Carbon Capture, Utilization, and Storage (CCUS) and clean hydrogen will play a significant role in the Administration’s efforts to address hard-to-decarbonize industries to promote clean US manufacturing.

On February 15, 2022, the White House announced important actions in furtherance of the Biden Administration’s broader decarbonization goals — this time with an eye towards clean domestic manufacturing. Framing the rollout, the White House released a fact sheet highlighting the Administration’s efforts for a “Cleaner Industrial Sector to Reduce Emissions and Reinvigorate American Manufacturing,” including key “Buy Clean,” hydrogen, and Carbon Capture, Utilization, and Storage (CCUS) announcements. These efforts include kicking off key multi-billion dollar hydrogen funding opportunities provided by the Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law), and new draft guidance from the White House Council on Environmental Quality (CEQ) titled “Carbon Capture, Utilization, and Sequestration Guidance,” to assist federal agencies with the regulation and permitting of CCUS projects. As more companies jockey for position and federal funding on both clean hydrogen and CCUS, the announcements are timed to provide critical guidance on these emerging areas of opportunity.

Clean Industrial Sector Fact Sheet

The new initiatives outlined in the fact sheet aim to support the industrial sector’s clean energy transition via clean hydrogen, federal procurement policies, trade, and CCUS. These new initiatives include:

• Accelerating Clean Hydrogen. Recognizing that clean hydrogen is especially important for hard-to-decarbonize sectors, the Administration announced three Requests for Information (RFI) related to the Department of Energy’s (DOE) hydrogen initiatives under the IIJA. Specifically, the Administration posted RFIs for US$8 billion in funding for Regional Clean Hydrogen Hubs, US$1 billion in funding for a Clean Hydrogen Electrolysis Program, and US$500 million in funding for Clean Hydrogen Manufacturing and Recycling Initiatives to support equipment manufacturing and strong domestic supply chains. Responses are due March 8, 2022, for the Regional Clean Hydrogen Hubs RFI and March 29, 2022, for the hydrogen electrolysis program and recycling initiatives RFI.
• Focus on Clean Procurement. Building on President Biden’s December 2021 executive order on federal sustainability,[1] CEQ and the White House Office of Domestic Climate Policy are formally establishing a “Buy Clean Task Force,” which will utilize the federal government’s purchasing power to promote the use of low-carbon construction materials, including cement. Consistent with this measure, the General Services Administration and the U.S. Department of Transportation are announcing new efforts to promote the use of low-carbon materials in construction and transportation projects. The Administration also revealed its plans to expand the “First Movers Coalition,” which was initially launched at COP26, to cover four additional sectors in 2022: aluminum, cement, chemicals, and carbon removal.
• Using Trade Policy to Reward Clean Manufacturing. In October 2021, the Biden Administration announced that the United States and the European Union are negotiating the world’s first emissions-based sectoral arrangement on steel and aluminum trade. The Administration aims to “restrict access to their markets for dirty steel and limit access to countries that dump steel in both markets, contributing to worldwide over-supply.”
• Responsibly Advancing CCUS Technologies. As discussed in more detail below, CEQ has issued new CCUS draft guidance to help federal agencies advance CCUS responsibly. In addition to this guidance, U.S. EPA is developing proposed rule revisions to strengthen the Greenhouse Gas Reporting Program to improve transparency on CCUS activities, DOE is offering funding to train a more diverse generation of engineers and scientists for carbon management roles, and the Federal Permitting Improvement Steering Council is working to facilitate collaborative CCUS project reviews. Importantly, the Administration affirmed that the Department of the Interior is working to establish safeguards for geologic sequestration on federally managed lands and is developing new regulations for geologic sequestration in the outer continental shelf, as required under the IIJA. Comments on the new guidance must be submitted by March 18, 2022.
• Supporting Equitable Innovation Across the Industrial Sector. Finally, the Administration announced several efforts to ensure that the industrial sector’s clean energy transition benefits communities across the country and meets the needs of stakeholders from underrepresented groups. These efforts include a new “Initiative for Interdisciplinary Industrial Decarbonization Research,” led by the White House Office of Science and Technology Policy to bring together social scientists, engineering and physical scientists, community groups, industry, government, and other stakeholders. In addition, DOE’s Advanced Manufacturing Office is working to establish the “Industrial Technology Innovation Advisory Committee” to find viable decarbonization pathways that will equitably benefit the industrial workforce and surrounding communities. DOE has also issued a RFI on Industrial Decarbonization that will provide insights on emerging technologies for industry to demonstrate or adopt, including for clean production of iron and steel, cement, chemicals, and food and beverages. Responses are due February 28, 2022.

CEQ Guidance on CCUS

As noted above, on February 15, 2022, CEQ issued new draft guidance for federal agencies regarding regulation and permitting of CCUS activities. The guidance builds on CEQ’s June 2021 CCUS report. The guidance includes several recommendations regarding agency coordination, evaluation of CCUS impacts, transparency, Tribal consultation, and impacts to overburdened communities. Comments on the new guidance must be submitted by March 18, 2022.

• Facilitating Federal Decision-Making on CCUS Projects and Carbon Dioxide Pipelines

CEQ proposes that:

• Agencies consider developing programmatic environmental reviews that can facilitate more efficient and effective environmental reviews of multiple projects
• Agencies establish inter-agency collaboration processes for CCUS projects, and CEQ will convene agencies to assess opportunities for improvement in carbon dioxide pipeline permitting
• Agencies with oversight authority for carbon dioxide pipelines update their regulations to address CCUS
  • CEQ states that it will collaborate with agencies to implement relevant provisions in the IIJA and monitor progress on these activities and new regulations in the coming months, including authorizing use of geologic pore space on federal lands
  • CEQ proposes that agencies, like U.S. EPA, include provisions that increase transparency regarding CCUS
• Public Engagement and Interdisciplinary Research

CEQ proposes that:

• Agencies facilitate a transparent process and public engagement regarding CCUS projects
• Agencies prioritize environmental justice best practices for CCUS efforts, in addition to developing robust Tribal consultation and stakeholder engagement plans
• Agencies with substantial CCUS involvement initiate interdisciplinary research, development, demonstration, and deployment programs
• Understating Environmental Impacts

CEQ proposes that:

• Agencies study CCUS-related criteria pollutants and carbon dioxide emissions from project infrastructure
• Projects on the outer continental shelf consider possible impacts on water column carbonate chemistry
• Agencies share best practices regarding data collection and CCUS project reporting

• Carbon Capture and Utilization and Carbon Dioxide Removal

CEQ proposes that:

• Agencies, like U.S. EPA and DOE, consolidate and publish a repository for life-cycle analysis methodology, results, and information related to carbon capture and utilization and carbon dioxide removal
• DOE and other agencies evaluate how CCUS standards and certifications can increase federal procurement of CCUS-related technologies

These initiatives and recommendations underscore the Administration’s commitment to a clean energy transition, including in hard-to-decarbonize sectors. Consistent with the IIJA, the Administration’s recent efforts demonstrate that CCUS and clean hydrogen will continue to play a significant role in the Administration’s priorities.

Latham & Watkins will continue to monitor and report on the Biden Administration’s clean energy efforts.

Endnote

[1] A summary of the Biden Administration’s executive order, which aims to use the US government’s procurement power to achieve “carbon pollution-free electricity” by 2030 and net zero emissions by 2050, is provided on Latham’s Global Environment, Land and Resources Blog, “President Biden Outlines Comprehensive Plan for Federal Sustainability,” January 11, 2022, available at https://www.globalelr.com/2022/01/biden-outlines-comprehensive-plan-for-federal-sustainability/.