Companies capture a lot of CO2. Most of it is going into new oil.

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Every year, companies around the United States capture around 18 million metric tons of carbon dioxide from natural gas processing plants, oil refineries and power plants. As long as that CO2 — equivalent to around 4 million cars on the road for a year — is buried somewhere deep underground, it can’t contribute to global warming.

That’s the theory, anyway. But today, the lion’s share of the CO2 captured from industrial processes doesn’t go back into the ground. Instead, 60 percent of it is used to extract more oil, in a controversial process known as “enhanced oil recovery.”

“I think it’s a huge problem,” said Lorne Stockman, research co-director of the advocacy group Oil Change International. “The oil and gas industry has done a very good job of co-opting our climate and clean energy policy.”

For over a decade, the U.S. government has been quietly funding the capture of CO2 that is ultimately used to drill more oil. Some experts and researchers argue that the climate impact is net positive: The oil will be drilled anyway, and the process can help companies learn how to capture CO2 more efficiently. But others say that the government shouldn’t be helping companies sustain more fossil fuel extraction.

The debate gets at one of the key questions for a country trying to shift away from fossil fuels — when is it still acceptable to financially support the production of oil and gas?

Climate and energy experts have said for years that the world will need some amount of carbon capture to zero out carbon emissions. The International Energy Agency estimates that the world will need to be able to capture 1.2 billion tons of CO2 per year by 2050; today, the world’s total carbon capture amounts to just 4 percent of that goal.

But for a long time, there wasn’t a way for companies to make much money off burying carbon dioxide underground. The United States did offer a tax credit for CO2 stored permanently, but it was only around $20 per metric ton. Experts say it didn’t give companies enough of an incentive to take on the costs of burying CO2 deep underground in places like saline aquifers — areas of porous rock filled with salty water.

So, many oil and gas companies used the CO2 that they captured for a process that already existed: enhanced oil recovery. Oil is removed from a well in three stages: First, natural pressure can push oil toward the surface. Then, drillers inject a fluid, usually water, to produce more. In the final stage, CO2 can be injected into the well, where it mixes with the oil, expands and propels the oil toward the surface. This final stage, enhanced oil recovery, accounts for around 4 percent of U.S. oil production. It’s popular in the Permian Basin — a major oil field that covers West Texas and Southeast New Mexico.

Most of the CO2 that companies now use for enhanced oil recovery comes from geologic sources, where they dig it up before injecting it into their wells. Some experts point to this to argue that enhanced oil recovery would happen anyway, regardless of whether captured CO2 is available.

Benjamin Longstreth, the global director of carbon capture for the Clean Air Task Force, says that as long as captured CO2 isn’t creating more oil production, then using captured CO2 doesn’t change much for the climate. “In both cases, the same quantity of [enhanced oil recovery] is happening,” he said. “And the same quantity of CO2 is going into the Earth.”

But other environmental groups argue that the government shouldn’t be funding this type of oil recovery. As part of President Biden’s signature climate bill, Congress updated a tax credit known as 45Q, which pays companies to capture CO2. The tax credit now offers companies up to $60 per ton of CO2 captured and used for enhanced oil recovery. (Companies get more, up to $85 per ton, if they inject the CO2 underground in something like a saline aquifer.)

“Congress should not have created — and later increased the value of — a new oil and gas industry subsidy under the guise of climate emissions mitigation,” said Josh Axelrod, senior advocate for the nature program at the Natural Resources Defense Council.

The government offers more cash for companies that pull CO2 directly from the air — rather than a power plant or natural gas processing — and put it into enhanced oil recovery. Companies pulling CO2 from the air get up to $130 if that CO2 goes into more oil, or up to $180 if it goes into permanent storage. (It is harder and more expensive to pull CO2 from the air than from a direct source, since it is less concentrated in the atmosphere.)

Erin Burns, the executive director of Carbon180, an advocacy group that supports technologies that can remove carbon from the atmosphere, says the government shouldn’t be funneling taxpayer money to foster oil production.

“We need to remove a lot of CO2 from the atmosphere,” she said. “And using that removal to produce additional fossil fuels is not aligned to meeting our climate goals.”

Burns and others think it’s strange that the U.S. government — which has promised to reach net-zero carbon emissions by 2050 — is boosting oil production. The current largest carbon-capture facility in the nation is owned by ExxonMobil and has the capacity to capture 7 million tons of CO2 per year. Most of its carbon dioxide is sold for enhanced oil recovery.

There is evidence that this practice might be on the way out — in part because firms can now make more money by burying it.

The Clean Air Task Force has been tracking new announcements of carbon-capture projects, and Longstreth points out that many of those upcoming projects aren’t planning to use the CO2 for enhanced oil recovery. Because companies now get $25 more per ton to bury the CO2 permanently, Longstreth says, there isn’t as much incentive to use it to drill oil. Remaining companies that use enhanced oil recovery, he says, may be in locations where there isn’t a better storage option.

“There are places where my understanding is there’s not a ready pipeline to saline storage yet,” he said.

Activists often decry carbon capture and storage as a “false solution” — simply a way for oil and gas companies to continue to operate and make money. But the International Energy Agency and others predict that at least some of this technology will be necessary to reach climate goals. Just, perhaps, not to drill more oil.

“We should use our public money and tax credits for actually stimulating a real clean energy transition,” Stockman said.

Climate change and global warming

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