Biprtisan Infrastructure Bill Includes $25 Billion in Potential New Subsidies for Fossil Fuels

August 04, 2021

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by Alleen Brown (The Intercept) Instead of reducing the role of fossil fuels in the economy, critics say, the bill subsidizes industry “greenwashing.” ... The latest draft bill would make fossil fuel companies eligible for at least $25 billion in new subsidies, according to an analysis by the Center for International Environmental Law.

“This is billions upon billions of dollars in additional fossil fuel industry subsidies in addition to the $15 billion that we already hand out to this industry to support and fund this industry,” said Jim Walsh, Food and Water Watch’s senior policy analyst.

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Just as concerning is the new economy the subsidies could entrench, said Walsh, through the creation of new fossil fuel infrastructure. “This would support the development of four petrochemical hubs that would create profit incentives for greenhouse gas emission production and would be focused on finding new ways of integrating fossil fuels into our economy for transportation, energy, petrochemical development, and plastics.”

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Such technologies include carbon capture and decarbonized hydrogen fuel.

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The bill includes billions of dollars for carbon capture, utilization, and storage; hydrogen fuel made from natural gas; and “low emissions buses” that could run on fuels including hydrogen and natural gas. It also encourages subsidies that go unquantified in the legislation, for example urging states to waive property taxes for pipelines to transport captured carbon.

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Meanwhile, carbon capture and storage are promoted primarily as a means to clean up continued emissions from fossil fuel processing facilities. Carbon capture would do nothing to resolve the array of severe environmental problems caused upstream by drilling, fracking, and mining — let alone the downstream burning of the fuels for energy.

The survival of the fossil fuel industry depends on its ability to convince the public that corporations are taking steps to address the climate crisis. Hydrogen and carbon capture, utilization, and storage have been two of the industry’s key strategies for achieving that goal. Exxon Mobil, Royal Dutch Shell, and Chevron, just to name a few, have touted their investments in hydrogen and carbon capture.

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Republicans, however, didn’t come up with the carbon capture and hydrogen spending: Many of the industry-friendly proposals were part of Biden’s plan from the start. “It’s truly bipartisan, which makes me cringe,” said Walsh.

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So-called clean or “blue” hydrogen would use carbon capture and storage to neutralize the greenhouse gas emissions associated with the process. Another type of the fuel, called “green” hydrogen, uses electricity drawn from renewables.

Neither “blue” nor “green” means of hydrogen production, however, are widely used.

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The infrastructure bill calls for a national strategy to put “clean hydrogen” into action, including four regional hydrogen hubs. The provision explicitly ties one hub to fossil fuels and calls for two others to be near natural gas resources.

Likewise, the carbon capture measure in the bill ties government investment to areas “with high levels of coal, oil, or natural gas resources.”

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Exacerbating the problem is that there is no real market for captured carbon — except to use captured gases to produce even more oil from old wells.

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Some proponents argue that carbon capture and hydrogen fuels could ultimately be beneficial for the climate if used for narrow purposes, like capturing carbon from steel production. READ MORE

'Clean' fossil fuels find support in infrastructure bill (Houston Chronicle)

Green fossil fuels with support on Bipartisan Infrastructure Bill (Energy Capital)

Bipartisan bill leaves out key climate, clean energy steps (Associated Press)

Billions for carbon capture, hydrogen, advanced nuclear included in bipartisan infrastructure plan (Casper Star Tribune; includes VIDEO)

One policy that could challenge a century of fossil-fuel dominance -- A clean electricity standard could be “the biggest change in our energy policy since the lights went on.” (Vox)

SPONSORED CONTENT: Tax Credits for Green Hydrogen Can Create New Jobs (NextEra Energy/The Hill)

Global clean hydrogen market set to double in 2021 - BNEF (Renewables Now)

Investments in Agriculture, Rural America Needed in Infrastructure Bill (Solutions from the Land)

Infrastructure Bill Has Big Wins for Oil, Climate Advocates Say (Bloomberg)

THE CARBON CAPTURE SCHISM: (Politico's Morning Energy)

The Role of Clean Hydrogen for a Sustainable Mobility (Belfer Center for Science and International Affairs at the Harvard Kennedy School)

Permian Basin gets vote of confidence with infrastructure plan (Bloomberg)

FEELING BLUE? (Politico's Morning Energy)

Excerpt from Casper Star Tribune: Many in Wyoming, including the oil and gas industry, see blue hydrogen as a way to keep the state’s gas production competitive as power plants’ demand for natural gas wanes. Several energy companies received grants last month from the Wyoming Energy Authority to support feasibility studies on the production and use of both blue and green hydrogen. READ MORE

Excerpt from Solutions from the Land: Biofuels get little mention in the bill that came to the Senate floor. One reference is made in language on a study on manufacturing fuels. Another reference comes in provisions on zero-emission buses that cites the potential use of biofuels, as well as liquified natural gas, compressed natural gas, hydrogen and propane.

However, Sens. Joni Ernst (R-IA) and Amy Klobuchar, D-MN) are reportedly working on provisions that would further boost biofuels and seek to add them to the infrastructure bill this week.

The measure sets aside $73 billion to modernize the nation’s electricity grid. The proposed outlay could result in the single largest federal investment in the grid in history and would aim to boost the transmission of renewable energy

In another effort to boost rural America, the bill sets aside $65 billion for rural broadband, an investment that would boost innovative, high-tech farming practices. Farmers and ranchers depend on broadband to implement the latest yield maximizing techniques, enabling growers to collect data and analyze outcomes. According to the USDA, nearly a third of U.S. farms have no access to the Internet.

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The White House and other infrastructure advocates who are not getting out of the current legislation what they want are looking ahead to a second, $3.5-trillion, Democrat-only spending bill, which is expected to be offered later this year as part of a budget resolution. READ MORE

Excerpt from Bloomberg: Many of the bill’s provisions are on the oil industry’s wish list. The proposed legislation has more than $10 billion for carbon capture, transport and storage — a suite of technologies fossil fuel companies hope will allow them to extend their license to operate for years, if not decades. There’s also $8 billion for hydrogen — with no stipulation that the energy used to produce it comes from clean sources. A new liquid natural gas plant in Alaska won billions in loan guarantees, while other waivers in the bill will weaken environmental reviews of new construction projects, experts say.

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Much of that anxiety has coalesced around support for carbon capture. Last month, hundreds of climate groups wrote an open letter calling on Biden to reject carbon capture as a “dangerous distraction” to eliminating fossil fuels entirely. While the scientific consensus holds that carbon capture will be crucial to slowing atmospheric warming, many environmentalists fear it will also prolong the life of the fossil fuel industry, particularly in the U.S.

Currently, some 40 million tons of carbon are captured globally, the vast majority by energy companies for a process known as enhanced oil recovery, in which the gas is pumped back into the ground to force crude oil to the surface. “EOR is disastrous for the climate, as it results in more oil extraction and more carbon emissions when that oil is burned,” the environmental groups wrote in their letter.

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Noah Deich, president and co-founder of Carbon 180, a group that advocates for carbon removal, said capture will be key to decarbonizing heavy industries such as steel and cement.

Deich understands the skepticism from climate groups, but doesn’t think the technology needs to enable oil production. “If done right, the bill could lead to a lot of carbon capture and recovery outside of the enhanced oil recovery space, and be a really good foundation for cleaning up heavy industry,” he said.

It’s not just carbon capture that irks the infrastructure bill’s critics. While there’s $5 billion to fund the purchase of clean-running school buses, half of that can be used for vehicles powered by cleaner-burning fossil fuels; those might be better for the environment than diesel, but not as clean as electric buses with no carbon emissions. Even the funding for EV charging infrastructure includes $2.5 billion of that could go to support vehicles that burn natural gas and propane, both of which burn more cleanly than gasoline, but which still contribute to global warming.

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John Noel, a senior climate campaigner for Greenpeace, said the infrastructure bill’s shortfalls will spur advocates to focus on the companion measure.

“The reconciliation package needs to be the place where we challenge the power of the fossil fuel industry and all fossil fuel subsidies and, like, kick the industry into a managed decline,” he said. “The outrage at this bipartisan bill is our leverage to make it happen.” READ MORE

Excerpt from Politico's Morning Energy: THE CARBON CAPTURE SCHISM: The bipartisan infrastructure deal includes $12.5 billion for large-scale deployment of carbon capture, which industry analysts say would bring the technology into the U.S. mainstream. It’s a huge victory for several climate-focused Democrats, who say it’s a vital tool to slice down emissions and introduced a number of bills this year to boost its development.

But many progressives are deeming it a “dangerous distraction” that would allow the oil and gas industry to prolong their high-emitting operations. Carbon capture would also need a significant buildout in pipelines to transport carbon to storage sites — which would be politically dicey due to resistance to new pipeline projects. The bipartisan infrastructure deal includes $2.1 billion for carbon transport.

“We have no idea what happens if one of these pipelines leaks or explodes. Fossil fuel companies are going to get this money and in the end rural and tribal communities are going to be the ones shouldering the risk,” Jane Kleeb, the chair of the Nebraska Democratic Party, told Pro’s Ben Lefebvre. Read more on the debate from Ben. READ MORE

Excerpt from Politico's Morning Energy: FEELING BLUE? A new study on blue hydrogen caused quite the splash Thursday, with the authors concluding the greenhouse gas footprint over blue hydrogen's lifecycle may not make it the climate solution its backers have made it out to be. In a peer-review study, Robert Howarth of Cornell and Mark Jacobson of Stanford find that the production of blue hydrogen, which is derived from natural gas with the resulting carbon dioxide captured and stowed away, could produce more greenhouse gases than coal — 20 percent more to be exact.

Blue hydrogen has been pushed by the natural gas industry as a clean energy alternative that could take advantage of the U.S.' ample gas reserves and use the existing infrastructure, such as pipelines. When burned itself, hydrogen does not produce carbon dioxide emissions, and hydrogen-powered fuel cells (which creates electricity instead of thermal power) can exceed the efficiency of combustion engines. The bipartisan infrastructure deal includes $8 billion to create regional "clean hydrogen hubs," with some of the locations focused on natural gas-producing areas.

But Howarth and Jacobson report that the natural gas extracted to produced hydrogen and burned to power the carbon capture leads to considerable emissions of fugitive methane — even higher than those for gray hydrogen. They also find carbon dioxide emissions for blue hydrogen only 9 to 12 percent less than for gray hydrogen.

"Often, blue hydrogen is described as having zero or low greenhouse gas emissions," the researchers write. "However, this is not true: not all of carbon dioxide emissions can be captured, and some carbon dioxide is emitted during the production of blue hydrogen."

Green hydrogen, made using renewable energy to pull the hydrogen from water in an extremely energy intensive process, accounts for only a small percentage of hydrogen production today, and 96 percent of hydrogen is generated from fossil fuels. The administration is hoping to expand green hydrogen as part of its jobs plan, but it wasn't explicitly named in the bipartisan infrastructure plan.

Despite the report's findings, hydrogen's backers value it as an important transition fuel, particularly in sectors whose emissions are hard to reduce, and they argue the technology is only getting better. “Hydrogen is not a panacea or a silver bullet, but it appears to be critical for decarbonization of ‘hard-to-electrify’ sectors such as long-haul heavy trucking, international marine shipping and some parts of heavy industry,” Mike Fowler, director of advanced energy technology research at the Clean Air Task Force, told The Guardian. READ MORE