CO2NNECT 2024

Thank you, Jill (Syvrud), for the introduction and good morning everyone.

I also want to thank Patrice (Lahlum) for inviting me to speak to today. We have worked together as close partners for two decades, and it is too bad that she was unable to be here today.

And a big thanks to the whole team at the Great Plains Institute and Carbon Action Alliance for the commitment of time, resources and hard work to organize this event every year. They are among a small number of NGOs around the world that have dedicated themselves to advancing carbon management as an essential climate strategy for achieving net-zero emissions, while sustaining high-wage jobs and communities that rely on domestic energy and industrial production.

Speaking here today is something of a homecoming for me. In 2018, I organized the first CO₂NNECT conference in Jackson Hole, Wyoming. It is gratifying to see the conference continue and evolve to meet the new challenges we are facing half a decade later.

Transition to Net-Zero

As you know, there has been a sea change in United States climate and energy policy since the first CO₂NNECT conference in 2018. Under the leadership of the Biden-Harris Administration, and with critical bipartisan support in Congress, we have embarked on an unprecedented and historic federal effort to meet the climate challenge and build a net-zero economy by midcentury.

We now have a comprehensive policy framework of funding, financing and incentives to help us advance the commercial deployment of carbon management at truly climate scale. When many of us gathered in Jackson Hole just six years ago, we could not have imagined a few years later the passage of the Energy Act of 2020, the Bipartisan Infrastructure Law in 2021 and the Inflation Reduction Act in 2022, providing the U.S. with the most robust and consequential policy tools in the world today to drive deployment of carbon management.

Going forward, carbon management must play an expanded economy-wide role in helping to decarbonize industrial and energy production and ultimately remove accumulated carbon dioxide from the atmosphere.

That is our focus at the Department of Energy - and specifically of our Office of Fossil Energy and Carbon Management.

And we have undoubtedly made huge strides in terms of technology development, the number of operating projects and those in the project development pipeline. Today, we have 18 commercial-scale carbon capture and storage projects in operation across the country today and about 220 publicly announced projects, according to the Clean Air Task Force's project tracker. These projects are at various stages of development, span a wide range of technologies and industries, and represent the potential for roughly 200 million tons of annual carbon capture and storage capacity.

But, we must also be clear-eyed and acknowledge the significant challenges - from the need to demonstrate these technologies at commercial scale across all major industries within this decade, to ramp up federal permitting of projects to a level commensurate with climate-scale deployment, and to ensure that communities experience real economic, jobs and environmental benefits from all of that deployment.

Today I want to talk about what we need to do-and specifically, what we at the Department of Energy are doing-to build on successes to date and meet challenges going forward.

Carbon Capture

Looking first at carbon capture and storage, our research and development at DOE has historically focused primarily on industrial applications with lower costs of capture, on coal-fired power generation, and on geologic storage.

That early pioneering work was of global importance and helped set the table for priorities and investment that we are making today. Today's priorities include commercial-scale deployment of carbon capture in natural gas combustion, both in power generation and industry; heavy industries with higher costs of capture, such as cement, steel and chemicals; clean hydrogen and ammonia produced from natural gas with carbon capture and storage; and the region-by-region buildout of CO₂ transport and storage hubs.

When it comes to natural gas, we are taking aim at challenging and vitally important areas for broader decarbonization, including combustion streams at power plants, liquefaction terminals, petroleum refineries, and industrial facilities.

To that end, the Department is supporting two commercial scale carbon capture demonstrations-potentially serial numbers one and two in the world-one at a combined-cycle natural gas power plant in California and the other at a cogeneration facility near Houston, as well as a number of industrial and power sector front-end engineering and design studies, or FEED studies, that developers must undertake to secure project financing.

While we are excited about the potential for carbon capture to help decarbonize natural gas, more companies need to make concrete commitments to deploy carbon capture and storage - in gas processing, liquefaction for export, and the many end uses of natural gas, as well as in the broader transition to clean hydrogen and ammonia.

Engaging industry on carbon capture across the natural gas supply chain is a key priority for our Office of Fossil Energy and Carbon Management. It is especially urgent given that the U.S. has recently become the world's largest producer and export of natural gas and that our natural gas export capacity is set to double by the end of this decade.

Hydrogen/Ammonia

Turning to hydrogen and ammonia, the Department's work has deep roots and a real track record. Perhaps the most notable success is Air Products' first-of-a-kind commercial scale demonstration of carbon capture storage from two steam methane reformers at Valero's Port Arthur refinery in Texas. This DOE-funded pioneer project has successfully captured and permanently stored 90 percent of the CO₂ emissions from the syngas stream-a million tons of carbon dioxide annually for over a decade.

Since January 2021, our Office of Fossil Energy and Carbon Management has committed about $138 million in projects that explore new, clean methods to produce hydrogen and to improve the performance of hydrogen-fueled turbines. With low-carbon hydrogen production from natural gas already commercially demonstrated, our current research, development and early demonstration projects now focus on producing clean hydrogen with carbon capture at lower costs and from additional feedstocks, including municipal solid waste, legacy coal waste, waste plastics, and biomass.

DOE is also encouraging the shift to low-carbon ammonia for fertilizer production and other applications. The Office of Fossil Energy and Carbon Management is supporting Wabash Valley Resources in Indiana through our CarbonSAFE program to develop a local geologic storage site. And we are pleased to report that the company will receive financing from our Loan Program Office to retrofit a brownfield location in a coal community to gasify waste products to make ammonia, together with carbon capture and storage.

Another promising opportunity is the development of sustainable aviation fuel from ethanol coupled with carbon capture, which has a real advantage given the low cost of capturing CO₂ from fermentation and the potential for the ethanol industry to achieve economies of scale through development of regional CO₂ transport and storage hubs.

We also continue to push the envelope on making fuels and chemicals from CO₂ and carbon monoxide. At the end of the day, converting carbon emissions into products is technically and commercially challenging-essentially reversing the process of combustion in most cases-but it allows us to tap into a near-limitless supply of sustainable carbon to meet the needs of a net-zero economy.

We have a long way to go on the carbon conversion front, but there are promising trends and growing industry interest. The 45V hydrogen tax credit and the 45Z sustainable aviation fuel tax credit in the Inflation Reduction Act have the potential to improve the economic landscape. And our office at DOE also recently announced improvements to the Utilization Procurement Grants, or UP Grants Program, including larger grants and additional resources to better assist applicants in the life cycle analysis review process required to claim the 45Q tax credit for carbon utilization.

CDR

At the same time, the challenges we face in fully decarbonizing some sectors, such as certain heavy industries, shipping and aviation, mean that between now and beyond midcentury, we will need to remove significant amounts of CO₂ already present in the atmosphere.

And that is where direct air capture and other types of carbon dioxide removal come in.

While carbon dioxide removal technologies are capturing the imagination of industry, government, and stakeholders all over the world, they are not yet widely deployed. So, our carbon removal portfolio at DOE is focused on demonstrating new technologies at pilot scale, scaling up and derisking commercial facilities, and building robust businesses models for a future carbon removal industry.

A decade ago, the Department of Energy started exploring direct air capture technology. Then, in 2021, DOE launched the Carbon Negative Shot-the U.S. government's first major effort to advance direct air capture and other pathways for carbon dioxide removal.

The Biden Administration has accelerated that push by helping to a create fertile carbon management ecosystem in which direct air capture project developers can deploy this comparatively new technology. The buildout of regional CO₂ transport and storage networks and the development of clean energy projects to power direct air capture projects-all supported through the Bipartisan Infrastructure Law and Inflation Reduction Act-will help accelerate deployment of direct air capture here in the U.S.

We are also exploring a range of technological approaches to carbon dioxide removal, including marine CDR, biomass with carbon removal and storage, and enhanced mineralization.

We have also selected five pre-commercial direct air capture projects under our EPIC Prize to advance innovative and diverse technologies and entrepreneurs through business accelerators and start-up support programs.

And last year we announced the Carbon Dioxide Removal Purchase Pilot Prize to enable companies to compete for the opportunity to sell carbon dioxide removal credits directly to DOE. Now, for the first time the federal government will purchase high-quality carbon removal credits from commercial-scale activities. The advance purchase of these credits will be backed up by credible monitoring, reporting and verification, thereby helping to finance projects. This advance purchase pilot modeled by the federal government will help establish best practice standards for successful carbon dioxide removal projects and, if successful, leverage much greater levels of private sector investment to grow this future industry.

INFRASTRUCTURE - CO₂ Transport and Storage Hubs

We are also building on decades of experience in large-scale transport and geologic storage of CO₂ by harnessing Bipartisan Infrastructure Law funding to develop an estimated 20-40 dedicated geologic storage hubs region-by-region through our CarbonSAFE program. This will create economies of scale and reduce the costs of carbon management for multiple companies and industries.

And the infrastructure bill has a range of tools to foster hub development. There is the $3.5 Regional Direct Air Capture Hubs Program, with funding awarded to the first two of four hubs, one in Texas and the other in Louisiana, as well as five FEED studies and 14 pre-feasibility studies for potential future direct air capture hubs throughout the country.

And last year DOE announced $7 billion for seven Regional Clean Hydrogen Hubs to accelerate commercial scale deployment of clean hydrogen production, plus an additional $1 billion in funding for a consortium to purchase hydrogen and provide early market demand. All but two of these regional hubs feature production of hydrogen with carbon capture and storage, either from natural gas or biomass.

We expect these hubs will kickstart a national network of clean hydrogen producers, consumers, and connective infrastructure, ultimately producing three million metric tons of clean hydrogen annually, or 30 percent of our total annual goal in 2030.

And to help build out the infrastructure for all of these hubs, an additional $2.1 billion for the Carbon Dioxide Transportation Infrastructure Finance and Innovation Authority, or CIFIA, will help jumpstart financing of CO₂ transport infrastructure through low-interest loans and grants, thus helping to knit together future carbon capture, direct air capture, and clean hydrogen projects with geologic storage sites to create regional carbon hubs.

Finally, we are also working to develop a Carbon Transport Research, Development and Demonstration Consortium. This consortium would include experts from National Labs, industry, research universities, labor unions, NGOs and other organizations that will coordinate CO₂ transport RD&D efforts.

VOLUNTARY CARBON MARKETS

The Biden-Harris Administration is also advancing polices to bolster the growth of carbon markets that will both support and require the deployment of carbon management technologies and infrastructure. In May, the White House released a new Policy Statement and Principles on Voluntary Carbon Markets to accelerate the voluntary and responsible development of those markets.

At the same time, DOE's Office of Fossil Energy and Carbon Management announced that 24 semifinalists would receive funding to scale up their carbon dioxide removal technologies under the first round of our Carbon Dioxide Removal Purchase Pilot Prize.

So, we have indeed made undeniable progress since CO₂NNECT was first held in 2018. But an undertaking of this scale and scope also presents inherent challenges. Scaling up permitting of geologic storage, building community and local stakeholder support for project deployment and improving the transparency and integrity of voluntary carbon markets are just some of those challenges - and these are areas where responsibility falls heavily on governments.

PERMITTING CHALLENGES

Let's start with permitting, which I know is top of mind for many here today.

On the one hand, that nearly 150 applications for Class VI CO₂ geologic storage permits are currently pending before the Environmental Protection Agency is encouraging. This surge in Class VI applications underscores rising industry interest in deploying carbon management projects, as well as the dramatic impact that the enhanced 45Q tax credit and other federal policy support is having in the marketplace.

On the other hand, deeply frustrating permitting delays risk undermining our ability to achieve the full deployment potential of current incentives, funding and financing in the Inflation Reduction Act and Bipartisan Infrastructure Law and our ability to meet ambitious climate goals over time.

At DOE we are partnering with EPA to develop additional tools and training opportunities to support permit applicants and reviewers across EPA and states. We are also leveraging National Lab experts to develop and deliver detailed trainings and technical assistance to EPA, states and permit applicants, including an "Ask a Scientist" workshop series for project developers and permit applicants.

Our DOE Labs-six labs currently and two more soon to join-are also providing prompt and robust support to EPA in reviewing certain technical information associated with Class VI permit applications.

And we are working very closely with EPA to compile best practices for Class VI permit applicants to improve the quality of applications submitted. These best practices are aimed at reducing the overall review time, while maintaining the requisite high level of safety considerations.

DOE also actively supports the delegation of federal Class VI permitting authority to states-known as state primacy-as a critical tool for meeting our own statutory responsibilities for implementing the Bipartisan Infrastructure Bill and to support the urgently needed wider industry buildout of carbon management projects and infrastructure.

The good news is that many states are expressing growing interest in Class VI primacy, and

Congress has appropriated funds to help states develop the capacity to do geologic storage permitting at the state level. These states, including Colorado, are seeking initial primary enforcement responsibility for Class VI wells.

There are also challenges to permitting of CO₂ pipelines that require new approaches and increased coordination on the part of governments at all levels.

Last October, the Department of Energy and the Council on Environmental Quality launched two federal Permitting Task Forces to help address the efficient, orderly and responsible development of CO₂ pipelines and related carbon capture and storage projects. This includes projects on both private and federal lands and of those that cross federal, state and tribal boundaries. These Task Forces have subcommittees comprised of diverse industry, NGO and community representatives; federal, state and tribal officials; and technical experts who meet every two weeks, all to improve and streamline the permitting process.

COMMUNITIES

Finally, if we are to deploy carbon management projects and infrastructure at climate scale, we must engage meaningfully with communities, tribes, and other impacted stakeholders-and deliver high-quality projects that create economic and environmental benefits for communities where projects are built. And by meaningful, I mean engagement that not only seeks to inform, but also to provide opportunities for local community and stakeholder input that demonstrably helps shape the actual design and development of projects and their associated benefits.

At DOE, we recognize that effective partnerships are those that are rooted in trust, transparency, and accountability to deliverables identified in direct consultation with communities.

That is why DOE has developed a Community Benefits Plan framework as a core initiative to institutionalize best practice community engagement in project development. You will hear more later today from my colleagues DOE colleagues Betony Jones and John Brown, but this framework aims to ensure that projects receiving public funding, particularly from the Bipartisan Infrastructure Law and the Inflation Reduction Act, create tangible economic, environmental, and societal benefits for local communities.

The Biden-Harris Administration is committed to ensuring that the beneficial impacts from this historic once-in-a-generation federal investment in clean energy and industrial projects flow to local communities, especially those communities in close proximity to power plants and industrial facilities. These impacted communities have often born the brunt of plant and mine closures, lacked the skills and training to access high-wage jobs at such facilities and experienced disproportionate burdens of pollution.

To date, 81 percent of Bipartisan Infrastructure Law and Inflation Reduction Act funding has been awarded to projects in counties with below average wages and 86 percent to counties with below average graduation rates. This represents real progress and a welcome change from past patterns of federal investment.

One of our principal tools for ensuring that these investments make a positive material difference to local communities is to require that recipients of DOE funding develop and implement Community Benefits Plans through close collaboration between project developers and communities.

Community Benefits Plans, in turn, can evolve into Community Benefit Agreements, which are legally binding agreements between community groups and developers that stipulate the benefits a developer agrees to fund or furnish in exchange for community support of a project.

An example is the Community Benefits Agreement that Tallgrass established with Bold Alliance, an environmental group that has historically opposed pipelines and advocated against the use of eminent domain in CO2 pipeline projects.

DOE does not require Community Benefit Agreements but encourages them as an outcome of developing a Community Benefits Plan. Ideally, strong Community Benefits Plans result in formal agreements to create lasting benefits that will continue after DOE's involvement in a project ends.

Whether a carbon management project proceeds with or without federal funding, DOE has launched an effort to complement Community Benefits Plan called the Responsible Carbon Management Initiative.

Through its 10 principles, which were informed by direct feedback from diverse stakeholders, the Initiative aims to encourage project developers to pursue the highest levels of safety, environmental stewardship, transparency, and community engagement and benefits in project development.

In particular, the Initiative is intended to support the growth of meaningful community engagement as a standard practice for projects across the carbon management sector, regardless of funding source.

This all-hands-on-deck effort to change how we invest in energy and industrial projects and engage communities directly in project design and development is not just the right thing to do. It is also good business.

As we heard from Professor Spence last night, it is not just climate and environmental justice advocates who are opposing carbon capture, CO₂ pipelines and geologic storage projects.

We are also seeing pushback from conservative local officials, landowners, farm organizations and others. Opposition to project development spans the political spectrum and includes every region of the country. And this opposition is not confined to just carbon management projects. Renewable energy projects and their associated infrastructure are targets as well.

In short, deployment of every technology pathway and type of infrastructure that we need to achieve net-zero emissions and ensure energy reliability and security is vulnerable to mounting local opposition to projects.

Fortunately, over the last several years, DOE staff and many of you in this room have been engaging significantly with communities and stakeholders across the country, and we have learned a lot from those interactions. In closing I would like to share a few lessons learned that may be helpful moving forward.

Start with building trust. Begin engagement early, and if possible, before announcing a project. Come back, follow up, and be specific about feedback received and what changes to the project have been made in response to that feedback.

Co-designing engagement. It can be helpful to co-design educational workshops and other events with communities. In the past, community-based organizations have helped DOE to identify accessible event locations, dates and times; trusted partners who can share information on the event and encourage community participation; and local experts who know the community well and can speak to its concerns. Designing events that are responsive to community input helps facilitate a robust, productive discussion.

Creative interactions. Design community events to be interactive, creating space for community organizations, project developers, local governments and other stakeholders to have informal, one-on-one dialogue through an open-house session where different perspectives are represented and/or exhibits similar to science fairs that provide hands-on learning opportunities for participants.

Ultimately, effective engagement goes both ways, and results in real changes to projects. It is important that everyone comes to the table and that we have honest and open discussions with citizens and stakeholders about the benefits and potential risks of projects proposed for development in or near their communities.

CLOSING

We have arguably the most robust policy framework in the world to develop and deploy carbon capture, removal, conversion, transport and storage across the whole value chain, economy-wide and at climate scale-and to do so in a way that delivers significant economic, jobs and environmental benefits to communities across our nation.

Yet, we also face growing challenges and barriers, most notably in project permitting and building local community and stakeholder support for project and infrastructure development at the level required to meet our climate goals.

We look forward to working with you to overcome those hurdles and to help drive forward the deployment of carbon management at truly climate scale.

Thank you, and I look forward to your questions.

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