Joe Biden has promised to slash fossil fuel subsidies as president. But the Democratic Party still supports a policy worth billions in tax credits to the industry — and an unproven "climate solution" that could keep it business for decades to come.
By Steve Horn
Former Obama administration energy secretary Ernest Moniz is heavily involved in expanding the carbon capture and storage industry. (Credit: Getty/National Clean Energy Summit/Isaac Brekken)
Climate change played a central role in the Democratic Party’s policy planning process in August, with politicians from presidential contender Joe Biden on down the ticket making the Trump administration’s climate denial a major talking point.
But away from the cameras, in its position papers and campaign planks, the top levels of the party — including the Biden campaign — are backing a pro-fossil fuel policy that the Republican Party also supports, known as carbon dioxide enhanced oil recovery, or EOR.
This story is part of Covering Climate Now, a global journalism collaboration strengthening coverage of climate change.
EOR is a drilling technique combining oil production with carbon capture utilization and storage, or CCUS, which is a blanket term for technologies that catch and collect greenhouse gas emissions before they enter the atmosphere. EOR (also known as “tertiary recovery”) involves injecting old oil wells with carbon dioxide — “flooding” in industry lingo — in order to flush out and extract remaining oil, then leaving the CO2 in the ground for the long-term thereafter.
Advocates of this technique pitch it as a climate solution, even though EOR can extend the profitable life of mature oil fields.
While the Biden campaign has promised to slash “fossil fuel subsidies at home in his first year” in office, both his supporters and those of progressive Sen. Bernie Sanders (Vt.), his chief challenger for the nomination, backed CCUS in the climate platform forged by their post-primaries “unity” task force in July. In August, the Biden campaign emerged from Democratic National Committee platform negotiations with a pledge to support the “development and deployment of carbon capture sequestration technology,” as well as to “double down on federal investments and enhance tax incentives for CCUS.”
The federal government currently subsidizes CCUS with the “45Q” credit, which offers tax breaks of up to $35 per ton for CO2 stored in underground geological formations via EOR, and up to $50 per ton for CO2 directly injected into geological formations.
The Democratic platform adds that the party “will advance innovative technologies that create cost-effective pathways for industries to de-carbonize, including carbon capture and sequestration that permanently stores greenhouse gases.” So does the Senate Democrats Special Committee on the Climate Crisis via a report the committee released on August 25, shortly after the DNC negotiations concluded.
(For its part, the 2020 Republican Party platform—which is the same version as the 2016 platform — calls on the "private sector to focus its resources on the development of carbon capture and sequestration technology.")
Proponents say that, to the extent oil drilling persists in the United States, EOR may be a way to make it more climate-friendly. According to a 2018 analysis by the Clean Air Task Force, a centrist environmental non-profit, “If we do not take advantage of CO2 EOR, the oil may be produced by other technologies that do not reduce emissions.”
Citing research by the International Energy Agency, the CATF analysis noted that “there is a potential to store 140 billion tons of CO2 in oil reservoirs around the world through CO2 EOR — resulting in a net emissions reduction by 88 billion tons.”
But critics of continued fossil fuel development say supporting EOR is just another way to keep oil coming out of the ground in perpetuity. “It seems like if the problem you're trying to solve is how to keep the fossil fuel industry in place, then CCUS is your answer,” says Demond Drummer, co-founder and executive director of New Consensus, a think tank aligned with supporters of the Green New Deal, the plan for tackling climate change backed by Democratic Party progressives. The Green New Deal’s suite of climate reforms, which Rep. Alexandria Ocasio-Cortez (D-NY) and Sen. Ed Markey (D-Mass.) introduced as a Congressional resolution in early 2019, calls for “meeting 100% of the power demand in the United States through clean, renewable, and zero-emission energy sources” by 2030.
But, Drummer says, if “the problem you're trying to solve is how to transition our energy infrastructure, the type that doesn't destroy our climate and our human beings ability to live on this planet, then you're going to have a different technology.”
John Laesch, a DNC negotiator, says there was steady pressure during the platform talks to support EOR and CCUS.
Laesch, an Illinois carpenter and Teamsters Local 174 member who recently announced plans to run for mayor of the city of Aurora in 2021, said that labor union negotiators at first asked him to withdraw his proposed amendment to ban federal tax breaks and other support for EOR and CCUS from the platforms.
“Basically they said that they wanted to remove that language so they could win in swing states and in the southern U.S.,” Laesch says.
After he refused to withdraw the proposal, Laesch says the union negotiators continued to “amp up the threat” by promising to ”make the whole platform more conservative and a lot worse on climate” as retaliation if he persisted. Ultimately, they offered a trade: a three-minute speaking spot to discuss the issue in exchange for not having any vote at all on his amendment. When he turned that down as well, Laesch says that the amendment simply vanished from the final platform, even though negotiators at earlier sessions had passed it.
Laesch later told Politico that contrary to the DNC’s public explanation for the move, “I definitively did not agree to drop my amendment and there was no misunderstanding.”
In his own written account of the negotiations, Laesch states that his “concern over a Biden administration advancing enhanced oil recovery to mitigate the climate crisis is that it would be like Donald Trump trying to solve the coronavirus crisis without masks, testing, or social distancing. CCS coupled with EOR will produce more carbon, not less.”
This Democratic embrace of EOR mirrors support by Republicans, where the position is not controversial, and comes after years of lobbying by the oil and gas industry to position EOR to Democrats as a climate solution. At the forefront of that push are two former senior-ranking Obama administration officials, who have allied with the Trump administration in their efforts to vastly expand use of EOR.
Seeds of this year’s DNC support for enhanced oil recovery were planted in 2017, when Ernest Moniz, President Obama’s second-term secretary of energy, founded a think tank called the Energy Futures Initiative to promote “analytically-based, technology-informed, all-of-the-above solutions on a range of energy policy issues.”
An enhanced oil recovery/carbon capture and storage demonstration project in Gaylord, Michigan. (Photo: DOE U.S. Department of Energy, National Energy Technology Laboratory)
The Energy Futures Initiative began to emerge as a high-profile opponent of the Green New Deal almost as soon as Markey and Ocasio-Cortez released it. In March 2019, Moniz and Andy Karsner, a former Energy Department assistant secretary in the Bush administration, co-authored an opinion piece for CNBC.com that characterized the Green New Deal’s proposals as a set of “demonstrably impractical” and extreme-left answers to climate change. The real answers, they argued, would be found in a “Green REAL Deal” that would enable a “wise and just transition to a low-carbon economy, moving as fast as is technically and socially possible [and] based on practicality, not ideology.”
In an editorial for Science magazine a few months later, Moniz expanded on the essential components of a Green Real Deal, including a focus on “breakthrough technology candidates [that] could enable carbon direct removal, commodity-scale CO2 utilization, biological and geological CO2 storage at gigatonne scale.” The Energy Futures Initiative followed that up in July 2019 with the release of a 29-page Green New Deal white paper that advocates for CCUS as a “pathway” to “tremendous emissions reduction potential in difficult to decarbonize applications (i.e. electricity load following and industry processes).”
This April, on the 50th anniversary of Earth Day, the Energy Futures Initiative launched the “Labor Energy Partnership,” a joint effort with Big Labor that is advocating for nationwide expansion of CCUS. Members include the AFL-CIO and the International Brotherhood of Electrical Workers. An AFL-CIO fact sheet about the partnership calls for “a national action plan for the deployment of carbon capture, utilization, and sequestration technology.” Lonnie Stephenson, the president of the IBEW, was recently announced as a member of the Biden transition team.
Moniz has also developed private sector ties to both the natural gas and CCUS industries since serving in the Obama administration.
In 2018 he joined the board of Southern Company, an electric utility developing carbon capture technology and advocating for its federal subsidization. According to Southern’s proxy statements, Moniz has received compensation for the position of over $486,000 to date in fees and stock awards.
Moniz is also positioning his own consulting business, EJM Associates, to get into the carbon-capture business via its ownership of G2 Net Zero LNG, a proposed $11 billion liquefied natural gas export terminal in southwestern Louisiana that would, according to the project’s website, cost-effectively “produce, transport, process, liquefy and export natural gas and produce industrial gases with net-zero greenhouse gas emissions by as early as 2026.”
LNG exports are coming under increasing climate scrutiny due in part to the high levels of methane, a greenhouse gas 84 times more potent than carbon during its first 20 years in the atmosphere, that are released throughout the natural gas supply chain. G2 Net Zero LNG is an apparent play at keeping LNG exports in business under the banner of capturing and storing carbon emissions.
Despite the conflict of interest that these industry ties suggest, Moniz is a prominent climate and energy advisor to the Biden campaign, and has become one of his key campaign surrogates. Moniz spoke at a Democratic National Committee platform planning meeting on July 3, and was the featured guest at a virtual campaign fundraiser for the Biden campaign on August 6, where the donations required to attend began at $1,000 per person and maxxed out at $25,000.
Moniz did not respond to repeated requests for comment. But he recently told Axios energy reporter Amy Harder that he does not consider Southern Company to be a fossil fuel corporation. “It’s an electricity utility. It also is a natural gas supplier at a retail level,” Moniz said. “But that’s [like] the statement that anybody who drives an internal combustion car is a fossil fuel company because they use them.”
Another one-time Obama administration official, former Environmental Protection Agency administrator Bob Perciasepe, now leads a D.C.-based climate and energy think tank that has long advocated carbon capture as a climate solution, called the Center for Climate and Energy Solutions, or C2ES.
Language supporting CCUS in the Biden campaign’s climate policy platform quotes word for word from materials created by a C2ES-related project called the Carbon Capture Coalition. (The coalition is a successor to a project C2ES launched in 2011 called the “National Enhanced Oil Recovery Initiative.”) Current coalition members include major oil firms like Shell, Occidental, and Baker Hughes, coal giant Peabody Energy, and labor unions including the AFL-CIO, IBEW, the Utility Workers Union of America, and the United Mine Workers of America.
Support for EOR even bridges the seeming chasm between the Democratic and Trump administration’s positions on climate change. In 2018, Presciasepe lauded a report featuring EOR that was produced by a Trump administration Energy Department group called the “Committee on Carbon Capture, Use, and Storage.” The report elevated CCUS “an essential tool in the climate solutions toolbox,” Presciasepe stated in a press release, and offered a “real roadmap to deploying it in the United States."
The committee’s chair, John Mingé, is a former CEO of BP America, and other participants include executives from Exxon, Southern Company — where Moniz is on the board — and Shell.
With that backdrop, it is perhaps unsurprising that powerful industry trade associations like the American Petroleum Institute and the Global CCS Institute have praised the Biden campaign and the Democratic National Committee for supporting expanded CCUS.
“You can’t address the risks of climate change without America’s natural gas and oil industry,” API stated in a press release about Biden’s plan. “This plan would require a massive amount of infrastructure build-out, a goal we all share.”
The Biden campaign did not respond to repeated requests for comment. A spokesperson for the Democratic National Committee also did not respond to a request for comment.
In 2018, a pro-CCUS bill began to make its way through Congress. Called the USE IT Act, for “Utilizing Significant Emissions with Innovative Technologies,” the legislation amended the Clean Air Act to allow the Environmental Protection Agency to funnel federal money to CCUS research, and expedited permitting for CCUS projects and related CO2 pipelines. The bill’s bipartisan support in the Senate ranged from outspoken climate advocate Sheldon Whitehouse (D-R.I.) to stalwart climate denier James Inhofe (R-Okla.).
This July the Senate passed the measure, tucked onto Page 1547 of the 1823-page annual defense spending bill, which still awaits a House vote. On September 10, a bipartisan group of House and Senate members wrote a letter to the heads of the House and Senate Armed Services Committees, supporting the pro-CCUS legislation’s inclusion in the defense bill.
Also in 2018, a bipartisan coalition of lawmakers introduced a bill to extend the 45Q tax credit, the “Furthering Carbon Capture, Utilization, Storage, and Reduced Emissions” Act. That measure was ultimately enacted as a rider to the fiscal year 2019 budget bill.
Bipartisan solutions sound good in theory, says Lukas Ross, a senior policy analyst with Friends of the Earth Action, but the details matter. “‘Bipartisan climate solutions shouldn’t be oil subsidies,” he says, “if I had to put it on a bumper sticker.”
Major climate and environmental groups are pushing back against this vigorous bipartisan support for CCUS. In a March 2020 policy memo, the group Food and Water Watch warned that legislation like the USE IT Act “would waste public money to lock in and double down on the dirty footprint of fossil fuels through the creation of an entirely new dangerous industry.” According to the group’s analysis, while “the most ambitious” CCUS technologies can reduce power plant carbon emissions by 90%, factoring in the energy needed to capture the emissions would lower that amount to about 80%; and that “when methane emissions from increased production are factored in, [carbon capture and storage] can only reduce electricity sector emissions by 39%.”
The industry’s carbon accounting methods may also be leaky.
In a 2018 report titled “Carbon Capture and Release,” the non-profit group Clean Water Action found that while the oil industry had claimed federal tax credits based on 59.7 million metric tons of captured CO2 as of May 2017, the EPA had only verified 3 million as of August 2017. That may equate to $597 million to $1.3 billion worth of tax credits claimed for carbon emission cuts that never happened.
This April, the Treasury Department’s inspector general reported that out of about $1 billion in 45Q tax credit claims by 672 companies between 2010 and 2019 by 672 companies, 99.9% were claimed by just 10 firms, 7 of which claimed $893 million worth of credits without submitting required CO2 sequestration monitoring and verification forms to the EPA. The IRS ultimately withheld $531 million in credits claimed by 4 of these 10 companies, according to the report, and Treasury watchdogs continue to audit some of the firms’ carbon storage accounting.
Sen. Bob Menendez (D-N.J.), who requested the investigation, called for a comprehensive audit of the entire 45Q tax credit program in response, on the basis of the "apparent failure of the fossil fuel industry to act in good faith."
The Trump administration is currently considering permits for over 1,000 miles of CO2 pipelines on public lands. Called the Wyoming Pipeline Corridor Initiative, the April proposal by the state-owned Wyoming Pipeline Authority would snake through every county in the state. In February Jason Begger, at the time the executive director of the Wyoming Infrastructure Authority, told Congress that he envisioned a vast increase of CO2 pipelines nationwide, from the current estimated 5,000 miles to some 300,000 miles. (The two agencies have since merged into a single Wyoming Energy Authority, with Begger as deputy director.) In April the EPA gave up its regulatory authority over Wyoming carbon dioxide injection wells, including those at EOR sites, to state authorities.
Rhode Island's Sen. Whitehouse, who co-sponsored 2018 legislation that extended the 45Q tax credit for CCUS and EOR, also supports the CO2 pipeline expansion. “Carbon capture wouldn’t be much use if it just went to enhanced oil recovery,” he said in email. “The program I helped pass into law provides greater incentives for the geologic storage of carbon dioxide than for enhanced oil recovery.”
Whitehouse noted that a recent analysis from the Clean Air Task Force showed that half of the CCUS projects currently planned or underway are designed to sequester CO2 permanently underground. Per Whitehouse, “the program is working as intended.”
But roughly half of those projects involve enhanced oil recovery, rather than sequestering CO2 pollution from sources not involved with oil production. According to a recent report by the National Petroleum Council, 9 of the 10 biggest CCUS projects currently in operation around the U.S. involve enhanced oil recovery.
Whitehouse “honestly sees this as a good thing for the planet,” says Shannon Anderson, an attorney and organizer for Wyoming’s Powder River Basin Resource Council, a local environmental organization. But she disagrees with his vision for the state’s future.
“For us here in Wyoming, there are real solutions out there on energy right now, they are available, they are affordable,” she says. “They are wind and solar, and battery storage.”
Not all Congressional Democrats are on board with using federal tax credits to grow the enhanced oil recovery industrial complex. In late July, Reps. Ilhan Omar (D-Minn.) and Nanette Barragán (D-Calif.), along with Sens. Sanders, Markey, and Jeff Merkeley (D-Ore.), introduced legislation called the End Polluter Welfare Act, which would end tax incentives for carbon capture and enhanced oil recovery.
But the bill faces the same headwinds that undercut Democratic Party climate activists at the DNC negotiations. It will be hard to get the legislation passed, says Mitch Jones, policy director for Food & Water Watch, “as long as the industry can funnel money to campaigns, and the revolving door between politicians and their advisors and industry keeps spinning.”
Both Anderson and Jones note that Democratic Party leaders often point to a 2018 special report from the U.N. Intergovernmental Panel on Climate Change that includes deployment of CCUS as one of many steps needed to keep average global temperature rise at or below 2 deg. C (3.6 deg. F). That has helped support for CCUS to become the “consensus position amongst Democratic leadership,” says Jones.
Food and Water Action’s Ross believes support for CCUS allows the petroleum industry’s Democratic Party allies, including powerful figures like Moniz and Perciasepe, to ignore the need for major industrial nations like the U.S to phase out oil and gas production expeditiously. Instead, he sees the opposite happening.
“It's really just providing a subsidized input to the oil and gas industry, which has sort of factored CO2 EOR into many of its business models,” said Ross. But “there's a reason that the rallying cry of the climate movement is ‘keep fossil fuels in the ground,’ and not ‘keep CO2 out of the atmosphere.’ Subsidizing extraction at this point in the climate crisis should be a nonstarter.”
John Laesch, the Democratic Party activist, puts it more simply. “If we adopt EOR or CCUS as our ‘solution’ to the climate crisis,” he says, “we're in just as much trouble as if we do nothing.”
Steve Horn is a freelance investigative journalist based in San Diego, California. He is a reporter/producer for The Real News Network, and his writing has appeared in The Guardian, The Intercept, Al Jazeera America, and other outlets. Find him on Twitter @SteveAHorn.