Hurricanes Ida and Nicholas battered the United States, leaving floods, tornadoes and destruction in their wake. Due to climate change, such weather events have become common throughout the world, resulting in lengthy, costly, and painful rebuilding processes. An August 2021 report by the Intergovernmental Panel on Climate Change concludes, “Human-induced climate change is already affecting many weather and climate extremes in every region across the globe. Evidence of observed changes in extremes such as heatwaves, heavy precipitation, droughts and tropical cyclones, and their attribution to human influence, has strengthened.” We need to reduce greenhouse gas (GHG) emissions to mitigate human-induced climate change.
American corporations have the unique opportunity to lead the United States in GHG reduction through environmental, social, and governance (ESG) practices. ESG is a set of standards used by values-based investors to allocate potential investments responsibly. Environmental criteria consider how a company performs and/or deploys capital as a steward of nature; social criteria examine how it manages relationships with employees, suppliers, customers and the communities where it operates; as well as governance deals with a company’s leadership, executive pay, audits, internal controls and shareholder rights. ESG utilization attracts external investors. ESG utilization also enables corporate boards to identify risks, develop mitigation strategies and improve branding. The destructive consequences of climate change are now predictable and, therefore, constitute a material risk that corporations should mitigate and disclose to shareholders in their annual 10K forms. Such practices can support responsible corporate growth.
Many industrial companies in the United States have begun to adopt technologies to mitigate GHG emissions. Carbon capture and storage (CCS) is among the most productive mitigation strategies. The Global CCS Institute defines CCS as capturing carbon dioxide (CO2) “at the source, compressing it for transportation and then injecting it deep into a rock formation at a carefully selected and safe site, where it is permanently stored.” This process can also capture CO2 from ambient air. There are some negative effects of CCS practices, such as construction, waste generation and particulate matter emissions, as well as limited risks of gas leaks from some geologic formations. On balance, however, the capacity for CCS to mitigate GHG emissions far outweighs the risks and costs. Industrial corporations’ continued adoption of CCS will help to further advance CCS operational efficiency and safety.
CCS is an undervalued and underutilized technology despite its ability to directly mitigate climate change. The International Energy Agency stated in a 2016 report that “CCS deployment has been hampered by fluctuating policy and financial support.” CCS is not yet a widely used factor in measuring a company’s ESG performance. Nonetheless, CCS adoption can yield three distinct benefits: mitigating GHG emissions, securing a workable E in ESG measures and attracting values-based investors. CCS is a well-established technology that has been in use on an industrial scale since the 1970s. Many large American energy firms, such as ExxonMobil, Chevron and ConocoPhillips, invest in CCS. Federal legislators also recognize the potential of CCS. For example, in negotiations with Senate Majority Leader Chuck Schumer (D.-N.Y.), Sen. Joe Manchin (D-W.Va.) indicated that his support for federal spending legislation required Democratic support for carbon capture, utilization and storage.
The U.S. Internal Revenue Service clarified CCS tax incentives in July 2021 when it issued guidance that addressed a tax credit for carbon oxide sequestration, known as 45Q. Developments such as this 45Q guidance make CCS deployment more predictable and, therefore, affordable. While many options may exist to address carbon emissions, carbon footprints and climate change resilience, the clear effectiveness of CCS and these tax incentives together offer a compelling case for CCS adoption. The time is now for savvy investors and businesses that prioritize ESG to increase their CCS focus as they continue to target carbon mitigation and attract values-based investors.
Samantha Phillips Beers is an environmental attorney at the Environmental Protection Agency (EPA) with more than 30 years within the federal government.
Angus Welch is a physical scientist at the EPA.
The views expressed are the authors own.