Big tech’s data center construction boom is fueling a flurry of natural gas development, despite the fuel’s challenges, and it’s complicating big tech’s climate goals. But carbon capture and storage (CCS) could mitigate emissions from those new plants, and hyperscalers could secure low-carbon power while meeting their needs for speed and reliability.
So how could natural gas with CCS serve data center loads?
In this episode, Shayle talks to Julio Friedmann, chief scientist at Carbon Direct, who recently co-authored a couple pieces on the topic. Despite recent high profile withdrawals of natural gas projects from the Texas Energy Fund, Julio makes the case that gas-plus-CCS has attractive advantages, provided the carbon capture actually happens. Shayle and Julio cover topics like:
- The surprisingly attractive economics, even at lower flue concentrations
- Where it may compete with renewables, storage, and nuclear
- The challenges of siting CO2 infrastructure and uncertainty around the 45Q tax credit
- Whether “CCS-ready” kicks mitigation down the road, like H2 blending
- Big tech companies like Meta that are signaling interest, but not taking action
- The range of CCS technologies and the manufacturers jockeying to supply them
- CCS’s uncertain political future in the U.S.
Recommended resources
- Carbon Direct: Carbon Capture for Natural Gas-Fired Power Generation
- Carbon Direct: Carbon capture for natural gas-fired power generation: An opportunity for hyperscalers
- Latitude Media: Where does gas fit in the puzzle of powering AI?
- Latitude Media: High costs, delays prompt withdrawal of five more Texas gas plants
- Latitude Media: Hydrogen-ready’ power plants aren’t actually ready for hydrogen
- Latitude Media: Engie’s pulled project highlights the worsening economics of gas
Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor.
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Transcript
Tag: Latitude Media: podcasts at the frontier of climate technology.
Shayle Kann: I’m Shayle Kann, and this is Catalyst.
Julio Friedmann: We are building the gas plants anyways. They’re being built, so it’s not a question of do you do A versus B. We’re already doing A, we’re just emitting uncontrolled.
Shayle Kann: Coming up: Shocker. We’re talking energy for data centers, but this time put some carbon capture on it. I’m Shayle Kann. I lead the frontier strategy at Energy Impact Partners. Welcome. All right. I promise we’re not going to talk about data centers and energy every other episode forever or I dunno, maybe we will. I can’t promise anything. Give me a break. Anyway, we have talked before a little bit about the build out of natural gas that is planned in the United States and a bunch of other countries that is being driven by data centers, but what about the fact that most of the companies that are driving that demand, the hyperscalers in particular, have been on the vanguard of decarbonization commitments and take it pretty seriously. Are they just going to purchase carbon removal to infinity? Maybe not. Maybe this is finally the moment for natural gas with carbon capture or maybe it’s a mirage as it has been many times in the past. Anyway, let’s explore. Julio, as many of you know, is the self-proclaimed carbon wrangler, but he’s also the chief scientist at Carbon Direct and he’s got thoughts, which if you know Julio makes sense. Here he is.
Julio, welcome back.
Julio Friedmann: A pleasure as always.
Shayle Kann: All right, let’s talk data centers and natural gas and possibly carbon capture and sequestration. Starting though, before we get to the CCS part, can you just give an overview of what you see as happening right now with regard to data center energy consumption and specifically natural gas build out or supply?
Julio Friedmann: Absolutely. So since the last time we talked, a lot has changed actually. For starters, we’ve learned the top five things that the hyperscalers and people building data centers want is in this order. Speed, speed, speed, cost and carbon. All of those are important, but speed is the thing that is driving a lot of this. The second thing we’ve seen is we’ve seen some very large announcement, five to 10 gigawatts as the biggest, but many multi gigawatt announcements. Many of these are multi-billion dollar announcements and involve very large data centers, hundreds of acres.
Shayle Kann: And when you say multi gigawatt announcements, what you’re saying is announcements of new generating capacity, natural gas generating capacity to be constructed to serve those data centers?
Julio Friedmann: Exactly, yes. Because of this urgency and speed and because of this we are also starting to see some pushback in the form of companies canceling some projects. We are also beginning to see shortages for natural gas turbines. Like all of these things are starting to hit the reality of it, but we continue to see interest in moving quickly. We still see interest in large volume in terms of both the size of the data center and the demand for high quality, high capacity factor electricity.
Shayle Kann: Okay. So lots of planned new natural gas buildout though subject to the constraints you described like turbines are backlogged until, I dunno, GE has said 2029 or 2030 or something like that and prices have gone up, but nonetheless it appears we’re going to build a lot new of it and then as you said, number five on the list of five priorities remains carbon. So it’s on there. So then the question of course is if we’re going to build this natural gas, there’s kind of no way around it or at least that is a perception then should we be throwing carbon capture on it? And so I guess the first question there is, is anybody in data center world already talking about that? Are there announced projects that would be natural gas with CCS?
Julio Friedmann: Are they talking about it? Yes. Are there announced projects? No, but we are getting a lot of inbound on this exact topic and we are talking to if not all of the hyperscalers, almost all of the hyperscalers. We’re talking also to private groups that are developing energy parks for data centers and other electricity offerings. We’re talking to utilities. This is very much of great interest to people. Some of the reason why things have not been announced is just because it takes time to put these things together. Some of the reason is that there is uncertainty out there. There’s uncertainty around things like 45Q. There’s uncertainty around the speed of permitting wells, but there is a great deal of interest especially in North America but not exclusively North America.
Shayle Kann: Let’s divert for a second from the data center thing. Can you give me a brief history and state of natural gas CCS globally? How much of it is there anywhere?
Julio Friedmann: Happy to. So even a little bit farther back, the first carbon capture device was fielded in 1938. We know how to do this. The first CO2 injections were in 1972. We know how to do this. We’ve been doing integrated systems for climate since 1997, so this is not exactly a new technology and we have deployed CCS on some 40 facilities around the world. We’re capturing around 60 million tons a year and inject to get underground. Originally that was mostly for enhanced oil recovery, not anymore. Now it is mostly just for climate and saline aquifer storage. All carbon capture technologies are tested on natural gas. This is an aspect of how you mature the technology and the reason why is because natural gas doesn’t have sulfur in particulates and a whole bunch of other nasty stuff. So every technology that’s out there is tested on natural gas both in the US at the National Carbon Capture Center and in technology Center Mongstad in Norway, there is one announced project that is under construction in the UK and this is a large project in the Teesside, T-E-E-S-S-I-D-E facility in Northern Scotland. And this is a place where they will be taking the CO2 offshore, storing it under the North Sea, but they’re building a new natural gas turbine there and it is going to be integrated with CCS. It is under construction plans to turn it on in 2026.
Shayle Kann: And that is the first, I just want to clarify what you said. We have 40 carbon capture facilities all over the world operating, but none of them are on natural gas power generation. Right. And so that Teesside project would be the first new natural gas project with CCS?
Julio Friedmann: Correct. And this is for perfectly valid technical grounds. The main one is that it costs more money to capture CO2 from a low concentration flue gas stream and natural gas plants when they’re running well are between four to 7% CO2 in the flue gas. So it actually costs more money on a dollar per ton basis to capture the CO2 something that people are waking up to in the modern moment. Is that it from a dollars per megawatt hour basis? It’s the opposite. It is actually because the natural gas energy content is much higher than other fuels. You can capture a lot of a CO2, but it is not require as big a parasitic load in terms of dollars. So this is one of the things that’s in our recent reports, like we’ve been writing about this recently, it’s been known for a long time. If you think about it in terms of dollars per ton, natural gas is the most expensive. If you think about it in terms of dollars per megawatt hour, it’s actually the least in the power sector.
Shayle Kann: So just to make sure I understand that, so if I’m comparing natural gas to coal for example, if you’re just measuring the dollars per ton cost of doing the capture and sequestration, natural gas can be more expensive than coal lower CO2 content or lower concentration, but if you measure it as an adder to the dollar per megawatt hour cost the LCOE of the project, it would be a smaller adder. Is that the right way to think about it?
Julio Friedmann: That is exactly the right way to think about it. And the reason why is coal emits more CO2 per unit of energy.
Shayle Kann: So there’s an interesting dynamic though, and I guess at the high level I want to get your take on this, which is I think the fear would be, okay, we’re going to build out all this new natural gas and so there’s, as you said, discussion occurring about making it carbon capture ready or implementing carbon capture from day one. And I want to get into some of the nuances of what makes that easier or harder depending on the situation or location. But to what degree do you fear that it is sort of kicking the can down the road in the same way that people talked for a while about hydrogen ready turbines that are going, very few people are actually doing significant hydrogen blending in those gas turbines at this point. Is that given that there are zero current active natural gas CCS projects, when you hear people starting to talk about that or even if you start to see announcements, how much credence do you put in them?
Julio Friedmann: Let me start by saying this is a reasonable concern. We’ve been talking about carbon capture power plants for a long time. My friend from the Natural Resources Defense Council, David Hawkins said, Hey, if the power plant is capture ready, my driveway is Ferrari ready? Come on in. I do think that this moment is a little different for a couple of reasons. One, we are building the gas plants anyways, they’re being built. So it’s not a question of do you do A versus B. We’re already doing a, we’re just emitting uncontrolled. So actually I give the builders and the hyperscalers a lot of credit for keeping the eye on carbon. They don’t have to, but they really do care about their corporate commitments. They’re really focused on keeping the emissions down, but they can’t wait. They have to build as fast as they can. The second thing is, again, we couldn’t get paid in the past. Now we can: 45Q exists. An interesting aspect of this actually is that the hyperscalers are also willing to pay a premium for the clean in the way that they would with nuclear, but they can build a natural gas with CCS plant in roughly half the time, which they could build a nuclear plant. And the third thing I would say is that we aren’t going to do this everywhere, but it’s not kicking the can down the road. It’s kind of the opposite. It is taking responsibility for your emissions. It is actually walking the walk of cleaning up your best. And so I sort of bridal at the idea of somehow this supports a dying industry and we should be doing renewables. Part of the reasons we’re doing this is because there’s backups in the renewable queues. Part of the reason we’re doing this is because there’s supply chain challenges in renewables as well as in natural gas. Part of the issue is if you want to cite a hundred megawatt solar plant, it’s a whole lot easier than a five gigawatt solar plant. So there is hair on all of this. I do believe that in a bunch of markets, renewables will be cheaper and will be faster. If that’s the case, build the renewables.
Shayle Kann: But yeah, I’m not making any statement with regard to renewables. I’m just wondering and maybe here’s the distinction. Tell me if this distinction matters to you, will the projects be announced as we are building a new natural gas plant with CCS from day one versus CCS ready? Right?
Julio Friedmann: It’ll take a while for that to click, but the answer is we better be doing that. So you have seen this large announcement of this Meta project in Louisiana, right? 2.6 megawatts, $10 billion. That’s going gangbusters-
Shayle Kann: Gigawatts, right?
Julio Friedmann: I’m sorry, yeah, 2.6 gigawatts. My apologies. I have every expectation that there will be carbon capture done on that plant. I know a lot of good people who are working on it, they have not yet made an announcement until they do. It’s reasonable to be skeptical to say, Hey, you guys are talking the talk. Are you going to walk the walk and actually do the capture? We have not yet seen anybody who says, we’re going to add this one and a half gigawatt plant and we definitely will do the carbon capture. We haven’t seen that either. Part of that reflects the uncertainty of the moment. Part of that reflects the complexity of this projects, but we have to get to that position. We have to move from capture ready to capture committed.
Shayle Kann: You mentioned costs. Do you have estimates of what measured in I guess dollars per megawatt hour is the number that I care about more than dollars per ton what the adder should be or will be?
Julio Friedmann: Right. So we published a report on this back in March. I encourage people to go to the carbon direct website, take a look. In the US, assuming three dollars per million BTU for natural gas on a new build, all costs — that means cost of capture, compression, transportation, storage and permitting — you’re looking at 70 to a 100 dollars a megawatt hour.
Shayle Kann: Total.
Julio Friedmann: Total. Everything. In many markets, that’s competitive with wind, solar and batteries. In many markets that just beats nuclear cold. I will add, if you retrofit an existing plant, it’s cheaper because assuming that plant has been fully depreciated, so you’re retrofitting something that’s in a utility off on the grid somewhere, the costs come in more like 40 to 70 dollars a megawatt hour. So quite cheap. And that means you’re looking at something like, 25 to 30 dollars a megawatt hour is the adder in most markets. And 45Q knocks off say half of that.
Shayle Kann: And let’s talk about this siting constraint here. I mean we’ve talked a little bit about there’s ample saline aquifer potential for carbon sequestration, whether it be from this kind of point source or DAC or whatever it might be in the United States, but how much of a sighting, the interesting thing about the build out of all of this natural gas, it is independent of the carbon capture part. It is siting constrained because either it’s co-located with the data center, in which case it is where the data center is and the data center needs to be where the power is available or it’s not co-located, but then you need to figure out where you can inject gigawatts of power into the grid. So either way, the grid is a constraint and so you’re adding an additional siting constraint by trying to figure out how to either to a pipeline or sequester. How much does that limit the aperture of where you think this is applicable?
Julio Friedmann: So first of all, heck yes, we’re not going to be doing this in New England. There’s no place to source CO2 in New England, period. Virginia is an interesting case. We are building huge amounts of data centers in Virginia. There’s not great storage there. So this becomes a real issue. In contrast, of course, Texas, Louisiana, central Illinois, the Rockies, these are great places to store CO2, even humbly California. If you’re looking at the Sacramento delta or the central basin, you can store a CO2 in these places. So it does add an extra circle to the Venn diagram. So you’re not just optimizing here for say, infrastructure, electricity, infrastructure and or fiber. You’re not just looking for land, you’re not just looking for communities that’ll say yes. You also then have to say, Hey, am I near CO2 transportation infrastructure or am I near a viable way to get to storage?
And one of the things we’ve been looking at is actually that there are more ways to move CO2 than most people think about. If the only option was a CO2 pipeline, we would have a much smaller aperture, but it’s not, we can move CO2 by rail, we can move CO2 by barge. And when you do these things, the aperture opens up. So as one example, I’m not proposing this, I’m not endorsing this, but if you wanted to do a CO2 storage project in Minnesota, there’s no place to store CO2 in Minnesota. Not an option, but you can actually put a CO2 on the barge and send it down to Louisiana and that’s pretty cost competitive actually in our analysis we show the cost for that and it’s much more reasonable than a lot of people understand.
Shayle Kann: Okay, so it limits the aperture somewhat. There may be more places than one might think that you could do it. Let’s talk about the technology for a second.
Julio Friedmann: Sorry, before we do that, if I may, I want to make sure everybody hears this. If there is no CO2 transportation in storage, there is no project period plop. You can’t make it work. And as people are setting their data centers, they should be siting with an eye towards that is another piece of resource and infrastructure they could consider.
Shayle Kann: Yeah, though as you said, it’s down the list. There’s a big long list before that and it’s challenging to cite data centers and so it’s tough to do that and it adds more infrastructure and more risk and you can see why it’s not the top of anybody’s priorities at the moment because it kind of currently pushes directly against the first three priorities, which is speed, right? Anytime you’re trying to add some additional complexity and permitting and infrastructure, it’s slower, almost inherently.
Julio Friedmann: Well, I would push back on that a little bit. Part of why we are seeing what we’re just seeing is that people are building the natural gas and then they’re like, alright, well now let’s get serious about the carbon capture piece. So you can build a gas plant fast and then you have another couple of years to build the CCS retrofit and over that time you’re generating power and you’re generating money. So there’s another way to think about this. Since you can decouple the carbon capture and the carbon storage piece from the power generation, you can build it in two steps. To your earlier point though, that comes with a risk. You got to actually do the second piece if you care about the climate piece. So about the technologies.
Shayle Kann: Yeah, technologies, I mean the way you described it at the beginning sort of implied like we’ve been doing this for decades and no major revolution needed from a technology perspective. Is that true as it pertains to natural gas power plants, given that it has not been done, as you said, everybody tests on a flue gas stack for natural gas and a lot of the stuff that we are actually deploying has other weird contaminants, natural gas. But do you view the technology risk on, I dunno how these disturbances are going to perform or their lifetime whatever for natural gas as being effectively retired already or do we need to see it first.
Julio Friedmann: Yeah, it’s better than that actually. So let’s start with the established technologies. There’s a handful of companies that will today sell you a big facility with a performance guarantee and a wrapper and they’ll sell you up to 10 million tons of capture a year. They’ll sell you big facilities. These are Fluor, Schlumberger, Shell, CANSOLV and Mitsubishi. These are all liquid solvent technologies, but that technology is in the basket. It’s done. Okay. Behind them are the next generation of technologies which are in fact really kind of being built for natural gas. So another solvent technology, Ion Technology, a different kind of liquid solvent. Cans- I’m sorry. Capsol out of Norway. There’s also physical sorbent technologies like Svante. There’s cryogenic technologies like FROSTCC, what’s the other one? Oh membranes. There’s a bunch of companies selling CO2 capture membranes. Interestingly, each of those has a different sweet spot in this ecosystem.
So one of the things we are beginning to see is many of the hyperscalers are saying, you know what? Let’s start small. Let’s go with 50 or a hundred megawatts. If that’s the case, you’re not going to call Mitsubishi the wrong technology. It’s too big actually for the plant that size, but if you’re building a 50 to a hundred megawatt power plant, hey, maybe one of these other technologies serves you better either because of the duty cycle or the heat rate or the climate of the facility itself, whether it’s in a cold place or a hot place or dry place or a wet place. And these new technologies are kind of at TL six or seven. They’re really getting to the point now where you can deploy them. And so there is an option to come in with these technologies and almost all of them are coming in at a substantially lower price. So there’s a lot of room to move in terms of the capture cost reduction as well.
Shayle Kann: We’ve been focused mostly on the US. We’re both based here. A lot of the data center buildout is here and we have 45Q. How much is happening internationally on this?
Julio Friedmann: So great question. Glad you asked. First stop is our friends to the north in Canada, they have a substantial investment tax credit, 60% ITC for carbon capture technology. That goes a long way and in fact, it is not impossible [that] the first integrated natural gas with CCS data center project will be in someplace like Saskatchewan or Manitoba or Alberta. Second, look overseas. The UK is very interested in this and they’re building these industrial hubs. So in addition to the Teesside project, which I mentioned that’s being supported with a contract for differences policy, that kind of support becomes a magnet. You’re going to see more of these plants there. In part, that’s a way to both have the UK meet its targets, displace coal, and also serve the domestic natural gas industry. Not to be outdone, our friends in the Gulf States, the MENA region, this is a hot to trot topic.
They’re very interested in attracting hyperscalers and data centers. They have poor volume, they have natural gas. So look to Saudi Arabia, the Emirates, Qatar, they’re all working this up in real time, not to be outdone even though they don’t have natural gas resources. Look to Japan and Korea. They sell the technology, so they want to sell the turbines, they want to sell the capture tech. They want to sell the EPC contract and they will do that in a place like Northwestern Australia or for that matter in Mexico. Any place where they can actually get the land and the gas and the storage volume. They can put these together. And we have been talking to these large industrial conglomerates in East Asia that are very enthusiastic about exactly this. They see the opportunity and because the hyperscalers are a distinct customer set, one that is prepared to pay for clean, it squares the circle level. Who’s going to pay for all this? Cost is an issue for the hyperscalers. It really is. But at a hundred dollars a megawatt, even at the high end, they’re in pretty good shape. I will reiterate that this number 70 to a hundred dollars megawatts requires low cost natural gas. So Europe is not going to be doing a lot of this. In contrast though, the Middle East, Australia. Yeah, that could work.
Shayle Kann: You mentioned some of the conglomerates that can provide the turbine and the capture tech and the EPC. I’ve been curious about whether that’s how this market ends up evolving. Are there pre-baked combined package offerings as opposed to, okay, I’m going to buy my turbine from GE and then I’m going to pick my capture technology from somebody else and I’m going to stick ’em together. I would presume that there is some savings you can yield from a holistic integrated solution.
Julio Friedmann: You are correct. One that has already hit the airwaves that you’ve seen is this partnership between Chevron, GE Verona and Engine No. 1, which is actually bringing together the capture tech, the financial wherewithal, the storage expertise into one vertically integrated offering. There’s something quite similar to that with ExxonMobil. They don’t have their own proprietary capture technology. Watch this space. We’ll see if that changes, but they are offering vertically integrated systems. They’ll build the power plant. They’ll run the power plant, they’ll store the CO2. Baker Hughes has this as an operating with GE Baker Hughes has a capture technology of their own. I think you’re going to see Siemens do something along these lines quite quickly and Mitsubishi has that. Mitsubishi has the turbines, they have the capture tech, they have the EPC contracting, so they are very interested in being the full service partner and they’re not alone. Kawasaki same kind of thing.
Shayle Kann: Back to the infrastructure question, I mean you mentioned the places where we can do it in the places where we can put CO2 on a barge or whatever it might be. I’d be interested to get an update from you though on permitting, on classics. Well permitting because that obviously there’s been a long poll in the tent for any CCS project in the us There’s action there, but tell me how much it’s accelerating.
Julio Friedmann: There’s a lot more action than people see. The story six months ago was about backlog. Six months ago. There was this massive backlog of class six wells at the EPA that were not getting permitted. Since then, there have been a flurry of announcements that includes wells in Louisiana I would add that includes wells in California, California permitted four class six wells in Bakersfield. So we are starting to see these happen, and that is being enabled both at the federal level through the training and streamlining of people to do the regulatory permitting. That was money from the bipartisan infrastructure law. They gave the EPA $50 million to train people. That’s finally coming through. The other thing we’re seeing is states are interested. So there’s this poll from places like Louisiana that have primacy, North Dakota that have primacy. They’re getting their wells permitted. California does not have primacy, but Governor Newsom wants to see this as an option in the state. And so the state of California has been working with the EPA to get this done. It is by no means settled, but I’m pleased to see the progress we have and we’re slowly banging our way through this backlog of permitting requests to the point where now there are enough holes in the ground that people can start to think seriously about this.
Shayle Kann: What has been the response from, I mean, I guess to the extent that projects are being announced or planned, or we could speculate on this if not the response from local communities to these kinds of projects. I mean whether the natural gas projects that are being built in the first place or adding CCS to them.
Julio Friedmann: So for starters, again, let me reiterate. The natural gas plants are being built that is happening and everything associated with them, the upstream fugitive emissions for where that’s a problem that’s still happening. So the communities are facing this choice where they’re like, well, we haven’t stopped the project. We can’t stop the project. What should we be thinking about? And I’ve been pleased to see at least some of them are open to the idea of CCS. Most communities still don’t understand what it is. They don’t understand how it can benefit their community. The community benefits are at best opaque, at worst, complicated. I’m pleased again to see the groups that are doing this are leaning forward pretty heavily. Not just the hyperscalers, but they’re partners, companies they’re working with. They’re walking the walk of going to communities. Many of these communities want the revenues, they want the jobs. They want a cleaner environment. And in fact, if you have a natural gas plant that’s running uncontrolled, carbon capture reduces the pollutant load. So we’re starting to see some traction. It is very much one by one. This is a retail discussion. You have to really understand each community, engage them where they are and see what’s going on. Mostly though, I’m happy to see that this is happening and the most committed people are putting together community benefits plans. They want the communities to benefits as well.
Shayle Kann: Okay, so final question for you. We probably can’t avoid talking about this. We’re obviously at a particular moment in time in US politics. What have we seen so far from this administration and this Congress that would affect the likelihood of build out, the ease of build out natural gas with CCS in either direction?
Julio Friedmann: So first, from the administration, there’s a lot of stuff that I just won’t go into so rapidly changing and it’s not particularly useful, but we are seeing Secretary Wright propose a set of cuts to programs that were approved by Congress and approved by the prior DOE. In some cases. The contracts have already been made, and this is part of the broader rescission around clean energy. It’s the Doge push and frankly, that’s in my humble opinion and error, the United States is a global leader in this technology. If we want energy dominance, this is what it looks like. We should be the world leader in these technologies and deploying them and providing services, et cetera. And if we don’t, these other countries like the Middle East and Japan are ready to go. They will just do this. The problem with that sensibility is it will chill projects everywhere will lose a decade of investment. If that money gets raked back, people who’ve put tens of millions of dollars into feed study, people who’ve been working on permits, they’ll just bolt and we’re going to lose a generation of workers and a generation of projects.
Shayle Kann: These are like OCED projects or what?
Julio Friedmann: These are projects in OCED, the Office of-
Shayle Kann: Clean Energy Demonstrations.
Julio Friedmann: Yes, the Office of Clean Energy Demonstrations. Thank you. They are also some other projects, ones that were just approved in the bipartisan infrastructure law separately, like the hydrogen hubs or the DAC hubs, the large projects hubs. There are other projects in the annual appropriations that aren’t SED related that would also get hit total just for this class of projects. We’re talking about $8 billion worth of projects. It’s bad if that stuff happens. It will be Golgotha.
Shayle Kann: Not to mention the sort of hard to quantify risks to 45Q in whatever reconciliation bill is up and coming, I think, who knows, right? I’ve given up trying to speculate on that.
Julio Friedmann: Well, that’s where I was going to go with 40- is Congress has got the ball on a lot of this stuff. Right? First of all, Congress approved the money for these other things and they approved and authorized the expend. The contracts are written. A lot of these projects want Congress to help ’em get built. With respect to 45Q and other tax credits in the IRA, the Inflation Reduction Act, I give high odds that they will sustain 45Q [and] 45V related projects. We’ll have to see already 21 members of the house have written a letter to Speaker Johnson saying that they want to keep this provision. I believe them four senior senators, including Senator Murkowski from Alaska, have come forward and say they want to preserve these particular credits and this important because both in the House and the Senate, those numbers are large enough to be blocking
Shayle Kann: And to be clear, that’s not specifically 45Q. It’s 45Q amongst a basket of credits. Right. It also includes the ITC and PTC and they see the energy tax credits in those letters.
Julio Friedmann: That is correct. In many cases though, let’s say look at Senator Barrasso or Senator Whitehouse, these are provisions for CCS that they personally worked on quite hard, so they haven’t pulled them out by name. But I think there’s a broad expectation that these are among the more favored classes. Same thing with Senator Kennedy. Sorry, Senator Cassidy in Louisiana. There are people of substance in the House and the Senate for which this particular tax credit would matter.
Shayle Kann: Yeah, it’s not, like I said, I’ve given up on speculating, but it’s not to imagine that 45Q would be more resilient than at least some of the other tax credits from the IRA. Nonetheless. I mean, I think you’ve made an important point here, which is there is momentum in this space, but that momentum is sort of shaky as a result of the current political environment in a couple of directions. And to your point, I think you said this before, that presumably also delays final investment decisions on new projects that might include CCS as well.
Julio Friedmann: A hundred percent. And for me, this is the money question is literally this kind of uncertainty is killing investment decisions at best. They’re delayed at some point or another, people just walk away. And it is critically important that the United States resolve these questions firmly and clearly so that investors can put money to work. That includes companies like Engine number One, that includes companies like the hyperscalers, that includes the vendors. People want to put money in this space, but they need to have confidence in it, and the uncertainty will kill the investments for sure.
Shayle Kann: All right, Julio, super interesting. Thank you as always for the time.
Julio Friedmann: Always a pleasure, my friend.
Shayle Kann: Julio Friedman is the chief scientist and chief carbon wrangler at Carbon Direct. This show is a production of Latitude Media. You can head over to latitude media.com for links to today’s topics. Latitude is supported by Prelude Ventures, prelude backs, visionaries, accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more@preludeventures.com. This episode was produced by Daniel Woldorff. Mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I’m Shayle Kann, and this is Catalyst.
