The sweeping climate and energy package negotiated by Senate Majority Leader Chuck Schumer and Energy and Natural Resources Chair Joe Manchin would funnel billions of dollars to decarbonize heavy industries like steel and cement, a development that is being called both a potential watershed moment for emissions and a barrier to addressing climate change.
The “Inflation Reduction Act” includes a $5.8 billion program of grants, rebates and loans for manufacturers that install equipment capable of slashing greenhouse gas emissions from some of the largest industrial emitters in the energy sector. Along with steel and cement makers, eligible industries would include producers of glass, pulp, ceramics and chemicals, among others.
Under the plan, the initiative — the Advanced Industrial Facilities Deployment Program — would be housed in the Department of Energy’s Office of Clean Energy Demonstrations, which was created by last year’s bipartisan infrastructure law.
The fate of the bill’s passage is uncertain. As of yesterday afternoon, Sen. Kyrsten Sinema of Arizona, a key Democratic swing vote, had not indicated whether she would support the package due to concerns about provisions that would raise taxes on corporations and the wealthy (Climatewire, Aug. 2).
But if the deal between Manchin (D-W.Va.) and Schumer (D-N.Y.) deal were to be enacted, advocates of the Advanced Industrial Facilities program say it would be a transformative step in cutting emissions from heavy industry, a sector that has often gotten scant attention from climate policymakers. Almost a quarter of U.S. greenhouse gas emissions come from the industrial sector, according to EPA, and many companies currently have few cost-effective alternatives to using fossil fuels for production.
“The industrial sector is a big chunk of the [emissions] story,” said Ed Rightor, industrial program director at the American Council for an Energy Efficient Economy (ACEEE). “This program is the first step out of the door towards developing” lower-carbon methods for industries’ production, he added.
Under the program, DOE could help manufacturers with half of the cost of installing new “advanced industrial” equipment, a definition outlined in the 2007 Energy Independence and Security Act.
In awarding financial assistance under the program, DOE would give priority to companies that provide an estimate of a project’s greenhouse gas emissions reductions and lay out a project’s possible benefits for nearby residents, while stating whether the company was part of a partnership with buyers of a plant’s output.
To cut emissions, companies could choose from a wide range of technologies and strategies, ranging from electric technologies, carbon capture and hydrogen to newly developed net-zero fuels and high-efficiency designs for products, according to the text of the 2007 law.
Some of those technologies could also get extra support from tax credits in the package, which could further subsidize decarbonization over the next decade, said Jason Walsh, executive director of the BlueGreen Alliance, which supports the bill’s provisions.
Companies might also find an important buyer for their “clean” products: the federal government itself, he said. In an executive action late last year, President Joe Biden created a “Buy Clean” task force to lay out how the federal government will steer its purchases toward low-carbon materials – something that supporters say will stoke the market for cleaner steel, cement and other commodities bought with infrastructure funds (Energywire, Feb. 15).
“There’s going to be greater and greater demand for goods that are produced in lower-and-lower-carbon ways. And this [program] will position those sectors very well for that shift in demand,” said Walsh.
Some industries, like aluminum, might be able to lean on clean electricity for decarbonization, he said. Others, like cement, might continue to burn fuel for their processes. “For some, we just don’t have a viable pathway via electrification at this point,” Walsh said.
The Portland Cement Association, a national trade association, welcomed the $5.8 billion that would be dealt out through the program, while emphasizing carbon capture’s usefulness for decarbonizing cement production.
“This funding would provide additional resources for the industry to advance CCUS and other decarbonization projects across the entire industry,” said the group’s senior vice president of government affairs, Sean O’Neill, in a statement.
He also welcomed the additional funding for carbon capture included in other provisions of the Inflation Reduction Act.
The Steel Manufacturers Association, the largest trade group for steel in the United States, did not respond to request for comment by publication time.
DOE and CCS
A new advanced-industry program could also open up questions similar to those facing other DOE programs hosted in the Office of Clean Energy Demonstrations. That office is already endowed with over $20 billion that will flow out to large-scale demonstrations of lower-carbon hydrogen, carbon capture and direct air capture.
Some environmentalists have criticized the funding, saying that emissions — including CO2 as well as criteria pollutants — could actually increase in some scenarios with use of those emerging technologies (Energywire, Feb. 16).
If hydrogen were being burned in power plants instead of natural gas, for instance, it could cause nitrogen oxide levels to spike, although it would not involve carbon dioxide emissions, said Abbe Ramanan, project director at Clean Energy Group, an environmental nonprofit.
That might be true equally for industrial manufacturers, she said. “You get all the same concerns there as you would if you’re using hydrogen for the power sector.”
Ramanan noted that the legislation leaves many of the new program’s details to be decided later by the Energy Department.
“The vagueness of it really concerns me. Because with industrial heat processes, there’s things with decarbonization that are pretty good and unlikely to do a ton of harm, and there are things you really need to watch out for,” she said. “The fact that there aren’t any of those guardrails in the text is definitely a little concerning.”
Ramanan said electrification and energy efficiency should get special priority under the program, if it is enacted. But other methods of decarbonization could raise issues of their own.
Jim Walsh, policy director at the group Food & Water Watch, said the proposed program will result in “subsidies” to industrial and chemical facilities to support the build-out of CO2 capture equipment, a technology he said has “questionable results.”
Critics of carbon capture, which traps CO2 emissions from sources like ethanol or power plants before they can enter the atmosphere, often note it doesn’t address emissions of methane, another greenhouse gas. They say it also can be very expensive to implement. Proponents of the technology say it will be critical to meeting global climate targets, particularly for industrial sectors that are difficult to decarbonize.
Representatives from the think tank Third Way said the need to address industrial emissions will only grow as economies worldwide continue to develop.
“It’s a problem that if we don’t address it now, it’s going to get much, much bigger,” said Ryan Fitzpatrick, director of Third Way’s climate and energy program.
“It also presents an opportunity: If the U.S. can help in developing newer technologies, bringing down the cost by demonstrating them, not only can we provide better, more effective solutions to countries that are really going to need them — as we are — we can also help our industries and our workers build and grow economically in the process,” Fitzpatrick said.