โ€˜Colossal Wasteโ€™: U.S. Leads Way in Public Spending on False Climate Solutions

A new report shows global spending on carbon capture and hydrogen subsidies โ€œfailed to make a dent in carbon emissionsโ€ after 50 years of research and development.
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Are oil companies willing to play with their own money on CSS? Credit: Buchsbaum Media

This article by Common Dreams is published here as part of the global journalism collaboration Covering Climate Now.

Among the worldโ€™s wealthiest countries, the U.S. leads the way in spending public money on so-called climate โ€œsolutionsโ€ that have been proven to โ€œconsistently fail, overspend, or underperform,โ€ according to an analysis released Thursday by the research and advocacy group Oil Change International.

The groupโ€™s report, titled Funding Failure, focuses on international spending on carbon capture and fossil-based hydrogen subsidies, which continues despite ample data showing that the technological fixes have โ€œfailed to make a dent in carbon emissionsโ€ after 50 years of research and development.

The report details how five countries account for 95 percent of all carbon capture spending, with the U.S. investing the most taxpayer money in the technology, at $12 billion in subsidies over the last 40 years.

Norway comes in second with $6 billion going to carbon capture and storage, while Canada has spent $3.8 billion, the European Union has spent $3.6 billion, and the Netherlands has poured $2.6 billion into the technology, with which carbon dioxide emissions are compressed and utilized or stored underground.

โ€œIt is nothing short of a travesty that funds meant to combat climate change are instead bolstering the very industries driving it,โ€ the report stated.

Harjeet Singh, global engagement director for the Fossil Fuel Non-Proliferation Treaty Initiative, told The Guardian that the subsidies amount to a โ€œcolossal waste of money.โ€

โ€œIt is nothing short of a travesty that funds meant to combat climate change are instead bolstering the very industries driving it,โ€ said Singh.

While proponents claim carbon capture and storage reduces planet-heating carbon emissions, OCI notes, it was originally developed in the 1970s โ€œto enhance oil production, and this remains its primary use,โ€ with the technology โ€œbarelyโ€ reducing emissions.

High-profile carbon capture failures in the U.S. include the Petra Nova project in Houston, Texas, which cost nearly $200 million in taxpayer funds and whose captured emissions were later used for crude oil production, and the FutureGen project, โ€œwhich swallowed $200 million and never materialized.โ€

โ€œInvesting in carbon capture delays the transition to renewable energy,โ€ reads OCIโ€™s report. โ€œInstead of wasting time and money on technologies that do not work, governments must commit to justly and urgently phasing out fossil fuels before itโ€™s too late.โ€

Despite the lack of data supporting the use of carbon capture, the group said, countries including the U.S. are โ€œpreparing to waste hundreds of billions of taxpayer dollars on these ineffective technologies, further benefiting the fossil fuel industry.โ€

The Petra Nova carbon capture and storage plant in Houston, Texas. (Credit: Wikmedia Commons)

OCI highlighted how the U.S. and Canada, while ostensibly fighting the climate crisis, have spent a combined $4 billion in public money to explicitly โ€œpay oil companies to produce more oil,โ€ with the subsidies going to carbon capture for โ€œenhanced oil recovery.โ€

The report also found that in addition to the $12 billion in taxpayer funds the U.S. has spent on carbon capture and fossil hydrogenโ€”a leak-prone gas produced through energy-intensive processes that cause their own emissionsโ€”the government has spent an estimated $1.3 billion on the 45Q tax credit, which allows companies to write off tax for every ton of carbon dioxide they store underground.

The Inflation Reduction Act (IRA) increased the amount given to companies in 45Q tax credits from $35 to $60 per ton, meaning that the subsidy could grow to over $100 billion in the next 10 years.

OCIโ€™s Policy Tracker shows that overall public spending on carbon capture and hydrogen could grow by between $115 billion and $240 billion in the coming decades.

โ€œWe need real climate action, not fossil fuel bailouts!โ€ said OCI in a post on social media.

From Skeptics to Believers

The groupโ€™s report also highlights that fossil fuel giants such as ExxonMobil have shifted from carbon capture skeptics to outspoken proponents of the technologyโ€”with the company bragging to investors that carbon capture and hydrogen would help its Low Carbon Business Unit make โ€œhundreds of billions of dollarsโ€ and grow to be โ€œlarger than ExxonMobilโ€™s base business.โ€

Exxon didnโ€™t launch its carbon capture efforts until 2018, having spent several years and hundreds of millions of dollars on another โ€œclimate solutionโ€ that ultimately failed: the use of algae to make biofuels.

Since then, Exxon has โ€œpushed for direct government funding for carbon capture, particularly at the U.S. Department of Energy (DOE),โ€ successfully lobbying for $12 billion allocated in the Bipartisan Infrastructure Bill in 2021 for โ€œcarbon management research, development, and demonstration.โ€

Exxon also lobbied for the increased rate of the 45Q tax credit in the IRA and โ€œplayed a โ€˜central roleโ€™ in drafting a 2019 DOE-sponsored report on carbon capture that determined Congress would need to create an incentive of around $90 to $110 per ton to support carbon capture deployment,โ€ according to OCI.

The Guardian on August 29 reported that Exxon still โ€œchases billions in U.S. subsidies for a โ€˜climate solutionโ€™ that helps drill more oil,โ€ describing how the oil giant hosted an event at the Democratic National Convention earlier this month where senior climate strategy and technology director Vijay Swarup praised the IRA for helping Exxon pursue carbon capture and said: โ€œWe need new technology and we need policy to support that technology. We need governments working with private industry.โ€

Exxonโ€™s enthusiasm for carbon capture, said OCI, is an example of how โ€œthe fossil fuel industry delays climate action, distracts from real solutions that would end the fossil fuel era, and does everything in its power to squeeze the last drops of profit from a dying industry, at the expense of all of us.โ€

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