Social cost of carbon poised to drop, but emissions concerns remain

The Inflation Reduction Act has the potential to make a significant dent in the social cost of carbon, but advocacy groups are targeting remaining emissions concerns from carbon capture to gas-fired appliances.

By 2050, the Inflation Reduction Act could cut the cumulative social costs of climate change by a range of roughly $745 billion to $1.9 trillion, the Office of Management and Budget said in its first publicly released analysis of the law's climate benefits. The savings would stem in part from avoiding negative health impacts and mitigating temperature and sea level increases associated with climate change.

The law contains nearly $370 billion in climate and energy spending and tax breaks and will impose a fee on methane emissions from oil and natural gas production. The U.S. Energy Department estimated that the act could help slash economywide greenhouse gas emissions by 40% from 2005 levels by 2030.

"The Inflation Reduction Act will help ease the burden that climate change imposes on the American public, strengthen our economy, and reduce future financial risks to the federal government and to taxpayers," said Candace Vahlsing, the Office of Management and Budget's associate director for climate, energy, environment and science, in a news release.

While the federal government touts the benefits of the Inflation Reduction Act, a consumer advocacy group plans to press federal agencies to ramp up oversight of carbon capture and storage facilities in the liquefied natural gas sector over concerns that federal incentives for the technology create the potential for greenwashing by the industry.

Public Citizen has long advocated for reining in LNG exports and has questioned the viability of carbon capture and storage, or CCS, for mitigating climate change. It joined other environmental groups in slamming the recently adopted Inflation Reduction Act for its inclusion of increased CCS tax credits that it sees as a "false solution" for reducing planet-warming emissions and a giveaway to fossil fuel interests.

The Inflation Reduction Act included larger federal 45Q tax credits for CCS operators. Under the law, companies will receive an $85/tonne tax credit tied to the amount of CO2 that is captured and stored in underground rock formations, up from an existing $50/tonne credit often characterized by the industry as too meager. Companies using CO2 in enhanced oil recovery are also in line for a credit hike under the tax package.

"The issue here is meaningful emissions reductions versus greenwashing," Tyson Slocum, director of Public Citizen's energy program, said during an Aug. 23 call with reporters. "We have seen the fossil fuel industry quickly embrace soft or inadequate [environmental, social and corporate governance standards]. We have seen the industry move towards carbon-neutral pledges that rely heavily upon dubious carbon offsets to reach those plans. I fear that CCS is just going to be an expensive taxpayer-funded round two of this greenwashing effort."

At the consumer and household level, climate and health organizations have petitioned the U.S. Environmental Protection Agency to regulate natural gas and fossil fuel appliances, recommending a course of action that could largely eliminate the products from the market within a decade.

The Aug. 23 petition asked the EPA to create a new category of air pollution sources that would include space and water heaters, cooking appliances and clothes dryers. A finding that the appliances significantly contribute to air pollution and endanger public health and welfare would require the EPA to issue performance standards for the new source category within a year.

The 26 groups that signed the petition recommended that the EPA require the equipment to emit no nitrogen oxide by 2030. This standard is achievable because commercially available electric heat pumps do not emit nitrogen oxide on-site, the petitioners said.

The petition represented another strategy in the growing movement to electrify buildings. Dozens of municipalities, counties and states have adopted restrictions on gas use in buildings. Meanwhile, the Energy Department is advancing space and water heating equipment rules that would push many consumers toward heat pumps, which condition ambient outdoor heat for indoor cooling and heating.

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