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Paris withdrawal adds to carbon capture challenges from administration

The Trump administration's proposed budget and withdrawal from the Paris Agreement on climate change delivered a one-two punch to the development of carbon capture technology in the U.S., according to proponents.

"It is impossible to hear the president refer to cities such as Pittsburgh, and Youngstown, Ohio, in explaining his decision on the Paris accord, and not be struck by the incongruity of his remarks today and his proposing, only eight days earlier, to slash, by 70%, the U.S. Department of Energy budget for carbon capture programs. The dissonance between the two is both shocking and unsettling," said Zack Space, the chair of the CoalBlue Project's board of directors. The CoalBlue Project is a coalition of Democrats dedicated to building support for energy polices that include sustainable coal.

"For the working men and women of western Pennsylvania, eastern Ohio, and in communities across America tied to the production and use of fossil energy — coal, natural gas, or oil continued federal support for the development and deployment of new and emerging carbon capture technologies is of paramount importance, just as it matters to all Americans concerned about, and committed to, a sustainable energy future," said Space, a former federal House representative for Ohio.

CoalBlue also highlighted the Trump administration's proposed cuts in the development of clean coal technology in his requested budget for the 2018 fiscal year, amounting to an 85% drop from 2016 levels.

While the coal industry response was applauding on President Donald Trump's plans to withdraw from the Paris Agreement, Jeff Erikson, the general manager of the Americas region at the Global CCS Institute, told S&P Global Market Intelligence that the budget proposal would have more effect on the future development of carbon capture and storage, or CCS, technology.

"The R&D development has long filled the gap that exists for early state technology to get them into commercialization," he said, though he added that he believes that Congress will restore some of the funding towards CCS projects in their iteration of the budget.

He said that even without federal funding, state and local governments, NGOs and private companies can pick up some of the slack.

According to Erikson, pulling out of the Paris Agreement will create uncertainty, which will hurt the development of CCS projects.

"These take a long time to come to fruition and those who are investing in it have confidence in both the costs and the income streams. Any kind of policy uncertainty hurts that," Erikson said.

Other countries like China, which Erikson said is already positioning itself as a CCS leader, might see the U.S. exit of the Paris Agreement as an opportunity to gain a competitive advantage on low carbon technology.

"That may not be particularly good for American businesses," he said.

Offering some potential relief from the administration, Secretary of Energy Rick Perry announced in a June 1 press release that in an upcoming trip to China and Japan, he planned "to discuss technological advances such as carbon capture ... that can leverage the abundant resources we have available in an environmentally responsible way."

John Thompson, director of the Fossil Transition Project of The Clean Air Task Force, an organization whose stated goal is to reduce pollutants from coal-fired plants, among other things, told S&P Global Market Intelligence that he saw this as a positive sign.

Thompson said that this is likely a signal that the Trump administration will focus more on the enhanced oil recovery side of carbon capture since it can add value to energy extraction.

He added that regardless of the Paris Agreement withdrawal, the issue that most affects carbon capture will be tax credits.

"Some of this is theater. At the end of the day, CCS rises or falls based on production tax credits," he said.