CARBON CAPTURE AT CROSSROADS, AS WASHINGTON CONSIDERS FUTURE OF TAX CREDIT

WASHINGTON - Scientists have tried for years to figure out an economic way to separate carbon dioxide from fossil fuel emissions before releasing them into the atmosphere, a goal viewed by many as critical to the future of the coal, oil and natural gas industries as the international fight against climate change intensifies.

But that mission has reached a crossroads as Congress decides whether to increase funding for the federal tax credit that supports the development of the technology,known as carbon capture. And leading the charge for more government support is an unlikely coalition of climate change hawks and oil and coal state lawmakers in Congress.

"They might support it for different reasons," said Brad Crabtree, vice president at the not-for-profit Great Plains Institute, which advocates for reducing carbon emissions from the energy sector. "Our emphasis is the urgency of getting this done."

With carbon capture still seeking a breakthrough to make it commercially viable, Congress must decide whether to continue pumping money into the technology when there is little agreement on the need and method for tackling climate change. Under a 2008 law, companies that capture carbon can claim a tax credit between $10 and $20 a ton, but that benefit ends once the industry reaches a total of 75 million tons -- a threshold that is fast approaching.

A bill awaiting a vote in the Senate, sponsored by Sen. Orrin Hatch, R-Utah, the powerful chairman of the Senate Finance Committee, would extend a variety of federal tax credits, including those for carbon capture. The legislation would lift the 75-million-ton cap on carbon captured and more than double the credit to between $35 and $50 per ton of carbon dioxide.

In the House, meanwhile, a coalition of more than 40 Democrats and Republicans, led by Rep. Mike Conaway, R-Llano, are urging party leaders to move similar legislation in the House. On Wednesday, discussions were underway whether to include carbon capture and other tax credits in a bipartisan budget deal being hashed out by party leaders.

"While the current credit has spurred development and advancement in [carbon capture], there are inherent limitations hindering its full potential," Conaway and others wrote in a letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi last week.

Carbon capture presents a risk to both parties, with opposition lining up both out of concern for the growing federal deficit and fear it would do little to slow climate change. But the technology also has found support from liberal Democrats, such as Sen. Tim Kaine of Virginia and Sen. Corey Booker of New Jersey, and Republicans from energy-producing states, such as Sen. John Barasso of Wyoming, chair of the Senate Environment and Public Works Committee, and Rep. Joe Barton, of Texas, who, when asked about his beliefs on climate change in 2016, replied there was carbon dioxide in his soda.

What brings these usually warring factions together are some undeniable and interconnected realities.

The United Nations' Intergovernmental Panel on Climate Change says there is no way for the world to avoid a catastrophic rise in temperature without developing a global carbon capture industry - essentially conceding that countries cannot switch to renewable and nuclear energy fast enough to avoid the worst climate change scenarios.

At the same time, coal and other fossil fuel industries are coming around to the reality that anti-carbon regulation is not going away. Earlier this year, the credit ratings agency Moody's reported that without carbon capture, the coal mining industry "will continue a steady, secular decline."

Carbon capture technology allows fossil fuels to be burned without putting carbon dioxide into the atmosphere. Generally only applied to large, stationary facilities such as power plants, carbon capture used a chemical process to separate carbon dioxide out during combustion. The carbon dioxide is then put into a pipeline, either for storage underground or use in an industrial process, including extracting oil from the ground

Carbon capture stands to substantially benefit the oil industry - a big draw for Texas congressmen like Rep. Ted Poe, R-Kingwood, and Rep. Blake Farenthold, R-Corpus Christi. Production companies such as Occidental Petroleum have pumped carbon dioxide into oil wells for decades to boost production in older fields, a process known as enhanced recovery. It's big business, with Occidental using carbon dioxide -- mostly drawn from natural sources underground -- for approximately one third of its U.S. production, a company spokesman said.

"This legislation is vital to boosting enhanced oil recovery's ability to capture CO2 available from power plants and industrial sources," Occidental CEO Vicki Hollub said in a statement. "With the current tax credit system reaching its limit, it is imperative that Congress comes together to pass this bipartisan legislation."

But this unusual coalition has plenty of work left to do before the legislation passes.

For all its promise, carbon capture has suffered high-profile failures. Last summer, for example, the power company Southern said it was suspending work on the carbon capture system at its coal- and gas-fired power plant in Kemper, Miss., after going $4 billion over budget.

And while some advocates believe expanding the tax credit would move the technology close to commercialization and widespread adoption, not everyone is so sure. Neil Kern, a technology development manager with the power giant Duke Energy, said carbon capture faces an uncertain future without pipelines to move the captured carbon dioxide and national policies, such as a carbon tax or cap and trade system, to provide incentives for companies to reduce greenhouse gas emissions.

"There has to be a driver to make people see this as a solution," he said. "Even with that, the technology would still need to win on economies compared to other low carbon technologies," like wind and solar energy

Such dire outlooks spook budget hawks in Congress who are wary of giving more money to a technology that likely faces a long road to commercialization. The legislation also is facing opposition from environmentalists who see carbon capture leading to increase oil production, thus raising greenhouse gas emissions.

"If governments do what they're supposed to do transitioning from fossil fuels and switching to renewables, you're not going to need carbon capture," said Julian NoiseCat, U.S. policy analyst at the environmental advocacy group 350.org.

Last year, carbon capture advocates had hoped the tax credit expansion would find its way into the Republican's recently enacted tax overhaul. When it didn't, and they were forced to seek a place in Hatch's bill to extent tax credits, it was a flashback to 2015 when carbon capture was left out an energy deal that lifted restrictions on oil exports in exchange for preserving tax credits for renewable energy.

"We tried to get part of that deal, but candidly we weren't as far along in our work," Crabtree said. "We didn't have the horses two years ago we have now."