For years, it has seemed that policymakers were far more focused on lining the pockets of climate activists than they were about actually helping the environment. The “45Q” tax credit, created by the Energy Improvement and Extension Act of 2008, and increased by the Inflation Reduction Act, is one of many examples, and one of the more egregious.
Originally, 45Q gave companies a tax credit for deploying technologies capturing CO₂ directly at the source of emissions, such as from industrial facilities where the release of carbon is dense. The economic value of “carbon capture and sequestration” (CCS) has its own skeptics, but CCS looks valuable compared to the concept known as “direct air capture” (DAC), for which a subsequent expansion of the 45Q credit provides nearly twice the subsidy given for CCS.
Remarkably, DAC is not tied to the removal of carbon released at a specific source, but rather aims to pull carbon out of the ambient air — a process some have described as trying to catch fog with a pair of tweezers. A recent report published by Jonathan Lesser of the National Center for Energy Analytics studies the economics and physics of DAC. The process essentially involves large fans blowing outside air through filters that eventually become saturated in CO₂, which is then removed and compressed for transport. While it may sound innovative to some, there are deal-killing problems.
EXPENSIVE CARBON CAPTURE: WE DON’T NEED IT AND WE SHOULDN’T SUBSIDIZE IT
As described in the report, DAC requires so much energy to draw out the relatively small amount of carbon in the air that using fossil fuels to power DAC facilities could eliminate the sought-after reduction in CO2 levels. To address this problem, the electricity necessary to extract carbon from the atmosphere would have to come largely from “emissions-free” electricity — generated from nuclear, wind, or solar plants.
However, these sources of electricity also come with huge problems. In an op-ed, Lesser explained that using wind and solar to generate the electricity necessary to power DAC would require a land area the size of Florida. The amount of new generating capacity required to power DAC would be prohibitively expensive, costing trillions of dollars. And, meeting the U.S. Department of Energy goals for carbon removal would require roughly 30% of the total U.S. electricity generation.
Additionally, while it is hoped that carbon stored underground — where most of this carbon will reside in perpetuity — will remain in place, it retains the potential to escape and kill. That happened in 1986 at Lake Nyos in Cameroon. A natural underground CO₂ deposit escaped, killing thousands of people along with the animals and livestock in the area. Increasing the amount of CO₂ stored underground raises the risk of disasters.
Finally, even if there were the willingness to bear the enormous economic costs and risks to the environment and human life, the coup de grace to the large-scale implementation of DAC is its inconsequential effect on global temperature. According to NCEA, reliance on DAC to meet the stated carbon reduction goals would only change the global temperature by 0.003 °C, an amount that represents just a fraction of the margin of error in estimating global temperatures.
Despite the uselessness of the technology, taxpayers are still estimated to spend a considerable amount of money on it. Estimates suggest that $46 billion per year is expended by the taxpayer for carbon sequestration under 45Q. That amounts to $850 billion by 2042 and $2 trillion if credits continue. This is the problem with subsidies. They incentivize inefficiencies into business models, often to the benefit of special interests with the best lobbying teams.
NATIONAL ACADEMIES MUST STRIKE BIASED CLIMATE CHANGE GROUP DESIGNED TO INFLUENCE FEDERAL JUDGES
The tax code creates many poor incentives, but the 45Q subsidy for DAC funds a futility. NCEA’s findings show that current 45Q subsidies and the costs to implement DAC considerably exceed the so-called “social cost” of carbon, i.e., the estimated value of the claimed damages attributable to CO₂ emissions. Indeed, in a day and age when electrons are in higher demand than ever to power the AI revolution, surely there are more useful ways to expend energy and money.
On the heels of the U.S. government’s reassessment of the environmental regulations of the past, ending outlandish and wasteful subsidies like the 45Q credit for DAC should be a no-brainer. It is time to end the unaffordable policies that do nothing but pad the pockets of climate activists.
Curtis Schube is the executive director of Council to Modernize Governance.