and investors.
IRS should provide an additional equivalent pathway
for demonstrating secure geologic storage through
CO2-EOR (in addition to the existing federal Subpart
RR Greenhouse Gas Reporting Program) based on the International
Organization for Standardization (ISO) Standard 27916 and
supplemented with additional public transparency and
accountability measures as recommended in the Coalition's June
28, 2019 comments (https://carboncapturecoalition.org/
wp-content/uploads/2019/06/Final-CCC-submission-to-Treasury-6-
28-19.pdf) to Treasury.
Facilitate CO2 transport infrastructure
planning, siting and permitting through passage of the USE IT
Act to help ensure the availability of infrastructure needed
for development of carbon capture, use and geologic storage
projects.
Technology Deployment & Cost Reductions
Just as federal investments in research, development, demonstration
and deployment (RDD&D) have successfully helped scale up wind, solar
and other low and zero-carbon energy technologies in the marketplace,
expanding, retooling and prioritizing federal investments in
transformational carbon capture, utilization, storage and removal
technologies will be a critical component of driving down costs of
carbon capture and utilization in key industrial sectors and making
sure that the next generation of technologies with reduced costs and
increased performance make their way to the marketplace. In this
context, it is especially crucial that an expanded federal RDD&D
program prioritize later-stage demonstrations of critical industrial
capture and utilization technologies and not just early stage research
and development.
The Carbon Capture Coalition welcomes and supports the many current
bipartisan legislative efforts to update and expand federal authorities
and funding for industrial carbon capture, utilization and storage as
part of a broader innovation agenda. These bills enjoy widespread
bipartisan and bicameral support and should be passed this Congress.
Key Policy Priorities
Ensure robust federal appropriations for carbon
capture, utilization, removal and storage RDD&D, ensuring
inclusion of diverse industry sectors and processes, technology
pathways and energy resources.
Retool and expand federal RDD&D programs, including
near-term passage of bipartisan legislation such as the USE IT
Act, House Fossil Energy R&D Act, Senate EFFECT and LEADING
Acts, and Clean Industrial Technology Act.
Provide DOE cost share for Front-End Engineering and
Design (FEED) studies to support the development of critical,
commercial-scale industrial carbon capture and utilization and
other technology demonstration projects.
Project Finance & Feasibility
An expanded portfolio of incentive policies to enhance and expand
upon the 45Q tax credit will ultimately be necessary to foster early
stage commercial demonstration and broader economywide deployment of
industrial carbon capture and utilization technologies. These include:
improvements to 45Q and other existing tax incentives that enhance
monetization; technical corrections to 45Q that broaden eligibility and
access; and complementary policies that contribute to overall financial
feasibility by lowering the cost of debt and equity, reducing commodity
risk and expanding markets.
An expanded incentive portfolio will be especially important to
achieve widespread demonstration and deployment of carbon capture in
three areas of crucial importance to industrial decarbonization:
carbon-intensive industrial processes with higher costs of capture,
such as the manufacture of steel and cement; electric generation needed
to power and, where feasible, further electrify industrial processes;
and natural gas reformation with carbon capture, which currently offers
the lowest-cost pathway to provide zero-carbon hydrogen for process
heat and other industrial applications.
Given the significant role that the federal government plays in the
purchase of cement, steel and other key industrial commodities, federal
procurement policy will play an especially important part in building
markets for early commercial carbon capture and utilization projects in
industry. In the case of low-margin industrial commodities, federal
procurement policy can enable early innovators and investors to deploy
technology to deliver a low or zero-carbon product to market, while
only adding marginally to the total cost of federally-funded
infrastructure, buildings and other projects.
Key Policy Priorities
Monetizing Financial Incentives
Prevent the disallowance of 45Q under the BEAT Tax,
similar to treatment of the Production Tax Credit for wind and
Investment Tax Credit for solar.
Enhance transferability of the 45Q tax credit
consistent with the 45J tax credit for advanced nuclear.
Provide a revenue-neutral refundability option for
45Q.
Establish a 45Q bonding mechanism.
Technical Corrections to Expand Eligibility and Access
Eliminate the 25,000-ton annual capture threshold in
45Q for carbon utilization projects.
Fix the 48A tax credit to enable carbon capture
retrofits of existing power plants (Carbon Capture
Modernization Act).
Federal Policies to Complement 45Q
Make carbon capture projects eligible for tax-exempt
private activity bonds (Carbon Capture Improvement Act).
Provide for eligibility of carbon capture projects
for tax-advantaged master limited partnerships (Financing Our
Energy Future Act).
Reform the DOE Loan Program.
Creating Predictable Markets for Carbon Capture and
Utilization
Develop federal procurement policies for
electricity, fuels and products produced from carbon capture,
utilization, removal and geologic storage.
Reduce commodity risk through federal contracts-for-
differences (CfDs).
Incentivize commercial production of low-carbon
fuels from captured carbon.
Ensure eligibility for carbon capture, if Congress
enacts a federal electricity portfolio standard.
Provide an enhanced investment tax credit for
transformational carbon capture technologies.
Infrastructure Deployment
To achieve the full potential of carbon capture to reduce
industrial emissions, while protecting and creating high-wage jobs, we
must responsibly scale up infrastructure to create a nationwide network
for transporting CO2 captured from industrial facilities,
power plants and ambient air to locations around the country where it
can be put to beneficial use or safely and permanently stored in
geologic formations. This buildout will include capacity expansions and
extensions of existing pipeline networks, as well as the construction
of long-distance, large-volume interstate trunk lines to serve states
and regions that currently lack such infrastructure.
Key Policy Priorities
Provide low and zero-interest federal loans to
supplement private capital in financing pipeline projects.
Provide federal grants to cover the incremental cost
of supersizing pipelines to provide for extra capacity and
realize economies of scale.
Support flagship demonstration projects in key
regions of the country, featuring large-volume, long-distance
interstate trunk lines linking multiple industrial facilities
and power plants that supply CO2 to multiple
utilization and geologic storage sites.
Facilitate planning, siting and permitting of
CO2 transport infrastructure (USE IT Act).
Provide eligibility for tax-exempt private activity
bonds and master limited partnerships (Carbon Capture
Improvement Act and Financing our Energy Future Act,
respectively).
In summary, economywide deployment of carbon capture, use and
geologic storage is not optional if we are to decarbonize industry and
achieve midcentury climate goals. Carbon capture technology provides a
viable pathway to enable the decarbonization and continued operation of
existing and new industrial facilities, while avoiding plant closures
and the offshoring of jobs and livelihoods. The U.S. is the world's
leader in the capture, use and geologic storage of CO2 from
industry, with nearly 50 years of successful commercial and operational
experience on which to build. We now have an opportunity to enact a
broader portfolio of federal incentives and other policies for carbon
capture, transport, use, removal and geologic storage. We must learn
from our successful experience with wind, solar and other low and zero-
carbon technologies and implement a broader policy framework for carbon
capture in order to sustain U.S. leadership and help put our nation on
a path toward midcentury decarbonization.
Thank you again for your opportunity to testify, and I look forward
to your questions.
Ms. Castor. Thank you, Mr. Crabtree. And I have a copy of
your May 2019 Federal Policy Blueprint from the Carbon Capture
Coalition. So without objection, we will add that to the
record.
[The information follows:]
Submission for the Record
Representative Kathy Castor
Select Committee on the Climate Crisis
September 26, 2019
ATTACHMENT: Federal Policy Blueprint. Carbon Capture Coalition, May
2019.
This report is retained in the committee files and available at:
https://carboncapturecoalition.org/wp-content/uploads/2019/05BluePrint-
Compressed.pdf
Mr. Crabtree. Thank you, Madam Chair.
Ms. Castor. Ms. Hight, you are recognized for 5 minutes.
STATEMENT OF CATE HIGHT
Ms. Hight. Thank you, Chair Castor, and thank you, Ranking
Member Graves and members of the select committee, for inviting
me to be here with you today.
It is truly an honor to be here with you during this very
important week for climate, Climate Week, which really presents
a special opportunity to bring attention to how we can
decarbonize industry.
As the chair mentioned, I am a principal at Rocky Mountain
Institute, where I lead our work on decarbonizing energy inputs
to industry. RMI was founded in 1982 in Colorado, and we are an
independent, nonpartisan charitable nonprofit dedicated to
transforming global energy use to move the world toward a low
carbon future that is clean, prosperous, and secure.
So I was invited here to provide RMI's perspective on
decarbonizing industry and to speak specifically about how
hydrogen can be used as part of the solution.
When we talk about industrial emissions, it is important to
take into account the whole value chain, from start to finish.
We need to consider how raw materials are sourced and
processed, how products are manufactured, and finally, all of
the transportation pathways--the ships, the trains, the planes,
the trucks--that enable that package to arrive on your doorstep
after you click the 2-day shipping button.
The environmental footprint of that package is unclear to
customers who cannot see the emissions from each step in that
value chain. But these activities contribute a huge share of
greenhouse gas emissions, more than 40 percent worldwide, and
these emissions are continuing to grow, putting our climate,
our health, and our economy at risk.
Hydrogen can play a key role in reducing industrial
emissions by displacing the fossil fuels that power much of
this sector. The good news is that hydrogen is being produced
in nearly every State, using a variety of different fuel
sources.
Collectively, the U.S. makes about 10 million metric tons
of hydrogen per year, which is about 15 percent of the global
total. The challenge is that we need to produce a lot more of
it, about 10 times as much, and we need more industrial sectors
to use it. You, as legislators, can play a key role in making
this happen.
About 95 percent of the hydrogen made in the U.S. today is
manufactured through a process called steam methane reforming
or SMR. Because this process uses natural gas as an input, it
results in significant carbon dioxide emissions.
A commercially available alternative to SMR is
electrolysis, which uses electricity to split water molecules
into hydrogen and oxygen. In itself, this process produces no
greenhouse gases, so its carbon intensity depends on the carbon
intensity of the electricity used.
We will need both of these processes and others under
development to manufacture the 600 million metric tons of
hydrogen per year that we need no decarbonize industry. And to
reach this level, production needs to steeply increase in the
next decade and then continue to grow at a steady rate.
To date, ramping up hydrogen supply and uptake by
industrial users has presented a sort of chicken or the egg
problem. Industry doesn't use a lot of hydrogen fuel for power,
because there is not enough of it for the market to be cost
competitive, and hydrogen producers don't want to take on the
financial risk of ramping up production if they don't have a
sure market to allow them to recover costs. Targeted policy is
key to resolving both sides of the problem so that we can meet
our decarbonization goal.
On the supply side, the focus should be on leveraging our
existing hydrogen production resources to build supply and
bring down prices while also accelerating production based on
low-carbon energy sources. This will require a mix of
regulations and financial incentives, including renewable
energy mandates, tax credits, loan guarantees, and feed-in
tariffs.
On the demand side, clear regulations, direct investment,
and loan guarantees for building additional transportation and
distribution infrastructure can make hydrogen easier for
industry to access. Financial incentives can be used to
stimulate hydrogen use by large industrial facilities, and
investment support programs can help reduce the costs
associated with fuel switching at these facilities.
These are just some of the tools that Federal policymakers
have to reduce investment risk in hydrogen production and grow
the market to the scale we need to decarbonize industry. And
the good news is that many of these tools have been applied
with impressive results in similar markets.
For example, the solar investment tax credit has helped
that industry to expand at an annual growth rate of 50 percent
since 2006, which has brought the price of solar power down
dramatically and facilitated deployment of thousands of
megawatts of clean electricity onto our Nation's power grid.
Similar instruments have been used to expand wind energy,
and the 45Q tax credit that Brad mentioned could do the same
for CCS.
Today we have the same opportunity with hydrogen. If we are
truly serious about decarbonizing industry, hydrogen will be a
critical part of the solution.
Thank you for inviting me to testify today. I look forward
to your questions.
[The statement of Ms. Hight follows:]
Testimony of Cate Hight, Principal, Rocky Mountain Institute, U.S.
House of Representatives Select Committee on the Climate Crisis,
Hearing entitled ``Solving the Climate Crisis: Reducing Industrial
Emissions Through US Innovation'', September 26, 2019
Thank you, Chairwoman Castor, Ranking Member Graves, and
distinguished members of the select committee, for inviting me to
testify and for your leadership in focusing on climate change. My name
is Cate Hight, and I am a principal at Rocky Mountain Institute (RMI).
Founded in 1982, RMI is an independent, nonpartisan, charitable
nonprofit dedicated to transforming global energy use to create a
clean, prosperous, and secure low-carbon future. I am grateful for the
opportunity to speak with you today about RMI's work to decarbonize
industry, including the challenges present in this harder-to-abate
sector, as well as the many opportunities we have to bring about
transformative change.
I was invited here today to provide RMI's perspective on
decarbonizing industry, as well as more specific information on how
hydrogen may be used as a critical, low-carbon fuel in industrial
processes. First, I'll share our wider perspective on this complex
sector. At RMI, we think of industrial decarbonization in terms of the
whole value chain, which means we consider the process from start to
finish, thinking through how goods and services are designed, produced,
sourced, and then ultimately delivered to consumers.
Consumer goods are formed through a set of industrial activities,
starting with the sourcing of raw materials, either through recycling
or virgin extraction. Those raw materials then undergo energy-intensive
processes to refine and transform them. Next, the product is
manufactured, generally in a large, energy-intensive factory, and
finally, it is shipped to the end consumer, typically on a ship, plane,
or truck that uses fossil fuels.
Although few of the activities in this chain are consumer facing,
they play an important role in our everyday lives. They are essential
to creating and delivering the things we use every day, from the cars
and bicycles we use to get around, to the phones and laptops we use to
connect to the world, and the cement, steel, and bricks we use to build
houses. These products all require raw materials, along with energy,
usually in the form of fossil fuels, to create and transport them. Not
surprisingly, these activities also contribute a significant share of
global greenhouse gas (GHG) emissions each year. If you include the
emissions from the generation of electricity (Scope 2 emissions), the
industry sectors represent more than 40% of the global GHG footprint
today.\1\ In addition to their contribution to climate change, these
emissions create daily risks to our food and water, our health, our
homes, and our economy. And industrial emissions are on the rise as
economies around the world continue to grow, to a point where heavy
industry alone will consume more than two times the remaining carbon
budget for limiting global warming to 1.5 degrees Celsius.\2\
---------------------------------------------------------------------------
\1\ https://www.ipcc.ch/sr15.
\2\ https://rmi.org/insight/the-next-industrial-revolution/.
---------------------------------------------------------------------------
The main challenges in decarbonizing industry are not necessarily
expensive solutions or the need to develop unknown technology. The main
challenge is that we have to overcome three fundamental market forces
that work against the energy transition: (1) maintaining the status quo
to de-risk investments in long-life assets, (2) commoditizing the
traded products to enable global competition and reduce the cost to
consumers, and (3) siloing capital in asset classes, which isolates the
processes that are in dire need of investments in low-carbon
technology.
Overcoming these forces will take a combination of market,
financial, and policy solutions. Today I will speak about how federal
policy may be used to address each of these barriers by deploying more
hydrogen into the industrial sector. When produced using renewable
resources, hydrogen can play a critical role in decarbonizing this
sector by replacing many of the fossil fuels the world relies on to
power the economy. And we have the technology available today to
produce large quantities of this clean energy source.
In fact, the US produces and uses hydrogen in its industrial
economy today. Each year, we manufacture about 10 million metric tons
of hydrogen, which is equal to about 15% of the global total. Most of
this hydrogen is manufactured using natural gas and steam as inputs.
Nearly three quarters of the hydrogen we produce is used in our
domestic petroleum refining industry; the remainder is primarily used
in fertilizer production.\3\ There are hydrogen production facilities
in almost every state in the US. However, scaling hydrogen production
and use to the level we need to truly decarbonize industry will require
intervention from policymakers, consumers, and the financial sector.
---------------------------------------------------------------------------
\3\ https://www.hydrogen.energy.gov/pdfs/
16015_current_us_h2_production.pdf.
---------------------------------------------------------------------------
How much more hydrogen do we anticipate we will need to decarbonize
industry? According to expert analyses by the International Energy
Agency,\4\ the Energy Transitions Commission,\5\ and Shell,\6\ this
pathway requires the world to produce and use about 600 million metric
tons of hydrogen per year by 2050. This is almost ten times the amount
of hydrogen produced today. And to reach this level, production needs
to steeply increase in the next decade and then continue to grow at a
steady rate.
---------------------------------------------------------------------------
\4\ https://www.iea.org/etp/publications/etp2012/facts/
widerbenefitsof2ds/.
\5\ https://www.energy-transitions.org/mission-possible.
\6\ https://www.shell.com/energy-and-innovation/the-energy-future/
scenarios/shell-scenario-sky.html.
---------------------------------------------------------------------------
For hydrogen to play an essential role in decarbonizing industry,
policymakers must focus on providing conditions that (1) stimulate
rapid and wide-scale hydrogen production and its uptake as the primary
fuel source for major industrial fuel consumers, including heavy
manufacturers and heavy transport; and (2) enable a transition from
fossil fuel-based hydrogen production to production that is based on
renewable energy sources.
As mentioned earlier, right now most hydrogen is produced for use
in the petrochemical sector, and most of it is produced using natural
gas as a feedstock in a process called steam methane reforming (SMR).
Unfortunately, SMR also produces a lot of carbon dioxide emissions. So,
while there is capacity to ramp up production at these facilities,
without carbon capture and storage (CCS), this production pathway
cannot play a long-term role in industrial decarbonization using
hydrogen.
SMR can, however, be part of the hydrogen story in the near term,
in much the same way that our current fossil fuel-dominated power grid
is part of the story for electric vehicles (EVs). EVs currently run on
power provided by a mix of sources. The market for EVs is rapidly
developing as more and more consumers demand them; simultaneously the
electricity grid is becoming cleaner, and therefore EVs are running on
greener power. In much the same way, SMR production can get more
hydrogen to market and increase its uptake by driving down prices,
while at the same time lower-emission hydrogen production methods
displace SMR hydrogen production.
Currently, the commercially available alternative to SMR is
hydrogen produced through electrolysis: grid-based electricity is used
to split water molecules into hydrogen and oxygen. Just like EVs that
run on grid-based power, this hydrogen is as ``clean'' as the electric
power used to produce it. The more renewable electricity available to
power hydrogen production, the more quickly the industrial sector can
move into a decarbonized, hydrogen-based future.
To scale up hydrogen production as quickly and broadly as needed,
federal policymakers can play a key role in stimulating the growth of
the market by (1) reducing the risk associated with investment in large
hydrogen production operations, and (2) helping kick-start regional
hydrogen markets. Policy solutions could include the following:
Policy or financial incentives/mandates for low-
carbon hydrogen production, including natural gas-based
production that includes CCS;
Government procurement policies that require
sourcing of hydrogen to power government operations;
Policy or financial incentives/mandates to increase
hydrogen uptake by industrial users, ensuring that SMR-based
production includes CCS;
A shift of federal subsidies away from oil
exploration and development and toward investment in hydrogen
infrastructure, which includes hydrogen production facilities
and the transportation and distribution infrastructure needed
to expand delivery routes to industrial users;
Investment in infrastructure or investment loan
guarantees for hydrogen transportation and distribution
infrastructure to expand delivery routes to industrial users;
Feed-in tariffs and tax credits to stimulate
hydrogen production and deployment of more renewable
electricity sources to the electricity grid;
Investment support programs to reduce the costs
associated with fuel-switching at industrial facilities;
Safety regulations governing hydrogen production,
transport, and use, similar to those for fossil fuel markets;
Investment in research and development for new,
sustainable hydrogen production pathways;
Policy or financial disincentives for industrial
facilities to use carbon-intensive resources such as coal or
natural gas;
Policy or financial disincentives for investment in
carbon-intensive electricity generation; and
Border adjustments for imported products in energy-
intensive, trade-exposed industries that are manufactured using
carbon-intensive pathways.
In summary, federal policymakers have a number of tools in the
toolkit to reduce investment risk in hydrogen production and grow the
market to the scale necessary to decarbonize industry. And the good
news is that many of these tools have been applied to great effect in
similar markets. For example, the solar investment tax credit has
enabled that industry to expand at an annual growth rate of 50% since
2006, which has brought the price of solar power down dramatically and
facilitated deployment of thousands of megawatts of clean electricity
onto our nation's power grid. Today, we have the same opportunity with
hydrogen. If we are truly serious about decarbonizing industry,
hydrogen will be a critical part of the solution.
Ms. Castor. Outstanding. Thank you to all of you for your
very helpful testimony.
At this time I would like to recognize Ms. Bonamici for 5
minutes for questioning.
Ms. Bonamici. Thank you very much, Chair Castor. Thank you
for the accommodation.
Thank you all for your very enlightening testimony.
According to the Intergovernmental Panel on Climate Change,
limiting warming to 1.5 degrees Celsius above preindustrial
levels would require unprecedented rates of transformation in
many areas, including the energy and industrial sectors.
So we know that the industrial sector is notorious for
being challenging to decarbonize. It is going to require both
reducing the demand for energy, by improving efficiency of
industrial production, and eliminating additional emissions
from the industrial processes. So it is really a two-part step
there.
In northwest Oregon, the district I am honored to
represent, the industrial sector is turning to mass timber as
an alternative to steel and concrete. Cross-laminated timber,
when harvested using sustainable forest practices, can
sequester and store massive amounts of carbon dioxide.
First Tech Federal Credit Union in Hillsboro, Oregon,
recently built one of the largest CLT structures in the
country. There are still questions about the lifecycle
assessments of CLT, but the material raises the possibility of
storing massive amounts of carbon in buildings for decades,
perhaps in perpetuity.
Also in northwest Oregon, we have an affordable housing
complex called The Orchards, 150 units of affordable housing
built to passive house standards. It has seen about a 90
percent reduction in energy used for heating and about a 60 to
70 percent reduction overall in their energy costs.
And I wanted to ask you, Ms. Hight, it is my understanding
that Rocky Mountain Institute Innovation Center is a net zero
building, meaning that it produces as much energy as it uses in
a year.
Are there sufficient incentives for new construction to use
materials that are less emissions intensive in a circular
economy model where materials that are extracted, produced, and
used can be recovered or repurposed or reused more
thoughtfully? And if not, how could Congress promote these
efforts to reduce energy demand?
Ms. Hight. Thank you for the question.
In fact, I was at our Innovation Center in Basalt last
week, and something that is so amazing about that building is,
it is in Snowmass, Colorado, which is one of the harshest
environments in the U.S., and it has no HVAC system and it has
a very limited, small heating system. We actually have sort of
a square on the ground for where the HVAC would have gone. So
it is quite an extraordinary building, and I encourage all of
you to visit it whenever you are in the area.
So there are a number of different opportunities for really
stimulating the sort of construction that you are talking about
in Oregon. Some of the things that my building colleagues have
shared with me, since this is not my area of expertise, is
really thinking about how we can set some clear Federal targets
for building sector greenhouse gas emission reductions.
So this would be targets related not only to the greenhouse
gas emissions that are emitted by the buildings themselves when
they combust things but also the energy use at those buildings.
Building codes and clear guidance for States to require all new
construction to be all electric and zero carbon as well. Tax
incentives to stimulate investment and efficiency upgrades for
existing buildings.
So recognizing that not everything is going to be brand
new, we need to retrofit some of the existing buildings as
well.
Appliance standards, and, of course, investment in research
and development so that we can really develop new technologies
like the ones you cited in Oregon with the laminated timber.
Ms. Bonamici. Right. Thank you so much.
And that leads me, research and development leads me to a
question to Mr. Crabtree.
In your testimony, you discuss the value of strengthening
investments in research and development, demonstration, and
deployment of carbon capture utilization, storage, and removal,
CCUS technologies. I have been on the Science, Space, and
Technology Committee throughout my time in Congress, and we
have spent a significant amount of time talking about the value
of research and development, including in CCUS.
So can you discuss how we can get this technology closer to
market deployment and avoid that sort of commercialization
valley of death that can happen? How can we accelerate the
widespread use of CCUS?
Mr. Crabtree. Representative Bonamici, thank you for the
question. It is a very good question. And your committee, the
Science Committee, the House Fossil Energy R&D Act is actually
something endorsed by the Coalition.
The essential, especially in the industrial sector, if you
take the top three, globally, sectors responsible for carbon
emissions, steel, cement, and basic chemicals, in that order,
the steel plant in the United Arab Emirates is the only
facility in the world operating at commercial scale right now.
So it is really important that in addition to the 45Q tax
credit, which is a deployment incentive, that we have both a
larger program of RDD&D, but also that we prioritize some of
these key sectors for which we do not yet have the commercial
deployment.
And the legislation that just passed out of your committee
takes us a big step in that direction, but that valley of death
is the result of having a very good R&D program up to the point
where a company or a project developer wants to put that
technology into the marketplace at commercial scale and then
Federal policy drops off the cliff, until that point where they
somehow magically are able to develop the technology and then
they can use a tax credit.
And so I think, especially in Federal RDD&D, we need to
bring the demonstration back into it and increase resources for
later stage demonstration of those technologies.
Ms. Bonamici. Thank you so much.
I see my time has expired. I yield back.
Thank you, Chair Castor.
Ms. Castor. Thank you.
Ranking Member Graves, you are recognized for 5 minutes.
Mr. Graves. Thank you, Madam Chair.
Ms. Hight, I appreciate you bringing up the issue of sort
of this whole chain and ensuring that we quantify emissions
from start to finish. And oftentimes folks look at just one
component.
If we carry out policies in the United States that are
uncompetitive, and if manufacturing migrates to China as we
have seen in many, many cases, in general, based on what we
have seen, does that result in a greater emissions profile or a
lower emissions profile as compared to manufacturing in the
United States?
Ms. Hight. Well, I would argue that in particular with
hydrogen, we have a huge opportunity to carve out a new
competitive industry in the U.S.
Mr. Graves. And I got that in your testimony and certainly
do appreciate it and think it needs to be part of our solution.
But right now, as we see the migration, the migration that
has occurred, looking at kilowatt hour emissions in China
compared to the United States, transportation emissions, and
things along those lines, are we better off producing
domestically or importing from China?
Ms. Hight. Well, given that we are not taking into account
the carbon footprint of the goods that we are importing
currently, I think that we are better off manufacturing in the
U.S. using green production processes, including use of
hydrogen and some of the technologies discussed today.
Mr. Graves. Thank you.
And I would actually say, if you look at statistics, you
will note that not just with green practices, just by flatout
comparing apples to apples, manufacturing in the United States,
manufacturing in China, looking at their fuel sources, looking
at our fuel sources, emissions profile to emissions profile,
and of course transportation emissions to transportation
emissions, you will find over and over again that we have lower
emissions in the United States for the same widget as they do
over there. And so I think it is an important point to make.
Mr. Crabtree, you talked a good bit about carbon capture
storage, and certainly it is great seeing the United States
playing a role in that technology.
Would you consider the United States to be a leader in
carbon capture technology in terms of R&D, or are we somewhere
behind others?
Mr. Crabtree. I would consider the United States the world
leader not only in R&D, but also deployment.
Mr. Graves. And what role do you believe that plays in our
long-term objective of reducing emissions and hitting targets
that have been established?
Mr. Crabtree. Well, so I think the modeling that is perhaps
clearest in suggesting the role that carbon capture needs to
play in meeting midcentury decarbonization is the IEA, the
International Energy Agency modeling which looked at the two-
degree scenario and concluded that between now and 2050, a
full--nearly 15 percent of all emissions reductions need to
come from carbon capture, and by 2050 it needs to be up to 20
percent annually. Nearly half of that needs to come from
industrial sources.
Mr. Graves. Great. Thank you very much.
Dr. Gregory, I was laughing whenever you were talking about
concrete and cement. My father is an engineer. My entire life,
if we misused the terms cement or concrete or interchanged, it
was like nails on chalkboard to him. He couldn't--he was like,
``No, no, stop!''
Dr. Gregory. My kids don't make that mistake either,
anymore, anymore.
Mr. Graves. Thank you for being here.
You made mention earlier about access to natural gas, and I
might have screwed up a little bit exactly what you said. What
role does access to natural gas for some of the concrete
industry folks play in emissions strategies as we move forward,
I guess now and as we move forward?
Dr. Gregory. Sure. For cement plants, the temperatures they
need to reach in order to make cement is 2,700 degrees
Farenheit. And so right now they are using entirely fossil
fuels. And so that is either coal or natural gas sources.
Certainly natural gas is the lower CO2 option
out of both of those. So having good access to natural gas is
important for those plants.
Mr. Graves. Thank you.
And so whenever policies are carried out that are
obstructing natural gas infrastructure, preventing pipelines
from being built, what happens?
Dr. Gregory. I think that will play a role in the
development of new plants. For existing plants, the short
answer is I think it loses an opportunity in order to lower
CO2 emissions with cement plants.
Mr. Graves. And if we stop producing these resources
domestically, what happens?
Dr. Gregory. The natural gas or the cement?
Mr. Graves. Cement. I am sorry.
Dr. Gregory. Then we would have to get it from other
countries.
Mr. Graves. And going back to my question to Ms. Hight,
what is your understanding of emissions profile when it is
produced in other countries and sent here versus produced
domestically?
Dr. Gregory. There is a whole range. But if you look at
China, which makes more cement than the rest of the world
combined--they make over 50 percent and the U.S. makes about 2
percent of the world's cement emissions--generally they have a
higher carbon footprint associated with production of cement
than the U.S. does.
Mr. Graves. So would you agree with the statement that from
end to end, if we produce that cement domestically, that you
are going to have a lower emissions profile than we would if we
were to, again, end to end, have it manufactured in China and
sent here?
Dr. Gregory. That is correct.
Mr. Graves. Thank you.
Madam Chair, yield back.
Ms. Castor. Ms. Brownley, you are recognized for 5 minutes.
Ms. Brownley. Thank you, Madam Chair.
Dr. Gregory, in your opening statement you talked about
some solutions towards sustainable development, and you talked
about measurement and reporting, you talked about performance-
based standards.
Is there any example of that within the United States or
outside of the United States where that is working well and
proving productive?
Dr. Gregory. I think a good first step has been in the LEED
green building standards. There are points that projects can
get for using products that have what is called an
environmental product declaration, which is essentially a
measurement of the footprint of that building product. And the
whole idea behind that was to get firms to start measuring this
and then use that as an incentive for that to be used in a
project.
The challenge has been there is no decision that is
actually made based on the reporting of that information. They
are just trying to get those reports done.
And so concrete is actually--it seems very simple, you
know, I mentioned it just has those few different ingredients,
but you can combine them in almost infinite ways to get
different performance.
So the next step of actually making decisions based on
those EPDs has proved much more challenging. And so there has
been legislation that is proposed in a couple of States,
California and Washington. They haven't included concrete
because of this need to shift to more performance-based
specifications.
So there is a lot of discussion about how you actually
implement that that we are involved in, and so there are some
opportunities, but nothing that is really implemented yet to
say let's make decisions based on performance-based
specifications in government projects yet.
Ms. Brownley. Thank you.
And, Mr. Crabtree, you also referenced successful policies
from other places with regards to carbon storage and carbon
capture. Can you point to any of those specifically?
Mr. Crabtree. Representative Brownley, thank you for the
question.
Actually I think overseas the examples of commercial
demonstration are very compelling. The Section 45Q tax credit,
as reformed by Congress last year, is widely considered the
best incentive available today in the world for carbon capture.
In New York this week, there were international leaders talking
about 45Q, and they were talking about carbon capture.
That said, there are specific funds, for example, the
ArcelorMittal steel plant that we visited in Belgium, they are
accessing EU funds to support not only the demonstration of
production of ethanol from waste emissions, which is an
extraordinary thing, but also very specific decarbonization
opportunities in their integrated steel mill process that
aren't related to carbon capture.
And I think that gets back to your colleague's previous
question about that valley of death. If there is a real gap, we
need to improve our incentives, but we also need to provide
more direct resources, I think this has been said by others,
cost share and other support for the specific demonstration of
core technologies that we are going to have to sector by sector
to decarbonize.
Ms. Brownley. And so if the United States decided that we
were going to fully deploy a carbon capture infrastructure
nationwide--so, I mean, what do you see are some of the
barriers, particularly as it relates to permitting and other
regulatory changes that would have to happen?
Mr. Crabtree. Well, so if you are talking about the
infrastructure to create a truly national system of
CO2 pipelines, we have a pretty successful history
of building pipelines to date, over 5,000 miles in various
systems, regional systems so far. I do believe that as we
deploy in States with larger proportion of Federal lands, it is
challenging to build linear infrastructure on Federal lands.
And the USE IT Act doesn't change any Federal statutes, but
what it does do is it would bring together States, Federal
agents, land agencies, States, Tribes, and key stakeholders,
industry, environmental advocates, and others, to try to work
proactively to think through the siting of pipeline
infrastructure and try to accelerate the process of siting
that.
I would say that the bigger challenge of building a
national network to move CO2 at the scale needed to
address the climate challenge is we need a Federal role in
financing extra pipeline capacity to build out that system in
parts of the country that do not yet have it.
Ms. Brownley. Thank you. Thank you for that.
And last question before my time is up.
Ms. Hight, is the cost of renewable hydrogen becoming more
competitive? And I guess if you could cite is there anyplace
where hydrogen is being used where it is cost competitive
compared to other energy sources?
Ms. Hight. Yeah. Thank you for the question.
So hydrogen is still more costly than other fuels today,
especially transportation fuels. But when you think about it,
hydrogen is three times as energy intensive as gasoline. So it
translates to roughly a price of about $5 a gallon for a
kilogram of hydrogen. So it is still more expensive, but not
prohibitively so.
And this sort of chicken or the egg problem I talked about
before, about needing to sort of stimulate the market in order
to bring that price down, is a key solution.
In terms of renewable hydrogen, there are places in the
U.S. today, including the State of Texas, where I hail from,
where there is renewable hydrogen that is able to produce from
renewable wind power, which is at an affordable cost, and they
are deploying that.
Ms. Brownley. Very good.
Thank you, Madam Chair. I yield back.
Ms. Castor. Mr. Griffith, you are recognized for 5 minutes.
Mr. Griffith. Thank you very much. I appreciate it.
Let me state up front, I am all for research and making
sure that we are researching everything that we can. I do think
we need to have some research parity so that we have our fossil
fuels and our renewables both being researched at a high level.
Would you agree with that, Dr. Gregory?
Dr. Gregory. Do you mean--what kind of research?
Mr. Griffith. Dollars, dollars.
Dr. Gregory. Research on what aspects of fossil fuels?
Mr. Griffith. Oh, what we can do to make it cleaner, make
better. And all kinds of research.
Dr. Gregory. Sure. Yeah.
Mr. Griffith. And the reason I bring that up is, is that we
have got a number of things that I have been interested in over
the years. I have a professor at Virginia Tech who has been
working on trying to figure out how you extract rare earth
minerals out of coal. As a result of that, they figured out how
to do some other things.
They are not quite ready for primetime on the rare earth,
but they have sold the technology to some Indian steel mills,
because what they have done is they have been able to make it
so that the carbon that they are mining in India, out of their
coal, can be used for steel production at a better rate and
they have lowered the carbon footprint or they are lowering the
carbon footprint at these steel mills, and that makes a lot of
sense to me.
We also have chemical looping which is, again, not quite
ready for mass production. But the cost of--we were talking
about carbon capture and sequestration--the cost there, about
60 percent of it is the capture. Chemical looping reduces that
cost and you automatically just have the CO2 that
you are getting, as opposed to having to try and separate
everything else.
And then we have a technology that is being developed also
in conjunction with a company in my district and Virginia Tech
where they have--and I will have to see if I--make sure I get
the language right here--but they have exhaust gas enters--this
would be MOVA Technolgies--exhaust gas enters the filter full
of various chemicals, it passes through a series of chambers,
each filtering out one pollutant. When it is finished, the gas
is cleaner and the chambers each contain just one material,
which then allows them to use those materials to be recycled
into our industrial systems and again reducing the overall
carbon footprint.
It takes money to get these kinds of researches from the
drawing board or these technologies from the drawing board to
the finished product. Wouldn't you agree, Dr. Gregory?
Dr. Gregory. Absolutely.
Mr. Griffith. And then last, but not least, Dr. Gregory, in
your testimony you said that unfortunately the current Clean
Air Act New Source Review program, as interpreted by the courts
and some prior administrations, actually penalizes companies
for increasing the efficiency of its facilities. And this time
I am going to have to agree with you. And I have a bill to fix
that.
Because what happened was, when they created the New Source
Review in 1977, they picked up--or when they added that to the
Clean Air Act--they picked up language from another section of
the code, identical language.
Unfortunately, the EPA has interpreted those two sections
differently. And what happens--and most people don't realize
this--what happens is companies don't know what the term
``modification'' means because of its different
interpretations.
And whether they are right or they are wrong--I have a
furniture company--I am sure this applies to cement, too--but I
have a furniture company in my district--and some of the
members of the committee have heard this story before, but it
is a real life example--where they have a conveyer belt that
probably stretches about the length of this room that they no
longer need. But the furniture goes all the way out to the end
of the conveyer belt and comes back, because at one point in
time they had a paint or lacquer process at the end of the
conveyer belt.
They are afraid to change the conveyer belt and become more
efficient because they are afraid it would trigger the entire
facility having to be placed under New Source Review and be
totally modified, where currently they don't have that problem.
So they deal with the inefficiency.
Is that true in the cement industry, as well, and concrete?
Dr. Gregory. It is a similar thing, where companies want to
be able to invest in energy efficiency improvements but are
concerned about what other things that that triggers.
Mr. Griffith. Yeah. And, unfortunately, one of my
colleagues in one of the hearings we had on the Energy and
Commerce Committee said: I thought by now we would have gotten
this problem resolved.
And I looked at him, and I thought: You know, what you
don't realize is, if we could take one bite of the apple at a
time, over the course of 10 or 15 or 20 years you probably
would have a lot of this resolved.
But when you are a company and you are looking at having to
swallow that apple whole, you decide you can't start because
you don't have the resources or the ability to finish. Is that
something you have run into as well?
Dr. Gregory. It is the same situation, just like you said,
where trying to make simple improvements in energy efficiency
can often have unintended consequences. So, yeah.
Mr. Griffith. So I think one of the things that we should
do in this committee is try to look at things like that,
because there are things we can do. We all want to make the air
cleaner. There are things that we can do, that we can
accomplish to do that where Democrats and Republicans can come
together in a bipartisan way and make our environment better
and keep our economy strong.
I appreciate it very much, and I yield back.
Ms. Castor. Mr. Casten, you are recognized for 5 minutes.
Mr. Casten. Thank you, Madam Chair.
You don't have to spend more than about 30 seconds
understanding the CO2 issues we are facing to know
that we have got to get to zero CO2 yesterday. The
hard question is, how?
And I am delighted to have this panel, because if you are
really honest about the ``how'' question, you have to sail into
the fact that there are things like fertilizer, like cement,
like steel, like silicon that we do not know how to make
without using fossil fuels right now, and we need to focus on
that. So thank you for being here.
And, oh, by the way. I don't know how to make a solar panel
on a concrete pad without steel and silicon.
I was proud to introduce H.R. 4230, the Clean Industrial
Technology Act, specifically to stand up an agency at the
Department of Energy to do that research, to put about $650
million in the deployment, cosponsored with Representative
McKinley and Chairwoman Johnson in the House.
I am pleased to report that the Senate, the version that is
led by Senators Whitehouse and Capito, passed out at committee
yesterday. So we are moving along. And anybody, please,
cosponsors, we are pushing forward over here.
I want to start, though, with a question about barriers,
because a lot of what we are talking about here is R&D. But a
lot of times, Mr. Gardiner, I know you know this well, we don't
do the right thing because there are regulatory barriers to
existing technology.
So can you help me out a bit, Mr. Gardiner? You suggested
the need for greater information about how combined heat and
power and waste heat and power could be utilized. These are
long questions, but I want to start simple and encourage you to
follow up with more information, if we can.
When you design a combined heat and power plant you have an
almost infinite degree of flexibility with the ratio of heat to
power that you use in the system. It is easy to do a 25
megawatt power plant if I can have equivalent efficiencies over
a huge range of waste heat to recover. The heat is used
locally, the electricity may or may not be exported, and they
are subject to wildly different prices.
Mr. Gardiner, would you agree that there are sometimes
regulatory barriers that cause you to suboptimize that design?
Mr. Gardiner. I do. And even more broadly, in some cases,
never to pursue the combined heat and power project in the
first place. We have done a lot of research looking at what
States do and what utilities do in the way of charging what are
known as standby rates. So you know what these are,
Congressman, but you have got to be basically, even with a
combined heat and power plant on your facility, you still need
to be connected to the grid. And the question is whether you
should be charged a lot or a little for being connected to the
grid. And we have discovered in the same States that----
Mr. Casten. I am sorry, I don't want to be rude, but I want
to get like 3 or 4 questions. Totally agree. And please provide
this to us.
Mr. Gardiner. Be happy to.
Mr. Casten. Because you know this, I know this, I don't
think the committee knows it, and let's take more than 5
minutes to walk through it. But a list of those barriers, and
if you have any estimate of what cost we impose economically
and environmentally by that suboptimization nationally, because
I think those are big numbers.
Mr. Gardiner. They are.
Mr. Casten. Second piece. You talked about combined heat
and power versus waste heat to power. In the old days we called
them bottoming and topping cycles. Terms change, it is the same
idea.
When you build a waste heat to power project on the top of
an industrial smoke stack or elsewhere, what is the marginal
fuel use?
Mr. Gardiner. Zero, because you are basically taking waste
heat from, let's say, a factory, that would otherwise just go
off into the atmosphere, you are capturing it and you are
turning it into productive power. So not only is there no
additional fuel required, there are no additional emissions. So
you are getting a lot of electricity.
In some cases--there is a project I am aware of at an
ArcelorMittal in northwest Indiana----
Mr. Casten. And, I am sorry, this is going to be quick, I
am going to be quick again. Is it safe to say that those
projects are functionally equivalent to traditional renewable
energy generation?
Mr. Gardiner. From their emission standpoint, yes.
Mr. Casten. Do they have access to the same incentives that
traditional renewable generation has?
Mr. Gardiner. They do not. They don't even have--waste heat
to power doesn't even have access to the investment tax credit,
which is available to combined heat and power. Congress in some
way did not insert those words actually in the Tax Code.
Mr. Casten. Please share that information with us as well.
I want to pivot in the little time I have left, Dr.
Gregory, and this may be an opportunity for both of you, I may
have teed up a sales opportunity for you.
We recently had a field hearing out at NREL in Golden. NREL
has a huge facility. They have got wind turbines, they have got
solar panels, they have got all this neat stuff, and they are
integrating and showing how to integrate the grid.
Right at the edge of their property there is a little
cement plant. You mentioned that runs about 2,700 degrees at
the inlet, I think the waste heat is around 600 or so, roughly?
Dr. Gregory. Sound about right, yeah.
Mr. Casten. Mr. Gardiner, can you make power with 600-
degree heat?
Mr. Gardiner. Yes.
Mr. Casten. I encouraged my friends at NREL to consider
reaching out to some people who might know how to do that,
because I think that having 24/7 renewable energy would be a
pretty nice thing to have there.
And I see I am now out of time. So thank you very much. And
I yield back.
Ms. Castor. Thank you for making the most of your time, Mr.
Casten.
Mr. Carter, you are recognized for 5 minutes.
Mr. Carter. Well, thank you, Madam Chair.
And thank all of you for being here. This is certainly very
important, industrial output and how it relates to our climate
and to our environment.
I wanted to ask you, Dr. Gregory, I really appreciate your
perspective on the lifecycle perspective and your explanation
of that and how we should be looking at it throughout the whole
process and the lifecycle carbon output. And I appreciate that,
especially looking at it from that perspective.
You mentioned in your testimony that there are Federal and
State laws that discourage the use of many of these lower
carbon alternatives. And can you describe a couple of those for
me?
Dr. Gregory. I don't know that they explicitly discourage
it, but they don't actually really provide much incentive to
use them at all.
Mr. Carter. Okay. Fair enough. Fair enough.
I am very interested in biomass. I am from Georgia, the
number one forestry State in the Nation, and biomass is a big
part. We have got quite a few plants in our district. And I
wanted to ask you about that. An alternative like biomass, what
about that?
Dr. Gregory. That could play a critical role in being used
as a form of alternative fuel in cement plants. So instead of
using the coal or natural gas to heat up that kiln to 2,700
degrees, biomass or other kinds of waste materials could be a
critical way to essentially be like a zero carbon source of
fuel. So that is really important.
Mr. Carter. Are there any plants that are doing that?
Dr. Gregory. There are. In the U.S., the current challenge
is that there are often limitations on the maximum amount of
alternative fuels that can be used. So, for example, usually in
the U.S. it is capped at about 15 percent, whereas in Europe
and other parts of the world they are using 35 percent or more.
And a lot of that has to do with these tensions between the use
of those alternative fuels and the Clean Air Act or RCRA.
And so basically those are opportunities to modify both of
those in order to encourage more use of alternative fuels
because that can definitely be done in a way that preserves
clean air while still lowering the carbon footprint of
producing the cement through the use of alternative fuels.
Mr. Carter. Okay.
Mr. Gardiner, in your opening comment you made, and I just
caught the tail end of it, so forgive me if I am getting this
wrong, but you said biomass used under the right circumstances.
Can you elaborate on that?
Mr. Gardiner. Yeah. I think that there are a couple of
issues that one has to think about. We have actually got a
project underway to look at the carbon accounting associated
with combusting biomass, because when you burn biomass there
are greenhouse gases that go up into the atmosphere right away.
The upside is that they are going to be recaptured at some
point back into other trees and things that are growing. That
doesn't necessarily happen right away.
So that is an example of an issue that has to be thought
through. I think there are plenty of sources of biomass where
that is not an issue, but it is a complex issue that needs to
be sorted through.
So we want to be sure that--we, in fact, have worked with
Procter & Gamble, that did a project in Georgia recently on
biomass that I think they feel very strongly about. I just was
talking with them this morning about it. And I think they are
opportunities for biomass to produce renewable heat, which is
what they were looking for in the context of their production
plant in Albany.
Mr. Carter. Do you see it as part of the portfolio of the
future of clean fuel?
Mr. Gardiner. Biomass?
Mr. Carter. Yes.
Mr. Gardiner. Yes. It is already a gigantic portion of the
portfolio for renewable heat. It is today the leading source of
renewable heat in the world. I think it is 75 percent or
something on that order.
So it is big. I think there are lots of questions about how
big it can be, given the scale of what we have to do on climate
change. How much biomass is really out there that is available?
And how far can we go? I think those are important questions
that need a lot more attention and focus.
Mr. Carter. Dr. Gregory, any disagreement with that?
Dr. Gregory. No. No.
Mr. Carter. Let me move on, because I suspect I may get
some at one point.
Mr. Crabtree.
Mr. Crabtree. I just wanted to add, in addition to the
opportunities with renewable heat and combined heat and power,
if you are using a biomass feedstock to produce energy and you
are capturing CO2 on the back end, you have the
potential to create an energy system with negative emissions,
and that could be a very valuable way for decarbonizing
industry if that energy is supplying an industrial process.
Mr. Carter. Great.
Ms. Hight.
Ms. Hight. Sure. Biomass has a lot of hydrogen in it, so
you break those hydrogen bonds, you make hydrogen energy.
Mr. Carter. Great. Great. Good. I like this panel. We need
to invite them back. Good.
Well, thank you very much. I appreciate your input. Biomass
is extremely important. As I mentioned, Georgia is the number
one forestry State in the Nation, we have sustainable forests
where we are replanting as we cut these trees down. It is a
byproduct, if you will, of the process by which we use. So I am
just really high on it. So thank you very much. Really high in
the sense that I am really----
Ms. Castor. Okay. I got that. That is a different biomass.
And it is appropriate now to go to Mr. Neguse from
Colorado.
Mr. Neguse. Thank you, Madam Chair. I am sure that is
coincidental, of course. Representative Carter enjoyed some
time in Colorado recently for a field hearing that we had in
Boulder. So you can pardon the faux pas there.
Thank you, Madam Chair, for holding this hearing.
And thank you for the witnesses. Just very informed, well-
informed panel, and very thoughtful discourse and discussion
today.
And of course, in Colorado, I represent the Second
District, Boulder, northern Colorado, Fort Collins, and the
central mountains. We have a number of businesses that are
engaged in some really cutting-edge technology, some of which
you all have described.
One in particular is a very local small business in Boulder
called Cool Energy, which is a Boulder-based company that has
developed a sterling engine that converts waste heat to
electricity to create emission-free power.
So I just want to give a chance to you, Mr. Gardiner, just
to kind of expound a little bit more on your exchange with my
colleague from Illinois with respect to what else you think the
Federal Government might be able to do to kind of incentivize
and create an environment in which these kind of technologies
can continue to advance and grow.
And I would say one example that you cited, the 45Q issue,
we are working on a piece of legislation emulating some of what
Senator Carper had proposed in the last Congress, a bipartisan
bill on that front.
But just give you a chance to expound further.
Mr. Gardiner. Sure. Thank you very much.
I would say one of the biggest problems is that markets
don't often reward these technologies for all the benefits they
offer. If you reduce carbon emissions, nobody is paying you
anything for that.
And so I think there is an important role for the
government to step in and to help create the incentives that
can't necessarily always replace all of that, but can make a
step in the right direction.
So for combined heat and power, and I think we have seen
this in other technologies that are zero or low carbon, the Tax
Code has been an important thing. There is an existing
investment tax credit on combined heat and power, and I think
that is a helpful financial incentive that helps make up for
the fact that combined heat and power and waste heat to power
deliver very low emissions, but the market has no way of
rewarding them for that.
So I definitely think the Tax Code, a very good place to
look. And not only is there an existing credit, but I think
there are proposals to do things like let the master limited
partnership provisions apply to things like combined heat and
power or waste to heat power, which could be an interesting new
approach.
Mr. Neguse. Thoughts from other folks on the panel?
No.
So, Ms. Hight, just with respect to the work that you do--
and, of course, we are thrilled to be able to have one of your
installations actually in Boulder, Colorado, and so happy to be
able to hear from you today.
As was mentioned, we were in Colorado earlier this year for
a field hearing that our wonderful chair and fearless leader so
graciously hosted in Colorado for us. And one of the places we
went to was NREL, which is just some really incredible
technologies that they are working on to reduce emissions,
including hydrogen in the H2@Scale program, which I know, Ms.
Hight, you will be familiar with.
So wondering if you can kind of, dovetailing with the
exchange with Mr. Gardiner, if you could perhaps expound on
what we could do at the Federal level to better incentivize the
renewable energy development of renewable hydrogen?
Ms. Hight. Sure. Thank you for the question. And, yes, I
think Colorado is very proud to have NREL just down the road
from us in Golden, and it is a really amazing facility.
There are a number of things the Federal Government can do.
I think it comes down to sort of the chicken or the egg, again,
I am going to come back to that, right, sort of stimulating
demand, stimulating supply of hydrogen.
We have the tools available today. We are producing
hydrogen today, quite a lot of it in the Gulf Coast in Texas.
We are producing them mostly from natural gas. We need to take
advantage of that production, expand the amount of hydrogen we
are producing, while also deploying additional renewables to
produce more renewable hydrogen.
The more of this makes it to market, the price comes down.
And then on the supply side, you work to stimulate uptake by
the big industries who can use it as a replacement to their
fossil fuels.
So I think we really need to look at both halves of the
equation with a mix of incentives and mandates to get more
renewable energy onto the grid in particular.
Mr. Neguse. Thank you.
With that, I yield back the balance of my time.
Ms. Castor. Thank you very much.
Mr. Armstrong, you are recognized for 5 minutes.
Mr. Armstrong. Thank you, Madam Chair.
And I am just going to start with I wish more people
watched these hearings, because this is kind of how Congress is
supposed to work, I think. And we will have plenty of things to
fight about as we go through, but in all honesty, I think that
is really appreciated.
I will say to Ms. Hight that Mr. Crabtree and I might argue
with you on the harshest climates in the U.S., which is going
to be a nice segue into Project Tundra. And I know that is not
necessarily why you are here, but I want to talk about North
Dakota, because it is probably--it has the ability to be the
first zero-emission coal plant in the United States.
And also for my friend from Virginia, he will be happy to
know there is research going to it. DOE offered $9.8 million
just recently to start this project.
So, Mr. Crabtree, you do--I would call you Brad and you can
call me Kelly, but I am not sure we can really do that--you
address carbon as essential in managing industrial emission and
to meet climate goals. In North Dakota, Project Tundra is this
initiative. Innovative technologies are being researched to
retrofit existing plants, and I know you have a ton of
background in coal as well, and capture over 92.
While these initiatives show that carbon capture
utilization and storage is technically viable, how do we make
these technologies economically and commercially viable?
Mr. Crabtree. Well, so in the case of--obviously, this is a
hearing on industrial emissions, but retrofitting coal-fired
power plants for carbon capture is relevant because of the
energy intensity of industrial processes and the need for 24/7
large amounts of energy all the time.
And we have the example of Petra Nova near Houston, which
is--it was the second fully commercial carbon capture project
on a coal-fired power plant in the world, is now the largest,
and it was built on time and on budget.
With the project in North Dakota, in terms of making it
financially viable, right now they are doing the feed study,
that is where the DOE funding came in. What would really be
helpful to that particular facility and several more in the
country right now is there is about $2 billion sitting in the
48A tax credit program that Congress has already allocated.
And because of the criteria, the statute, initially it was
for energy efficiency at power plants, and then Congress, I
think wisely, added carbon capture later to the statute, but
they didn't adjust the energy efficiency metric. And when you
equip a power plant with carbon capture, obviously it takes
power to run the carbon capture systems, and you can't then
meet the energy efficiency requirement in the law.
The irony of this is that the emissions reductions that
would come from retrofitting the power plant for carbon capture
vastly exceed the emissions reductions from the energy
efficiency requirement.
So I would argue it is important for North Dakota, but in a
global context, if we could retrofit three or four coal-fired
power plants with this $2 billion in available resources in the
48A tax credit, that would be of global significance in
addressing climate change.
Mr. Armstrong. Thank you.
So I am going to go back to that, too, because the first
time I ever saw this was actually in Weyburn and up there and
that was going to be used for enhanced oil recovery.
And I think--and you would be the expert on this--but there
is a difference between capture and deployment, right? I mean,
when Weyburn was originally designed, they were going to store
the carbon, and then they were going to utilize the carbon for
enhanced oil recovery. And unless it has changed a whole lot,
that doesn't work really well, because you were talking about
pipelines earlier and how we deal with that.
So, I mean, is the technology increasing on storing carbon
versus then deploying it for other uses?
Mr. Crabtree. So it is technically feasible to withdraw
CO2 from a reservoir once you have injected it. And,
of course, if you doing geologic storage of CO2
through the process of enhanced oil recovery, you are injecting
the CO2, you are liberating oil, producing that oil.
Some of the CO2 comes back up with the oil. The oil
companies pay for that CO2, so they strip it out and
reinject it.
It is actually not easy to get CO2 back out of
the reservoir. The reality, I would suggest, though, is that
the volumes of CO2 available to us if we capture
them are so large that they will exceed the potential for
utilization. And so I don't think there will be a lot of
interest or need in taking that CO2 back out of a
geologic storage situation.
Mr. Armstrong. And then that will just move me into another
thing because it will be litigated in North Dakota, and it
doesn't necessarily relate to CO2 other than it is
going to be using the same space.
We also have a really cool project going at Red Trail
Energy, which is an ethanol plant that is going to do carbon
capture. So if we ever want to do a field hearing, I would
recommend Red Trail because it is closer to my house, I could
have you over for dinner, and Project Tundra really is kind of
out there anyway.
But are we watching how different States, the Federal
Government, is regulating pore space? Because that is going to
be the next big conversation when we start having these--when
we start continuing to move forward with this.
Mr. Crabtree. Yes, I am not sure about Federal regulation,
of course, because I think we are going to see a lot shake out
about how States approach it and what works best, especially in
saline storage. This actually--the Red Trail facility is very
relevant to this hearing because it is CO2 from
fermentation ethanol, it is going to be stored in a geologic
formation. And that really could achieve truly negative carbon
emissions because the CO2 captured through
photosynthesis turned into ethanol is not readmitted to the
atmosphere.
Mr. Crabtree. Thank you.
Mr. Armstrong. And I know I am over my time, but just one
thing. I just think the real issue here is, regardless of what
we are putting down there once we start litigating how that
space--or once we start regulating and litigating who owns that
space and how that space is allowed to be used, it is not going
to matter whether it is CO2 from methane,
CO2 for anything, because, I mean, we are going to
have to watch that going forward.
So thank you.
Ms. Castor. I will recognize myself now for 5 minutes.
So the climate science dictates that we have to reduce
carbon emissions in the industrial sector. And as we discussed
today, this is not easy in industry because it is so energy
intensive and it's trade exposed. And we are very sensitive to
the fact that the cost of doing business is a real concern for
competitiveness in the global market.
Mr. Gardiner, can we do this? What do you think?
Mr. Gardiner. Absolutely. I think there are lots of
technologies that are available today. They sometimes have a
hard time getting into the market because, as we were talking
about before, sometimes there are barriers, or because there is
not enough of a pull to bring them into the matter on the
benefits that they offer on the carbon side and other benefits.
And, look, for an issue like renewable sources of heat,
they are out there. We have heard about hydrogen, it is out
there in small quantities. There definitely are projects that
are being done today.
So I think all it takes is, depending on what technology we
are talking about, it is either figuring out how to create the
right incentives to get them into the marketplace, get rid of
the things that are standing in the way. And research and
development clearly is going to be a huge thing. We are going
to need that in a very significant way on a very broad range of
technologies.
The success we have seen in the electricity sector has
largely come because we made the clean things cheap. So now
they are the preferred things in the marketplace, and that is
driving all the emission reductions that we are seeing in the
power sector. And we just basically need to do the same thing
in the industrial sector.
Ms. Castor. Right. So a lot of you have talked about how we
reprioritize incentives, borrow from what we have learned, and
how we have built incentives for renewable energy. Renewable
energy deployment has also increased due to the demand side,
policies like State renewable portfolio standards and clean
energy standards.
You started to talk a little bit about this with Mr. Casten
from Illinois. You drew the comparison with renewable thermal
technologies in addition to financial support. Could you
explain to the broader audience here renewable thermal
technologies, first of all, and then what kind of demand side
policies should be applied?
Mr. Gardiner. So there is a broad range of renewable
thermal technologies, some more readily available than others.
Renewable natural gas. So you are basically taking materials
that come from wastewater treatment plants, landfills, and
others, gases, and converting that into something you can
insert in a pipeline, and it goes off to wherever you want to
use it.
Solar thermal. Hydrogen produced from renewable sources is
renewable thermal energy. You can electrify parts of industrial
facilities. Research suggests there is pretty good
opportunities there. And if your electric power is produced
from renewables, then you have done renewable thermal
technologies.
On the demand side, I think two thoughts. One is that we
see a number of States, I think there are 14 now, that as a
part of their standards that require utilities to produce more
renewable electricity, they offer a credit for renewable
thermal technologies. And it is a fairly diverse set of States,
including places like North Carolina, Texas, and Nevada.
So that is an example of using demand--it is not quite a
demand side policy, but it is an incentive that is helpful.
In transportation fuels, both the Federal Renewable Fuel
Standard and California's Low-Carbon Fuel Standard are demand
policies. They require a certain amount of either low carbon
fuel or renewable fuel in the fuel mix. That is driving the
development of renewable natural gas.
And so there are renewable natural gas projects happening
all over the place. The challenge is that all of that renewable
natural gas is really going into the transportation sector and
not into the industrial sector. But that is a fixable kind of a
problem.
Ms. Castor. Ms. Hight, you, prior to Rocky Mountain
Institute, you did a lot on methane controls globally. There
must be some red flags here when it comes to methane and the
industrial sector and things like being more reliant on natural
gas. What do you say?
Ms. Hight. So one of the things that we focus on at Rocky
Mountain Institute is sort of solving this problem of kind of
the transition from coal-fired generation to natural gas-fired
generation that we are really facing in the country right now.
Natural gas does burn cleaner than coal and has less
CO2 emissions when you combust it. But the
environmental footprint of natural gas is maybe not so good
compared to coal when you take into account the methane leaks
and the process emissions of methane that take place along the
way.
So natural gas is going to continue to be part of our
future. All the models demonstrate that natural gas is going to
be one of the fossil fuels that are going to be around for a
while. So we need to figure out how to address the leakiness of
natural gas, using incentives and regulations that can bring
those emissions down.
At the same time, we need to be using the abundant natural
gas resources we have in the U.S., coupled with carbon capture
and storage to produce real renewable resources like hydrogen,
get more of that onto the market, help that market take off, so
that we can bring more renewable hydrogen onto the grid to
displace it.
Ms. Castor. Thank you very much.
Mrs. Miller, you are recognized for 5 minutes.
Mrs. Miller. Thank you, Chairwoman Castor, and I really
mean it. I am so thrilled that we have this panel in front of
us today.
And thank you all for being here.
This issue today is so incredibly important. Innovation is
key as we move forward in addressing climate change. Rather
than completely shifting from key hydrocarbon baseload energy,
such as coal and natural gas, we can use innovation and new
technology to keep those same affordable forms of energy while
working to reduce or even eliminate emissions across the board.
Further, by using these technologies in our industrial
sector, we can produce more American goods and create jobs here
in the United States.
I believe carbon capture is the critical component in our
discussions on this committee. When the technology is fully
realized, carbon capture will be able to allow us to continue
to use the use of key baseload energy, keep energy costs low,
and keep more jobs here in the United States.
Mr. Crabtree, what are the biggest obstacles, scientific or
policy side, to fully developing carbon capture? The math and
chemistry are there for this solution, so what is holding us
back?
Mr. Crabtree. Representative Miller, thank you for the
question.
I would say that first and foremost with the current
generation of technologies in the power sector, carbon capture
technologies, the challenge is no longer one of technology but
of policy and of business model. And so the 45Q tax credit is a
huge step forward. It will provide $35 per ton of every
CO2 stored through enhanced oil solar recovery or
$50 per ton of CO2 stored in a saline geologic
formation.
The challenge is that those credit values are below what is
needed to retrofit a power plant in the power sector. Coal is
more expensive. Natural gas even more expensive than coal in
terms of carbon capture. So what we need to do is we need to
complement the 45Q tax credit with additional incentives that
will reduce the cost of capital of equity and debt.
For example, making a carbon capture project eligible for
tax-exempt private activity bonds, master limited partnerships,
things like that. Also, existing tax credits, enhancing them so
that they can enable them more monetization. So expanding the
pool of investors.
Right now with the 45Q tax credit, unlike with wind and
solar, it is subject to the provisions of the BEAT tax, so
there is a whole pool of investors that will not be able to
supply capital to a carbon capture project.
There is also--we could provide the same level of tax
credit transferability to 45Q that the nuclear 45J tax credit
enjoys. And the wind industry, by the way, is seeking that for
the production tax credit as well.
And then, finally, I don't want to repeat myself----
Mrs. Miller. Do it quickly.
Mr. Crabtree. The 48A tax credit has $2 billion in it and
it is available right now, and the Carbon Capture Modernization
Act would make that available and would put the United States
even more on the map as a leader in innovation in the power
sector.
Mrs. Miller. Thank you.
While the U.S. has already greatly reduced emissions, how
could carbon capture help reduce emissions from some of the
world's biggest emitters, such as China and India?
Mr. Crabtree. Well, so the average--the coal plant fleet in
Asia is vastly greater than the one in the United States, and
the average age of a power plant in Asia is 11 years. So if we
are to meet midcentury climate goals, there is no alternative
but to having a cost-effective, widely demonstrated option for
retrofitting coal-fired power plants on Asia's power plant
fleet. It is just an absolute must.
And so maybe our greatest leverage here in the United
States is to demonstrate in our own marketplace how viable and
effective it is to manage CO2 emissions from power
plants by doing projects and doing more of them. And it will be
also very important to do that with natural gas, not just coal.
Mrs. Miller. If we were to fully utilize carbon capture,
could we go to a net zero carbon output while continuing to
rely on our key baseline fuels?
Mr. Crabtree. Yes. In fact, the global modeling that gets
us to zero shows that we have to deploy carbon capture
literally economy-wide on all power generation on all major
industrial sources of CO2.
And then not only that, we have to go negative and we have
to start taking CO2 out of the atmosphere with
direct air capture technology, capturing CO2 from
energy production with biomass. It is an absolute essential
component of getting to zero by midcentury.
Mrs. Miller. Thank you.
Dr. Gregory, proposals like the Green New Deal push to move
our entire Nation, including our industrial sector, to fully
renewable schemes. How would that impact the creation of
concrete and cement?
Dr. Gregory. A fully renewable requirement on the
production of cement is challenging without CCUS because it
requires use of fossil fuels, at least right now, in order to
do that. That is currently not possible using the current
technologies that we have.
Mrs. Miller. Thank you. I yield back.
Ms. Castor. Terrific.
Well, I want to thank you all very much for your compelling
testimony, it is very helpful to the committee.
Without objection, all members will have 10 business days
within which to submit additional written questions for the
witnesses. Please respond as promptly as you can.
Without objection, I would also like to enter into the
record a letter from Roxanne Brown, international vice
president at large of the United Steelworkers, and a letter
from Paul Noe, vice president of public policy at the American
Forest and Paper Association.
[The information follows:]
Submission for the Record
Representative Kathy Castor
Select Committee on the Climate Crisis
September 26, 2019
September 24, 2019.
Chairwoman Castor,
House Select Committee on the Climate Crisis,
Washington, DC.
Ranking Member Graves,
House Select Committee on the Climate Crisis,
Washington, DC.
Dear Chairwoman Castor and Ranking Member Graves, On behalf of the
United Steelworkers (USW), I would like to thank you and the members of
the select committee for holding this week's hearing on the issue of
industrial greenhouse gas emissions and the climate crisis. I write to
you on behalf of the members of the United Steelworkers, North
America's largest manufacturing union. Our members supply almost every
sector of the economy, and produce a wide array of products, including
paper, glass, ceramics, cement, chemicals, aluminum, rubber, and of
course, steel. They produce these energy-intensive products in
facilities that are as efficient as any in the world. In fact, over the
past several decades the industrial sector and its workers have
undertaken many initiatives to increase their energy efficiency. And
while the industrial sector can, and must, further improve efficiency
in order to decarbonize sufficiently to avert the worst potential
consequences of the climate crisis, it is crucial that any policy
undertaken to reduce emissions in this sector be developed in a manner
cognizant of the unique factors that make this particularly challenging
for industry. To that end, I thank you for allowing me to provide the
perspective of our members and our union.
The United Steelworkers have, for decades, been a leader in the
labor community on environmental issues, including climate change. We
were the first industrial union to endorse a comprehensive climate
change bill, and we have actively engaged for years on the development
of environmental laws and regulations. We continue this work at both
the state and federal level, working with partners such as the
BlueGreen Alliance, which our union formed along with the Sierra Club
in 2006, and which continues to provide a strong and credible voice
articulating the shared commitment of the labor and environmental
communities.
As Congress considers potential policies to address climate change,
the way in which these policies affect the industrial sector is of
paramount importance. With the industrial sector accounting for 22
percent of total U.S. greenhouse gas (GHG) emissions, it must be part
of any comprehensive decarbonization effort both here and abroad.
Still, this must be developed in a manner that recognizes the
challenges this sector--with its large capital cost and embedded
process emissions--faces. There is great potential for decarbonization
in the industrial sector while still maintaining production and
employment, but to achieve this requires significant upfront investment
in proven industrial energy efficiency technologies; development and
scaling of technologies such as carbon capture, utilization, and
sequestration; and strong measures to ensure that additional costs
placed on American industries by mandates or direct carbon pricing do
not lead to emissions and job leakage.
industrial energy efficiency
A key goal of the Steelworkers has long been advocating for the
increased use of industrial energy efficiency technologies such as
Combined Heat and Power (CHP) and Waste Heat to Power (WHP). CHP
captures the heat produced in conventional power generation and WHP
captures the heat produced in industrial processes. Both systems then
use that heat in other industrial processes as useful energy. These,
along with on-site renewable generation and other existing efficiency
measures, are among the most efficient ways for industrial sources to
reduce demand for external energy sources including electricity, which
in turn can dramatically reduce energy consumption.
The Department of Energy found that increased deployment of
efficiency technologies like CHP, WHP, and on-site renewable generation
can reduce overall energy consumption in the industrial sector by 15%,
from 47% to 32%, by 2025. That sort of reduction can make a real
difference in total national energy consumption and, by extension, GHG
emissions. These technologies are already reducing emissions and are in
use in thousands of facilities across the U.S., many of which are in
industries that Steelworker members work such as steel, oil, and pulp
and paper. Further deployment can both further reduce emissions and
bring down the cost of these systems through economies of scale.
In addition, policies to reduce industrial emissions need to be
made in the understanding that unlike power generation, which could, in
theory, be entirely decarbonized by replacing traditional fossil fuels
with clean energy sources, industrial emissions cannot be entirely
eradicated that way. Because industry produces process and other
emissions that are unavoidable, policies to develop effective carbon
sinks are necessary to achieve net-zero emissions. Carbon capture,
utilization, and storage is therefore a critical component of any
climate policy. We support policies--like the Utilizing Significant
Emissions with Innovative Technologies (USE IT) Act--to make these
technologies and necessary infrastructure more widely available to
industry.
The challenge to further deployment of industrial energy efficiency
technologies like these is largely one of available funding for
investment. The benefits of these systems to industry are substantial,
but they accrue over a long period of time through decreased energy
costs, however the costs are also substantial and are almost entirely
upfront. Manufacturers with limited access to capital often simply
cannot put together the necessary funding in the short term to install
these systems, even if the benefits outweigh the costs in the long
term. Any policy that focuses on industrial emissions must include
measures to lower the cost of investment for manufacturers to drive
further deployment.
Many companies and sectors are experimenting with new technologies
to reduce emissions from the industrial sector. These exciting
opportunities are costly to research, develop, and deploy; therefore,
not all companies are able to engage in these activities. We also urge
Congress to robustly support and fund this type of research at the
Department of Energy or other relevant agencies to ensure that new
emissions reduction technologies are developed and commercially
available to industrial sources as soon as possible.
emissions leakage
While industrial energy efficiency policies and carbon capture can
provide options to industry to responsibly reduce emissions, many
policy proposals to address GHG emissions involve some sort of carbon
price. The Steelworkers have endorsed certain of these carbon price
policies in the past, notably the 2009 Waxman-Markey bill. Our union
does not oppose carbon pricing, so long as carbon price policies
include necessary provisions to address the needs of our members.
Foremost among these is a comprehensive policy to prevent emissions and
job leakage.
The idea underpinning carbon pricing is that the assessment of a
cost on emissions will provide an incentive to reduce them, either
through the development of more efficient process or of new products
which can be made with fewer emissions. This theory is sound, as long
as those costs cannot simply be evaded by companies offshoring
production to nations which do not apply a similar carbon price, or
downstream producers and consumers avoiding the cost by purchasing
imported goods from such nations.
In energy-intensive, trade-exposed industries like steel, glass,
aluminum, chemicals, rubber, and pulp and paper, this threat is
particularly acute because they are globally-traded commodity-based
industries, in which even small differences in production costs can
have a huge effect. A carbon price at almost any level that impacts
American producers, but not imports will have a huge negative impact on
domestic production and employment. In addition to those lost jobs and
production, a carbon price that results in leakage will likely have the
doubly undesirable effect of making the climate crisis worse, as
production displaced to countries such as China, whose industries are
less efficient, will result in more global GHG emissions.
The Steelworkers are pleased to see that a consensus has seemingly
formed in the U.S. policy community that any serious carbon pricing
policy must include a mechanism to prevent this leakage. The structure
of the leakage prevention policy can vary somewhat based on the type of
carbon pricing policy enacted, but the end result of any acceptable
leakage prevention policy must be the enactment of a strong border
adjustment mechanism.
The border adjustment, properly applied, will prevent leakage by
ensuring that U.S. producers do not face a cost disadvantage relative
to foreign producers. By applying a commensurate carbon cost on
products consumed in the United States regardless of the country of
origin, it would be compliant with international trade rules and would
ensure that the commitment of the U.S. to combating climate change
would not only drive increased efficiency in domestic production, but
in foreign production as well.
As discussed earlier, the speed in which cost disadvantages in
energy-intensive, trade-exposed industries can affect U.S. production
in those industries cannot be overstated. As such, it is imperative
that a border adjustment be fully in place and operational as soon as
domestic industries face a carbon price. If the structure of the carbon
price is a carbon tax, the border adjustment needs to be enacted at the
same time that U.S. producers incur the tax. If the border adjustment
cannot be stood up in time, the application of the tax on energy-
intensive, trade-exposed industries must be delayed until the border
adjustment can be applied.
The application timeline is somewhat different in the case of a
cap-and-trade system, such as the one proposed in the 2009 Waxman-
Markey bill. In that bill, which USW endorsed, the border adjustment
was delayed for several years after the carbon price would have been
applied to allow time for international negotiations. Critically,
however, during the time between enactment of the carbon price and the
application of the border adjustment, energy-intensive, trade-exposed
industries were defended from leakage via the allocation of free
allowances against the cap until such time as the border adjustment was
ready. At that point, the allocations would phase out as the border
adjustment phased in. Our Union's position is that the border
adjustment should be applied as soon as possible, and if there are
delays of any sort because of trading rules or other factors, the
industrial sector must be held harmless via some method, whether that
method is a delay in the application of the carbon cost on industrials
or the provision of cost mitigation during the delay.
However, it is eventually structured to fit in a carbon price
regime, the application of a strong border adjustment measure to
prevent emission and job leakage is critical to the successful
application of the carbon price.
conclusion
Addressing the climate crisis is the defining challenge of our
generation, and the United Steelworkers are ready to join in that
effort. We have led the way within the labor community on these issues
for decades and will continue to do so. However, for these efforts to
be successful and lasting, they must be designed with an understanding
of how they will impact America's industrial workers and move American
industry into the future. The needs of energy-intensive, trade-exposed
industries must be taken into account through the inclusion of policies
that will drive innovation and efficiency in those industries, and
policies including a border adjustment to prevent the loss of
production and jobs due to carbon leakage.
On behalf of the United Steelworkers, I would like to thank the
Select Committee for holding this hearing on this critical aspect of
addressing the climate crisis. We look forward to continuing to work
together to meet our shared goal of solving this crisis, while
maintaining and creating jobs for Americans.
Sincerely,
Roxanne D. Brown,
International Vice President At Large.
Submission for the Record
Representative Kathy Castor
Select Committee on the Climate Crisis
September 26, 2019
September 24, 2019.
Chairman Kathy Castor,
Ranking Member Garret Graves,
House Select Committee on Climate Crisis,
Washington, DC.
Dear Chairman Castor and Ranking Member Graves: Thank you for the
opportunity to discuss key considerations for U.S. climate policy.
We appreciate the Committee's outreach to us and other
stakeholders. Seeking input from stakeholders on such approaches will
allow for more informed and productive discussion and deliberation.
The American Forest & Paper Association (AF&PA) serves to advance a
sustainable U.S. pulp, paper, packaging, tissue and wood products
manufacturing industry through fact-based public policy and marketplace
advocacy. AF&PA member companies make products essential for everyday
life from renewable and recyclable resources and are committed to
continuous improvement through the industry's sustainability
initiative--Better Practices, Better Planet 2020. The forest products
industry accounts for approximately four percent of the total U.S.
manufacturing GDP, manufactures nearly $300 billion in products
annually and employs approximately 950,000 men and women. The industry
meets a payroll of approximately $55 billion annually and is among the
top 10 manufacturing sector employers in 45 states.
AF&PA's sustainability initiative--Better Practices, Better Planet
2020--comprises one of the most extensive quantifiable sets of
sustainability goals for a U.S. manufacturing industry and is the
latest example of our members' proactive commitment to the long-term
success of our industry, our communities and our environment. We have
long been responsible stewards of our planet's resources. We are proud
to report that our members have already achieved the greenhouse gas
reduction and workplace safety goals. Our member companies have also
collectively made significant progress in each of the following goals:
increasing paper recovery for recycling; improving energy efficiency;
promoting sustainable forestry practices; and reducing water use.
AF&PA'S Voluntary Emissions Reductions
In 2011, as part of the association's voluntary Better Practices,
Better Planet 2020 sustainability goals initiative, AF&PA set a goal to
reduce member greenhouse gas (GHG) emissions--measured in carbon
dioxide equivalents per ton of production--by 15 percent. After meeting
that goal ahead of schedule, members set a 20 percent reduction goal
and they now are close to achieving that goal as well, as emissions
were 19.9 percent lower in 2016 than in 2005.
To put these and other emission reductions in context, it is
helpful to consider the U.S. Nationally Determined Contribution (NDC
that was part of the Paris Accord). Specifically, the U.S. NDC was to
achieve a 17% GHG mass reduction between 2005 and 2020, and a 26-28%
GHG mass reduction by 2025, with best efforts to achieve a 28% GHG mass
reduction by 2025.
The US pulp and paper industry has already exceeded those targets,
by reducing direct emissions by approximately 35 percent on a mass
basis between 2005-2016. Further, as stated above, AF&PA members have
reduced their direct and indirect GHG emissions by 19.9 percent between
2005-2016 on an intensity basis.
In addition to our members' voluntary progress already discussed
above, AF&PA currently is developing new sustainability goals to
replace the existing Better Planet 2020 goals. Among others, we are
working on a new GHG reduction goal.
Industry Innovation
The industry also is innovating for the future. The industry's
Alliance for Pulp and Paper Technology Innovation--APPTI--works to
transform the paper and forest products industry through innovation in
its manufacturing and products. For instance, a project is underway to
reduce the energy used in certain paper manufacturing processes by 23
trillion BTUs, which would lead to significant GHG reductions. This
project is being carried out by a team led by the Georgia Institute of
Technology and is funded by APPTI members and the Department of
Energy's RAPID Institute.
APPTI identifies high priority, pre-competitive technology
challenges for the pulp and paper industry and promotes scientific
research and development projects to address them. Current projects
under development, if implemented, could achieve significant energy and
related GHG reductions for the industry
Climate Policy
AF&PA believes that any comprehensive climate legislation must
balance environmental, social, and economic concerns to ensure that our
nation's economy and forest products industry remain globally
competitive.
In particular, any legislation should recognize the forest products
industry's important and unique role in reducing greenhouse gases,
including sustainable forest management practices, carbon
sequestration, biomass energy use, electricity generation, and paper
recovery for recycling. Sustainably managed forests and our products
sequester and store approximately 14 percent of annual U.S. carbon
dioxide emissions. Paper recycling reuses a renewable resource that
sequesters carbon and helps reduce greenhouse gas emissions by avoiding
landfill methane emissions and reducing the total energy required to
manufacture some paper products. Any climate legislation should
recognize early actions taken to reduce greenhouse gas emissions. The
forest products industry's use of energy efficiency technology such as
combined heat and power technology also needs to be given full
consideration.
The carbon neutrality of biomass harvested from sustainably-managed
forests has been recognized repeatedly by an abundance of studies,
agencies, institutions, legislation and rules around the world and
includes the guidance of the Intergovernmental Panel on Climate Change
and the reporting protocols of the United Nations Framework Convention
on Climate Change.
Prior to 2010, the U.S. clearly recognized forest-based biomass
energy as carbon neutral. In EPA's Greenhouse Gas (GHG) Tailoring Rule,
for the first time, no such designation was made, subjecting biomass
energy used in stationary sources to Clean Air Act permit program
requirements. In 2011, EPA issued a rule deferring regulation of
biogenic carbon dioxide emissions while its Science Advisory Board
(SAB) studied the issue and pledged to complete an accounting framework
for biogenic emissions from stationary sources by July of 2014, but
failed to finish the work.
Numerous EPA documents and policy memos have found positive
benefits from forest biomass use, including EPA's original draft
accounting framework (September 2011) and revised draft framework
(November 2014). Both documents recognize the GHG reduction benefits of
bioenergy from forest product mill residuals and byproducts, including
black liquor. In April 2018, EPA issued a policy statement to treat
biogenic carbon dioxide emissions from the combustion of forest biomass
at stationary sources as carbon neutral. As the next step, EPA should
implement regulations soon.
From a broader perspective, it is critical to recognize that U.S.
manufactures must compete globally. To the extent that Congress adopts
laws that increase the domestic cost of production for US based
manufacturing, those higher costs of production will shift production
jobs, and economic growth outside of the U.S.
In turn, since U.S. manufacturers are a more efficient user of fuel
and natural resources than manufacturers in most other countries, when
production shifts to outside the U.S., there will be a net increase in
global GHG emissions.
In addition, global energy use trends and emissions projections
indicate the US will continue to be comparatively advantaged as an
efficient user of fuel and lower emissions intensity for the
foreseeable future. This data suggests that policies adopted by
Congress that increase competition remove barriers and lower costs to
US manufacturing, are the preferred policy prescription for achieving a
net reduction in global GHG emissions.
Thank you for seeking our industry's input and we look forward to
working with the Committee as this process moves forward.
Best Regards,
Paul Noe,
Vice President, Public Policy American Forest & Paper Association.
Ms. Castor. I would like to remind everyone, we do have a
request for information that is out. We are looking for the
policy proposals to help build our National Climate Action
Plan, the recommendations that will go to the Congress next
spring. So I encourage you to check that out and share it
widely. And thank you again for being here today.
The hearing is adjourned.
[Whereupon, at 3:36 p.m., the committee was adjourned.]
----------
United States House of Representatives Select Committee on the Climate
Crisis
Hearing on September 26, 2019, ``Solving the Climate Crisis: Reducing
Industrial Emissions Through U.S. Innovation''
Questions for the Record
David Gardiner, President, David Gardiner and Associates
November 22, 2019.
Hon. Kathy Castor,
Chair, Select Committee on the Climate Crisis,
Washington, DC.
Dear Chair Castor, Thank you for inviting me to testify before the
Select Committee on the Climate Crisis in September. I appreciated the
opportunity to provide information to the Select Committee on combined
heat and power (CHP) and waste heat to power (WHP). Thank you as well
for your thoughtful follow-up questions and those of the Honorable Sean
Casten. Please find attached my responses to your questions.
Sincerely,
David Gardiner,
President, David Gardiner and Associates.
the honorable kathy castor
1. How can existing Federal procurement policies be updated to
prioritize decarbonization in the industrial sector?
The federal government is the nation's largest energy consumer and,
as a result, can and should be a leader in decarbonizing its own energy
use, especially throughout the Department of Defense, the largest
energy user within the federal government. The military has recognized
the importance of combined heat and power (CHP) to ensure resilience of
its installations. For example, Army Directive 2017-07 says ``The Army
will reduce risk to critical missions by being capable of providing
necessary energy and water for a minimum of 14 days.''\1\ CHP can
provide heat and electricity when the grid is down, so the Army is
seeking to build microgrids and CHP projects. Among other CHP projects,
the Army broke ground in November 2017 on a 2 MW CHP project at
Picatinny Arsenal, a military research and manufacturing facility
located in New Jersey. The CHP system will provide steam for heating
and numerous ammunition manufacturing processes as well as 2 MW of
electricity, which will be able to operate even when the grid is
down.\2\ Congress should do all it can to support these efforts and
those at other government installations.
---------------------------------------------------------------------------
\1\ Secretary of the Army, ``Army Directive 2017-07 (Installation
Energy and Water Security Policy),'' Feb. 23, 2017. https://
www.asaie.army.mil/Public/ES/doc/Army_Directive_2017-07.pdf.
\2\ J.E. "Jack" Surash, PE, Acting Deputy Assistant Secretary of
the Army for Energy & Sustainability, ``The U.S. Army's pivot to energy
and water resilience,'' October 22, 2018. https://www.army.mil/article/
212756/the_us_armys_pivot_to_energy_and_water_resilience.
---------------------------------------------------------------------------
In addition, Federal procurement policies could establish a goal to
reduce emissions from its suppliers, as Walmart has done by adopting
its Project Gigaton goal. Under such an approach, procurement policies
could give preference in awarding contracts to product manufacturers
who have decarbonized their industrial processes. In 2017, California
adopted AB 262 under which suppliers' emissions performance will be
taken into account when an agency is contracting to buy steel, flat
glass, and mineral wool (insulation) for infrastructure projects.\3\
Such an approach could be adopted at the federal level for a variety of
products with significant carbon emissions. This would also encourage
manufacturers to reduce their emissions further while ensuring a large
federal market.
---------------------------------------------------------------------------
\3\ California. Legislature. Assembly. Public contracts: bid
specifications: Buy Clean California Act. A.B, 262. 2017-2018.
California State Assembly: October 16, 2017. https://
leginfo.legislature.ca.gov/faces/
billTextClient.xhtml?bill_id=201720180AB262.
---------------------------------------------------------------------------
Many in manufacturing are already prepared for such a move as the
private sector has given increased attention to reducing its emissions
and increasing energy efficiency: a 2018 study of 160 of the largest
manufacturing companies with U.S. facilities found that 79% of these
companies had greenhouse gas (GHG) targets, while 43% had energy
efficiency (EE) targets.\4\ Signatories to the Renewable Thermal Energy
Buyers' Statement have also demonstrated their interest in reducing
their GHG emissions and are actively seeking ways to expand and
accelerate the renewable thermal energy market.\5\ Renewable thermal
technologies will benefit from the same policies that have helped to
advance other renewable energy sources such as wind and solar.
---------------------------------------------------------------------------
\4\ Alliance for Industrial Efficiency, ``Committed to Savings:
Major U.S. Manufacturers Set Public Goals for Energy Efficiency,'' June
26, 2018. https://chpalliance.org/resources/alliance-report-finds-
majority-u-s-manufacturers-make-commitments-save-energy-reduce-
emissions/.
\5\ Renewable Thermal Collaborative, ``The Renewable Thermal Energy
Buyers' Statement,'' https://www.renewablethermal.org/buyers-
statement/.
---------------------------------------------------------------------------
Utilization of CHP and waste heat to power (WHP) can help both the
federal government and manufacturers to decarbonize. Conventional
electric generation is very inefficient, with roughly two-thirds of
fuel inputs lost as wasted heat from the process. Additional energy is
lost during transmission from the central power plant to the end user.
By generating both heat and electricity from a single fuel source at
the point of use, CHP lowers emissions and increases overall fuel
efficiency--allowing utilities and companies to effectively ``get more
with less.'' CHP can make effective use of more than 70% of fuel
inputs. As a consequence, natural gas-fired CHP can produce electricity
with about one-quarter of the GHG emissions of an existing coal power
plant. WHP, which uses waste heat from industrial processes to generate
electricity with no additional fuel and no incremental emissions,
reduces emissions and offsets costs associated with purchased power.
As I noted in my written testimony, according to the Department of
Energy, the chemicals, petroleum refining, food, paper, and primary
metals industrial sectors have the greatest potential for CHP
installation, creating a significant opportunity to cut industrial
emissions while increasing competitiveness.\6\
---------------------------------------------------------------------------
\6\ United States Department of Energy, ``Combined Heat and Power
(CHP) Technical Potential in the United States,'' March 2016. https://
www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
Fueling CHP and WHP systems with renewable natural gas can help to
further reduce emissions. CHP systems can run on renewable fuels, such
as biomass--forest and crop residues, wood waste, or food-processing
residue--or biogas--manure biogas, wastewater treatment biogas, or
landfill gas. Renewable natural gas (RNG), or biomethane, is a
pipeline- quality gas that is fully interchangeable with natural gas
and compatible with U.S. pipeline infrastructure and can be used to
fuel CHP systems. Over time, CHP systems can evolve and use different
types of fuel. A system using natural gas today may run on RNG in the
future.
2. Are there environmental, health, safety, or other risks and
tradeoffs to pursuing industrial efficiency and renewable thermal? How
can they be mitigated?
In addition to the land-use considerations addressed in question 7,
pursuing additional CHP deployment at industrial sites could raise
concerns about air quality as onsite emissions can increase, however
this can be addressed through existing Clean Air Act regulations. WHP
uses waste heat from industrial processes to generate electricity with
no additional fuel and no incremental emissions.
The use of any type of combustible gas carries inherent risks,
though the nation's natural gas delivery system has historically had
excellent performance and natural gas utilities remain vigilant and
committed to continually upgrading this crucial infrastructure based on
enhanced risk-based integrity management programs.\7\ There are
additional challenges presented when injecting RNG into the natural gas
pipeline network including variability in composition and supply of
gas, the potential impact on end use applications, and odorization and
leak detection. RNG quality standards can help to ensure that RNG will
not harm the distribution company's infrastructure or customer end-use
equipment and will also prevent harm to human health and safety.\8\
Several utilities in the United States have already developed gas
quality standards that specifically address RNG, demonstrating that
such challenges should not be a barrier to RNG deployment.\9\
Interconnection guidelines can also provide clarity when connecting RNG
projects to gas pipeline systems and uniform standards can offer
consistency for projects across jurisdictions. The Northeast Gas
Association released an Interconnect Guide for RNG in New York earlier
this year, and while the report is specific to one state, the framework
it presents could be adopted by other states.\10\ Though adding RNG to
the gas distribution system requires careful planning, this need not be
an impediment to additional deployment.
---------------------------------------------------------------------------
\7\ American Gas Association, ``An Increase in Safety Leads to a
Decrease in Emissions,'' 2019. https://www.aga.org/globalassets/2019-
increase-in-safety-leads-to-a-decrease-in-emissions-v.3.pdf.
\8\ M.J. Bradley & Associates, ``Natural Gas Utility Business
Models for Facilitating Renewable Natural Gas Development and Use,''
July 2019, p. 2. https://www.mjbradley.com/sites/default/files/
RNGLDCOptions07152019.pdf.
\9\ Id.
\10\ Northeast Gas Association, ``Interconnect Guide for Renewable
Natural Gas (RNG) in New York State,'' August 2019. https://
www.northeastgas.org/pdf/nga_gti_interconnect_0919.pdf.
---------------------------------------------------------------------------
3. You mentioned in your testimony that CHP and WHP also have the
benefits of being distributed energy resources and advancing the use of
microgrids. Could you expand upon how these benefits help facilities
obtain more reliable power and become more resilient?
Distributed energy resources allow energy to be created close to
where it is consumed, reducing the use of electric transmission and
distribution systems, reducing line loss of electricity and thereby
saving money. Distributed energy resources can also provide increased
reliability and resiliency, not only for facilities that host such
resources, but also for a host facility's surrounding community.
Facilities that are critical infrastructure--assets, systems, and
networks that, if incapacitated, would have a substantial negative
impact on national security, economic security, or public health and
safety \11\--are particularly well suited to utilize distributed energy
resources as access to energy is a high priority for ensuring that
critical facilities can continue to deliver services and assist in
recovery.\12\ In addition to the general benefits of distributed energy
resources, CHP and WHP systems provide further benefits in that they
typically run and are maintained continuously, providing a consistent
source of heat and power unlike intermittent resources such as wind and
solar, and have lower emissions than diesel or oil generators. These
systems may also be connected to a microgrid, allowing several
buildings or facilities to keep the lights on during a grid power
outage.
---------------------------------------------------------------------------
\11\ Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT)
Act of 2001. Pub. L. 107-56 at Sec. 1016(e). 26 Oct. 2001. https://
www.congress.gov/bill/107th-congress/house-bill/3162/text.
\12\ United States Department of Energy Better Buildings,
``Distributed Generation (DG) for Resilience Planning Guide,'' January
2019, p. 4. https://betterbuildingsinitiative.energy.gov/sites/default/
files/attachments/DG%20for%20Resilience%20Planning%20Guide%20-
%20report%20format .pdf.
---------------------------------------------------------------------------
Investments in microgrids have been encouraged by some policymakers
at the state and federal level. When a traditional electric grid has an
outage or needs to be repaired, all users of the grid are impacted. A
microgrid is a local energy grid that can disconnect from the
traditional grid and operate on its own during a traditional grid
outage.\13\ To function independently, a microgrid requires either
battery storage or a form of distributed generation such as CHP or WHP.
CHP systems provide 39% of the energy in existing microgrids.\14\
Microgrids are used by universities, military installations,
municipalities, and public institutions, helping to maintain their
reliability of electric and thermal energy supply and to improve their
resiliency against extreme weather and power outages.\15\ In some
locations, a number of critical facilities such as hospitals, fire and
police stations, emergency shelters, and gas stations can be connected
and configured to operate in isolation from the larger utility grid,
even during extended outages.\16\
---------------------------------------------------------------------------
\13\ United States Department of Energy, ``How Microgrids Work,''
Jun. 17, 2014. https://www.energy.gov/articles/how-microgrids-work.
\14\ Greentech Media, ``US Microgrid Growth Beats Estimates: 2020
Capacity Forecast Now Exceeds 3.7 Gigawatts,'' Jun. 1, 2016. https://
www.greentechmedia.com/articles/read/u-s-microgrid-growth-beats-
analyst-estimates-revised-2020-capacity-project#gs.fmnot7GL.
\15\ Id.
\16\ United States Department of Energy, ``CHP for Resiliency in
Critical Infrastructure,'' May 2018, p. 3. https://
betterbuildingsinitiative.energy.gov/sites/default/files/attachments/
CHP_Resiliency.pdf.
---------------------------------------------------------------------------
Whether used to power a single building or as part of a microgrid,
CHP systems have additional benefits over other types of backup power,
such as onsite diesel generators. CHP systems generally run and are
maintained continuously, avoiding the need to call a generator into
operation that may not have been used recently. In addition, CHP
systems frequently run on natural gas delivered directly via pipelines,
avoiding the need for a fuel delivery as well as resulting increased
emissions from diesel or oil.\17\ Many critical infrastructure
customers such as hospitals, universities, municipalities, and data
centers have successfully deployed CHP and WHP systems, increasing
their resiliency against natural disasters, emergencies, or other
events that may impact the electric grid. Power outage protection can
be designed into a CHP system that efficiently provides electric and
thermal energy on a continuous basis.
---------------------------------------------------------------------------
\17\ United States Environmental Protection Agency, ``Valuing the
Reliability of Combined Heat and Power,'' January 2007, p. 2. https://
www.epa.gov/sites/production/files/2015-07/documents/
valuing_the_reliability_of_combined_heat_and_power.pdf.
---------------------------------------------------------------------------
CHP systems can improve the resiliency of critical infrastructure.
If the electric grid is impaired, CHP systems can continue to operate,
providing electric and thermal service without interruption. This can
mitigate the impacts of an emergency by keeping critical facilities
operational until power is restored. In addition to providing power and
heat to a host facility to keep the facility operational, such host
facility may also be able to provide services to their local community
to aid in the recovery effort.
Case studies have demonstrated the benefits of CHP systems during
severe weather events that result in electric grid service disruption.
During and after Superstorm Sandy in the northeast United States,
numerous facilities with CHP systems were able to remain operational.
For example, South Oaks Hospital in New York was able to provide
critical services for two weeks relying solely on its CHP system and
admitted displaced patients, offered refrigeration of vital medicines
to those who had lost power, and welcomed the local community to
recharge phones and electronic devices at its facility.\18\ In New
Jersey, The College of New Jersey was able to disconnect from the
electric grid for a week and the campus continued to operate despite
the grid disruption. In addition, the College's equipment was used to
assist the state's largest utility in reestablishing service after the
grid outage: the utility was able to use the College's equipment to
back-feed one of their power lines to bring it back in service.\19\
Louisiana State University has also benefitted from a CHP system, the
university never lost power during Hurricane Katrina, allowing the
school to continue to operate and allow administrative offices of other
institutions to relocate to the main campus.\20\
---------------------------------------------------------------------------
\18\ ICF International, ``Combined Heat and Power: Enabling
Resilient Energy Infrastructure for Critical Facilities,'' March 2013,
13.
\19\ Id. at 18.
\20\ Id. at 24.
---------------------------------------------------------------------------
4. You mentioned that most of the policies for renewable heat occur
within the European Union. Could you elaborate on some of these
policies and how they could be applied in the United States?
Unlike the United States where policies have focused almost
exclusively on renewable electricity and transport, the European Union
Renewable Energy Directive (RED) takes a more comprehensive approach by
requiring 20% of European Union final energy consumption to be met by
renewables in 2020, with contributions from electricity, transport, and
heating and cooling. Individual countries have also seen success in
increasing renewable heat by setting ambitious targets, utilizing
existing infrastructure to achieve economies of scale, and providing
financial incentives.
District heating can facilitate the deployment of renewable heat
because of economies of scale and siting of facilities, though
government policies facilitating use of additional renewables are still
necessary. Denmark, Finland, and Sweden are three countries with
extensive district heating systems that also have ambitious long-term
targets to switch to renewables. This combination of infrastructure and
policy has made these countries leaders in the deployment of renewable
heat: in 2015, the share of renewables in heat consumption was 39.6% in
Denmark, 52.8% in Finland, and 68.6% in Sweden, with biomass comprising
the main source of renewable heat in each country.\21\
---------------------------------------------------------------------------
\21\ International Energy Agency, ``Renewable heat policies:
Delivering clean heat solutions for the energy transition,'' 2018, p.
21. https://www.iea.org/publications/insights/insightpublications/
Renewable_Heat_Policies.pdf.
---------------------------------------------------------------------------
France and Germany also have ambitious targets for heat's role in
their transitions to the greater use of renewable energy. France has
distinct measures for different sectors: its commercial and industrial
program includes subsidies for both project support and project
execution and supported 3,600 projects from 2009-2015.\22\ In the
residential sector, tax credits of 30% of capital costs are the main
incentive for renewable heat development along with a reduced value
added tax (VAT) rate.\23\ In Germany, the focus has been on buildings
rather than industrial process heat: building code obligations for
renewable heat in new construction and a subsidy program with extra
incentives when linked to energy efficiency improvements have driven
additional deployment of renewable heat.\24\
---------------------------------------------------------------------------
\22\ Id. at 29.
\23\ Id.
\24\ Id. at 31.
---------------------------------------------------------------------------
The United States does not have specific targets, nor a clear
policy, for renewable heat at the federal level. However, some states
have adopted renewable heating and cooling plans or have provided
incentives, demonstrating that programs in the U.S. are possible. For
example, Vermont established a goal to increase the share of renewable
heat from 20% to 30% by 2025, New York offers a range of incentives for
biomass heating systems, air and ground source heat pumps, and
biodiesel blended with conventional heating oil, New Hampshire requires
a specific portion of its renewable portfolio standard (RPS) come from
heat,\25\ and 14 other states offer a credit for renewable thermal
energy as part of their state renewable electricity standards.\26\
Other state-level incentives include sales tax exemptions and
rebates.\27\ While some states have taken the lead in increasing
renewable thermal, not all states choose to participate, creating a
patchwork of policies and a dearth of incentives to promote renewable
heat in some areas. A further challenge is that many of the state
programs are only focused on buildings and there is less support for
accelerating the use of renewable thermal technologies in the
manufacturing sector.
---------------------------------------------------------------------------
\25\ Id. at 40
\26\ Clean Energy States Alliance, ``Renewable Thermal in State
Renewable Portfolio Standards,'' July 2018. https://www.cesa.org/
assets/Uploads/Renewable-Thermal-in-State-RPS-April-2015.pdf.
\27\ International Energy Agency, ``Renewable heat policies:
Delivering clean heat solutions for the energy transition,'' at 40.
---------------------------------------------------------------------------
Setting ambitious targets for renewable heat deployment and
providing financial support for projects has been successful in
European countries and has begun at the state level in the U.S..
Additional support at the federal level could help to further increase
the use of renewable heat in the country.
5. You mentioned that the high upfront capital costs of CHP and WHP
systems make it difficult to compete for limited investment capital.
How can the Federal government incentivize companies to make these
investments? What types of financial instruments would be most
effective?
A 2015 United States Department of Energy study found that some of
the key economic and financial barriers to the accelerated adoption of
CHP included internal competition for capital, the ``split-incentive''
between capital improvement and operation and management budgets,
securing low-cost financing due to financial risks, and lack of
financing instruments such as Master Limited Partnerships.\28\
Regulatory barriers such as utility business models that result in rate
designs that unfairly charge partial requirements customers and do not
appropriately recognize the value of the services the CHP systems
provide to the grid were also acknowledged by the Department.\29\
---------------------------------------------------------------------------
\28\ United States Department of Energy, ``Barriers to Industrial
Energy Efficiency,'' June 2015, p. 95. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_5%20Study_0.pdf. See also
United States Department of Energy, ``Barriers to Industrial Energy
Efficiency: Report to Congress,'' June 2015, p. 9-10. https://
www.energy.gov/sites/prod/files/2015/06/f23/EXEC-2014-
005846_6%20Report_signed_0.pdf.
\29\ Id. at 103-104.
---------------------------------------------------------------------------
Installation of CHP systems typically requires a significant
upfront investment which can eclipse long-term benefits. Insufficient
capital and internal competition for capital prevent many facilities
from installing CHP systems, even when such a system has an attractive
financial return.\30\ A company may also be hesitant to make
investments outside of its core business and may require an even higher
rate of return compared to other, more familiar capital
investments.\31\ Internal accounting practices that separate plant
operation and maintenance budgets from capital improvements, resulting
in costs and savings accruing to different budgets, can also make it
difficult to demonstrate the financial benefits of a system.\32\
Facilities may also have a hard time finding favorable financing for a
long-term investment in the facility upgrade.\33\
---------------------------------------------------------------------------
\30\ Id. at 95.
\31\ Id. at 96.
\32\ Id. at 97.
\33\ Id.
---------------------------------------------------------------------------
First signed into law in 2005 as part of the Energy Policy Act, the
federal Investment Tax Credit (ITC) has played, and continues to play,
a critical role in driving energy innovation and technological
leadership in the United States. The federal ITC has helped to create
thousands of jobs, lower electricity prices for families and
businesses, reduce carbon emissions, and maintain the country's
competitive edge in emerging energy technologies. Section 48 and
Section 25D of the ITC provide tax credits that cover renewable energy
technologies such as CHP, micro-turbines, solar energy, geothermal,
fuel cells, and distributed wind energy. Increasing, or at the very
least maintaining, this tax credit will continue to allow American
businesses to realize energy and cost savings, support clean energy
jobs, and reduce carbon and other GHG emissions.
While the ITC has helped to support the deployment of CHP systems,
WHP systems have not been able to benefit from this policy. Despite the
fact that WHP is a zero-emission energy resource, these systems
currently do not currently qualify for the Section 48 ITC. There are
key differences between CHP and WHP systems that prevent WHP from
accessing the ITC as written: while CHP systems capture waste heat
generated in the production of electricity for thermal uses, WHP
systems capture waste heat and energy from thermal processes and
operations and convert that energy into electricity. The exclusion of
WHP systems from the federal ITC puts such projects at a competitive
disadvantage. The proposed Waste Heat to Power Investment Tax Credit
Act would rectify this problem by allowing an energy tax credit for
investments in WHP property.\34\
---------------------------------------------------------------------------
\34\ United States. Cong. Senate. Waste Heat to Power Investment
Tax Credit Act. 116th Cong. 1st sess. S. 2283. Washington: 2019.
https://www.congress.gov/bill/116th-congress/senate-bill/ 2283?r=2&s=1.
---------------------------------------------------------------------------
Loan programs can also be an effective policy to support additional
CHP deployment. For example, the LIFT America Act creates a loan
program to support the deployment of distributed energy systems for
states, institutions of higher education, and electric utilities as
well as a technical assistance and grant program to disseminate
information and provide technical assistance to nonprofit and for-
profit entities for identifying, evaluating, planning, and designing
distributed energy systems.\35\ As discussed in question 3 above,
distributed energy systems have significant reliability and resiliency
benefits, especially for facilities that are critical infrastructure.
---------------------------------------------------------------------------
\35\ United States. Cong. House of Representatives. Leading
Infrastructure for Tomorrow's America Act. 116th Congress. 1st sess.
H.R. 2741, Secs. 33303-33304. Washington: 2019. https://
www.congress.gov/bill/116th-congress/house-bill/2741/text#toc-
H364FAC1BA8D742599CF5C109 84A7AF57.
---------------------------------------------------------------------------
Federal grants could also help to increase CHP deployment in the
United States and such legislation has previously been proposed. The
Job Creation through Energy Efficient Manufacturing Act would require
the Department of Energy to establish a Financing Energy Efficient
Manufacturing Program that provides grants for energy efficiency
improvement projects in the manufacturing sector.\36\ Entities eligible
for grants would include state energy offices, nonprofit organizations,
electric cooperative groups, or certain entities with a public-private
partnership.\37\ The grant recipients would then distribute subgrants
to nongovernmental, small or medium sized manufacturers located in the
state in which the recipient is located to carry out projects that
improve the energy efficiency of the manufacturers and develop
technologies that reduce electricity or natural gas use by the
manufacturers.\38\ By improving the efficiency of industrial plants,
policies such as this Act will reduce carbon and other GHG emissions,
reduce energy costs for manufacturers making them more competitive, and
create jobs.
---------------------------------------------------------------------------
\36\ United States. Cong. Senate. Job Creation through Energy
Efficient Manufacturing Act. 115th Cong. 1st sess. S. 1687. Washington:
2017. https://www.congress.gov/bill/115th-congress/senate-bill/1687. A
similar bill was also introduced in 2018, see United States. Cong.
House of Representatives. Job Creation through Energy Efficient
Manufacturing Act. 115th Cong. 2d sess. H.R. 5042. Washington: 2018.
https://www.congress.gov/bill/115th-congress/house-bill/5042/text.
\37\ Id.
\38\ Id.
---------------------------------------------------------------------------
Historically, tax policies have been able to stimulate investments
in both conventional and clean energy projects. However, conventional
energy technologies have access to low-cost capital through types of
financing mechanisms that are not available to CHP projects. A Master
Limited Partnership (MLP) is a business structure that provides tax
advantages to the partners in the business, permitting investors to
trade shares and thereby allowing energy projects that qualify as MLPs
to have lower cost of capital.\39\ Congress should adopt bipartisan
legislation to allow clean energy projects to qualify as MLPs, as they
do not qualify under current law.
---------------------------------------------------------------------------
\39\ Id. at 98.
---------------------------------------------------------------------------
To the extent any technology neutral tax credit regimes or economy-
wide tax systems such as cap and trade are being considered, it is
essential to ensure that the emissions for CHP systems are
appropriately calculated. For example, with regard to technology
neutral approaches on tax credits, the model in the Clean Energy for
America Act calculates the emissions rate for CHP using both electrical
and useful thermal energy.\40\ If a carbon pricing regime is under
consideration, allowance structures must appropriately account for the
savings realized by CHP systems.
---------------------------------------------------------------------------
\40\ United States. Cong. Senate. Clean Energy for America Act.
116th Cong. 1st sess. S. 1288. Washington: 2019. https://
www.congress.gov/bill/116th-congress/senate-bill/1288/text.
---------------------------------------------------------------------------
In addition to financial and tax barriers, regulatory barriers that
impact project economics can also restrict capital outlays for CHP
systems. Though CHP and WHP systems can operate independently from the
electric grid, many facilities that install such systems still
interconnect with the electric grid to provide backup power during
scheduled or unscheduled outages. Public utilities implement standby
rates to recover infrastructure costs related to providing this backup
power service and ensure that CHP host sites have power available when
it is needed. However, in many cases, these rates are burdensome,
inflexible, unpredictable, or lack transparency.\41\ By ensuring that
standby rates better reflect the actual costs that a CHP or WHP system
imposes on the electric grid, utilities can be compensated for costs
while still encouraging investments in these systems.
---------------------------------------------------------------------------
\41\ Alliance for Industrial Efficiency, ``Standby Rates: Barriers
to CHP Deployment on a National Scale,'' May 2018. https://
chpalliance.org/wp-content/uploads/2018/05/Standby-Rates-One-
Pager_5.9.19.pdf.
---------------------------------------------------------------------------
Though standby rates are approved by state utility regulators,
federal policies could help to make standby tariffs and rates simple,
transparent, and consistent. For example, the HEAT Act directs the
Department of Energy to establish model rules and procedures for
interconnection and its associated costs and procedures for determining
fees or rates for supplementary power, backup or standby power,
maintenance power, and interruptible power supplied to facilities that
operate CHP and WHP systems.\42\ This legislation would establish a
federal framework to help states develop solutions to meet growing
energy demands efficiently and economically through the use of CHP and
WHP, strengthening local economies and supporting national energy
policy goals.
---------------------------------------------------------------------------
\42\ United States. Cong. Senate. Heat Efficiency through Applied
Technology Act. 116th Cong. 1st sess. S. 2706. Washington: 2019.
https://www.congress.gov/bill/116th-congress/senate-bill/2706.
---------------------------------------------------------------------------
The ability of equitable standby tariffs to unlock the potential of
CHP and WHP has been acknowledged by utility regulators at the national
level. The National Association of Regulatory Utility Commissioners
(NARUC) recently recognized the significance of standby rates to the
viability of CHP and WHP projects as well as the potential of CHP and
WHP to improve system reliability and resiliency. In a 2019 resolution,
NARUC ``encourages regulators to consider whether the cost of standby
rates discourages further deployment of CHP and WHP, and could harm CHP
and WHP facility competitiveness; and encourages Commissioners to
assure that standby rates for partial requirements customers
acknowledge that: (a) effectively coordinating CHP and WHP with grid
system operations reduces demand and costs; and (b) CHP and WHP have
the potential to improve system reliability and resiliency.'' \43\
---------------------------------------------------------------------------
\43\ NARUC Board of Directors, ``Resolution on Standby Rates for
Partial Requirements Customers,'' February 13, 2019. https://
pubs.naruc.org/pub/758747DC-F64E-BFD7-D411-817D44D3E571.
---------------------------------------------------------------------------
6. During the hearing, you mentioned that you have a project
looking at the carbon accounting associated with combusting biomass.
Could you elaborate on the sources of emissions studied? Were emissions
outside of combustion, such as tree removal and transport, taken into
account? Could you share the findings of this project?
The Renewable Thermal Collaborative (RTC) serves as the leading
coalition for organizations--businesses, cities and universities--that
are committed to scaling up renewable heating and cooling at their
facilities and dramatically cutting carbon emissions. Our partner in
the RTC, World Wildlife Fund, is leading a project to help large
thermal energy buyers evaluate whether biomass, considered from a
lifecycle perspective, emits greater or fewer carbon emissions than
other fossil fuels. There is growing recognition that automatically
assuming carbon neutrality for bioenergy is inadequate to account for
climate impacts, particularly for forest biomass as a fuel where the
time lag between emission and uptake from regrowth can take up to a
century for slow-growing trees. Nor is there yet consensus on the best
way to account for this biogenic carbon. However, the World Resources
Institute intends to create new accounting guidelines for land sector
emissions and removals within the Greenhouse Gas Protocol \44\ over the
next few years. The Greenhouse Gas Protocol is a voluntary standard for
accounting that is widely used and accepted globally for emissions
reporting. Until we have accepted accounting practices, it will be
difficult to reach agreement on these challenging issues.
---------------------------------------------------------------------------
\44\ http://ghgprotocol.org/.
---------------------------------------------------------------------------
In the meantime, RTC's biomass project has been reviewing
accounting options and developing a method (called GWPbio) for
comparing biomass to other fuels to help large thermal energy buyers
make sound investment decisions. Because the project is still underway,
we do not have final results yet. However, the decision tool that is
being developed adopts a lifecycle approach and considers emissions
from many sources, from the traditional footprint including combustion,
cutting, processing and transporting the wood product, to its biogenic
impact, that considers the type of wood species, their regrowth rate
(shorter is better for carbon), the amount of carbon and duration it is
stored in a product (e.g., furniture vs fuel) and direct and indirect
land use impacts of above and below ground carbon as well as soil
carbon, among other attributes.
The decision tool is expected to be publicly available at the end
of Q1 in 2020.
7. Could you expand upon what issues need to be considered when
determining whether sources of biomass are appropriate for renewable
thermal to reduce greenhouse gas emissions? Taking into account land-
use considerations and the multiple uses of biomass, what is a
reasonable scale for using biomass for renewable thermal?
Several key issues that need to be considered when determining
whether sources of biomass are appropriate for renewable thermal to
reduce greenhouse gases are outlined in the second paragraph of the
answer to question 6. In addition to the GWPbio tool under development,
the Greenhouse Gas Protocol for the land sector will be a definitive
resource when completed.
In short, there is not yet a consensus on the reasonable scale for
using biomass for renewable thermal energy or for other needs. The U.S.
Department of Energy Oak Ridge National Laboratory completed the
Updated Billion-Ton Report Study \45\ in 2016 to estimate the amount of
biomass available in the US. The study was a US-wide assessment of
bioenergy feedstock availability. It considered issues of access,
maintaining base case soil health and other factors, but did not
explicitly apply sustainability criteria or standards in its analysis.
The RTC has some work underway to develop criteria to filter against
the results of the Updated Billion-ton Study results. However, a robust
scientific study developed and carried out with stakeholder input and
peer review is needed. For now, and until WRI completes the land sector
Greenhouse Gas Protocol, a sound approach would use waste materials and
materials that are harvested from sustainably managed forests,
considering climate and forest health, including biodiversity. Forest
Stewardship Council controlled wood supply would provide a sound
sustainability filter.
---------------------------------------------------------------------------
\45\ U.S. Department of Energy Oak Ridge National Laboratory.
Updated Billion-Ton Study (2016). https://www.energy.gov/sites/prod/
files/2016/12/f34/2016_billion_ton_report_12.2.16_0.pdf.
---------------------------------------------------------------------------
In addition, we would note that some states have analyzed these
issues extensively as part of their rulemakings to determine
appropriate crediting of biomass thermal energy products in their
Renewable or Alternative Portfolio Standards. Massachusetts'
Alternative Portfolio Standard, for example, offers credits for biomass
thermal projects under these guidelines. However, as outlined in a
report from the Clean Energy States Alliance on these issues, states
have taken different approaches to biomass in their standards. The RTC
is only beginning to assess how the states have addressed these issues
so does not endorse any particular approaches which the states may have
taken.
David Gardiner and Associates is happy to share with the Committee
any additional studies or reports we develop that address these issues.
the honorable sean casten
1. In terms of designing a combined heat and power plant there can
be a lot of flexibility in terms of how a system can be utilized to
produce various ratios of heat to power. However, these two products
can be subject to very different regulatory regimes that can in turn
influence how a system is designed and its ultimate efficiency as you
discussed in your testimony before the Committee. How can regulation at
both the state and federal level create barriers that can incentivize
CHP developers to sub optimize design of a plant with regard to overall
efficiency?
Conventional electric generation is very inefficient, with roughly
two-thirds of fuel inputs lost as wasted heat from the process.
Additional energy is lost during transmission from the central power
plant to the end user. By generating both heat and electricity from a
single fuel source at the point of use, CHP lowers emissions and
increases overall fuel efficiency. When electricity and thermal energy
are provided separately, overall energy efficiency ranges from 45-55%,
but, though efficiencies vary for individual CHP installations, a
properly designed CHP system will typically operate with an overall
efficiency of 65-85%.\46\ Because they combust less fuel to provide the
same energy services, CHP systems reduce all types of emissions,
including greenhouse gases, criteria pollutants, and hazardous air
pollutants. As a consequence, natural gas-fired CHP can produce
electricity with about one-quarter of the GHG emissions of an existing
coal power plant. WHP, which uses waste heat from industrial processes
to generate electricity with no additional fuel and no incremental
emissions, reduces emissions and offsets costs associated with
purchased power.
---------------------------------------------------------------------------
\46\ United States Department of Energy, ``Combined Heat and Power
(CHP) Technical Potential in the United States,'' March 2016, p. 3-4.
https://www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
Industrial and manufacturing facilities often have large thermal
loads in comparison to their electric power needs. Installing a CHP
system to meet such facility's entire thermal load would create the
most energy and emissions savings: the optimal way to size a CHP system
for a facility is by matching the thermal output of the system to the
baseload thermal demand of the facility.\47\ However, when a CHP system
is deployed at such a facility, the CHP system is frequently not sized
to meet the entire thermal load, but instead is capped at the electric
demand of the facility because it is either impossible to sell the
excess electric power or difficult to sell the excess electric power at
a price that reflects its value. Regulations that prohibit the sale of
excess power to the grid, prohibit wheeling \48\ or the sale of excess
power to another facility, or that do not appropriately value such
power create this sub-optimization of CHP deployment. The inability to
sell excess power, or to sell excess power at a competitive price, can
be a deterrent to CHP projects sized to meet facility thermal
loads.\49\
---------------------------------------------------------------------------
\47\ Id. at 11.
\48\ ``Wheeling'' in the electric market is the interstate sale of
electricity or the transmission of power from one system to another.
See U.S. Department of Energy Office of Electricity Delivery and Energy
Reliability, ``United States Electricity Industry Primer,'' July 2015,
p. 91. https://www.energy.gov/sites/prod/files/2015/12/f28/united-
states-electricity-industry-primer.pdf.
\49\ United States Department of Energy, ``Barriers to Industrial
Energy Efficiency,'' June 2015, p. 101. https://www.energy.gov/sites/
prod/files/2015/06/f23/EXEC-2014-005846_5%20Study_0.pdf.
---------------------------------------------------------------------------
Policies that allow facilities that install CHP systems to sell
excess electric power would help to encourage additional deployment of
CHP and would result in increased energy efficiency by creating thermal
and electric energy in one system. Policy options include power
purchase agreements (PPAs) with a local electric utility which
typically guarantee that a CHP system owner can sell power at a
predetermined rate for a certain number of years. However, state
utility regulation that does not provide fair treatment to all of the
benefits and costs of CHP may curtail the attractiveness of these types
of agreements.\50\ Third-party PPAs are another policy option where a
CHP system owner can sell excess electricity to neighboring facilities,
however in many states CHP system owners are not able to deliver excess
electricity to nearby plants that are under common ownership or sell
excess power except to the electric utility that serves the CHP site,
creating a potential barrier to CHP deployment.\51\ In general, rules
that prohibit or diminish the value of excess power sales leave large
amounts of energy and emissions savings unrealized.
---------------------------------------------------------------------------
\50\ Id.
\51\ Id. at 102.
---------------------------------------------------------------------------
2. Given than waste heat to power represents a zero marginal fuel
use source of energy with emission equivalent to those of renewable
sources, how should federal incentives treat these projects? Should
they receive similar support to other zero-carbon sources of energy?
Waste heat to power (WHP) systems capture waste heat, a byproduct
of industrial processes, and use it to generate electricity with no
additional fuel and no incremental emissions. WHP is a clean form of
energy that uses leftover heat from industrial, commercial and
institutional operations to generate electricity for use onsite or for
export to the electric grid. WHP systems capture waste heat from
sources such as exhaust stacks, pipes, boilers and cement kilns, which
would otherwise be lost to the atmosphere, and convert the waste heat
into electricity. Because WHP generates electricity with no additional
fuel or combustion, WHP is effectively a ``zero emission'' energy
resource. Like wind and solar energy, waste heat is a resource we
already have, but it just needs to be captured and used. However, the
resource is underutilized in the U.S.: as of 2016, the U.S. Department
of Energy determined existing WHP capacity to be 469 megawatts and the
WHP technical potential to be 7,624 megawatts, meaning that the U.S.
was utilizing around six percent of this resource.\52\
---------------------------------------------------------------------------
\52\ United States Department of Energy, ``Combined Heat and Power
(CHP) Technical Potential in the United States,'' March 2016, p. 18,
28-29. https://www.energy.gov/sites/prod/files/2016/04/f30/
CHP%20Technical%20Potential%20Study%203-31-2016%20Final.pdf.
---------------------------------------------------------------------------
As of 2016, of the 40 states that had some form of portfolio
standard, either an RPS, alternative portfolio standard (APS), or
energy efficiency resource standard (EERS), 32 states included WHP
systems.\53\ While this recognition at the state level is important, it
also demonstrates that WHP is not fully recognized for all of the
benefits it delivers.
---------------------------------------------------------------------------
\53\ U.S. Environmental Protection Agency Combined Heat and Power
Partnership, ``Portfolio Standards and the Promotion of Combined Heat
and Power,'' March 2016, p. 16-32. https://www.epa.gov/sites/
production/files/2015-07/documents/
portfolio_standards_and_the_promotion_ of_combined_heat_and_power.pdf
---------------------------------------------------------------------------
Despite being a zero-emissions technology, WHP does not currently
qualify for the federal Investment Tax Credit. CHP and WHP have some
key differences that prevent WHP from accessing the ITC as written. CHP
systems capture waste heat generated in the production of electricity
for thermal uses, whereas WHP systems capture waste heat and energy
from processes and operations and convert that energy into electricity.
WHP should receive support just as other zero-carbon sources of energy
do.
Questions for the Record
Jeremy Gregory, Research Scientist and Executive Director, MIT Concrete
Sustainability Hub
the honorable kathy castor
1. How can existing Federal procurement policies be updated to
prioritize decarbonization in the industrial sector?
I recommend simply asking suppliers of construction materials for
government projects to report on the environmental impacts and
performance of their products across the full product lifecycle, along
with steps being taken by the supplier to improve the product's
environmental impact profile over time. If the projects involve
buildings that are seeking LEED certification, this can be used to
achieve points in the materials and resources portion of the rating
system. Many suppliers do not think to lower the environmental impacts
of their products because they do not measure the impacts and are not
asked to report them. Changing these practices will likely cause them
to lower their environmental impacts as a means of differentiating
themselves in the marketplace.
2. Are there environmental, health, safety, or other risks and
tradeoffs to pursuing solutions for low-carbon cement and concrete? How
can they be mitigated?
In some cases, there are immediate opportunities to reduce the
carbon footprint of cement and concrete--simply by switching to more of
a performance-based system for materials selection. Portland limestone
cement, for example, is a proven material that provides the same
performance benefits of traditional cement formulations while reducing
the emissions profile by approximately 10%. In other cases, it is too
early to tell what the long-term impacts of alternative formulations
will be over the lifecycle of specific projects. There will almost
certainly be performance trade-offs with different solutions (e.g.,
changes in strength, durability, constructability, etc.) and these need
to be considered by engineers and concrete producers when changing
concrete mixtures. However, there are unlikely to be significant health
and safety issues directly resulting from the use of low-carbon cements
and concrete because the industry knows the importance of developing
solutions that do not affect workers or the users of structures
containing concrete.
3. You mentioned that biomass could be used as an alternative fuel
in cement plants. Could you expand upon what issues need to be
considered when determining whether sources of biomass are appropriate
for use in cement plants to reduce greenhouse gas emissions? Taking
into account land-use considerations and the multiple uses of biomass,
what is a reasonable scale for using biomass in cement plants?
Biomass and other nontraditional nonhazardous secondary materials
provide excellent sopources of fuel for cement kilns due to the unique
operating characteristics of cement kilns. Indeed, many facilities have
also incorporated biomass sources into their fuel mix, from switchgrass
and nut shells to used railroad ties.
With respect to technical considerations when selecting biomass or
other alternative fuels for use in kilns, key considerations include
the heat value of the fuel (paper, plastic, fibers and fabrics, for
example, have very positive profiles) as well as the contaminant
characteristics. Because of the extremely high temperatures and long-
residence time for kiln fuels, these fuels offer favorable, and often
better heat and emissions characteristics than traditional fossil
fuels. The high heat and energy efficiency of modern cement plants
allows for a high-level of conversion of fuel to energy.
From a resource use perspective, increased use of biomass and other
alternative fuels is a net positive for both the environment, the
economy, and society. Cement kilns can convert waste biomass streams
into a valuable fuel commodity, without complicated chemical processing
to create fuels. For some of our members that have chosen to grow
switchgrass or other high-heat value biomass sources, the land used to
cultivate the fuel provides a valuable ecological habitat and a natural
buffer between the plant operations and the community.
With respect to potential scale of use, we see a considerable
opportunity to increase the use of biomass and other alternative fuels
within the cement industry. Today, for example, US cement kilns use
derive roughly 15 percent of their kiln fuel from biomass and other
alternative fuel sources (used tires, solid waste, etc.) while the
average fuel mix in Europe ranges from 35 to 60 percent.
To get there, however, we are going to need to take a hard look at
the federal and state permitting processes for alternative fuel use in
specific kilns. Current EPA rules, and sometimes state regulations, can
make it difficult to incorporate nontraditional fuels into the fuel
mix. While EPA has provided limited exemptions for some biomass
streams, regulatory burden and fear of inconsistent enforcement can
create concerns.
Questions for the Record
Brad Crabtree, Vice President of Carbon Management, Great Plains
Institute
the honorable kathy castor
1. In this committee, we've talked, often with frustration, about
how China has cornered key parts of the clean energy market, such as
batteries and solar panels. Has China cornered the market in carbon
capture for industrial emissions, or is this an opportunity for the
United States to take the lead and export critical technology to China
and other countries?
According to the Global Carbon Capture and Storage Institute
(GCCSI), China has commenced construction of one large-scale carbon
capture and storage facility and another seven large-scale projects are
in different stages of development. By contrast, the U.S. has 13
operating commercial-scale facilities that capture carbon dioxide (CO2)
from a variety of industrial and power generation sources and have a
combined annual capture capacity of over 25 million metric tons. Thus,
the U.S. remains the clear leader in the deployment of carbon capture,
the commercial use of captured carbon and its safe and permanent
geologic storage in oil and gas fields and saline formations, and we
have the potential to expand that global leadership role. GCCSI
recently updated its database of large-scale carbon capture and storage
projects under development globally by adding ten new projects, eight
of which are in the U.S.
The U.S. oil and gas industry has globally unmatched experience and
expertise with large-scale CO2 injection and storage that dates back to
1972. Multiple other U.S. industries collectively have decades of
experience capturing and managing CO2 at commercial scale. And American
innovators, entrepreneurs and investors are on the cusp of a
technological and economic transformation in the beneficial use of
captured CO2 and carbon monoxide (CO) to produce low and zero-carbon
fuels, chemicals, advanced materials, and products.
However, if we are to maintain and strengthen America's global
leadership position, Congress must build on last year's landmark
bipartisan reform and expansion of the Section 45Q tax credit by
enacting a broader portfolio of federal incentives and other policies
for carbon capture, much as has successfully been done for other low
and zero-carbon technologies, such as wind and solar. The 70-plus
companies, unions and NGOs that participate in the Carbon Capture
Coalition recently reached consensus on just such a policy portfolio
for American leadership on carbon capture. The Coalition's Federal
Policy Blueprint was submitted to the Committee for the record at the
hearing.
2. Several labor unions are members of your coalition. Why is the
topic of industrial efficiency and carbon capture so important to them?
Carbon capture technologies can enable the decarbonization of
critical economic activities, while avoiding the closure of existing
industrial and manufacturing facilities and power plants and helping to
achieve the emissions reductions needed to meet midcentury climate
goals. Key sectors of our economy suited to carbon capture deployment
support a high-wage, highly-skilled jobs base vital to the livelihoods
of working Americans and to the stability and well-being of entire
communities and regions that depend on them. Therefore, economywide
deployment of carbon capture represents a central and necessary
objective of a broader federal climate strategy and policy framework
for labor unions, and it is the reason why unions have participated
actively in the Coalition since its founding in 2011.
3. What is the biggest challenge for industrial carbon capture and
what policy would make the greatest impact?
While industrial carbon capture from high-purity industrial sources
of CO2 such as ethanol, natural gas processing and ammonia production
have now become economically viable under the reformed federal 45Q tax
credit, many industrial processes produce less pure streams of CO2 and
have higher costs of capture. These industries also tend to produce
low-margin commodities that are vulnerable to global competition, and
they are thus highly sensitive to any increases in costs of production
associated with implementation of emissions reduction technologies such
as carbon capture. Moreover, some of the most carbon-intensive
industrial sectors, such as refining, chemicals, cement, and steel
production, have deployed few and, in some cases, no examples of carbon
capture and utilization technology at full commercial scale, which
means that the first large-scale projects in these industries will be
more costly and involve more commercial risk to project developers and
their investors who are the early adopters.
Following last year's reform and expansion of the Section 45Q tax
credit, there is no longer one single policy that would have the
greatest impact, but rather we now need to take a page from the policy
success of wind and solar by enacting a broader portfolio of federal
policies to enhance and build on 45Q as noted in the response to
question 1 above. The first component of this broader federal policy
portfolio includes technical fixes and enhancements to 45Q and other
existing incentives, as well as new incentives to reduce the cost of
capital in financing carbon capture projects (see response to question
10 below for more detail). Second, now that we have the revamped 45Q
credit as a cornerstone federal incentive for deployment, it is crucial
that federal policymakers devote attention to ensuring that CO2
transport infrastructure becomes an important element of broader
federal infrastructure policy to ensure that we have robust
infrastructure in place across the country to transport CO2 from where
it is captured to where it can be geologically stored and put to
beneficial use (see response to question 9 for more detail.) Finally,
Congress can help ensure that the next generation of carbon capture and
utilization technologies with lower costs and improved performance make
their way into the marketplace by continuing to advance bipartisan
RDD&D legislation such as the USE IT Act, Clean Industrial Technology
Act and the Fossil Energy R&D Act, which would provide dedicated
federal funding for research, development and demonstration of capture
and utilization technologies in key industrial sectors.
4. You mentioned that Federal procurement policies will play an
important role for creating early markets for industrial carbon capture
projects. Could you expand upon which types of industrial products
would be best suited for government procurement? Which of these have
potential for carbon utilization?
The Carbon Capture Coalition has identified as a priority the
development of federal procurement policy for low, zero and even
carbon-negative electricity, liquid fuels and products produced through
carbon capture, utilization, removal and storage. While the Coalition
has yet to develop specific policy recommendations, Coalition
participants recognize the important role that federal procurement
policy has played in providing demand-side support for other low and
zero-carbon technologies, complementing the role of tax credits and
other financial incentives on the supply side to help drive private
investment in commercial technology deployment.
Carbon capture and utilization in industrial settings is
multifaceted, so federal procurement policies not only need to support
market development for different non-energy products, but also for
electricity and a wide range of liquid fuels. For example, utilization
of waste steel plant CO emissions to produce low carbon ethanol, jet
fuels and chemicals is currently being commercialized in China and
Europe and could readily be deployed in the U.S. with the right mix of
policy support. Also, low and zero carbon-electricity and hydrogen are
critical to decarbonization of industrial sectors, and government
procurement policies can help stimulate deployment of carbon capture in
power generation and in hydrogen production for industrial heat and
other applications.
In addition, key industrial commodities such as steel and cement
lend themselves to government procurement policies. Infrastructure and
construction constitute a significant component of market demand for
such commodities, and federal funding for projects plays a major role
in these markets. Because the purchase of these commodities represents
a small percentage of total project costs, the federal government can
provide a meaningful premium in the marketplace for lower-carbon steel,
cement and other commodities manufactured with carbon capture and/or
incorporating carbon utilization, without significantly increasing the
total federal contribution to such projects.
Finally, federal procurement policies can play an especially
important role in establishing markets for products derived from the
utilization of captured CO2 and its precursor CO that have a
smaller carbon footprint than their traditional counterparts.
Considering both technological maturity and potential market size,
building materials, fuels, chemicals and plastics produced from
captured carbon are examples of promising areas where procurement
policy could make a real difference in fostering deployment. Beyond
reductions in carbon emissions, there are additional benefits to many
of these technologies, including military readiness. Direct air
capture-to-fuels applications, for example, could enable the military
to produce fuels around the world through the capture of CO2
from ambient air.
5. Are there environmental, health, safety, or other risks and
tradeoffs to pursuing carbon capture utilization and storage? How can
they be mitigated?
Carbon capture, pipeline transport and geologic storage of
CO2 have been undertaken at scale for nearly a half century
in the U.S., and over a billion tons of CO2 have been
injected into geologic formations over that time period without
significant environmental incidents. Industry currently purchases and
manages on the order of 65-70 million metric tons of CO2
annually for injection. Environmental, health and safety risks are
known, minor, well-managed and regulated. The transport, use and
geologic storage of that CO2 is enabled by just over 5,000
miles of existing CO2 pipelines in 11 states, the operation
of which over decades has involved no fatalities or major environmental
accidents. Few industries on this scale have a comparable safety and
environmental record.
6. You mentioned the importance of the 45Q tax credit for carbon
capture projects. Beyond 45Q, what policies does the Carbon Capture
Coalition recommend for creating markets for industrial carbon capture?
This question is already addressed in responses to questions 1, 3,
4, 9 and 10, especially questions 4 and 10.
7. You mentioned in your testimony visiting two overseas
demonstrations of CCUS at steel production facilities. Could you talk
about what you learned from these visits that could be applied to
facilities in the United States? Why do you think these innovative
applications were demonstrated in other countries and not in the United
States? What made these countries better environments for testing these
technologies?
U.S. state and federal officials and representatives of industry,
labor, NGO and philanthropy recently had the opportunity to visit the
world's only large-scale carbon capture facility at a steel plant in
the United Arab Emirates and a commercial-scale carbon utilization
project under construction at a steel mill in Belgium and to consider
how these technologies and business models could be applied here in the
U.S. The direct reduction ironmaking process used by Emirates Steel in
the UAE is widely deployed in the U.S. The specific HYL technology from
Energiron produces a pure stream of CO2 that can be readily
configured for capture and compression, and it is currently installed
at a steel plant in Louisiana, potentially creating a near-term
opportunity in the U.S. In Belgium, the ``Steelanol'' project under
development between the U.S. company LanzaTech and global steel
producer ArcelorMittal to produce ethanol from steel mill CO emissions
could also be pursued in the U.S. under the right policy circumstances.
In both the UAE and Belgium, the commitment of resources by Abu
Dhabi (through the Abu Dhabi National Oil Company) and the European
Union, respectively, and the economic opportunity to add value to
existing energy and industrial production through carbon capture and
utilization provided the impetus to these projects and made their
development feasible. Here in the U.S., the existing 45Q tax credit,
coupled with targeted federal resources and incentives for early
commercial technology demonstration in key industrial sectors such as
steel, cement, chemicals, etc., would enable similar steel and other
large-scale industrial carbon capture projects to move forward.
Specifically for carbon utilization-to-fuels pathways such as LanzaTech
and ArcelorMittal's CO-to-ethanol process, incentive support for low-
carbon fuels through the Renewable Fuels Standard or some comparable
federal policy would be needed for deployment to proceed.
8. Are there ways that carbon capture can help industrial
facilities with reliability and resilience?
Many types of industrial facilities are very energy-intensive and
require cost-effective, reliable electricity and industrial heat on a
24/7 basis. Installing carbon capture on coal and natural gas power
generation can decarbonize electricity inputs to industrial production
without impacting supply or system reliability. Similarly, steam
methane reforming of natural gas with carbon capture currently provides
the lowest-cost source of zero-carbon hydrogen, thus enabling cost-
effective, on-demand provision of near zero-carbon heat to industrial
processes.
9. You mentioned that expanding infrastructure for the transport of
carbon dioxide will be crucial for bringing down the costs of
deployment of CCUS. Can you describe the existing carbon dioxide
pipeline infrastructure in the United States and how and where it would
need to be expanded to accommodate the volumes projected for deep
decarbonization?
Currently, the U.S. has just over 5,000 miles of existing
CO2 pipelines in 11 states, and CO2 has been
safely transported and injected for injection and geologic storage at
scale since 1972. The bulk of today's CO2 transport
infrastructure is concentrated in several pipeline networks, with the
largest centered on the Permian Basin of Texas and New Mexico and other
smaller networks on the Gulf Coast and in the Northern Plains, with the
remainder consisting of single source-to-sink pipelines in several
states.
For carbon capture to realize its full potential to contribute to
midcentury emission reductions as borne out in modeling by the
International Energy Agency (IEA) and Intergovernmental Panel on
Climate Change (IPCC), a national system of CO2 transport
infrastructure will need to be developed on a scale comparable to
systems now in use to transport oil and gas. This will entail scaling
up existing regional CO2 infrastructure hubs substantially,
establishing new hubs in areas of concentrated industrial and energy-
related emissions and geologic storage potential (e.g. Louisiana Gulf
Coast and industrial Midwest), and developing new long-distance, large-
volume CO2 trunk lines and associated feeder lines to
regions not currently served by infrastructure for carbon management,
including the Upper Midwest, Midwest and coastal regions.
The Carbon Capture Coalition has urged Congress to make
CO2 transport infrastructure a core component of broader
federal infrastructure policy, specifically recommending a federal role
in leveraging private capital investment through:
Low-interest federal loans to finance extra pipeline
capacity and realize economies of scale;
Support for large-volume, long-distance
CO2 trunk line demonstration projects to support
development of key regional hubs; and
Encouragement to state and local governments to
designate anthropogenic CO2 pipelines as ``pollution
control devices'' to enable tax abatement.
The Investing in Energy Systems for the Transport of CO2
Act of 2019 (INVEST CO2 Act) recently introduced in the
House incorporates the Coalition's recommendations for a federal role
in helping to finance the buildout of national CO2 transport
infrastructure.
10. You mentioned that carbon capture projects are difficult to
finance due to the high cost of debt and equity and the risk involved
in the investment. Which government financing mechanisms would best
lower these costs and risks?
As noted above, the Coalition recommends a portfolio of policies to
expand the pool of eligible investors and projects, reduce investment
risk, and make capital available to projects on more favorable terms.
The following policies involve technical fixes and enhancements to the
existing 45Q tax credit, improvements to other existing complementary
incentives and new financial incentives.
First and foremost, Congress should extend now the authorization of
45Q beyond the current deadline for beginning construction at the end
of 2023 in order to provide the kind of longer-term planning and
investment horizon that has helped spur private investment, commercial
deployment and cost reductions for other low and zero-carbon
technologies. The newly-reformed 45Q credit provides a foundational
incentive for early commercial carbon capture deployment, but
significant delays by the IRS in providing guidance have reduced the
time period available to plan, engineer, permit and finance large-
scale, capital intensive carbon capture and utilization projects from
six years to just four.
In addition, technical fixes and new policy options to enhance and
complement 45Q would further incentivize private investment in the
deployment of carbon capture technologies. The technical fixes
identified below offer many potential near-term deployment benefits to
the carbon capture industry:
Eliminating the 25,000-ton minimum annual capture
threshold in 45Q that inadvertently risks precluding most
carbon utilization projects from eligibility;
Preventing the disallowance of 45Q and the 48A tax
credit under the Base Erosion and Anti-Abuse Tax--BEAT (a
technical fix already afforded investors claiming the
Production Tax Credit for wind energy and the Investment Tax
Credit for solar energy), which otherwise risks reducing the
pool of available investors in carbon capture projects; and
Enabling developers of power plant carbon capture
retrofit projects to access available 48A tax credits by
incorporating needed technical fixes provided for in the Carbon
Capture Modernization Act. (The legislation would address a
conflict in current law that makes the tax credit unworkable
for potentially eligible projects.)
The Coalition also recommends several new policy options to help
the carbon capture industry achieve economywide deployment:
Providing enhanced transferability for the 45Q
credit in statute by including additional taxpayers who are
involved in the carbon capture transaction to be allowable as
transferees (modeled on the transfer provision in Section
45J(e) of the Advanced Nuclear Tax Credit);
Establishing a revenue-neutral refundable option for
45Q to enable a greater diversity of companies and business
models to benefit from the tax credit; and
Creating an ``American Energy Bond'' option to allow
project developers to make interest payments in the form of tax
credits, if they invest bond proceeds in qualified energy
infrastructure projects, including carbon capture and
utilization.
Providing for the eligibility of carbon capture and utilization
eligible for federal financial incentives that have proven effective in
other industries can further reduce the cost of capital and complement
and reinforce the deployment potential of the 45Q credit. The Carbon
Capture Improvement Act would make carbon capture and utilization
projects eligible for tax-exempt private activity bonds, and the
Financing Our Energy Future Act would also allow carbon capture and
utilization projects to become master limited partnerships, thus
affording the tax advantages of a partnership coupled with the benefit
of being able to raise equity in public markets.
Finally, ensuring the widespread availability of infrastructure to
transport CO2 from where it is captured to where it can be stored or
put to beneficial use will reduce costs and increase investor
confidence in proposed capture and utilization projects. As referenced
in the response to question 9, the Investing in Energy Systems for the
Transport of CO2 Act of 2019 (INVEST CO2 Act) would provide for a
federal role in providing low-cost financing to support the deployment
of CO2 transport infrastructure and ensure that such
infrastructure is built with sufficient capacity to stimulate private
investment in ongoing development of capture and storage projects over
time.
11. You mentioned that there is potential for using biomass as a
feedstock for power generation and capturing the carbon dioxide on the
back end to create negative emission energy for industry. Could you
expand upon what issues need to be considered when determining whether
sources of biomass are appropriate for power generation with carbon
capture to reduce greenhouse gas emissions? Taking into account land-
use considerations and the multiple uses of biomass, what is a
reasonable scale for using biomass for power generation with carbon
capture?
While IPCC modeling indicates that deploying atmospheric carbon
removal strategies at significant scale--including bioenergy with
carbon capture to achieve negative emissions--is necessary to meet
midcentury climate goals, the Carbon Capture Coalition does not take a
position regarding the appropriate future scale and scope of biomass
utilization in bioenergy production with carbon capture relative to
other negative emissions strategies, including direct air capture
deployment. However, existing biofuels production and biomass power
generation in U.S. provides ample opportunity to deploy carbon capture,
use and geologic storage of biogenic CO2 emissions to demonstrate the
commercial potential for larger-scale negative emissions energy
systems--without expanding beyond current levels of biomass feedstock
use in energy production. If we are even to have the option of scaling
up negative emissions energy systems in the post-2030 period, it is
important that federal policymakers support commercial demonstration of
bioenergy with carbon capture now at biofuels and biomass power
facilities using existing feedstock supplies. In the meantime, federal
policymakers and stakeholders can and should continue to work to forge
agreement on policies that can help ensure long-term sustainable
biomass utilization in the context of midcentury decarbonization.
Questions for the Record
Cate Hight, Principal, Rocky Mountain Institute
the honorable kathy castor
1. What is the biggest challenge to deploying renewable hydrogen
for industrial processes? What single policy would be most effective at
addressing this challenge?
Today's biggest challenge is that industry does not use a lot of
``renewable'' hydrogen because there is not enough of it on the market
for it to be cost-competitive. The existing market is predominantly
supplied by hydrogen produced through steam methane reformation (SMR),
without consideration of the carbon footprint of this process. And
hydrogen producers don't want to take on the financial risk of ramping
up production if they don't have a sure market to allow them to recover
costs. To increase hydrogen supply and bring down the cost, regulations
and/or financial incentives could be used to stimulate low-carbon
hydrogen production, including that produced using zero-carbon
electricity and also though SMR with associated carbon capture and
storage (CCS).
2. You mentioned government procurement of hydrogen as a potential
policy solution. What considerations are important when designing
procurement policy for hydrogen? How should the source of hydrogen play
a role?
Government demand for hydrogen, articulated through procurement
policies focused on procuring more hydrogen as well as products
produced using hydrogen fuel (such as steel), can play a key role in
stimulating hydrogen production. Such policies should focus on sourcing
low-carbon hydrogen, including that produced though zero-carbon
electricity and also though steam methane reformation (SMR) with
associated CCS. In addition, The long-term goal should be for all
hydrogen to be produced using renewable electricity; in the near term,
however, the goal should be to build the supply of hydrogen to bring
down the price. Additionally, the government should continue to invest
in Department of Energy (DOE) programs, such as H2@Scale, to continue
to drive development of hydrogen pathways.
3. Are there environmental, health, safety, or other risks and
tradeoffs to pursuing the use of hydrogen? How can they be mitigated?
Hydrogen has been safely produced and used in the American
industrial sector for more than half a century. As with every fuel,
safe handling practices are required, but hydrogen is non-toxic and
does not pose a threat to human or environmental health if released. In
addition, when used to generate power and for several other industrial
applications (e.g., steelmaking), hydrogen produces only water as a
byproduct, and does not release air pollutants or particulate matter.
The environmental impact of hydrogen production depends on the
production pathway. Hydrogen can be produced through electrolysis using
any power source, the cleanest being renewable power. Hydrogen can also
be produced through reforming of fossil fuels including natural gas;
this process releases carbon dioxide that must be captured. In
addition, one would need to account for the environmental impact
associated with the production, transmission and distribution of the
natural gas to the hydrogen production facility.
4. You mentioned the similarities between hydrogen use and electric
vehicles. Could you elaborate on how the Federal government can help
the hydrogen market grow while simultaneously incentivizing lower-
emission hydrogen production for this growing market?
The similarity between growing the hydrogen market and in the EV
market relates to the fuel sources used to create both markets. Right
now, EVs are simply powered by the mix of power offered on the grid;
widespread availability of power at a reasonable price has enabled the
EV market to take off, while simultaneously the grid is becoming
greener and a larger share of that power is being provided by renewable
sources.
The development of the hydrogen market should follow that same
dynamic. Right now, over 90% of the hydrogen produced in the US in
produced through SMR, but the goal is to produce more hydrogen using
electrolysis powered by low-carbon electricity. The focus now needs to
be on building hydrogen supply so the price can come down, the demand
can increase, and additional investments can be made in renewable
hydrogen production. This will require applying CO2-capture at existing
SMR facilities, and also regulations and financial incentives,
including renewable energy mandates, tax credits, loan guarantees, and
feed-in-tariffs. On the demand side, clear regulations, direct
investment, and loan guarantees for building additional transportation
and distribution infrastructure can make hydrogen easier for industry
to access. Financial incentives can be used to stimulate hydrogen use
by large industrial facilities, and investment support programs can
help reduce the costs associated with fuel-switching at these
facilities.
5. Are there ways that hydrogen can also help industrial facilities
with reliability and resilience?
Hydrogen has the potential to be used as stationary power (for
buildings), backup power, storage of energy harvested through wind and
solar processes, and as battery-like portable power (most commonly used
in forklifts today). Energy stored in hydrogen fuel cells allows for
the seamless transition of energy within the power grid in the event of
a power station failure or a black-out situation. In addition, Power-
to-Gas (P2G) is the only technology capable of providing storage at
terawatt-hour scale without location limitations. Renewable electricity
is used to create hydrogen, which then is stored in a storage system
like tanks, caverns, or the natural gas grid. Using the natural gas
grid would allow for very large amounts of renewable hydrogen to be
stored very economically, as very little new infrastructure needs to be
build. Effectively, this hydrogen reservoir could be used as back-up
capacity for when there are production disruptions or shortages in the
power grid.
6. How do other countries view the use of hydrogen as a
decarbonization strategy? What policies have they implemented and what
can we learn from them?
Many countries are planning to use hydrogen as a mechanism to
decarbonize. The scale of these applications and the role they play in
the economy varies quite substantially. Australia for instance has a
number of highly developed pathways focusing on the production and
export of hydrogen in addition to use in heavy transport applications.
Japan, Korea, China, and Germany have announced ambitious goals for
deployment of hydrogen fuel cell electric vehicles; China plans to have
1 million fuel cell electric vehicles on its roads by 2030. Some
nations are setting targets for the type of hydrogen used in industry:
in 2018, France announced a target of 20-40% low-carbon hydrogen use in
industrial applications. In addition, there is a large effort in Europe
through the European Commission's Fuel Cell and Hydrogen joint
undertaking. This effort is a public private partnership to develop
multiple hydrogen pathways, including using existing natural gas
pipeline networks to transport hydrogen.
7. You mentioned that government investment in hydrogen
infrastructure for transportation and delivery will be needed to scale
up hydrogen use in industry. Can you comment on how existing hydrogen
infrastructure would need to be expanded? How would the footprints of
hydrogen and carbon dioxide infrastructure overlap? Are there synergies
we can take advantage of?
Current hydrogen production is largely concentrated in areas where
oil and gas refineries are located, and integrated with other
(petro)chemical facilities that use the hydrogen as feedstock. This
infrastructure will need to be expanded into additional geographies as
hydrogen production expands across the US. However, there is promise in
using existing the nation's extensive natural gas pipelines to carry
hydrogen instead. Current research supports blending of 20% hydrogen
into natural gas streams without changes to pipeline infrastructure.
This percentage could be higher if natural gas pipeline is retrofitted
to carry the smaller hydrogen molecules.
Hydrogen and carbon dioxide infrastructure could overlap as
transportation and pipeline infrastructure is developed. Storage and
utilization approaches for CCS could in some instances co-locate with
hydrogen production technologies such as SMR, but the development of
large-scale carbon dioxide storage, in geologic formations for example,
will require the transportation of CO2 in the future. As such, planning
for these infrastructure projects and indeed identification of storage
capacity might offer potential for synergies in the development phases.
8. You mentioned that biomass could be used to make hydrogen
energy. Could you expand upon what issues need to be considered when
determining whether sources of biomass are appropriate for hydrogen
feedstocks to reduce greenhouse gas emissions? Taking into account
land-use considerations and the multiple uses of biomass, what is a
reasonable scale for using biomass for hydrogen?
Biomass can be used to produce electricity that is then used to
power via electrolysis; it can also be gasified to produce hydrogen,
with appropriate controls to capture the resulting carbon monoxide and
carbon dioxide byproducts produced. The production of hydrogen from
biomass will likely be dependent on the relative cost of hydrogen
production using this fuel source versus steam methane reforming. A
more viable pathway for biomass in industrial applications may be to
combust it directly and capture CO2 emissions, rather than using the
additional energy required to transform it into hydrogen before use.
[all]