US DOE looks to revamp its mission under Biden
President Joe Biden's first budget request on May 28 furnished the US Department of Energy's (DOE) Office of Fossil Fuel Energy with a new and longer name that reflects a revised mission to decarbonize the nation's economy with technologies that promote greater use of hydrogen and carbon capture, use, and storage.
The DOE fiscal year 2022 budget request renames it the Office of Fossil Energy and Carbon Management (FECM), and charges it with advancing Biden's goal to reach net-zero carbon levels by 2050 in alignment with the 2015 Paris Agreement.
DOE is not just making cosmetic changes with a name change, nor is it stopping at taking newly developed technology to the point of deployment. It is creating an Office of Clean Energy Demonstrations (OCED), which, armed with a $400 million budget (subject to congressional approval), will serve as DOE's hub for demonstrating "near- and mid-term" technologies and systems with the goal of quicker commercial adoption and increased availability.
According to the DOE budget request, OCED will be responsible for staging at least one commercial-scale demonstration a year based on the technology it has helped develop and demonstrate at one of its offices. It also would help other offices such as FECM with "technology scale-up and demonstration activities funded within their existing programs to ensure a consistent approach to capital intensive, late-stage technology development."
Meanwhile, DOE is charging the renamed FECM with reducing GHGs such as CO2 and methane from industrial sectors that are hard to decarbonize. The department has identified technologies such as carbon capture and storage, hydrogen, and direct air capture as key to the transition towards a carbon-pollution-free economy, as well as building a US critical minerals supply chain.
Budget proposals are basically "very long statements of policy priorities" from the White House, and the Trump administration's proposed budgets generally ignored climate change, while trying to stimulate demand for coal in spite of business realities, Daniel Bresette, executive director for the nonprofit Environmental and Energy Study Institute, told IHS Markit in a 5 June email.
"This proposal is different. The Biden-Harris administration proposes to marshal and harness the levers of government under their control to reduce greenhouse gas emissions. Some of that comes at the expense of fossil fuels, but mostly the budget proposal represents a series of ambitious investments across the US energy sector, which has been in transition for the past two decades, to accelerate decarbonization and advance equity and environmental justice," Bresette wrote.
Boosting carbon capture
Perhaps more importantly than the proposed 19% increase for FECM spending to $890 million for fiscal year 2022, this DOE office will no longer be used to fund, develop, and promote traditional fossil fuel combustion technologies. The request zeroes out funding for technologies to extract shale oil using either enhanced oil recovery or hydraulic fracturing. It also eliminates funding to design, build, and operate a 10-MW pilot plant using supercritical transformational electric power technology that was initiated in 2015. This technology uses CO2 as a supercritical fluid to convert heat energy into electrical energy without the use of steam, according to DOE.
Instead, DOE is seeking $531.5 million, or a 19% increase over prior appropriations, for its Carbon Capture Utilization and Storage and Power Systems (CCUS&PS) program. The aim of this program is to research and develop, demonstrate, and deploy (RD&DD) technologies that capture carbon from industrial processes; utilize it in high-value products such as plastics, medicine, fuels, and other chemicals; and store it at commercial-scale sites.
For the CCUS&PS program, DOE is seeking a 74% increase over prior funding of $150 million for pre- and post-combustion CO2 capture technology RD&D; a 65.2% increase to $38 million for utilizing CO2 in value-added products such as cement, concrete, steel, chemicals, and fuels using systems-based carbon management approaches; and a 48.1% increase to $117 million for improving the operations and efficiency of commercial-scale CO2 storage sites.
DOE, under the same program, is seeking $63 million, or a 57.5% increase over prior funding, for a program dedicated to removing atmospheric CO2 through direct air capture, terrestrial sinks via planting trees and wetlands, or via mineralization, where CO2 is injected into rock rich in calcium and magnesium forming carbonates.
"Robust federal funding is critical for economywide deployment of carbon capture technologies," said Brad Crabtree, director of the Carbon Capture Coalition, in a 1 June statement. The coalition represents a nonpartisan group of more than 80 businesses and organizations, such as Air Liquide, Archer Daniels Midland, and Peabody, that are seeking to build federal policy support for economywide deployment of carbon capture, removal, transport, utilization, and storage.
Extending tax credits
Moving forward though, Crabtree said, significant additional annual increases will be crucial to reaching the five-year funding that Congress authorized in the bipartisan omnibus spending package for CCUS programs at the end of 2020. This same piece of legislation also included a two-year extension for the tax credit for capturing, storing, and utilizing CO2 known as a 45Q.
Over the five-year fiscal year 2021-2025 period, the legislation authorizes a total of $4.7 billion for the expansion and reorganization of the core carbon management programs that include capture, utilization, and storage, but funding to the agency must be approved each year through the annual appropriations process.
Crabtree lauded the White House's request to Congress to seek a direct-pay option and a five-year extension to the 45Q tax credit for carbon capture to accompany the funds it is seeking for DOE budget.
Currently, projects containing carbon capture, utilization, and storage technologies are eligible for the tax credit if they already exist or they are under construction before the end of 2025. This White House proposal would tag another five years onto the tax credit.
According to Crabtree, the direct-pay option would allow the full value of the 45Q credit to flow directly to projects, rather than developers having to find a tax liability against which to claim the credit. Also, the five-year extension of the 45Q credit will provide project developers and investors a 10-year window to plan, engineer, permit, and finance projects. The five-year extension would be on top of the two years the 45Q tax credit received in the omnibus spending bill package.
Both these proposals would require congressional approval.
The Senate Finance Committee included the direct pay option for clean energy technologies including CCUS in its 26 May approval of the Clean Energy for America Act, but did not include any language to further extend the 45Q tax credit, according to the Carbon Capture Coalition.
Aside from its CCUS&PS program, DOE is seeking $130 million for its natural gas technologies program, where the focus is on developing sensors and monitors to reduce methane emissions across the fossil fuel infrastructure. The same program also includes leveraging the existing natural gas pipeline system to transport ammonia or hydrogen as demand arises, improving the steam reforming process to produce hydrogen, and blending hydrogen with natural gas.
In a 4 June sit-down interview with IHS Markit, Serban Cantacuzene, vice president R&D, Americas for Air Liquide, said he sees the DOE name change as "a positive sign."
"For me, the name of the department is related to the scope of the mission. So, if they adjust the name, it means there is a new focus and change in the mission and the vision of what they are trying to achieve," he added.
At Air Liquide's Innovation Hub in Newark, Delaware, Cantacuzene said, researchers are developing processes and technologies for safe use and transport of hydrogen via the existing natural gas pipeline network.
Steel pipelines are designed to transport a certain type of fluid or gas, be it oil, natural gas, nitrogen, oxygen, carbon dioxide or hydrogen, according to Cantacuzene.
"If you want to reuse a pipe that was designed for a certain type of gas for another type of gas then we need to make sure it can be done safely within the parameters of the pipeline," he said.
Hydrogen can be safely blended with natural gas at a rate of up to 10%. For higher percentages though, researchers at Air Liquide are conducting tests and using models to make sure hydrogen doesn't interact with the steel and make it brittle. "We are making sure that over 20, 30 years, the aging of the pipeline is not affected by higher blends of hydrogen," Cantacuzene added.
Replacing fossil fuels with cleaner hydrogen in the manufacturing, transportation, and electric power sectors is a goal that Biden, along with prominent Democrats, including US Senator Thomas Carper of Delaware, are trying to promote in a bid to decarbonize the economy.
"The technologies exist, but for the moment the market is yet to developed, so, the costs are high. What Senator Carper is doing is helping, creating incentives for people to invest. As we invest, the cost will go down and applications of solutions will get wider and wider," Cantacuzene said.
The FECM's mission doesn't just stop at clean energy technologies. The DOE office, as is the case over at the Department of Interior, is looking to fund development of technologies to recover critical minerals such as lithium and cobalt, from feedstocks such as carbon and other ores, mining byproducts, abandoned mines, and wells.
Earlier this year, Secretary of Energy Jennifer Granholm aligned the agency's efforts with Biden's executive order to identify domestic sources for critically needed battery storage.
"Can we ourselves be able to extract in a responsible way those critical minerals for our own energy security and put people to work? I think we can," Granholm said during a 3 March talk during CERAWeek by IHS Markit.
The agency is seeking $45 million for its minerals sustainability program, which is a net $8 million below current funding levels, for the program. DOE said the carbon ore processing program will bear the brunt of the cuts, while critical minerals will see a boost of about $10 million.
Global demand for lithium-ion batteries in plug-in electric vehicles—which Biden and other world leaders view as one pathway to reducing GHG emissions from the transportation sector—requires a stable supply chain of critical minerals, notably lithium, cobalt, and manganese.
The DOE program will not only support efforts to find domestic sources of these minerals but also will back efforts to recycle used batteries for extracting the minerals.
Granholm said the DOE budget makes "historic investments" in clean energy technology and puts the US back in the "driver's seat" as the country transitions to 100% clean energy, while reining in emissions from fossil fuels.
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