As Congress prepares its budget reconciliation package, one of the most effective ways it can reduce the large greenhouse gas (GHG) emissions from the industrial sector is by supporting commercialization of transformative industrial technologies.
The federal government has funded research, development, and demonstration projects for some of the critical technologies. However, these projects do not frequently reach commercial-scale deployment because potential investors often consider initial deployments, which can cost $1 billion or more, too high risk. Federal co-funding could address this challenge, accelerating adoption of these technologies.
An ACEEE policy brief released today proposes federal co-funding for the first three installations at production scale of new technologies that decarbonize industrial processes. Legislation to establish a program along these lines was introduced Friday by Rep. Kathy Castor, the chair of the House Select Committee on the Climate Crisis.
We rallied environmental, industry, and labor stakeholders this week to call on Congress to include this proposal and other industrial decarbonization investments in the budget reconciliation bill this fall.
Under our plan, factory owners, technology providers, and other partners would work together to submit proposals for cost-sharing of the first, second, or third applications of new transformative industrial technologies. The Department of Energy would then select the proposals that would best maximize long-term GHG reductions for co-funding. The maximum grant would be 60% of the total cost for the first application of a new technology, 45% for the second application, and 30% for the third.
A review of large demonstration projects worldwide found that the average public share of costs was 64%, so this program, with a 30%–60% public share, will be less generous than the global average.
A recent ACEEE analysis found that this proposal, which we call “First Three,” could reduce U.S. GHG emissions by more than one billion metric tons over several decades, by far the largest reduction among policy proposals we examined. This emissions reduction is equivalent to the current combined annual emissions of California and Texas.
The new ACEEE brief also provides examples of transformative technologies poised for adoption that this new program could support. Examples include low-GHG hydrogen production, GHG reductions in virgin iron and aluminum production, and process changes to reduce GHG emissions in Portland cement production.
Congress is now working on a budget reconciliation bill that will include multiyear funding for a variety of programs to dramatically reduce U.S. emissions. The proposed First Three program would be one of the most cost-effective investments (in terms of terms of emissions reduction per federal dollar), that Congress can make while also putting the United States on the path to long-term industrial decarbonization.