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The American Jobs Plan: What’s in it for carbon capture?

April 22, 2021 Work Area: Carbon Capture

A few weeks ago, President Biden presented the American Jobs Plan. The 27-page factsheet proposes an array of investments in American infrastructure and communities. “The American Jobs Plan will lead to a transformational progress in our effort to tackle climate change with American jobs and American ingenuity,” said President Biden when he presented the Plan at the Carpenters Pittsburgh Training Center in Pittsburgh, Pennsylvania.

Squeezed into one short paragraph is the most significant investment proposal to commercialize carbon management technologies ever put forward by a single government. The Plan could grow US carbon management capacity by more than 13 fold³ by 2035 while safeguarding and creating tens of thousands American jobs⁴ and establishing the US as a global leader in innovation and decarbonization.  The American Jobs Plan is also a significant part of the new US NDC, which mentions carbon capture as part of the decarbonization pathways for industry and electricity. 

The President’s plan also provides a vision of how American manufacturing centers can become the heart of a decarbonized economy. Right there, in Pennsylvania, the American Jobs Plan’s carbon capture, removal, transport, and storage provisions could have a significant impact on future-proofing the state’s industries. According to a White House factsheet, more than 11 percent of the state’s output stems from manufacturing, employing around 9 percent of the total workforce. Decarbonizing Pennsylvania’s cement, steel, and chemical industries with carbon capture could deliver some six million tonnes of annual emissions reductions. The Plan proposes the right policies to draw investment into the necessary carbon management infrastructure, which could create thousands of jobs over the next decade.

Rightfully, the Plan also aims to ensure that these investments benefit communities that have been historically overburdened by adverse public health impacts from polluting energy infrastructure. It signals that we have a responsibility to engage and protect communities when deploying carbon capture, removal, transport and storage technologies and infrastructure, ensuring that there will be no additional burden.

Let’s break it down in detail and explore what the plan’s carbon management provisions mean for communities and climate.

Demonstration Facilities

President Biden’s Plan aims to establish ten “pioneer” commercial carbon capture demonstrations in key industrial sectors such as cement, steel, and chemical production.

The industrial sector is responsible for a quarter of global emissions. Cement, steel, and chemicals, for example, are industrial products that help form the backbone of our economy, with their demand typically growing as the economy expands. Global industrial emissions have also stayed constant as a share of overall emissions since 1990, signaling the difficulty of reducing emissions in the sector. Carbon capture technologies are the primary option available today for reducing process emissions from industrial manufacturing.

There are more than 20 existing carbon capture facilities globally, but the technologies are far from fully commercialized. The American Jobs Plan ensures that the U.S. will invest in the decarbonization of these industries at home, ultimately enabling emissions reductions abroad by bringing the technologies to market. One notable cement facility in Norway that aims to capture and store its carbon is supported by a landmark carbon management infrastructure investment by the Norwegian Government. Another one planned in Colorado will potentially capture some 725,000 tonnes of CO₂. There are currently no steel plant carbon capture projects in planning in the US, despite the sector emitting some 60 million tonnes⁵ of CO₂ each year. 

An essential dimension of the Plan’s impact will be to build multiple facilities of each application, not just one. Congress already introduced this idea in the Energy Act of 2020; the concept allows for learning-by-doing and cost reductions in successive projects, providing domestic and global benefits. Cost reductions mean that the technologies are available and accessible, enabling more domestic companies to decarbonize, and in turn creating a larger constituency for climate ambition and action. The same logic can be applied internationally. Reducing cost will enable other countries to access the technology more cheaply, ultimately providing global climate benefits.

These pioneer demonstrations alone could create some 10,000 jobs every year, on average, over the next five years. A Rhodium Group analysis has shown that the top three states with carbon capture opportunities in the cement sector are Missouri, Texas, and Michigan, and in the steel sector Indiana, Ohio, and Michigan. Opportunities to decarbonize the chemical sector and store the CO₂ are abundant in the Gulf Coast. Beyond these states, opportunities to align manufacturing with climate goals through investments in carbon capture stretch across the country.

Kick-starting a Carbon Management Industry

Moreover, the American Jobs Plan would kick-start a carbon management industry to enable net-zero emissions. The Plan supports the commercialization of geologic CO₂ storage, as envisioned in the SCALE Act, and proposes the reform and expansion of the federal 45Q tax credit. Both of these policies reinforce each other, and they are important pillars for establishing a carbon management industry: an improved 45Q tax credit will enable more facilities to invest in capturing their carbon, while the SCALE Act will enable them to permanently store their captured carbon via regional networks of shared CO₂ transport and storage infrastructure.

But what does a reformed 45Q entail?

Most critically, a direct payment option for all clean energy and industrial tax credits is needed. Tax equity markets, which are relied upon for monetizing tax credits in the absence of direct pay, represent a limited pool of capital with high transaction costs and complexity, diverting incentive dollars to financial third parties and away from innovation, emissions reduction, and job creation. Enabling a direct pay option would enable significantly more investment to flow into the deployment of wind, solar, carbon capture, and other decarbonization technologies and speed up their deployment.

The second change is increasing the value for 45Q to achieve the deployment and emissions reductions we need. Currently, the credit provides $50 t/CO₂ for geologic storage and $35 t/CO₂ for CO₂ storage via enhanced oil recovery. But as projects are being developed, experience has shown that this carbon price is insufficient to make higher-cost, climate-essential applications of carbon capture in industry, power, and direct air capture pencil out. According to CATF calculations, $85 t/CO₂ for geologic storage would accelerate investments in industrial and power applications. Analysis by the Rhodium Group has shown that there would be limited deployment in cement and no deployment in the steel and iron industries without this higher tier for industry and power. A new $180 t/CO₂ 45Q-tier could accelerate direct air capture, a more nascent, and thus more expensive application.


Finally, extending the 45Q credit by ten years—allowing projects that begin construction by the end of 2035 to qualify—would signal a long-term government commitment to carbon capture, removal, transport, and geologic storage as a decarbonization option, in turn providing more certainty for investors and enabling a whole new generation of carbon capture projects to be planned. A long-term credit extension is critical to enable project developers certainty to pursue new projects, since it typically takes four to six years for facilities to be planned and constructed.

With these optimizations, CATF analysis has shown that carbon capture at industrial and power facilities could increase to more than 290 million tonnes of CO₂⁶ annually over the next decade, up from about 22 million tonnes today.


As described above, the SCALE Act would enable facilities incentivized to capture their carbon by the 45Q tax credit to connect into a carbon management infrastructure system. Its primary purpose is to enable the development of large-scale geologic CO₂ storage and the responsible buildout of CO₂ transport options. The SCALE Act addresses a tough chicken-and-egg problem: Without CO₂ transport and storage options, it is impossible for facilities to invest in the capture of CO₂. But without facilities capturing their CO₂, there is no rationale to build CO₂ transport and storage. Modeling by the Decarb America project has shown that the SCALE Act alone could deliver some 13,000 direct and indirect jobs over the next five years. Its provisions could also grow US carbon management capacity in line with where models such as the Princeton Net-zero America study suggest we need to be by 2030 to be on-track for net-zero emissions by mid-century. 

The potential success of the 45Q – SCALE Act policy combination is foreshadowed by the impact 45Q has already had. Since being reformed in 2018, 45Q has led to nearly 40 project announcements. This includes carbon capture applications in multiple sectors, including industry, electric power, and direct air capture.

Notably, the first large-scale CO₂ transport and storage infrastructure projects have been announced in the Midwest, spanning multiple states and painting a picture of what the future carbon management system could look like: CO₂ transport infrastructure aggregating CO₂ captured from multiple, harder-to-abate industrial facilities and disposing in shared geologic CO₂ storage infrastructure, creating jobs and future-proofing industries along the way. These projects reveal what the future of carbon capture, removal, and storage might look like, and what kind of infrastructure is needed to deliver on net-zero ambition.

President Biden has proposed the boldest suite of carbon management priorities ever. As the analysis has shown, the Plan can boost carbon-cutting on the path to net-zero emissions while protecting existing high-wage jobs, creating tens of thousands of new jobs and ensuring the viability of strategically and culturally important industry. Fortunately, the President’s proposals – robust expansion of the 45Q tax credit to ramp up deployment of carbon capture across the economy, passage of the SCALE Act to build out a net-zero system of CO₂ transport and storage infrastructure, and commercial demonstration of carbon capture in the industrial sectors most critical to tackling climate change – all have strong bipartisan backing in legislation now before Congress, positioning them well for near-term enactment.

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