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1、Policy Incentives to Scale Carbon Dioxide Removal:Analysis and RecommendationsAPolicy Incentives to Scale Carbon Dioxide Removal:Analysis and RecommendationsJames Boyd,Emily Joiner,Alan Krupnick,and Michael TomanReport 24-03 February 2024Resources for the FutureiAbout the AuthorsJames Boyd is the as

2、sociate vice president for research and policy engagement,a senior fellow,and Thomas Klutznick Chair in Environmental Policy at RFF.He conducts policy and economic analysis related to forestry,nature-based climate solutions,and natural resource management.He earned his PhD from the Wharton Business

3、School at the University of Pennsylvania,and has been a visiting professor at Stanford University and Washington University in St Louis.He previously codirected the National Socio-Environmental Synthesis Center.Boyd works with diverse partners from government,nongovernmental organizations,and privat

4、e-sector institutions,and emphasizes close collaboration between decisionmakers and academic researchers to generate science that is useful and practical in real-world settings.Emily Joiner is a research associate at RFF.She works on a suite of topics including carbon dioxide removal,agricultural em

5、issions reduction,and wildfire risk impacts and mitigation.She obtained dual BS degrees in sustainability and economics from Arizona State University and an MS degree in agricultural and resource economics from the University of Arizona(UA).Prior to joining RFF,she held internships with UAs Water Re

6、sources Research Center,the Babbitt Center for Land and Water Policy,and the City of Gilberts Water Department.Joiners research interests include nonmarket valuation methods,benefit-cost analysis and its regulatory implications,and water economics in the US West.Alan Krupnick is a senior fellow at R

7、FF and an expert on the oil and gas sector,reducing greenhouse gas emissions from this and the industrial sectors,and cost-benefit analysis.In particular,Krupnicks recent research focuses on green public procurement,decarbonized hydrogen and tax credits,and developing markets for green natural gas.H

8、is portfolio also includes guiding the value of information agenda covered by our VALUABLES initiative with NASA,the valuation of reducing asthma risks,estimating the value of statistical life,and issues of regulatory reform.Michael Toman returned to RFF as a senior fellow in 2021 after stints at th

9、e World Bank Development Research Group,RAND Corporation,and the Inter-American Development Bank.Mike served as a Senior Staff Economist at the White House Council of Economic Advisers from 19941996.His current research interests include reduction of agricultural greenhouse gas emissions,critical mi

10、nerals for decarbonization,markets for emission reduction credits,and climate change policies in developing countries.Mike has a BA from Indiana University,a MSc in applied mathematics from Brown University,and MA and PhD degrees in economics from the University of Rochester.Policy Incentives to Sca

11、le Carbon Dioxide Removal:Analysis and RecommendationsiiAbout RFFResources for the Future(RFF)is an independent,nonprofit research institution in Washington,DC.Its mission is to improve environmental,energy,and natural resource decisions through impartial economic research and policy engagement.RFF

12、is committed to being the most widely trusted source of research insights and policy solutions leading to a healthy environment and a thriving economy.The views expressed here are those of the individual authors and may differ from those of other RFF experts,its officers,or its directors.About the C

13、overThe image on the cover of this report has been reproduced courtesy of Climeworks.Climeworks was not involved in the production of this report,nor does it espouse any of the views contained therein.Sharing Our WorkOur work is available for sharing and adaptation under an Attribution-NonCommercial

14、-NoDerivatives 4.0 International(CC BY-NC-ND 4.0)license.You can copy and redistribute our material in any medium or format;you must give appropriate credit,provide a link to the license,and indicate if changes were made,and you may not apply additional restrictions.You may do so in any reasonable m

15、anner,but not in any way that suggests the licensor endorses you or your use.You may not use the material for commercial purposes.If you remix,transform,or build upon the material,you may not distribute the modified material.For more information,visit https:/creativecommons.org/licenses/by-nc-nd/4.0

16、/.Resources for the FutureiiiContents1.Introduction 12.Net Zero:The Goal and the Gap 33.Carbon Dioxide Removal Technologies and Costs 53.1.Technological Options 53.2.Conventional versus Novel Technologies 83.3.CDR Cost Estimates 94.Criteria for CDR Policy Analysis 115.Current US CDR Policies 135.1.P

17、olicies for Stimulating Forest Carbon Removal 145.2.Policies for Stimulating Use of DAC and BEC 155.3.RD&D Policies and Investment Initiatives for DAC and BEC 165.4.Policies and Regulatory Frameworks for CO2 Transport and Storage 185.5.Mechanisms for Addressing Equity in Benefits of CDR Expansion 19

18、5.6.Environmental Considerations 205.7.Monitoring,Reporting,and Verification Challenges 215.8.Policy Responses to Implementation Challenges 236.Policy Recommendations for Initiating the CDR Transition 286.1.Policies to Increase Conventional Land-Based CDR 286.2.Policies for Catalyzing Increased Inve

19、stment in DAC and BEC Technologies 306.3.Policies Governing CO2 Transportation and Storage 336.4.Benefits Sharing 346.5.Ancillary Environmental Consequences and Environmental Justice 35Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendationsiv7.Policy Recommendations for Achiev

20、ing Net Zero by Midcentury 367.1.Cost-Effective CDR and ER 377.2.Achieving Cost-Effective Policy:Cap-and-Trade or Carbon Pricing with CDR(CAT+and CP+)387.3.Different Approaches to Midcentury CDR Policy 407.4.Other Midcentury Policy Scenarios 427.5.Overshooting and the Need for Net-Negative Emissions

21、 (beyond Midcentury)467.6.Sequencing of ER and CDR Policies over Time 468.Conclusions 489.References 50Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations11.IntroductionMany analysts have concluded that large amounts of atmospheric carbon dioxide(CO2)must be captured and p

22、ermanently stored in the coming decades to meet international goals for arresting climate change,even with aggressive measures to limit greenhouse gas(GHG)emissions.The amount of carbon dioxide removal(CDR)needed to achieve net-zero GHG emissions poses a technological challenge,requiring significant

23、 advances in CDR capability and deployment.CDR at the needed scale will be expensive,particularly in the near term.It also can pose social and environmental challenges through spillover effects on communities,changes in land use,and major increases in electricity consumption.This report discusses th

24、e challenges for the United States in scaling up CDR,recommends immediate policy actions to improve and scale up CDR,and discusses longer-run policy frameworks through which CDR can play its necessary role for achieving net-zero GHG emissions in the United States by midcentury.In particular,we recom

25、mendwith important caveatsthat CDR incentives be integrated with incentive-based mechanisms for GHG mitigation in the longer term.The“removal gap”is the amount of CDR needed to achieve policy targets for limiting temperature increase,given trajectories for GHG emissions and policies for their mitiga

26、tion.As the size of the removal gap becomes clearer,so does the gap in removal policies.As observed in Smith et al.(2023),no countries have yet set removal goals.Current US policies encourage some CDR via subsidies for increased forest carbon storage,carbon capture and storage(CCS)with bioenergy,and

27、 direct air capture.A variety of recent policy measures,including financial incentives in the 2022 Inflation Reduction Act,are providing increased CDR stimulus.However,the size of the removal gap and the policy focus on near-term initial investments versus longer-term technological development and s

28、caling up indicate a need to fortify current policies and consider longer-term policies to induce the required amounts of CDR capacity.Notably,the nature and design of policies to motivate and finance the necessary levels of CDR have received little attention,an oversight that is increasingly recogn

29、ized(Honegger 2023;Meyer-Ohlendorf and Spasova 2022;Schenuit et al.2021).1 Recent studies on the need for CDR make these observations:“There is an urgent need for comprehensive policy support to spur growth in CDR”(Smith et al.2023,39).“CDR at anywhere approaching the scales projected here would req

30、uire strong policy incentives and public investment”(Fuhrman et al.2023,9).1 An exception focused on BECCS deployment is Zetterberg et al.(2021).Resources for the Future2Substantially scaling up global CDR by midcentury will be a technological challenge.It will also be a challenge for climate policy

31、.Core policy questions include the following:How can policies create the incentives needed for private provision of CDR at a large scale over the long term?If private sector investment in CDR remains limited by high cost or other constraints,what might the government do to scale up CDR?What policies

32、 would improve CDR technologies and lower their cost over time?How do CDR and GHG emissions reduction policies interact,and what are the implications for CDR policy design?This report also addresses complementary policies to deal with a range of other issues that arise in scaling up different CDR ap

33、proaches:What measures can address the environmental and social consequences of CDR and thus ameliorate the negative community reactions that otherwise may result?Beyond technological and economic barriers,what other barriers to CDR deployment need to be addressed?Two examples:health and safety meas

34、ures,and the siting and regulation of industrial capture facilities,GHG storage facilities,and CO2 pipelines.Our focus is US policy,though important aspects of our analysis are also relevant for other countries.In addition,US policy will trigger international questions,such as whether CDR projects a

35、broad can be used by US emitters to offset their emissions.The United States should play a leading role in CDR deployment and policy development because it is the second-largest global GHG emitter,with a correspondingly large need to counteract residual emissions.In addition,the United States is in

36、a strong competitive position to produce CDR,given its wealth,robust institutions,capacity for technological innovation,and large land mass suitable for nature-based removal and storage infrastructure.The United States also has an existing,though limited,suite of removal incentives on which to build

37、.The report is organized as follows.Section 2 explains the urgent necessity for carbon dioxide removal as a complement to emissions reductions.Section 3 looks at the various technologies that can deliver CDR,their development status,and their costs.Section 4 lays out the criteria by which we analyze

38、 current and recommended CDR policies.Section 5 reviews todays US CDR policies and highlights policy gaps,weaknesses,and other barriers to CDR deployment.Section 6 makes recommendations for new policies and modifications of existing policies to accelerate CDR technology development and larger-scale

39、CDR investments.It also makes recommendations for addressing CDRs environmental and other community effects,and it suggests complementary policies related to,for example,permitting CO2 pipelines and storage facilities.The recommendations in Section 6 can be thought of as a policy“on-ramp”that can fa

40、cilitate the transition to a policy architecture consistent with net-zero ambitions.However,the policy steps discussed in Section 6 will not drive sufficient CDR investment to meet net-zero goal.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations3Section 7 explores the mor

41、e ambitious midcentury CDR policy architecture needed to continue the transition to net zero and compares the options in terms of cost-effectiveness,equitability,and feasibility.Section 8 concludes with some final observations.2.Net Zero:The Goal and the GapBecause growth in GHG emissions has not be

42、en curtailed as envisaged in the 2015 Paris Agreement(which itself was only an initial step toward deep cuts in GHG emissions),many observers have concluded that the internationally accepted aim of capping the global average temperature increase at less than 2.0C,and as close to 1.5C as possible,is

43、infeasible without major increases in CDR.2 Net zero requires both deep emissions reductions and emissions removals(the“net”in net zero)to offset residual emissions that are economically or technologically impractical to avoid.Furthermore,net negative emissions removal(above and beyond what is achie

44、ved by a net-zero economy)will be necessary to reduce the stock of atmospheric CO2 if emissions“overshoot”the trajectory for achieving the temperature limits.For those reasons,the need for large-scale increases in CDR is urgent.How much new CO2 removal is needed depends on the timing of global emiss

45、ions pathways.However,the National Academy of Sciences(2019)estimates that worldwide,10 Gt of CDR will be needed annually by 2050,and 20 Gt annually by 2100.3 These numbers are consistent with a more detailed range of scenarios reported in Smith et al.(2023),who report a range of 6.8 Gt to 16 Gt ann

46、ually by the time net zero is achieved,and larger amounts in the final decades of the century.Smith et al.(2023)also report that about 2 Gt is removed annually worldwide.This implies the need to quintuple annual global removal by 2050 and increase it by a factor of 10 by 2100.Although quintupling gl

47、obal removal over the next 27 years may not seem challenging,99.99 percent of the current 2 Gt of CDR comes from afforestation,reforestation,and carbon-oriented forest management practices.This form of removal faces natural biophysical limits(available land area,suitable climatic and soil conditions

48、),not to mention the social and economic trade-offs associated with massive conversion of agricultural and range lands to forest.This means most new CDR must come from novel technology that has not yet been deployed at scale.The 2015 Paris Agreement reflects voluntary national commitments to GHG mit

49、igation,which in turn reflect countries state of economic development.Article 3 of the 1992 United Nations Framework Convention on Climate Change also allows for“common but differentiated responsibilities.”Looking ahead to midcentury,how 2 Smith et al.(2023);Coalition for Negative Emissions(2021);En

50、vironmental Defense Fund(2021);Committee on Developing a Research Agenda for Carbon Dioxide Removal and Reliable Sequestration et al.(2019);IPCC(2018);World Resources Institute(n.d.).These sources also provide background on the temperature goals;in addition,see IPCC(2018).3 For reference,the United

51、States currently emits roughly 5 Gt annually.Resources for the Future4much decarbonization by(current)lower-and lower-middle-income countries could be expected?For the world to achieve global net-zero emissions by midcentury,advanced-economy countries must aim for negative net emissions to offset co

52、ntinuing emissions elsewhere.In Figure 1,the bar represents the total amount of emissions reduction(ER)and CDR needed to achieve net zero emissions.In the status quo,there is not enough of either to meet the net-zero goalthat is,CDR is insufficient to counteract residual emissions.The net-zero gap m

53、ust be addressed by expanding both ER and CDR.In a net-zero economy,the gap is filled by expanded ER and CDR.All residual emissions remaining after ER measures are implemented are counteracted by CDR(Figure 2).The stylized graphs raise two important policy questions.What is the right balance of ER a

54、nd CDR in a net-zero economy,and what policy mechanisms will best achieve that balance?In Sections 67,we address different policy approaches.Figure 1.Status Quo:Not Enough CDR or ERFigure 2.Midcentury Net Zero:CDR Removes Residual EmissionsPolicy Incentives to Scale Carbon Dioxide Removal:Analysis a

55、nd Recommendations53.Carbon Dioxide Removal Technologies and Costs3.1.Technological OptionsCDR comprises several processes by which CO2 is deliberately removed from the atmosphere and durably stored in land,ocean,geologic,or product reservoirs(IPCC 2022a).4ARI(afforestation,reforestation,and improve

56、d forest management)consists of actions taken to expand the forest carbon sink(including carbon stored in soils);it includes harvested carbon stored in wood-based products.5 We refer to this collection of activities as simply afforestation because the distinction between afforestation(the conversion

57、 of land to forest)and reforestation(the replanting of forest after harvest or disturbance from fire,disease,or pests)is not important to our recommendations.BC(biochar)is a carbon-dense material formed when plant biomass is heated to a high temperature with limited oxygen.Applying it to soils or bu

58、rying it increases carbon sequestration in soils.BiCRS(biomass carbon removal and storage)involves the capture of atmospheric carbon by plants followed by the disposal of that plant biomass in ways that inhibit decomposition,such as underground or deep in the ocean.Another BiCRS approach is ocean ir

59、on fertilization to promote phytoplankton CO2 uptake;the storage occurs when the phytoplankton die and fall to the ocean floor.BEC(bioenergy with carbon capture)is the production and use of plant biomass as a feedstock for supplying energy,through either combustion or fermentation and refining into

60、fuel;BECCS(bioenergy with carbon capture and storage)adds transportation(by pipeline or other means)and long-term underground storage of the CO2.6DAC(direct air capture)uses chemical processes to remove CO2 directly from the air;DACCS(direct air capture with carbon storage)adds transportation if nee

61、ded(by pipeline or other means)and long-term underground storage of the CO2.Because DAC facilities are designed to remove CO2 in concentrations found in the air,they do not have to be located near sources of CO2 emissions but could be located near storage facilities.4 Depending on the technology,the

62、 duration of storage varies and may be uncertainclearly important factors.5 Additional carbon could also be stored in agricultural soils,but both the amount of feasible storage and its permanence remain unclear(Toman et al.2022).6 BiCRS is sometimes defined in a way that includes both BECCS and stor

63、age in wood prod-ucts(Sandalow et al.2021).We choose to define it as a set of approaches distinct from those sequestration options.Resources for the Future6EW(enhanced weathering)involves pulverizing silicate rock,which accelerates its natural ability to absorb atmospheric CO2,and then spreading the

64、 pulverized rock on land.OAE(ocean alkalinity enhancement)expands the ocean carbon sink and reduces ocean acidification by altering the chemistry of seawater,in either of two ways.The first is like EW,through addition of silicate rock material,but with dispersal in the ocean.The second uses onshore

65、facilities to process seawater electrochemically and then return it to the ocean.CDR does not include naturally occurring biotic,mineral,or marine CO2 uptake because those processes are not deliberately induced or enhanced by human action.Natural processes provide a baseline amount of atmospheric re

66、moval,but the definition of CDR restricts it to deliberate additions to that baseline.CDR also does not include carbon capture,use,and storage(CCUS)of industrial or power sector CO2 emissions,except in the context of BECCS,because CCUS captures exhaust gases rather than removing atmospheric CO2 and

67、is therefore considered an emissions reduction strategy.7 Finally,CDR does not include avoided deforestation because deforestation is a source of emissions.Avoided deforestation is accordingly considered an emissions reduction strategy,not CDR.Because BEC and DAC technologies figure prominently in t

68、he discussions that follow,additional information on them is provided in Box 1.7 However,technological improvement in BECCS is to a considerable extent improvement in CCS technology(leaving aside improvements in the efficiency of the facilities using biomass-based fuels).Since the need for CDR depen

69、ds on the scale and pace of increase in GHG mitigation,the need also will be affected by the extent to which CCS plays a role in GHG mitigation.As noted subsequently,major controversies surround that question.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations7Box 1:Summar

70、y of BECCS and DACCS TechnologiesBioenergy carbon capture and storage applies the point-source carbon capture technologies used for CCUS to the emissions from burning biomass energy inputs.Together with the sequestration of CO2 in biomass fuels,this is what qualifies the technology as a potential CD

71、R approach.The most common capture technologies involve various chemical reactions(with liquid solvents or solid sorbents)to remove the CO2 from flue gas.The captured CO2 then is moved into long-term underground storage(in the United States,that transport will be mainly by pipeline).The capture effi

72、ciency of the point-source carbon technologies generally exceeds 90 percent of the CO2 in flue gas from power and industrial plants,though non-bioenergy CCUS demonstration projects have regularly underperformed(Hong 2022;Osman et al.2021;National Energy Technology Laboratory n.d.;Robertson and Mousa

73、vian 2022).That level of capture efficiency also does not account for emissions attributable to the electricity used to operate the facility(Scope 2 emissions),emissions generated in securing the feedstock or sourcing materials(Scope 3 emissions),or CO2 leakage in transportation and storage(Chiquier

74、 et al.2022).A related concern is the life-cycle energy production from BECCS.Fajardy and Mac Dowell 2018)show that the gross energy produced by the biomass combustion,minus the energy consumed by the carbon capture technology and the feedstock cultivation,preparation,and transport,can be less than

75、half of the gross energy produced.Wood pellets,agricultural waste,and lignocellulosic biomass(straw and grasses)are among the popular fuel types for BEC(Buchheit et al.2021;Muratori et al.2016).Municipal and animal waste,algae,and repurposed cooking oil have also received attention as potential feed

76、stocks(Pour et al.2018).Biomass inputs may be combusted(e.g.,in power plants or industrial boilers)or fermented,followed by production of bioethanol that then can be combusted or sold.The most active commercial applications of BEC,wood pellet burning for power generation and bioethanol production,ar

77、e the most land and water intensive.BEC also requires land,water,and nutrient inputs to produce feedstock as well as water for the carbon capture process.Rosa et al.(2021)estimate that BEC has the highest water footprint of all carbon capture technologies.Direct air capture and storage removes low-c

78、oncentration CO2 from the ambient air using chemical reactions similar to those for BECCS,followed by transport(as needed)and storage.Because the CO2 concentration is low(compared with flue gas),more energy is required per unit of CO2 removed for DAC than for BECone reason DAC is currently more expe

79、nsive(Ozkan et al.2022).The power requirements also raise a concern about potential Scope 2 emissions and reduced local air quality.Negative emissions via DAC or BEC require clean energy to reduce or eliminate the Scope 2 emissions.Ammonia can be a byproduct emission from both BEC and DAC plants,dep

80、ending on the choice of sorbent used for CO2 separation.Resources for the Future83.2.Conventional versus Novel TechnologiesARI is often termed the“conventional”approach:it already occurs at a large(though insufficient)scale,and its broader deployment faces no significant technological barriers.Of th

81、e“novel”approaches,DACCS,BECCS,BC,and BiCRS have all been demonstrated and in some cases deployed,but at limited scale and relatively high cost.Continued basic and applied research and development will be needed to lower costs and expand use.EW and OAE are at an even earlier stage of development.Alt

82、hough considered physically and chemically practical,they have not yet been deployed in any significant way.8Figure 3 conveys the need for both expanded ARI and more significant expansion in novel CDR approaches.In their analysis of integrated assessment scenarios,Smith et al.(2023,Chapter 7)disting

83、uish between“conventional CDR on land”(which corresponds to ARI)and“novel CDR”(all other approaches).They find that a doubling of conventional land-based CDR by 2060 and major increases in novel CDR(up to 1,300 times the current levels)are needed to achieve net zero by midcentury,with even more expa

84、nsion needed by 2100.Currently,a doubling of CDR via ARI appears to be physically and technologically possible(Griscom et al.2017;Roe et al.2019;Austin et al.2020),but it would require significant policy intervention.Increases beyond a doubling of ARI would create increasingly difficult land-use tra

85、de-offs and other concerns.In comparison,although DACCS and BECCS are technologically feasible,their limited development and deployment constrain dramatic acceleration at an acceptable cost.Lowering the cost of the novel CDR approaches is therefore paramount for achieving the CDR growth necessary to

86、 meet the Paris Agreement temperature goals.8 See Fuhrman et al.(2023)for further discussion of novel CDR approaches.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations93.3.CDR Cost EstimatesCDR costs per unit of CO2 removed vary significantly across these approaches,and f

87、uture costs are highly uncertain.For novel approaches,costs are expected to decline over time with further innovation and investment,but the magnitude and timing of cost reductions are unpredictable.ARI cost estimates are$10$100/tCO2.9 Although already deployed at scale,there is no central cost esti

88、mate:forest-based CDR costs vary greatly because of differences in forest features and forest sequestration strategies(e.g.,afforestation vs.changed harvest practices).The opportunity costs of land-use conversion to forests(e.g.,its value in alternative uses,such as agriculture or range)and changes

89、in forest management(e.g.,the commercial opportunity costs of delayed harvests)also vary significantly.DAC costs for the two most common removal strategies are$90$220/tCO2(for solid sorbent methods)and$150$600/tCO2(for liquid solvent methods)(Hong 2022;McQueen et al.2021;Ozkan et al.2022;Sinha and R

90、ealff 2019).The cost difference between the two methods is driven by the higher thermal energy requirements of 9 Interpreting forest sequestration cost estimates requires distinguishing between the(relatively lower)costs of avoided deforestation(which is an emissions reduction strategy,not CDR)and t

91、he costs of forest-based CDR(e.g.,from afforestation).For cost analyses,see Mendelsohn et al.(2012);Nielsen et al.(2014);Busch and Engelmann(2017);Griscom et al.(2017);and Austin et al.(2020).Figure 3.Scenarios for Expanding Conventional and Novel CDRSource:Smith et al.(2023,74).Removal pathways nee

92、ded to meet 2100 Paris Agreement temperature goals are based on a portfolio of integrated assessment scenarios,with the share of conventional land-based and novel approaches depicted separately.Conventional CDR=ARI;Novel CDR=DACCS,BC,BECCS,BiCRS,EW,OAE.Resources for the Future10the latter approach,e

93、xcluding transport and storage costs.10 A DAC plant operated by Climeworks currently sells removals for$1,200/tCO2(Climeworks 2023).(Fuss et al.2018)estimate that BEC via combustion costs$80$200/tCO2,without specifying feedstock.Anticipating higher costs in biomass feedstocks as BEC is scaled up,the

94、 Intergovernmental Panel on Climate Change(IPCC)projects that the first 0.3 Gt of emissions captured from BEC will cost$50$100/tCO2,with additional CDR costing$100$200/tCO2(IPCC 2022b).Different feedstocks have different compositions and energy potentials.Bioenergy company Drax reported the joint co

95、st of generating 1 MWh of energy using wood pellet feedstock and capturing 1 ton of CO2 at$186(Gratton 2022).BEC with bioethanol fermentation reportedly costs$30/tCO2(Sanchez et al.2018).The cost of capture at pulp and paper plants with BEC integrated into the operation is estimated to be$31$73/tCO2

96、 in the United States(Sagues et al.2020).Again,these costs exclude transport and storage.The transport costs of CO2 for DACCS and BECCS depend on the mode of transportation.In the United States,liquid CO2 can go by truck at a cost of$0.175/tCO2/mile;train transport costs$0.071/tCO/mile(Sandalow et a

97、l.2021).Combined pipeline transport and storage costs per unit of CO2 have been estimated at$4$45/tCO2;unit costs decrease as the flow rate rises and increase less than proportionately with distance traveled(E.Smith et al.2021,Table 5).BC for CDR costs have received relatively little attention.A sur

98、vey of estimates suggests$30$120/tCO2(Fuss et al.2018).BiCRS costs are also not well documented.Costs of transport from biomass sources to storage sites in the United States are$20$40/tCO2(Stolaroff et al.2021).A recent study estimates the cost of“wood vault”storage,where the decomposition of woody

99、biomass is prevented via anaerobic containment options,to be$10$50/tCO2(Zeng and Hausmann 2022).As OEA and EW rely on similar inputs,their estimated costs are similar.A review of OEA costs reports$72$159/tCO2 sequestered(Renforth and Henderson 2017).EW costs of$60$200/tCO2 have been reported,dependi

100、ng on the type of rock used(Beerling et al.2020;Strefler et al.2018).A supply chain for rock or silicate powder,which exists in bulk from mining operations but is disparately located and not well catalogued,must be developed before the deployment of EW and OEA can be accelerated(Beerling et al.2020)

101、.10 Here,levelized cost refers to the combined operating and capital costs per tCO2 captured.Not all reported costs are levelized;review papers may report operating costs only.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations114.Criteria for CDR Policy AnalysisOur analys

102、is of policies to accelerate implementation of CDR emphasizes the following themes.CDR policies should be designed to minimize costs in achieving their goals.Cost-effectiveness is self-evidently desirableboth to reduce the overall social burden of a net-zero economy and to minimize political opposit

103、ion.Cost-effectiveness refers to the minimization of all costs associated with a particular CDR approach,not just direct technological expenditure.This includes monitoring and verification costs,community dis-amenities,and negative(or positive)spillovers to other sectors.Moreover,the goal is to mini

104、mize costs of the transition to net zeronot just in the short term but also over the coming decades,when innovation could reduce costs significantly.Policies focused only on accelerating CDR and reducing emissions may not address all the technologies social costs,especially community and sectoral sp

105、illovers.Complementary measures are needed to address these effects,which is why it is important to be attentive to their presence.In addition,ethical and equity concerns,such as those advanced by the environmental justice movement,are not captured in this perspective on costs.Such concerns(as discu

106、ssed below)must be addressed by any policies that seek the right balance between mitigation and removal.Policy should be technology neutral.CDR technologies are diverse,many have not yet been deployed in practice or at a significant scale,and some have yet to be discovered.Accordingly,we advocate po

107、licies that reward performance rather than favor one technology over another.Because technology performance will change as CDR costs fall and capacity expands,remaining neutral over time,with consideration of the different characteristics and relative maturities of the technology options,is critical

108、 for achieving CDR cost-effectiveness.Financing sufficient CDR is a core policy challenge.Policymakers must consider many things:creating incentives for innovation,accounting for and dealing with social and environmental co-effects,and ensuring that removal occurs as intended and promised.However,pe

109、rhaps the biggest questions for CDR policy are how it will be financed and by whom.The cost of transforming economies to meet net-zero and temperature goals will be large,and costs are unavoidable if those goals are to be met.A core policy goal is therefore to create incentives to finance sufficient

110、 CDR to meet climate change limitation goals while also trying to achieve the goals cost-effectively and to distribute the cost across society in a way that is equitable and politically acceptable.Resources for the Future12Public sector support for CDR research,development,and demonstration is neede

111、d,but as technologies mature,it should be scaled back in favor of policies relying on private sector incentives.Market failures associated with early-stage innovationin this case,the novel CDR stageargue for government support for RD&D.One such failure is the non-appropriability of innovations benef

112、its(arising from the public-good nature of new information),which depresses the incentive to undertake early-stage innovation.Moreover,between small pilots and commercializationthe stage called the“valley of death”in the life cycle of innovationobtaining sufficient private finance is difficult becau

113、se financial risks are high and hard to diversify.Given the amount of technological transformation needed and the time required to accomplish it,aggressive and well-funded RD&D programs to improve CDR technologies and lower their costs are urgently needed.However,in the longer run,as technologies ma

114、ture,the rationale for public sector support declines and a shift to private technology development incentives is more appropriate.Accordingly,we emphasize policies that feature early government RD&D investment but are designed with long-run private sector innovation and investment incentives in min

115、d.Significant policy transitions are required,and interactions among policies need to be considered.Existing policy frameworks can be improved to stimulate innovation and increase CDR investment in the near term.However,existing policy approaches,even if they are strengthened,will be inadequate to a

116、chieve net zero by midcentury.Policy incentives should evolve from encouraging incremental improvements in the status quo for CDR to a midcentury policy architecture capable of achieving net-zero or even net-negative emissions.In that architecture,policies for CDR and mitigation(emissions reduction)

117、need to evolve in tandem.11 For example,policies affecting the shift to renewable electricity generation(which mitigates emissions)have a significant bearing on the efficacy and relative cost of CDR technologies like DACCS.Another example is the relationship between voluntary CDR credit markets and

118、compliance-based credit markets if emissions reduction requirements are strengthened and expanded to new sources in the future.More fundamentally,the linkage between CDR and mitigation is important because adequate CDR cannot be cost-effectively or fairly delivered using only government policies to

119、directly stimulate CDR investment,like subsidies.Policies that create incentives for emitters to undertake or finance CDR are also needed.We develop below the argument that a cost-effective approach to net zero is to strengthen emissions reduction requirements and allow GHG emitters to offset their

120、emissions by financing CDR.The longer that economy-wide emissions mitigation policies are delayed,the greater the need and the difficulty in scaling up CDR.11 The idea that CDR policy incentives should be integrated into broader climate policy incentives is also emphasized by Zetterberg et al.(2021)

121、in their analysis of BECCS policy.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations13Negative CDR effects must be identified and addressed.As noted,CDR technologies can have negative effects and raise equity issues.For example,industrial-scale facilities to capture and t

122、ransport CO2 can themselves create local health and safety risks;those capture facilities and the electricity generation needed to operate them can increase local pollution;and siting industrial facilities,pipelines,and large afforestation areas may require extensive changes in land use.12 Such effe

123、cts will matter to the politics and fairness of CDR deployment,and they need to be addressed.Complementary policies that address the ancillary effects of CDR also can enhance its practical feasibility by reducing or redistributing costs.5.Current US CDR PoliciesThe policies considered in this sectio

124、n fall into several general classes.The largest class is policies that stimulate research,development,and demonstrationthat is,policies that encourage innovation in CDR technologies and early investment to test those technologies in the field.Another class is policies to directly stimulate increased

125、 use of CDR(in contrast to innovation policies that increase use via cost reductions).An example of this is California legislationpassed by the state senate but not yet enactedthat would require CDR by entities reporting 25,000 or more metric tons of GHG emissions per year.13Other policies address e

126、nabling conditionsmeasures affecting the transport and storage of captured CO2,as well as policies addressing monitoring,reporting,and verification(MRV).The last class comprises policies for ancillary impacts(e.g.,effects on local air quality or land and water use)and for social equity.We retain the

127、 label“novel”for all options that are not conventional land-based CDR(like ARI).Currently,no specific policies target advanced or novel nature-based solutions(BC,BiCRS,EW,and OAE),though some government R&D funds could be available soon for these options(see discussion of the CREST program,Section 6

128、.2).Current policies primarily relate to ARI,DACCS,and BECCS.12 Increasing land devoted to forest cover can have positive environmental effects(e.g.,enhancement of species habitat and water resources),but it will also reduce the availability of land for agriculture and human settlement,potentially l

129、eading to higher food and living costs and effects on rural communities.13 California Senate,SB-308 Carbon Dioxide Removal Market Development Act,May 18,2023(https:/ bill would require some emitters to purchase negative emissions credits beginning in 2028.Resources for the Future145.1.Policies for S

130、timulating Forest Carbon RemovalFederal programs administered by the US Department of Agriculture(USDA)provide subsidy payments(usually cost-shares)for afforestation,reforestation,and forest carbon management.14 Notable infusions of new cost-share money were included in the Infrastructure Investment

131、 and Jobs Act(IIJA)in 2021 and the Inflation Reduction Act(IRA)in 2022.15 The text of the IRA establishes a priority to reduce and sequester CO2 and includes payments to small and underserved forest owners for increasing carbon sequestration and storage,as well as to states,Native American communiti

132、es,and local governments for tree planting.16 These funds are available to agricultural landowners as well.The IRA also provides$1 billion in technical assistance funds to induce participation in these cost-share programs.Several other programs are designed to stimulate increased use of wood product

133、s,including long-lived forest products that contribute to carbon sequestration.The IIJA provides financial assistance to facilities that purchase and process byproducts from ecosystem restoration projects.The funds can be used to offset the costs of establishing,reopening,retrofitting,expanding,or i

134、mproving sawmills or other wood-processing facilities.These measures can reduce the cost of switching to long-lived wood products that sequester carbon.Grants and loans to encourage use of woody biomass in energy production are also available under the Rural Energy for America Program.Some emissions

135、 reduction regulations also create demand for increased forest carbon sequestration by allowing forest carbon credits to offset emissions.Californias cap-and-trade program allows covered sources to meet a small percentage of their emissions reduction obligations through forest carbon credits and oth

136、er types of emissions credits(California Air Resources Board 2021).1714 These include the Forest Land Enhancement Program,Conservation Reserve Program(CRP),Environmental Quality Incentives Program(EQIP),Healthy Forests Reserve Program,and Emergency Forest Restoration Program.15 Infrastructure Invest

137、ment and Jobs Act,Pub.L.No.117-58,H.R.3684;Inflation Reduction Act of 2022,Pub.L.No.117-19,H.R.5376.16 The federal tax code provides tax credits,deductions,treatment of capital gains,and amortization rules that reduce the forest sectors tax burden,thereby increasing forest carbon sequestration incid

138、entally by inducing increased forestland area(Sedjo and Sohngen 2015).17 The allowed percentages are 4 percent through 2025 and 6 percent over 20262030.In the Regional Greenhouse Gas Initiative(RGGI,implemented by Connecticut,Delaware,Maine,Maryland,Massachusetts,New Hampshire,New Jersey,New York,Pe

139、nnsylvania,Rhode Island,Vermont,and Virginia to cap and reduce their GHG emissions associated with electricity production),forest-based and other credits can be no more than 3.3 percent of total emissions reductions,and several states do not allow credits for offsetting plants emissions(RGGI 2023).P

140、olicy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations15Voluntary climate commitments also can create demand for forest carbon credits and thus stimulate forest CDR.Customer,shareholder,and employee concerns drive corporate commitments(such as to net-zero operations)even witho

141、ut regulatory requirements.These commitments have stimulated the market for CDR credits,with forest credits dominating the marketplace.Voluntary markets take various forms,from bilateral agreements between a specific company and forest landowner to marketplace-like exchanges where an intermediary co

142、nnects offset demanders and suppliers.Currently,hundreds of companies participate in voluntary offset markets,with offsets provided by dozens of forest providers supported by verifiers who validate the claimed increases in carbon storage.In 2021 the size of the global voluntary credit market was est

143、imated to be$700 million,but McKinsey has stated that corporate net-zero commitments could trigger a substantial increaseup to$50 billion by 2030(Blaufelder et al.2021).Finally,a variety of US programs are designed to stimulate innovation in wood product utilization and thus expand demand for forest

144、 products that could substitute for carbon-intensive products,such as cement and steel.The Forest Services Forest and Rangeland Research($323.6 million in FY 2022)supports technology development,including research by the Forest Products Laboratory.The agencys Wood Innovations Program provides grants

145、 to support R&D in wood products,including innovative building materials and biomass-to-energy production.The IRA includes$100 million in additional funds for the Wood Innovation Grant program for the construction of new facilities“that advance the purposes of the program and for the hauling of mate

146、rial removed to reduce hazardous fuels to locations where that material can be utilized”(Subtitle D Sec.23001(a)(5).The 2018 Farm Bill directs USDA to support R&D on the use of mass timber for“tall wood buildings”(the Timber Innovation Act authorized under HR 2,the Agriculture Improvement Act of 201

147、8).5.2.Policies for Stimulating Use of DAC and BEC The 45Q tax credit,initiated in 2008,was expanded by the IRA in 2022.18 DAC investments can receive a tax credit of$180/ton of CO2 removed when the CO2 is geologically stored,or$130/ton credit for facilities that remove at least 1,000tCO2 per year i

148、f the CO2 is channeled to enhanced oil recovery(EOR).CCUS also receives a 45Q tax credit,which benefits BECCS directly(since it uses CCS)and may benefit both DAC and BEC indirectly through the creation of pipelines and augmented storage opportunities.The credit for CCUS is$85/ton for geologic storag

149、e and$60/ton for utilization,including EOR.To receive the tax credit,capture from power generation must exceed 18,750 tons per year and achieve a capture rate of greater than 75 18 Because of high costs,DAC technology has played a limited role to date in compliance-based or voluntary markets for emi

150、ssions credits.DAC is an option for voluntary action by pioneer investors in the Frontier Climate fund,an advanced market commitment aiming to buy$1 billion of permanent(over 1,000 years)carbon removal by 2030(https:/ for the Future16percent.19 Both tax credits are based on gross CO2 removal by a fa

151、cility,without considering the emissions associated with the electricity required to operate the facility(Scope 2 emissions).205.3.RD&D Policies and Investment Initiatives for DAC and BECRD&D policies can lower the cost of DAC and BEC.“Supply-push”policies can help fund the initial steps of basic re

152、search and lab-scale technology development and have been used at all levels of technology readiness.Most recently,significant funds have been made available for demonstration projects.“Demand-pull”policies create demand for the fruits of RD&D by increasing the economic rewards for technological adv

153、ances and demonstrations,thus creating an economic incentive to scale up production and commercialization.Government innovation policies are justified by market failures specifically related to RD&D.One is the difficulty innovators face in gaining market returns commensurate with the full value to s

154、ociety of their technological advances.Patent protections have limited durations,for instance,and sometimes minor changes to patented ideas and technologies can skirt such protections.Carbon Negative Shot,one of the Department of Energys(DOE)Earthshot innovation efforts,was established in 2021 to pr

155、omote R&D for engineered CDR.Its goals are to achieve the$100 per metric ton cost for CDR by 2030,establish rigorous life-cycle analysis accounting,develop cost estimates for MRV with long-term storage,and increase CDR use to the gigaton removal scale.It is most applicable to DAC,but processed pelle

156、t or ethanol BEC configurations could also fall within the scope of the innovation target.DOEs 2023 Request for Information on stimulating place-based innovation policies could apply to DAC or BEC.For the early and middle stages of new technology development,supply-push measures also can be used to

157、co-finance pilot tests.Even with recent legislation giving the DOE billions of dollars for demonstration 19 CCUS also benefits from the 48C tax credit,which subsidizes the production of equipment for carbon capture,transportation,and storage alongside other clean energy products.Another IRA tax cred

158、it provision,the 45V program,subsidizes production of hydrogen(H2)with CC.The use of H2 made in the United States with natural gas through a process called steam methane reforming is widespread in refining,fertilizer production,and other types of chemical production.Adding precombustion carbon captu

159、re units to the steam methane reforming process can reduce its direct emissions footprint to the level necessary to receive the credit.The 45Q and 45V credits cannot be stacked.Analysis has found that 45Q is the better option for H2 producers in most cases(Krupnick and Bergman 2022).20 Projects rece

160、iving 45Q tax credits under the IRA also must comply with several labor-related requirements,including paying prevailing wage rates and conditions governing apprenticeships.Should an operation aiming for the tax credit fail to meet the IRA employment requirements,all credit values are divided by 5.P

161、olicy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations17projects,more is likely to be needed to invest in pilot facilities to improve technology design and operation and demonstrate commercial-scale feasibility.Another market failure is that private capital markets may either

162、overestimate the risk associated with newly developed technologies or demand a high rate of return on private investment because it is hard to reduce portfolio risk through diversification.A new technology then must pass through this“valley of death”to advance toward market-level application.Demand-

163、pull policies are especially useful for addressing the potential for commercially scaling up a technology once pilot tests demonstrate its promise.They also are useful for fostering the scaling up of technology use to obtain further cost reductions from economies of scale and learning-by-doing.Turni

164、ng to specific CDR innovation programs,new prizes have been created to serve as demand-pull mechanisms.The IIJA appropriates new funding for DAC Technology Prize Competitions.DOE has established three prize programs for DAC:the DAC Pre-Commercial Energy Program for Innovation Clusters Prize,DAC Pre-

165、Commercial Technology Prize,and DAC Commercial Prize(National Energy Technology Laboratory 2023).These prizes collectively will provide up to$115 million in funding,with prizes increasing over successive phases.Each prize program is phased and targets a different aspect of bringing this technology t

166、o market.Also worth noting are the nongovernmental innovation prizes,such as the XPRIZE awarding$100 million for viable CDR pathways scalable to gigaton removal needs(XPRIZE Team 2021).The Storing CO2 and Lowering Emissions(SCALE)Act,which passed as part of the 2021 IIJA,provides billions of dollars

167、 for CDR administered through DOE.Included in the IIJA is$3.5 billion in grant funding for regional DAC hubs;two have already been funded,in Texas and Louisiana.21 DAC facilities located close to one another that capture and either sequester or utilize at least 1 MMT CO2/year are eligible.The IIJA a

168、lso provides grants for states and municipalities to procure building materials made using captured CO2,like concrete and aggregates.22 The premise of the DAC hubs program is that locating DAC facilities close to storage sites or CO2 demanders and funding multiple hubs will stimulate positive spillo

169、vers through information sharing and learning-by-doing that can accelerate and improve individual companies RD&D efforts.The SCALE funding also includes money for the Carbon Capture Demonstration Projects Program,which finances projects targeting above 95 percent CO2 removal for geologic storage.Ano

170、ther$2.5 billion funds carbon storage,validation,and testing 21 SCALE Act.H.R.8995.116th Cong.(2020).22 Steel is hard to decarbonize,so carbon capture technology is considered essential to the production of low-carbon steel.US Steel is planning on incorporating CC technology to meet its midcentury n

171、et-zero goal,making production eligible for future procurement under the SCALE Act.Resources for the Future18through the National Energy Technology Laboratorys CarbonSAFE initiative,and$2.1 billion in loans is available for the Carbon Dioxide Transportation Infrastructure Finance and Innovation Prog

172、ram.23Finally,demand-pull policies include public sector procurement of goods and services.For example,the IRA and the Biden administrations Buy Clean executive order have emphasized that inputs to infrastructure projects,such as steel and cement,should have low embedded carbon.5.4.Policies and Regu

173、latory Frameworks for CO2 Transport and StorageLong-distance transmission of captured CO2 is an integral part of CCS and thus of BECCS,as well as for some DAC facilities.At present,the United States has about 5,400 miles of CO2 pipelines;other pipelines cannot be easily repurposed for CO2 transport.

174、The high-pressure,super-dense state in which the gas is transported has the potential to exacerbate pipeline weaknesses and lead to fracturing.In 2022 the Pipeline and Hazardous Materials Safety Administration released specific safety measures for pipelines transporting CO2.24 How these rules might

175、reduce the perceived risk of CO2 pipelines is uncertain.A major issue for establishing storage sites is environmental approval of underground CO2 injection.The US Environmental Protection Agency(EPA)governs the approval of so-called Class VI injection wells,used for carbon dioxide storage,through th

176、e Safe Drinking Water Act.Regulatory review of these wells seeks to prevent groundwater contamination through its interaction with injected CO2.To speed up the approval process,some states are seeking delegation from EPA to regulate Class VI wells,but 23 In addition,$310 million is targeted to the C

177、arbon Utilization Program,including for development of standards and certifications to support commercialization of carbon oxide products.Along with the standardization of carbon oxide products,this demand-pull program awards grants to local authorities to use or procure products derived from the ca

178、pture of carbon oxides.SCALE also expands the Carbon Capture Technology Program to include pipeline infrastructure,with an additional$100 million over the next five years to be administered by the National Energy Technology Laboratory.24 These rules include instituting emergency preparedness plans f

179、or existing pipelines,providing advisory bulletins on pipeline safety,and funding further research on pipeline safety through a competitive academic grant(PHMSA 2022).Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations19the application process for delegation is lengthy.25

180、Requirements for the geologic sequestration of CO2 are detailed in federal regulation.26Decisions on liability for the integrity of long-term storage vary across states.In states where above-and below-ground property rights differ(so-called split estate ownership),responsibility for verifying the in

181、tegrity of the storage site is complicated.27 Some states have set up mechanisms to eventually transfer monitoring responsibility for geologic storage sites to the state government after CO2 injection has been completed,funded by fees collected from the party doing the injection on a per ton basis.T

182、his reduces the long-term risk for carbon storage project developers,who then are responsible only for monitoring and fixing leaks for the duration of injection activity(and a certain interval thereafter,usually five to 20 years).This transfer of the long-term risk to the public increases the import

183、ance of prior validation of site integrity.5.5.Mechanisms for Addressing Equity in Benefits of CDR ExpansionBiden administration initiatives make establishment of community benefits agreements a requirement for grant funding.Plans for sharing benefits with communities must address equity issues asso

184、ciated with CDR projects.The Justice40 Initiative sets a goal that 40 percent of the overall benefits of an applicable government program should reach disadvantaged communities.The provisions for CCUS and novel CDR in the IIJA and IRA are included under Justice40,as are ongoing carbon capture and st

185、orage programs at the Office of Fossil Energy and Carbon Management.Community benefits plans(CBPs)encompass Justice40 considerations specifically for regional DAC hubs(Office of Clean Energy Demonstrations 2022).Funding opportunity announcements for IIJA funds require applicants to submit an initial

186、 CBP covering four main goals:community and labor engagement;investing in the American workforce;advancing diversity,equity,inclusion,and accessibility;and contributing to the Justice40 Initiative.CBPs are weighted at 20 percent of the overall technical merit in review of proposalsa significant perc

187、entage,illustrating the importance and value of these plans for project evaluation.25 The Bureau of Land Management(BLM)also has established a protocol for processing applications by parties seeking geologic sequestration on BLM-managed lands.Class II wells,which are used for oil and gas injection,g

188、enerally can be used for CO2 storage via EOR and do not require the siting and approval process for Class VI wells.However,California SB 1314,passed in late 2022,bans the injection of CO2 into Class II wells,thereby effectively banning EOR with CO2 in the state.26 75 FR 75079,Dec.1,2010.,Subpart RR,

189、Geologic Sequestration of Carbon Dioxide.27 Montana,Indiana,Louisiana,Wyoming,Nebraska,and North Dakota have all acted to establish subsurface pore space rights,often as a piece of comprehensive legislation to enable CCUS(Nixon Peabody 2022).Because BLM-managed lands are not split estate,the process

190、 of granting geologic storage rights on these lands is easier.Resources for the Future205.6.Environmental ConsiderationsBEC requires land,water,and nutrients to produce feedstocks,plus water for the carbon capture process.Effects on environmental quality and natural resources are governed by existin

191、g federal statutes regulating water quality,hazardous waste disposal,and endangered species protection,and by agreements for allocating water rights.28 DAC plants have smaller land footprints and use less water than BEC plants.The relationship between CCS(with BEC and otherwise)and air pollution can

192、 be complex.In the power sector,CCS will modify the profile of local pollutants(fine particulates,sulfur dioxide,and nitrogen oxides)when applied to a specific combustion process,whether that plant uses coal,natural gas,or a form of biomass.There also can be system-wide effects on local pollutants b

193、ecause of changes in the utilization of different types of generating plants.In addition,gaseous ammonia is a byproduct of the amine-based carbon capture technologies used for BEC.The amount of ammonia emissions from amine-based capture systems can be significant,though it can be limited by introduc

194、ing water into the system(Heo et al.2015).The aim is to capture the ammonia in liquid form as a valuable byproduct,but fugitive gaseous ammonia is a precursor for fine particulates(PM2.5).Gaseous ammonia also can be a byproduct of DAC if it uses amine-based technology.EPA has produced guidance on PM

195、2.5 precursors,including ammonia,to assist the development of state implementation plans.In addition,there are emissions limits for ammonia produced from fossil fuel combustion,which would include instances of BECCS cofiring(Mathias and Wayland 2019;Phillips 1995).Concerns over ancillary emissions f

196、rom amine-based systems may attenuate as the technology underlying other types of capture systems improves and is more frequently adopted.Irrespective of emissions,DAC or BEC facilities could be subject to various rules under the Clean Air Act.If located independently of other industrial facilities,

197、they would be considered new sources;if co-located,they would place those existing facilities into the“modified”category.Either way,they would trigger New Source Review rules,which require more stringent limits on pollutant emissions.That in turn typically requires expensive modifications of any fac

198、ilities(such as cement plants)using captured CO2 emissions.New Source Review rules thus could be a barrier to adoption of DAC or BEC.28 Concerns also have been raised over the potential competition between bioenergy crops and food crops for land and the implications for yield,supply,and prices(Haseg

199、awa et al.2020).However,modeling evidence on food prices from this land-use competition is mixed(compare Fajardy et al.2021 and Muratori et al.2016).Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations21That the local pollutants mentioned above are regulated under the Clean

200、 Air Act does not automatically preclude worsened air quality.Scope 2 emissions also are a major consideration for DAC and BEC(Fajardy and Mac Dowell 2018).Standards for power plants specify maximum allowed emissions per kWh produced.Air quality could worsen near power plants that increase their ele

201、ctricity generation to supply a DAC or BEC facility if those plants are significant sources of pollution.295.7.Monitoring,Reporting,and Verification ChallengesAn implementation challenge for all CDR policy approaches is measuring and verifying the effectiveness of projects and accounting for risks t

202、o and uncertainties in CDR performance.Performance assessment and MRV are related to issues of permanence,life-cycle emissions,additionality,and leakage.Permanence.In varying degrees,the permanence of CO2 storage is uncertain for any CDR project.The duration of forest carbon sequestration is inheren

203、tly impermanent because of trees natural or harvested life cycle,the life cycle of wood products(which varies by how wood is used),and the potential for fire,disease,and other risks.BC and BiCRS approaches,because they rely on storing biotic material and slowing its decomposition,are also inherently

204、 impermanent.Engineered CDR approaches that involve underground storage,including BEC and DAC,involve the risk of CO2 leakage back into the atmosphere.Although the magnitude of this risk remains uncertain,available evidence(e.g.,from CO2 injection into oil and gas wells)suggests that the risk is low

205、,with underground storage duration anticipated to be tens of thousands of years(Kampman et al.2016).Life-Cycle Emissions.Engineered CDR approaches,such as DAC and(to a somewhat lesser extent)CCS used with BEC,require significant amounts of power.BEC also has emissions from the cultivation,harvest,an

206、d transport of biomass inputs.ARI projects have emissions from energy use to increase the forest sink.Accordingly,determining the net performance of such projects requires assessment of energy inputrelated emissions.On the other hand,BEC projects reduce demand for fossil fuelderived 29 Areas in atta

207、inment with the National Ambient Air Quality Standards with and without DAC would not face increased regulatory and compliance pressure.Areas moved by DAC-related emissions from attainment to nonattainment status would be under pressure to reduce emissions to return to compliance.Areas in nonattainm

208、ent with and without DACs are already under compliance pressure,which could plausibly increase if the severity of their violations increases.Policy in place matters,too.For instance,cap-and-trade systems limit overall emissions.Resources for the Future22energy and thus lower(net)emissions.Similarly,

209、the use of forest products in building construction would reduce emissions associated with steel and concrete.30Additionality.To measure the performance of policies designed to increase CDR investment,quantification of the investment and resulting emissions removal must be compared with an alternati

210、ve,business-as-usual outcome without the policy.Such additionality requires demonstrating that the CDR activity and resulting emissions removal would not have occurred in the absence of the policy.Assessing additionality also is relevant to financial incentives for CDR investment provided in volunta

211、ry carbon markets.31 In practice,verifying additionality can be difficult because the baseline for comparison is a counterfactual situation.For example,suppose a forest owner claims to have produced CDR credits by delaying a harvest by 10 years.The problem is that the owner mayfor entirely commercia

212、l reasonshave chosen to delay harvest anyway,in which case reduced emissions from the delay should not be attributed to a credit payment or other CDR policy reward.The opposite situation applies to engineered CDR,including DAC and BEC:in the absence of CDR policies,there is no incentive to undertake

213、 these projects,but the current high cost of these approaches limits investment.Leakage.Leakage refers to the possibility that a CDR action taken in one location will trigger reduced storage in another location.ARI and BEC approaches are particularly subject to leakage because they are land-based ac

214、tivities.For example,if managers of some forests delay harvests as a CDR strategy,that can create incentives for managers of other forests to accelerate their harvests.If agricultural land is afforested or switched to bioenergy cropping,other lands may be converted to agriculture.Reduced storage fro

215、m leakage should be subtracted from project-specific sequestration in calculating the projects net storage effectiveness.Unfortunately,quantifying leakage is difficult because it is determined by complex and often global market forces.3230 To illustrate,we used a figure of 0.37kgCO2e/kWh for the cur

216、rent average carbon intensity of the US power grid,5 percent for transmission and distribution losses,and 1400kWh to 2100kWh electricity input per ton of CO2 removal for DAC(Lux et al.2023).These figures imply averages of 544816kgCO2e released from the electricity powering DAC per ton of CO2 removed

217、.They do not include energy requirements for preparing,transporting,or storing the captured CO2.31 Any sequestration project already required by law or regulation or contractual obligation,financially motivated in the absence of a sequestration incentives,or representing common practice does not pas

218、s the test of additionality.32 Empirical studies reveal very wide ranges(10 to 90 percent)in estimated leakage(Murray et al.2004).Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations235.8.Policy Responses to Implementation ChallengesCross-Cutting Issues.CDR by ARI generally

219、 has more significant permanence,additionality,and leakage issues.If the associated reductions in ARI performance are underestimated and not reflected in policy incentives,ARIs“CDR return on investment”will appear artificially high,and investment will be inappropriately skewed toward it.A greater ca

220、pacity to address these issues would build trust in the land sector,allowing it to sell credits at higher prices.For BECCS and DACCS,in contrast,the challenges arise in not underestimating life-cycle emissions.Policy adjustments can be made to counteract such distortions.For example,CDR credit progr

221、ams can actuarially account for permanence risks,if those risks can be reasonably well quantified given available information.Calculations of CDR credits can require adjustments based on estimated leakage losses and estimated life-cycle emissions that reduce net removal,either by reducing the amount

222、 of GHG removal in a CDR credit or by discounting its price.Currently,nature-based credits are typically“discounted”(or margins of error are built into the amount of CDR that can be claimed)because they have performance risks and thus are harder to verify.However,these adjustments are empirically ch

223、allenging.33We stressed in Section 4 the importance of policies that deploy CDR cost-effectively and that are technology neutral.Performance measurement and MRV issues relate to both.Cost-effectiveness assessments and the application of appropriate incentives will be undermined if uncertainty about

224、permanence,life-cycle emissions,additionality,and leakage for different CDR technologies are not(or cannot be)properly addressed.Similarly,policy will not be technology neutral if a failure to account for these differences skews incentives.Therefore,improved quantification of MRV uncertainties,perfo

225、rmance risks,and offsetting life-cycle effects(including leakage)is an essential cross-cutting challenge for CDR policy.The challenge should be treated as a priority for research and development.The importance of R&D investment to advance novel CDR technologies also applies to improving performance

226、assessment and MRV.Institutional innovations would also help address the MRV challenge:in particular,a greater governmental role in evaluating and reconciling the numerous overlapping or conflicting credit protocols being used in carbon credit markets.Ideally,the issue would be addressed collaborati

227、vely by agencies with technical expertise in CDR(e.g.,DOE,USDA)and environmental monitoring(e.g.,EPA,National Oceanic and Atmospheric Administration),as well as agencies with expertise and authority in monitoring other commodity markets(e.g.,Securities and Exchange Commission,Commodity Futures Tradi

228、ng Commission).33 The California emissions program allows purchase of forest offsets and requires purchase of a buffer pool of credits to account for fire and other performance risks.Analysis of the buffer pool has indicated that its size is insufficient to cover expected forest damages over the nex

229、t 100 years(Badgley et al.2022).Resources for the Future24Challenges with ARI.Incentives for ARI in the United States generate some CDR,but not nearly enough for ARI to contribute its share in meeting the midcentury net-zero goal.For context,the Biden administrations US Long Term Strategy anticipate

230、s a 30-year need for US CDR ranging from 1 to 1.8 Gt/year,or 1.2 to 3.2 times current levels,mainly from conventional land sources(US Department of State and Executive Office of the President 2021).However,the US forest sink has been declining for several decades and will continue to do so,absent ne

231、w policy incentives(Wear and Wibbenmeyer 2023).More aggressive policies are needed to promote afforestation,reforestation,and carbon-storing commercial forestry practices.As already noted,ARI approaches are currently inhibited by the challenge of quantifying and verifying CDR performance.Forest carb

232、on science,modeling,and data collection are fairly advanced,with tools available to account for vegetation growth and harvest rates;wildfire,disease,and drought risks;and other factors affecting carbon removal dynamics.Nevertheless,place-based MRV is informationally demanding,and thus it is institut

233、ionally difficult to assess the amount and timing of incremental CO2 removed.Forest CDR removal claims are often met with skepticism(Greenfield 2023;Elgin 2021).Even in a governmentally regulated(as opposed to voluntary)forest carbon credit program with relatively formal and stringent eligibility cr

234、iteria,concerns are regularly raised about the accuracy of claimed removals.For example,critiques of the claimed additionality and permanence of forest offset credits figure prominently in recent analyses of the California emissions market(IEMAC 2022).Similar quantification and verification challeng

235、es also apply to government subsidy programs.Much of the current policy support for increased forest sequestration on private lands under the IRA involves government cost-shares.Improved quantification and verification of CDR will be important to the success and public support of such programs.Chall

236、enges with DAC and BEC.As noted,incentives for market penetration by DAC and BEC focus on stimulating initial investments and are not large enough for scaling up these approaches to meet the midcentury net-zero goal.In addition,as with ARI,BEC approaches need to be subjected to life-cycle analysis t

237、o assess emissions from growing,transporting,and processing the biomass feedstock,as well as the emissions involved in operating a BEC facility.For example,large-scale farming operations apply nitrogen-based fertilizers to bioenergy crops,leading to N2O emissions,and they may release soil carbon thr

238、ough tillage practices.These emissions reduce the net GHG removal provided by BEC.Estimates of overall removal efficiency with combustion BEC range from 50 to 80 percent of the CO2 stored in the feedstock biomass(Chiquier et al.2022;Rosa et al.2021).In contrast,it is relatively easy to quantify the

239、CO2 captured by a DAC plant,though the Scope 2 emissions from the electricity used by the DAC plant also need to be assessed.The 45Q tax credits present specific issues for DAC and BEC because of its their reliance on CCS.The magnitudes of the 45Q tax credits are fixed in the IRA until their expirat

240、ion almost a decade hence;there is no provision for reducing them as publicly Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations25funded RD&D brings down the costs of the technologies over time.Moreover,the IRA tax credits are based on gross removals;they do not account f

241、or differences in the overall carbon intensity of various DAC and BEC projects or life-cycle emissions.Thus,it is timely to consider how to transition to other policies that can be more effective(and cost-effective)in scaling up the technologies.Programs to provide government financing for DAC and B

242、EC face administrative challenges:deciding whether projects are eligible,picking the projects most likely to meet program goals,and where cost-shares apply,raising the necessary private funds(usually 100 percent matching).A good object lesson on the tax credit program is that almost 50 percent of th

243、e credits for CCUS projects allowed by the Internal Revenue Service(which administers the program)under the pre-IRA rules had to be clawed back because of defects in MRV systems(George 2020).The current focus on tax breaks and RD&D grants for improving DAC and BEC and encouraging initial investments

244、 in their use leans toward supply-push measures to promote technology development up to pilot testing.This is useful for technologies at early stages of development.However,DAC and BEC have advanced past the earliest stages.In this situation,innovative demand-pull measures(discussed in Section 5.3)t

245、o support advanced development and commercialization of those technologies would be more useful.Safety and Legal Issues.Construction of pipeline infrastructure almost invariably involves lands held by individuals or local communities,including Native nations.These situations can be legally and polit

246、ically challenging.Similar land userelated challenges can arise in locating underground storage facilities and the carbon capture facilities themselves,not to mention electricity transmission lines to serve the facilities.Permitting and other legal requirements,as well as political opposition,will d

247、elay and increase the costs of infrastructure development.34Aside from siting,public health and safety are major concerns for CO2 pipelines.Because CO2 moves through pipelines at extremely low temperature and high pressure,a pipeline rupture or even a significant leak could have catastrophic consequ

248、encesblasts from depressurization of the escaping gas,freezing from exposure to its low temperature,displacement of breathable oxygen.A 2020 rupture of a CO2 pipeline in Yazoo County,Mississippi,lasted about four hours and affected approximately 200 people,with 45 hospitalized for oxygen deprivation

249、.Though the accident was not linked to any fatalities,it prompted the Pipeline and Hazardous Materials Safety Administration to release safety rules for CO2 pipelines,and it remains a commonly cited story in popular press amid expectations of CO2 pipeline expansion(Simon 2023).Thus,an important step

250、 for CDR policy is to bolster public confidence by validating(or strengthening,if necessary)the pipeline safety rules.34 To the extent that direct air capture facilities and energy supply facilities in BECCS projects can be located near underground reservoirs for CO2 storage,the burden of pipeline s

251、iting and construction is reduced.DOE has mapped available reservoir space in its Carbon Storage Atlas(National Energy Technology Laboratory 2015).Resources for the Future26Another important but less commonly noted policy gap concerns economic regulation of long-distance CO2 pipelines and owners or

252、operators of CO2 storage facilities to limit the exercise of market power while also addressing risks inherent in large investments in a new industry.CO2 pipelines are like natural gas pipelines(and unlike oil pipelines)in lacking other competitive means for transmitting the CO2 and having increasin

253、g returns to scale(so duplicating pipelines would be wasteful).Investments in BEC or DAC facilities connected to CO2 pipelines will be deterred if pipeline operators use their market power to raise tariffs above the cost of service.On the other hand,large investments in CO2 pipelines also will be de

254、terred without some assurance of sufficient throughput and an adequate price to recover investment costs.Concerns about market power and investment start-up risk are likely to arise with storage facilities,too.Although CO2 can be sequestered underground in many locations,cost advantages from proximi

255、ty to a facility(from lower CO2 transportation costs)can give its manager a degree of market power.Yet,large investments in storage capacity will be held back if the pricing of storage services or the volume of storage demanded is uncertain.A final concern is who owns the CO2 at different points alo

256、ng the chain of collection,transmission,and storage.Ownership must be established to clarify legal responsibilities if policies are breached,to enter into contracts for the services provided along the supply chain,and to implement incentive-based policies like emissions credits or allowances based o

257、n removal.Equity in Benefits Sharing.Making CDR projects(including their siting)more equitable through Justice40 and community benefits plan requirements raises several issues(Krupnick 2023).To generalize,environmental justice advocates do not want additional industrial-scale activities in disadvant

258、aged neighborhoods,both because existing industrial activities and distribution networks are located disproportionally in communities of color and because capture and distribution networks can pose hazards from air pollution(see below for ancillary impacts)and CO2 leaks from infrastructure.Krupnick(

259、2023)finds several issues with CBP requirements for grants.One is determining who represents the community in negotiating the plan and reporting and addressing concerns about an on-going projectparticularly if some groups adamantly oppose the development.CBPs should describe prior community engageme

260、nt efforts and the benefits flowing to disadvantaged communities further down the supply chain or farther away.A second issue is the culture of private sector actors entering into CBPs,since the required two-way engagement may be difficult for some companies.A third is the weak enforcement mechanism

261、s in community benefits agreements(part of the CBP requirements),which often keep CBPs from meeting their goals(Belongie and Silverman 2018).A fourth issue is the lack of attention paid to economic efficiencythat is,the goal of maximizing net benefits to disadvantaged communities(although CBP guidan

262、ce recognizes there will be both positive and negative effects).Even under the best of circumstances,it may be difficult to identify,let alone quantify and monetize,all the benefits and costs of CDR projects.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations27Ancillary En

263、vironmental Impacts and Environmental Justice.An important part of siting and operating DAC and BEC facilities will be addressing the environmental and natural resource concerns summarized above.Although DAC facilities could provide increased property and income tax revenue for local governments,and

264、 siting requirements could include providing local jobs and amenities,those benefits do not ameliorate environmental justice issues.Any land and water degradation likely will be a local responsibility unless the Endangered Species Act or Clean Water Act is triggered.As for air quality,we noted that

265、the Clean Air Act does not preclude worsened air quality due to local pollutants emitted from BEC biomass combustion or Scope 2 emissions from increased electricity generation(across the grid)to supply DAC and BEC facilities(Fajardy and Mac Dowell 2018).35Environmental justice advocates are understa

266、ndably concerned about adverse air pollution impacts of DACCS and BECCS(see Section 4.6).The two technologies are electricity intensive and their demand could increase emissions from fossil fuel power plants,at least until the electricity grid is decarbonized.The resulting pollution would not necess

267、arily be adjacent to the DACCS or BECCS facilities,however,because of the interconnected nature of the grid.The facilities themselves could also emit pollutants:BEC plants combust biomass-based fuels,and DACCS and BECCS processes that rely on amine-based systems emit ammonia.Even if air pollution do

268、es not worsen from DACCS or BECCS,policies for implementing CDR could cause unacceptably high levels of current air pollution harming disadvantaged downwind communities to persist.If existing combustion plants with high levels of local air pollution can extend their operational lives by using CDR cr

269、edits to offset GHG reduction obligations,longstanding harm to downwind communities will continue.If CDR credits are not available for offsets,the prospective use of CDR still could cause some GHG emissions reduction obligations to be softened or postponed(McLaren 2020).35 An additional regulatory i

270、ssue is that a DACCS or BECCS project installed on or adjacent to a facility covered by Clean Air Act rules for local pollutants raises the issue of whether that installation is a“major modification”of the facility that triggers New Source Review(NSR).NSR rules require more stringent limits on pollu

271、tant emissions,and that in turn typically requires expensive modifications of the facilities in question.NSR rules thus could be a barrier to adoption of DACC or BECCS.On the other hand,more stringent GHG mitigation rules may trigger the same rule.Resources for the Future286.Policy Recommendations f

272、or Initiating the CDR TransitionGiven the urgency of substantially increasing CDR deployment over the next two to three decades,policies to facilitate that expansion are needed.Scaling up CDR presents several interrelated challenges.One is the current high cost of CDR approaches,especially(but not e

273、xclusively)DAC and BEC.Policies are needed not just to stimulate innovation and reduce costs for these technologies but also to provide the enabling conditions for scaling them up.This section discusses on-ramp policies for expanding CDR deployment over the near term.Another challenge is devising st

274、rong,cost-effective,and properly sequenced policies that remove barriers and create economic incentives for increased adoption of CDR as the transition proceeds.We discuss this challenge in Section 7.6.1.Policies to Increase Conventional Land-Based CDRAs noted in Section 4.8,the countrys conventiona

275、l CDR sink(mostly from forests)is currently declining,and without policy intervention,it will continue to decline over the coming decades.To expand conventional land-based CDR,an aggressive ramp-up in ARI incentives is needed.In the absence of stronger compliance-based mechanisms for reducing GHG em

276、issions that also reward forest sequestration,and with voluntary credit markets currently providing only limited incentives,the government could increase land-based CDR through public investment in afforestation.For example,land management agencies could establish a national forest carbon reserve pr

277、ogram36 to provide direct incentives to convert land to forest from other uses(and reduce conversion away from forests).The government also could increase the IRAs$4.9 billion for supporting restoration and protection of national forests(Section 23001)and state and private forest improvement and con

278、servation(Sections 23002 and 23003).Another important government strategy is to incentivize demand for longer-lived forest products so that more carbon is stored in wood products and landowners have an incentive to expand planting and forested area.The design of the IRA does not ensure that the fund

279、ing will be directed toward the most effective land-based CDR investment:afforestation.Except for the examples mentioned above,IRA funds for addressing GHG emissions mostly target reducing emissions and increasing soil carbon sequestration on working farms and ranches,rather than encouraging land-us

280、e conversion from agriculture into forestry.Moreover,although the 36 Such a reserve is likely needed in any event to provide a larger backstop to compensate for forest carbon sequestration credits that fail to perform because of wildfire,disease,or other forest losses.Policy Incentives to Scale Carb

281、on Dioxide Removal:Analysis and Recommendations29IRA committed$20 billion to GHG reduction and removal,that is not enough to drive significant increases in the US land sink.To underscore the scale of what is needed,consider the following scenarios based on recent research on the US forest carbon sin

282、k(Wear and Wibbenmeyer 2023).Under a business-as-usual scenario,the sink between now and 2060 will remove 0.73 Gt per year,on average.This reflects a decline in the sink from a 2021 yearly removal of 0.84 Gt.If 3 million forested acres are added to the landscape each year for 30 years,the amount rem

283、oved increases to 0.95 Gt per year,on average.37 In other words,expanding US forest cover by 90 million acres(an area roughly equal to Montana)increases annual CDR relative to 2021 rises by only 0.11 Gt.Accelerating the rate of afforestation and increasing the acreage would improve the numbers.Never

284、theless,the example indicates the scale of land-use change needed to meaningfully expand the US land sink.Another land-based CDR strategy is carbon storage in agricultural lands.Such lands hold only a fraction of the carbon stored in forests,however,and the carbon is hard to measure and maintain.Imp

285、roved forest management strategiesaltering forest composition,lengthening harvest rotationscan also be expanded and applied across existing managed forestland,but they inherently yield less net carbon removal per acre than afforestation.Afforestation provides net CDR that is easier to quantify and v

286、erify than improved forest management.For one thing,the baseline from which CDR gains are measured is clearer:the land use prior to afforestation.The performance of afforestation projects can be measured by satellite relatively cheaply by observation of the plantings and forest features.Net CDR gain

287、s for improved forest management,in contrast,require more complex and hard-to-measure baselines.How would the forest have been managed without policy intervention?This involves assessment of commercial and economic information.Claimed CDR from improved management practices(the actions yielding addit

288、ional net CDR)are also harder to monitor.It is relatively easy to confirm when unforested land is converted to forest,but harder to verify that management and harvest practices have changed as promised.3837 This would cost$5 billion to$7 billion per year(roughly$17 to$24 per ton of CDR).38 The CEO o

289、f Lyme Timber,a firm that has extensively participated in both compliance and voluntary offset markets,recently noted that an“honest assessment”of many forest carbon projects,“including some that Lyme has developed,is that while legal and fully compliant with the protocols,they may not have required

290、 the forestland manager to reduce near-term harvest levels relative to historical harvests or change management practices to increase carbon sequestration”(Hourdequin 2022).Resources for the Future306.2.Policies for Catalyzing Increased Investment in DAC and BEC TechnologiesAs noted previously,the f

291、ocus of policies for engineered CDR has been mainly on R&D and near-term initial investments.Creating the on-ramp for scaling up those approaches requires a shift to technological development through commercial-scale investments and,to support those investments,increased financing for CDR.Improving

292、a technologys energy efficiency through the acceleration of alternative capture methods is also crucial for wide-scale deployment.Table 1,from Bergman et al.(2023),shows how the choice of effective policy type for RD&D can be linked to the technology readiness level(TRL)of engineered CDR technology.

293、39 The TRL is an indicator from 1 to 9,with the lowest numbers(1 to 3)associated with novel or otherwise nascent technologies for which basic and applied R&D is still crucial;the higher numbers(7 to 9)correspond more advanced stages of technology development.At present,19 DAC plants are operational(

294、Hong 2022;McQueen et al.2021;Ozkan et al.2022),most at a pilot scale.The most common chemical approaches for DAC report TRLs between 5 and 8,with less-advanced approaches at TRL 5 or below(Smith et al.2023;Hong 2022;Mission Innovation 2022).TRLs for BEC are reported to lie between 5 and 7(Smith et a

295、l.2023;Hong 2022).40In general terms,early-stage technologies needing basic and applied R&D are good candidates for supply-push policies,such as R&D grants and innovation prizes.Use of these policies is illustrated by the Advanced Research Projects Agency-Energy(ARPA-E),created in 2009.ARPA-E suppor

296、ts high-risk,high-reward projects,based on the idea that returns to innovation are considerably skew-distributed(Scherer and Harhoff 2000).Projects often are selected for funding even when they fall below the peer-review cut-off line.The outstanding success of certain projects can help support other

297、 projects that would not receive funding.Unfortunately,relatively few ARPA-E projects have succeeded(Azoulay et al.2019).39 TRLs represent a systematic approach to assess technological maturity,from basic research to system testing and utilization,that can be applied across a broad range of technolo

298、gies.TRL levels range from 1 to 9,with higher numbers indicating greater maturity(Frank 2015).40 TRLs for afforestation and reforestation are 89,indicating the maturity of this longstanding approach to carbon removal.For novel CDR solutions,the TRLs are as follows:ocean fertilization,12;ocean alkali

299、nization,12;enhanced rock weathering,34;and burial of biochar in soil,67(Smith et al.2023).Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations31DAC and BEC technologies with TRLs between 5 and 8 are targets for increased scale-up and commercialization,but these stages stil

300、l have technology cost risks that require larger-scale investments to overcome.Demand-pull policies should play a larger role in advancing these technologies because they can promote greater scaling-up and because they shift the focus from support of inputs(investments)to outputs(removed CO2).Beyond

301、 technology prizes and other examples of demand-pull policies described in Section 5.3,advance market commitments(AMCs)can be used by the government(and subsequently,private buyers)to purchase specified quantities of removal using an emerging technology over a specified period at an agreed price.Pro

302、curement can be undertaken using contracts for differences(defined above)or a reverse auction Table 1.Technology Readiness Levels and Applicable Policies for Technology AdvancementPolicyPolicy type TRLsTraditional grants and cooperative agreements Supply-push19Public loans and loan guarantees Supply

303、-push 9Targeted research funding(ARPA model)Supply-push 16Inducement prizesDemand-pull with push elements 36Public procurement Demand-pull89Advance market commitments Demand-pull 79Milestone payments Supply-push with pull elements29Technology standards Demand-pull69Carbon contracts for difference*De

304、mand-pull79Source:Adapted from Bergman et al.(2023).Note:A“contract for differences”is an offer to ensure that specified quantities of output are purchased at a guaranteed price,with the provider of the contract agreeing to make up the difference between the prevailing market price and the guarantee

305、d price.Contracts for differences can ensure a revenue stream for the provider of carbon removal when a removal technology is first being adopted but demand remains limited.This includes the possibility that removal quantities are sold to private buyers,with the government topping up the payment to

306、ensure that the provider receives a minimum price for specified quantities of removal over a specified period.The contract for difference is like a put option,which gives the contract holder the assured opportunity to sell a specified number of stock shares at a predetermined strike price.Resources

307、for the Future32mechanism.41 AMCs are better than grants for later-stage TRL technologies because they give developers incentive and time to build at scale to meet the commitments.They are especially relevant for the highest TRLs because removals can occur in the near future rather than waiting for

308、a technology to further mature.Both AMCs and public procurement have advantages over a tax credit for removal that is not directed at stimulating development of more efficient,lower-cost options.A rapid policy shift in this direction is essential for ramping up these technologies.The CREST Act,intro

309、duced in June 2022 but not yet passed,42 could create a pilot purchasing program,implemented by the DOE secretary,with$110 million over three years to fund both DAC and BEC.43 This approach could be particularly useful for DAC technologies that can achieve technological maturity at somewhat smaller

310、scale,since a small program still can help lower unit costs as investments scale up,as well as reduce technological uncertainty.Under CREST,the pilot purchasing funding would be allocated using a reverse auction.The bill requires that eligible projects must have at least a 99 percent likelihood of r

311、etaining stored emissions for 100 years or longer.Under the bill,30 percent of funds each year would be allocated to projects aiming for storage between 100 and 1,000 years,and 70 percent of funds to projects targeting 1,000 years or more.The CREST Act also contains stipulations for how additionalit

312、y,timing,MRV planning,and permanence should be addressed in bids.Although demand-pull measures are useful for helping promising technologies cross the valley of death into commercial application,some technology advances do not survive.Public sector cofinancing can make it more challenging to determi

313、ne which technologies are failing and when to cut off support.This is especially the case for policies providing direct or indirect subsidies for capital investment,since such policies benefit stronger and weaker companies,and the government cannot measure the strength of an innovator in the precomm

314、ercial stages of the RD&D cycle.Along with strong policies to encourage innovation and a takeoff of investment in engineered CDR,there is a potential opportunity to improve on the current IRA 45Q tax breaks for DAC(discussed in Section 5).One possibility is to transition from tax breaks toward publi

315、cly financed AMCs.However,the 45Q tax breaks have relatively low transaction costs,and the risk of unproductive use of the tax credit is low because the recipients must prove they made the required reductions in emissions.AMCs have higher transaction costs,at least initially,and auditing their perfo

316、rmance is more complicated than audits associated with the tax code.41 In a reverse auction,participating entities offering CO2 removal would submit bids with information on their desired price per ton of removal,estimated removal capacity,assessment of removal permanence,and any pertinent details a

317、ssociated with transport and storage.DOE would fund proposed removal projects starting with the lowest bid price and moving through projects with higher bid prices until the appropriation for the year is fully committed.42 CREST Act of 2022,S.4420,117th Cong https:/www.congress.gov/117/bills/s4420/B

318、ILLS-117s4420is.pdf43 It also would support some novel nature-based approaches.Policy Incentives to Scale Carbon Dioxide Removal:Analysis and Recommendations33Policymakers should understand that an aggressive program of ramping up BEC and DAC will have significant costs.In the IIJA,more than$3.5 bil

319、lion was allocated for DAC hubs and$4.6 billion was allocated for development of pipeline infrastructure and geologic storage for DACCS and BECCS.These figures do not include the tax expenditures in the IRA.Although the total cost of ramping up is uncertain(and unknowable at this juncture),the figur

320、es mentioned above are only an initial down payment on the demand-pull and supply-push outlays likely needed for bringing these CDR technologies to commercialization.6.3.Policies Governing CO2 Transportation and StorageTo enable expanded investment in DACCS and BECCS,new legislation should establish

321、 federal jurisdiction over all aspects of CO2 pipelines.44 At the top of the list for federal action is establishing uniform,strong health and safety standards.45 Federal policy also is needed to create fair,effective,and expeditious permitting for new CO2 pipelines so that the country can scale up

322、carbon capture with underground storage.The standards need to address social justice concerns and provide fair compensation for pipeline rights-of-way.Siting challenges may arise for locating industrial-scale DAC facilities near natural CO2 reservoirs.Compensated land takings for co-locating DAC fac

323、ilities could reduce the need for pipeline construction.Fair and effective federal standards to compensate for DAC sites are needed here as well.These issues are part of a larger debate on siting and permitting energy-related facilities.The debate is illustrated by the Lower Energy Costs Act,46 whic

324、h passed in the House of Representatives in 2023,and a press release by the White House in the same year(Biden-Harris Administration 2023).In addition,a regulatory mechanism is needed to curb market power in setting tariffs or limiting access to CO2 pipelines.Effective control over market power in s

325、torage will require both limits on prices and a public utility“obligation to serve”that prevents storage facilities from exercising price discrimination in access.The rationale for this regulatory structure is the same as for natural gas pipeline regulation:large economies of scale and the inefficie

326、ncy of constructing multiple competitive lines.An unanswered question here is what degree of vertical integration among collection,transport,and storage in CDR may be desirable.Although control over market power by CO2 pipelines will reduce the operating revenue risks for DAC facilities and reservoi

327、rs,developers of new pipelines and storage facilities 44 This can build on the process for designating federal energy corridors in the 2005 Energy Policy Act.45 As noted in Section 3,PHMSA has specified safety measures for pipelines transporting CO2(PHMSA 2022).46 Lower Energy Costs Act,H.R.1,118th

328、Congress https:/www.congress.gov/bill/118th-con-gress/house-bill/1/all-info.Resources for the Future34may need to lower their revenue risks from underutilization.Natural gas pipelines are treated as public utilities,with prices set to recover costs subject to regulatory review.How to do this for CO2

329、 pipelines without dulling operators incentives to compete for business remains an open question.As noted in Section 5.8,CDR policy needs to clarify who owns the CO2 captured from the atmosphere.An approach consistent with practices in the natural gas sector would vest ownership of collected CO2 wit

330、h the facility that carried out and bore the cost of collection.Long-haul CO2 pipelines would function as common carriers,providing transmission service without taking title to pipeline contents.When the CO2 is stored,ownership could transfer from the collection facility to the storage facility(as i

331、s done today when natural gas is purchased for storage).The storage facility would be liable for costs incurred from leaks arising from negligent operationfor any damages caused and compensation for release of the previously sequestered CO2.47 Because of ongoing operational costs plus amortization o

332、f investment costs,a long-term storage facility would require a long-term service agreement with the operators of collection facilities to maintain safe and secure storage.If the storage facility owns the stored CO2,it could also provide the“merchant function”for selling CO2 removal services to othe

333、r entities that have emissions to offset.If CDR regulations are written to require an ownership connection between emissions credits or allowances and the physical quantities of CO2 removed,then the collection entities may need to retain ownership of the CO2 and have long-term“rental”agreements to store it.6.4.Benefits SharingGiven concerns about locating engineered CDR in communities that already