Serving data center load with carbon capture

Big tech’s data center construction boom is fueling a flurry of natural gas development, despite the fuel’s challenges, and it’s complicating big tech’s climate goals. But carbon capture and storage (CCS) could mitigate emissions from those new plants, and hyperscalers could secure low-carbon power while meeting their needs for speed and reliability. So how could natural gas with CCS serve data center loads? In this episode, Shayle talks to Julio Friedmann, chief scientist at Carbon Direct, who recently co-authored a couple pieces on the topic. Despite recent high profile cancellations of natural gas projects, Julio makes the case that gas-plus-CCS has attractive advantages, provided the carbon capture actually happens. Shayle and Julio cover topics like: The surprisingly attractive economics, even at lower flue concentrations Where it may compete with renewables, storage, and nuclear The challenges of siting CO2 infrastructure and uncertainty around the 45Q tax credit Whether “CCS-ready” kicks mitigation down the road, like H2 blending Big tech companies like Meta that are signaling interest, but not taking action The range of CCS technologies and the manufacturers jockeying to supply them CCS’s uncertain political future in the U. S. Recommended resources: Carbon Direct: Carbon Capture for Natural Gas-Fired Power Generation Carbon Direct: Carbon capture for natural gas-fired power generation: An opportunity for hyperscalers Latitude Media: Where does gas fit in the puzzle of powering AI? Latitude Media: High costs, delays prompt withdrawal of five more Texas gas plants Latitude Media: Hydrogen-ready’ power plants aren’t actually ready for hydrogen Latitude Media: Engie’s pulled project highlights the worsening economics of gas Credits: Hosted by Shayle Kann. Produced and edited by Daniel Woldorff. Original music and engineering by Sean Marquand. Stephen Lacey is executive editor. Catalyst is brought to you by Anza, a platform enabling solar and storage developers and buyers to save time, reduce risk, & increase profits in their equipment selection process. Anza gives clients access to pricing, technical, and risk data and tools that they’ve never had access to before. Learn more at go.anzarenewables.com/latitude. Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Shayle Kann?

  Latitude Media, podcast at the frontier of climate technology. I'm Shail Khan and this is Catalyst.

• 0:11Speaker 01

  We're building the gas plants anyways. They're being built, so it's not a question of do you do A versus B. We're already doing A, we're just emitting uncontrolled.

• 0:21Shayle Kann?

  Coming up, shocker, we're talking energy for data centers, but this time, put some carbon capture on it.

• 0:36Speaker 02

  Catalyst is brought to you by Antenna Group, the communications and marketing partner behind the most influential companies in energy, climate and infrastructure. For three decades, Antenna has helped ambitious companies stand out, build market leadership and become category-defining brands. From breakthrough startups to global industry leaders, their team brings the expertise, relationships and track record to accelerate your momentum. Learn more at antennagroup.com.

• 1:02Speaker 03

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• 1:34Speaker 02

  Demand flexibility is now an essential part of the data center's speed to power playbook. But how do data centers actually curtail load? Gridbeyond is the end-to-end solution for flexible energy management. Gridbeyond's advanced derms and VPP platform is tailored to what data centers care about most: maximizing reliability, intelligently meeting curtailment obligations, reducing costs and managing all your distributed resources in one place. Ready to transform your distributed energy management? Get started at gridbeyond.com.

• 2:09Shayle Kann?

  I'm Shayle Khan. I lead the Frontier Strategy at Energy Impact Partners. Welcome. All right. I promise we're not going to talk about data centers and energy every other episode forever, or I don't know, maybe we will. I can't promise anything. Give me a break. Anyway, we have talked before a little bit about the build out of natural gas that is planned in the United States and a bunch of other countries that is being driven by data centers. But what about the fact that most of the companies that are driving that demand, the hyperscalers in particular, have been on the vanguard of decarbonization commitments and take it pretty seriously. Are they just going to purchase carbon removal to infinity? Maybe not. Maybe this is finally the moment for natural gas

• 2:52Shayle Kann?

  with carbon capture. Or maybe it's a mirage, as it has been many times in the past. Anyway, let's explore. Julio, as many of you know, is the self-proclaimed Carbon Wrangler, but he's also the chief scientist at Carbon Direct, and he's got thoughts, which, if you know Julio, makes sense. Here he is. Julio, welcome back.

• 3:13Speaker 01

  A pleasure as always.

• 3:15Shayle Kann?

  All right, let's talk data centers and natural gas and possibly carbon capture and sequestration. Starting, though, before we get to the CCS part, can you just give an overview of what you see as happening right now with regard to data center energy consumption and specifically natural gas build out or supply?

• 3:34Speaker 01

  Absolutely. So since the last time we talked, a lot has changed, actually. For starters, we've learned the top five things that the hyperscalers and people building data centers want is, in this order, speed, speed, speed, cost, and carbon. All of those are important, but speed is the thing that is driving a lot of this. The second thing we've seen is we've seen some very large announcement. Five to 10 gigawatts is the biggest, but many multi-gigawatt announcements. Many of these are multi-billion dollar announcements and involve very large data centers, hundreds of acres.

• 4:15Shayle Kann?

  And when you say multi-gigawatt announcements, what you're saying is announcements of new generating capacity, natural gas generating capacity to be constructed to serve those data centers.

• 4:25Speaker 01

  Exactly, yes. Because of this urgency and speed and because of this, we are also starting to see some pushback in the form of companies canceling some projects. We are also beginning to see shortages for natural gas turbines, like all of these things are starting to hit the reality of it. But we continue to see interest in moving quickly. We still see interest in large volume in terms of both the size of the data center and the demand for high quality, high capacity factor electricity.

• 5:00Shayle Kann?

  Okay, so lots of planned new natural gas build out, though subject to the constraints you described, right? Like turbines are backlogged until, I don't know, GE has said 2029 or 2030 or something like that, and prices have gone up. But nonetheless, it appears we're going to build a lot new of it. And then, as you said, number five on the list of five priorities remains carbon, so it's on there. So then the question, of course, is if we're going to build this natural gas, there's kind of no way around it, or at least that is a perception, then should we be throwing carbon capture on it? And so I guess the first question there is, is anybody in data center world already talking about that? Are there announced projects that would be natural gas with CCS?

• 5:41Speaker 01

  Are they talking about it? Yes. Are there announced projects? No. But we are getting a lot of inbound on this exact topic and we are talking to, if not all of the hyperscalers, almost all of the hyperscalers. We're talking also to private groups that are developing energy parks for data centers and other electricity offerings. We are talking to utilities. This is very much of great interest to people.

• 6:11Speaker 01

  Some of the reason why things have not been announced is just because it takes time to put these things together. Some of the reason is that there is uncertainty out there. There's uncertainty around things like 45Q. There's uncertainty around the speed of permitting wells. But there is a great deal of interest, especially in North America, but not exclusively North America.

• 6:31Shayle Kann?

  Let's divert for a second from the data center thing. Can you give me like a brief history and state of natural gas CCS globally? How much of it is there anywhere?

• 6:42Speaker 01

  Happy to. So even a little bit farther back, the first carbon capture device was fielded in 1938. We know how to do this. The first CO2 injections were in 1972. We know how to do this. We've been doing integrated systems for climate since 1997. So this is not exactly a new technology. And we have deployed CCS on some 40 facilities around the world. We're capturing around 60 million tons a year and inject it underground. Originally, that was mostly for enhanced oil recovery. Not anymore. Now it is mostly just for climate and saline aqua for storage. All carbon capture technologies are tested on natural gas. This is an aspect of how you mature the technology. And the reason why is because

• 7:25Speaker 01

  natural gas doesn't have like sulfur and particulates and a whole bunch of other nasty stuff. So every technology that's out there is tested on natural gas, both in the US at the National Carbon Capture Center and in Technology Center in Norway. There is one announced project that is under construction in the UK. And this is a large project in the TEESide, T-E-E-S-S-I-D-E facility in northern Scotland. And this is a place where they will be taking the CO2 offshore, storing it under the North Sea. But they are building a new natural gas turbine there, and it is going to be integrated with CCS. It is

• 8:10Speaker 01

  under construction, plans to turn it on in 2026.

• 8:13Shayle Kann?

  And that is the first, I just want to clarify what you said. We have, we have 40 carbon capture facilities all over the world operating, but none of them are on natural gas power generation, right? And so that TEESide project would be the first new natural gas project with CCS.

• 8:31Speaker 01

  Correct, and this is for perfectly valid technical grounds. The main one is that it costs more money to capture CO2 from a low concentration flue gas stream. And natural gas plants, when they're running well, are between 4% to 7% CO2 in the flue gas. So it actually costs more money on a dollar per ton basis to capture the CO2. Something that people are waking up to in the modern moment is that it, from a dollars per megawatt hour basis, it's the opposite. It is actually because the natural gas energy content is much higher than other fuels. You can capture a lot of CO2, but it is not require as big a parasitic load in terms

• 9:15Speaker 01

  of dollars. So this is one of the things that's in our recent reports, like we've been writing about this recently. It's been known for a long time, if you think about it in terms of dollars per ton, natural gas is the most expensive. If you think about it in terms of dollars per megawatt hour, it's actually the least in the power sector.

• 9:34Shayle Kann?

  So just to make sure I understand that, so if I'm comparing natural gas to coal, for example, if you're just measuring the dollars per ton cost of doing the capture and sequestration, natural gas can be more expensive than coal, lower CO2 content, or lower, lower concentration. But if you measure it as a, as an adder to the dollar per megawatt hour cost, the LCOE of the project, it would be a smaller adder? Is that the right way to think about it?

• 10:02Speaker 01

  That is exactly the right way to think about it. And the reason why is coal emits more CO2 per unit of energy.

• 10:08Shayle Kann?

  So there's an interesting dynamic, though, and I guess is, you know, at the high level, I want to, I want to get your take on this, which is, I think the fear would be, okay, we're going to build out all this new natural gas, and so there's, as you said, discussion occurring about making it carbon capture ready or implementing carbon capture from day one. And I want to get into some of the nuances of what makes that easier or harder, depending on the situation or location, but, but to what degree do you fear that it is?

• 10:39Shayle Kann?

  Sort of kicking the can down the road, in the same way that people talked for a while about hydrogen-ready turbines that are going, you know, very few people are actually doing significant hydrogen blending in those gas turbines at this point. Is that, given that there are zero current active natural gas CCS projects, when you hear people starting to talk about that, or even if you start to see announcements, how much credence do you put in them?

• 11:03Speaker 01

  Let me start by saying this is a reasonable concern. We've been talking about carbon capture power plants for a long time. My friend from the Natural Resources Defense Council, David Hawkins, said, "Hey, if the power plant is capture-ready, my driveway is Ferrari-ready. Come on in." I do think that this moment is a little different for a couple of reasons. One, we're building the gas plants anyways. They're being built, so it's not a question of do you do A versus B. We're already doing A, we're just emitting uncontrolled. So actually, I give the builders and the hyperscalers a lot of credit for keeping the eye on carbon. They don't have to, but they really do care about their corporate commitments. They're really focused on keeping the emissions down.

• 11:48Speaker 01

  But they can't wait. They have to build as fast as they can. The second thing is, again, we couldn't get paid in the past, now we can. 45Q exists. An interesting aspect of this, actually, is that the hyperscalers are also willing to pay a premium for the clean, in the way that they would with nuclear. But they can build a natural gas with CCS plant in roughly half the time in which they could build a nuclear plant. And the third thing I would say is that we aren't going to do this everywhere, but it's not kicking the can down the road. It's kind of the opposite. It is taking responsibility for your emissions. It is actually walking the walk of cleaning up your mess.

• 12:33Speaker 01

  And so I sort of bridle at the idea of somehow this like supports a dying industry and we should be doing renewables. Part of the reasons we're doing this is because there's backups in the renewable queues. Part of the reason we're doing this is because there's supply chain challenges in renewables, as well as in natural gas. Part of the issue is if you want to cite 100-megawatt solar plant, it's a whole lot easier than a 5-gigawatt solar plant. So there is hair on all of this. I do believe that in a bunch of markets renewables will be cheaper and will be faster. If that's the case, build the renewables. But

• 13:06Shayle Kann?

  Yeah, I'm not making any statement with regard to renewables. I'm just, I'm just wondering, and maybe this, maybe here's a distinction. Tell me if this distinction matters to you. Will the projects be announced as we are building a new natural gas plant with CCS from day one versus CCS ready? Right?

• 13:25Speaker 01

  It'll take a while for that to click, but the answer is we better be doing that. Like, so you've seen this large announcement of this meta project in Louisiana, right? 2.6 megawatts, $10 billion, that's going gangbusters.

• 13:41Shayle Kann?

  Gigawatts, right.

• 13:42Speaker 01

  I'm sorry. Yeah. 2.6 gigawatts. My apologies. I have every expectation that there will be carbon capture done on that plant. I know a lot of good people who are working on it. They have not yet made an announcement. Until they do, it's reasonable to be skeptical. To say, hey, you guys are talking the talk. Are you going to walk the walk and actually do the capture? Right? We have not yet seen anybody who says, we're going to add this one and a half gigawatt plant, and we definitely will do the carbon capture. We haven't seen that either. Right? Part of that reflects the uncertainty of the moment. Part of that reflects the complexity of this project. But we have to get to that position. We have to move from capture ready to capture committed.

• 14:27Shayle Kann?

  You mentioned costs. Do you have estimates of what, measured in, I guess, dollars per megawatt hour is the number that I care about more than dollars per ton, what the adder should be or will be?

• 14:39Speaker 01

  Right. So we published a report on this back in March. I encourage people to go to the Carbon Direct website. Take a look. In the US, assuming $3 per million BTU for natural gas, on a new build, all costs, that means cost of capture, compression, transportation, storage and permitting, you're looking at $70 to $100 a megawatt hour.

• 15:05Shayle Kann?

  Total.

• 15:05Speaker 01

  Total. Everything. In many markets, that's competitive with wind, solar and batteries. In many markets, that just beats nuclear coal.

• 15:16Speaker 01

  I will add, if you retrofit an existing plant, it's cheaper because assuming that plant has been fully depreciated, so you're retrofitting something that's in a utility off on the grid somewhere, the costs come in more like $40 to $70 a megawatt hour. So quite cheap. And that means you're looking at something like 20 to 25 to $30 a megawatt hour is the adder in most markets. And 45Q knocks off, say, half of that.

• 15:47Shayle Kann?

  And let's talk about the siting constraint here. I mean, we've talked a little bit about like there's ample saline aquifer potential for carbon sequestration, whether it be from this kind of point source or or DAC or whatever it might be in the United States. But how much of a siting, you know, the interesting thing about the build out of all of this natural gas is it is independent of the carbon capture part. It is siting constrained because either it's co-located with the data center, in which case it is where the data center is, the data center needs to be where the power is available, or it's not co-located, but then you need to figure out where you can inject gigawatts of power into the grid. So either way, the grid is a constraint.

• 16:31Shayle Kann?

  And so you're adding an additional siting constraint by trying to figure out how to either attach to a pipeline or sequester. How much does that limit the aperture of where you think this is applicable?

• 16:40Speaker 01

  So first of all, heck, yes. We're not going to be doing this in New England. There's no place to source CO2 in New England, period. Virginia is an interesting case. We are building huge amounts of data centers in Virginia. There's not great storage there, right? So this becomes a real issue. In contrast, of course, Texas, Louisiana, Central Illinois, the Rockies, these are great places to store CO2, even Humboldt, California. If you're looking at the Sacramento Delta or the Central Basin, yeah, you can store CO2 in these places. So it does add an extra. Circle to the Venn diagram. And so you're not just optimizing here for, say, infrastructure, electricity, infrastructure and/or fiber. You're not just looking for land.

• 17:25Speaker 01

  You're not just looking for communities that'll say yes. You also then have to say, hey, am I near CO2 transportation infrastructure? Or am I near a viable way to get to storage? And one of the things we've been looking at is actually that there are more ways to move CO2 than most people think about. If the only option was a CO2 pipeline, we would have a much smaller aperture, but it's not. We can move CO2 by rail. We can move CO2 by barge. And when you do these things, the aperture opens up. So as one example, I'm not proposing this. I'm not endorsing this. But if you wanted to do a CO2 storage project in Minnesota, there's no place to store CO2 in Minnesota. Not an option. But you can actually put a CO2 on the barge and send it down to Louisiana.

• 18:10Speaker 01

  And that's pretty cost competitive, actually. In our analysis, we show the cost for that. And it's much more reasonable than a lot of people understand.

• 18:22Speaker 02

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• 19:06Speaker 03

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• 19:47Speaker 02

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• 20:32Shayle Kann?

  Okay, so it limits the aperture somewhat. There may be more places than one might think that you could do it. Let's talk about the technology for a second.

• 20:43Speaker 01

  Sorry, before we do that, if I may, I want to make sure everybody hears this. If there is no CO2 transportation and storage, there is no project. Period, plop. You can't make it work. And as people are setting their data centers, they should be citing with an eye towards that is another piece of resource and infrastructure they could consider.

• 21:02Shayle Kann?

  Yeah, though, as you said, it's down the list, right? There's a big, long list before that, and it's challenging to cite data centers, and so it's tough to do that. And it adds more infrastructure and more risk, and you can see why it's not the top of anybody's priorities at the moment, because it kind of currently pushes directly against the first three priorities, which is speed, right? Anytime you're trying to add some additional complexity and permitting and infrastructure... It's slower, almost inherently.

• 21:32Speaker 01

  Well, I would push back on that a little bit. Part of why we are seeing what we're just seeing is that people are building the natural gas and then they're like, all right, well, now let's get serious about the carbon capture piece. So you can build a gas plant fast and then you have another couple of years to build the CCS retrofit. And over that time, you're generating power and you're generating money. So there's another way to think about this. Since you can decouple the carbon capture and the carbon storage piece from the power generation, you can build it in two steps. To your earlier point, though, that comes with a risk. You got to actually do the second piece if you care about the climate piece. So about the technologies.

• 22:14Shayle Kann?

  Yeah, technologies. I mean, you know, the way you described it at the beginning sort of implied like we've been doing this for decades and, you know, no major revolution needed from a technology perspective. Is that, is that true as it pertains to natural gas power plants, given that it has not been done? As you said, everybody tests on a flue gas stack for natural gas and a lot of the stuff that we are actually deploying is, has other weird contaminants that natural gas doesn't. But do you view the technology risk on, I don't know, how these sorbents are going to perform or their lifetime, whatever, for natural gas as, as being effectively retired already? Or do we need to see it first?

• 22:53Speaker 01

  Yeah, it's better than that, actually. So let's start with the established technologies. There's a handful of companies that will today sell you a big facility with a performance guarantee and a wrapper. And they will sell you like up to 10 million tons of capture a year. They will sell you big facilities. These are FLUR, Schlumberger, Aker, Shell, CanSolve, and Mitsubishi. These are all liquid solvent technologies, but that technology is in the, in the basket. It's done. Okay? Behind them are the next generation of technologies, which are in fact, really kind of being built for natural gas. So another solvent technology, ion technology, a different kind of liquid solvent cans, oh, sorry, capsol out of Norway.

• 23:38Speaker 01

  There's also physical absorbent technologies like Svante. There's cryogenic technologies like Frost CC. There's, what's the other one? Oh, membranes. There's a bunch of companies selling CO2 capture membranes. Interestingly, each of those has a different sweet spot in this ecosystem. So, one of the things we are beginning to see is many of the hyperscalers are saying, you know what? Let's start small. Let's go with 50 or 100 megawatts. If that's the case, you're not going to call Mitsubishi. It's the wrong technology. It's too big, actually, for the plant that size. But if you're building a 50 to 100 megawatt power plant, hey, maybe one of these other technologies serves you better.

• 24:22Speaker 01

  Either because of the duty cycle, or the heat rate, or the climate of the facility itself, whether it's in a cold place, or a hot place, or a dry place, or a wet place. And these new technologies are kind of at TRL 6 or 7. They're really getting to the point now where you can deploy them. And so, there is an option to come in with these technologies, and almost all of them are coming in a little or at a substantially lower price. So, there's a lot of room to move in terms of the capture cost reduction as well.

• 24:52Shayle Kann?

  We've been focused mostly on the US. We're both based here. A lot of the data center build out is here, and we have 45Q. How much is happening internationally on this?

• 25:02Speaker 01

  So, great question. Glad you asked. First stop is our friends to the north in Canada. They have a substantial investment tax credit, 60% ITC for carbon capture technology. That goes a long way. And in fact, it is not impossible that the first integrated natural gas with CCS data center project will be in someplace like Saskatchewan, or Manitoba, or Alberta. Second, look overseas. The UK is very interested in this, and they are building these industrial hubs. So, in addition to the T-side project, which I mentioned, that's being supported with a Contract for Differences policy. That kind of support becomes a magnet. You're going to see more of these plants there.

• 25:47Speaker 01

  In part, that's a way to both have the UK meet its targets, displace coal, and also serve the domestic natural gas industry. Not to be outdone, our friends in the Gulf States, the MENA region, this is a hot topic. They are very interested in attracting hyperscalers and data centers. They have poor volume, they have natural gas. So look to Saudi Arabia, the Emirates, Qatar, they're all working this up in real time.

• 26:16Speaker 01

  Not to be outdone, even though they don't have natural gas resources, look to Japan and Korea. They sell the technology. So they want to sell the turbines, they want to sell the capture tech, they want to sell the EPC contract, and they will do that in a place like Northwestern Australia, or for that matter, in Mexico. Any place where they can actually get the land and the gas and the storage volume, they can put these together. And we have been talking to these large industrial conglomerates in East Asia that are very enthusiastic about exactly this. They see the opportunity. And because the hyperscalers are a distinct customer set, one that is prepared to pay for clean, it squares the circle of, well, who's going to pay for all this?

• 26:58Speaker 01

  Cost is an issue for the hyperscalers, it really is, but at $100 a megawatt, even at the high end, they're in pretty good shape. I will reiterate that this number, $70 to $100 megawatts, requires low-cost natural gas. So Europe is not going to be doing a lot of this, right? In contrast, though, the Middle East, Australia, yeah, that could work.

• 27:20Shayle Kann?

  You mentioned some of the conglomerates that can provide the turbine and the capture tech and the EPC. I've been curious about whether that's how this market ends up evolving? Is it like, are there pre-baked combined package offerings as opposed to, okay, I'm going to buy my turbine from GE and then I'm going to pick my capture technology from somebody else and I'm going to stick them together? I would presume that there is some savings you can yield from a holistic integrated solution.

• 27:49Speaker 01

  You are correct. One that has already hit the airwaves that you've seen is this partnership between Chevron, GE Verona, and Engine Number One. Which is actually bringing together the capture tech, the financial wherewithal, the storage expertise into one vertically integrated offering. There's something quite similar to that with ExxonMobil. They don't have their own proprietary capture technology. Watch this space, we'll see if that changes. But they are offering vertically integrated systems. They'll build the power plant, they'll run the power plant, they'll store the CO2, right? Baker Hughes has this as an offering with GE. Baker Hughes has a capture technology of their own.

• 28:32Speaker 01

  I think you're going to see Siemens do something along these lines quite quickly. And Mitsubishi has that. Mitsubishi has the turbines, they have the capture tech, they have the EPC contracting. So they are very interested in being the full service partner. And they're not alone. Kawasaki, same kind of thing.

• 28:49Shayle Kann?

  Back to the infrastructure question. I mean, you mentioned the places where we can do it, the places where we can put CO2 on a barge or whatever it might be. Be interested to get an update from you, though, on permitting, on Class 6 well permitting. Because that obviously has been the, there's been a long pole in the tent for any CCS project in the US. There's action there, but tell me how much it's accelerating.

• 29:14Speaker 01

  There's a lot more action than people see. The story six months ago was about backlog. Six months ago, there was this massive backlog of Class 6 wells at the EPA that were not getting permitted. Since then, there have been a flurry of announcements. That includes wells in Louisiana. I would add, that includes wells in California. California permitted four Class 6 wells in Bakersfield. So we are starting to see these happen. And that is being enabled both at the federal level through the training and streamlining of people to do the regulatory permitting. That was money from the bipartisan infrastructure law. They gave the EPA $50 million to train people. Like, that's finally coming through. The other thing we're seeing is states are interested.

• 29:59Speaker 01

  So there's this poll from places like Louisiana that have primacy, North Dakota that have primacy. They're getting their wells permitted. California does not have primacy, but Governor Newsom wants to see this as an option in the state. And so the state of California has been working with the EPA to get this done. It is not by no means settled, but I'm pleased to see the progress we have. And we're slowly banging our way through this backlog of permitting requests to the point where now there are enough holes in the ground that people can start to think seriously about this.

• 30:29Shayle Kann?

  What has been the response from, I mean, I guess to the extent that projects are being announced or planned, or we could speculate on this, if not, the response from local communities to these kinds of projects, I mean, whether the natural gas projects that are getting built in the first place or adding CCS to them.

• 30:45Speaker 01

  Right, so for starters, again, let me reiterate, the natural gas plants are being built. That is happening, right? And everything associated with them, the upstream fugitive emissions for where that's a problem, that's still happening. So the communities are facing this choice where they're like, well, we haven't stopped the project, we can't stop the project, what should we be thinking about? And I've been pleased to see at least some of them are open to the idea of CCS. Most communities still don't understand what it is. They don't understand how it can benefit their community. The community benefits are at best opaque, at worst complicated. I'm pleased, again, to see the groups that are doing this are leaning forward pretty

• 31:28Speaker 01

  heavily, not just the hyperscalers, but their partners, companies they're working with. They are walking the walk of going to communities. Many of these communities want the revenues, they want the jobs, they want a cleaner environment. And in fact, if you have a natural gas plant that's running uncontrolled, carbon capture reduces the pollutant load. So we're starting to see some traction. It is very much one by one. This is a retail discussion. You have to really understand each community, engage them where they are and see what's going on. Mostly, though, I'm happy to see that this is happening. And the most committed people are putting together community benefits plans because they want the communities to benefit as well.

• 32:07Shayle Kann?

  Okay, so final question for you. We probably can't avoid talking about this. We're obviously at a particular moment in time in US politics. What have we seen so far from this administration and this Congress that would affect? The likelihood of build out, the ease of build out of natural gas with CCS in either direction.

• 32:29Speaker 01

  So first from the administration. There's a lot of stuff that I just won't go into because it's so rapidly changing and it's not particularly useful. But we are seeing Secretary Wright propose a set of cuts to programs that were approved by Congress and approved by the prior DOE. In some cases, Congress, I mean, the contracts have already been made. And this is part of the broader rescission around clean energy. It's the DOGE push. And frankly, that's, in my humble opinion, an error. The United States is a global leader in this technology. If we want energy dominance, this is what it looks like, right?

• 33:12Speaker 01

  We should be the world leader in these technologies and deploying them and providing services, et cetera. And if we don't, these other countries like the Middle East and Japan are ready to go. Like, they will just do this. The problem with that sensibility is it will chill projects everywhere. We'll lose a decade of investment if that money gets raked back. People who've put tens of millions of dollars into FEED study, people who've been working on permits, they'll just bolt. And we're going to lose a generation of workers and a generation of projects.

• 33:44Shayle Kann?

  These are like OSED projects? Or what?

• 33:46Speaker 01

  These are projects in OSED, the Office of

• 33:49Shayle Kann?

  Clean Energy Demonstrations?

• 33:50Speaker 01

  Yes, the Office of Clean Energy Demonstrations. Thank you. There are also some other projects, ones that were just approved in the bipartisan infrastructure law separately, like the hydrogen hubs or the DAC hubs, the large projects hubs. There are other projects in the annual appropriations that aren't OSED-related that would also get hit. Total, just for this class of projects, we're talking about $8 billion worth of projects. It's bad. If that stuff happens, it will be gogoffa.

• 34:23Shayle Kann?

  Not to mention the sort of hard-to-quantify risks to 45Q in whatever reconciliation bill is up and coming, I think. Who knows, right? Like, I've given up trying to speculate on that.

• 34:34Speaker 01

  Well, that's where I was gonna go with 40 is Congress has got the ball on a lot of this stuff, right? First of all, Congress approved the money for these other things, and they approved and authorized the expenditures, the contracts are written. A lot of these projects want Congress to help them get built. With respect to 45Q and other tax credits in the IRA, the Inflation Reduction Act, I give high odds that they will sustain 45Q, 45V-related projects. We'll have to see. Already 21 members of the House have written a letter to Speaker Johnson saying that they want to keep this provision. I believe them. Four senior senators, including Senator Murkowski from Alaska, have come forward and say they

• 35:18Speaker 01

  want to preserve these particular credits. That's important because both in the House and the Senate, those numbers are large enough to be blocking.

• 35:30Shayle Kann?

  And to be clear, that's not specifically 45Q. It's 45Q amongst a basket of credits, right? It also includes the ITC and PTC. They say the energy tax credits in those letters.

• 35:42Speaker 01

  That is correct. In many cases, though, let's say, look at Senator Barrasso or Senator Whitehouse. These are provisions for CCS that they personally worked on quite hard. So they haven't pulled them out by name, but I think there's a broad expectation that these are among the more favored classes. Same thing with Senator Kennedy. I'm sorry, Senator Cassidy in Louisiana. Like, there are people of substance in the House and the Senate for which this particular tax credit would matter.

• 36:12Shayle Kann?

  Yeah, it's not, like I said, I've given up on speculating, but it's not hard to imagine that 45Q would be more resilient than at least some of the other tax credits from the IRA. Nonetheless, I mean, I think you've made an important point here, which is There is momentum in this space, but that momentum is, you know, sort of shaky as a result of the current political environment in a couple of directions. And so that, and to your point, that, I think you said this before, that presumably also delays final investment decisions on new projects that might include CCS as well.

• 36:52Speaker 01

  100%. And for me, this is the money question is literally, this kind of uncertainty is killing investment decisions. At best, they're delayed. At some point or another, people just walk away. And it is critically important that the United States resolve these questions firmly and clearly so that investors can put money to work. That includes companies like Engine Number One, that includes companies like the hyperscalers, that includes the vendors. People want to put money in this space, but they need to have confidence in it. And the uncertainty will kill the investments for sure.

• 37:28Shayle Kann?

  All right, Julio. Super interesting. Thank you, as always, for the time.

• 37:32Speaker 01

  Always a pleasure, my friend.

• 37:35Shayle Kann?

  Julio Friedmann is the chief scientist and chief carbon wrangler at Carbon Direct. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. Latitude is supported by Prelude Ventures. Prelude backs visionaries accelerating climate innovation that will reshape the global economy for the betterment of people and planet. Learn more at preludeventures.com. This episode was produced by Daniel Waldorf. Mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shayle Khan, and this is Catalyst.