A Free-Market Energy Blog

Carbon Capture Coalition: Naked Cronyism

By Robert Bradley Jr. -- July 16, 2018

“The ‘vast majority’ of CO2 pipelines carry carbon dioxide for enhanced oil recovery, according to US Department of Energy…. But this free-market niche is a now being joined [via the Carbon Capture Coalition] by a wholly new application for CO2 that is all about government mandates and subsidies.”

“As Wendall Phillips warned in 1852, ‘Eternal vigilance is the price of liberty. Power is ever stealing from the many to the few’.”

Government goes to those who show up. This aphorism explains the growth of government: those particularly advantaged by special government favor organize and lobby while the rest of us tend to our private business.

Such cronyism marks real-world government versus the romantic view wherein impartial legislators above the special-interest fray wisely block the entreaties of those who would injure the common interest of taxpayers and consumers.

The latest example of bad-government incentives, to be discussed, is the newly formed Carbon Capture Coalition.

Special-Interest Theory of Government 

Real-world special-interest politics, so obvious, has actually had to compete against the textbook political-science theory of reformer, pluralistic government. But political economists recognized the virus of concentrated benefits/diffuse costs back in the 19th century.

In 1885, Simon Newcomb lamented “the custom for Congress to attend almost exclusively to special ‘interests’ in shaping its policy, thus losing sight of the general public welfare.” Newcomb presented a mathematical  hypothetical, which I summarized in Capitalism at Work (pp. 131–32):

Assume that a proposed law would confer benefits to a business firm of $500,000 and cost each American a penny. Individuals “could not send a letter, or print a handbill, or call a meeting of his neighbors without spending more time than the question was worth.” But the business could underwrite books, editorials, lectures, and public meetings to generate petitions for the cause, as well as “provide a body of able lawyers to plead with individual members of Congress.” Thus special interest wins over the (underrepresented) general interest.

Government wealth transfers from the many to the few is called the concentrated benefits, diffuse costs problem. Certain companies and projects get the loot–one hundred cents on the dollar, minus lobbying costs–while the rest of us (taxpayers or consumers) pay pennies.

Carbon Capture Coalition

I was reminded of naked cronyism with this story in E&E Daily, Energy CEOs, Obama climate officials form CCS group (June 19, 2018):

Coal, oil and utility CEOs and top climate officials from the Obama administration are forming a new leadership council to push carbon capture legislation and policies. The group will be part of the Carbon Capture Coalition, an organization advocating for bills such as the “Utilizing Significant Emissions With Innovative Technologies (USE IT) Act,” S. 2602, that passed the Senate Environment and Public Works Committee this month.

It also will back broader state policies and industry actions that could help deploy technologies capturing CO2 from fossil fuels and utilizing or storing the greenhouse gas.

It is Bootleggers and Baptists all the way, what Enron pioneered in the energy/climate arena:

The National Carbon Capture Leadership Council initially will include Bipartisan Policy Center President Jason Grumet, Prairie State Generating Co. CEO Don Gaston, Occidental Petroleum Corp. CEO Vicki Hollub, Utility Workers Union of America President Mike Langford, Cloud Peak Energy Inc.

CEO Colin Marshall, Center for Climate and Energy Solutions President Bob Perciasepe, and William and Flora Hewlett Foundation Environment Program Director Jonathan Pershing.Pershing previously was a top climate adviser to former Energy Secretary Ernest Moniz and President Obama. Perciasepe was a deputy EPA administrator during the Obama administration.

The formation of the council represents a commitment from top business and [nongovernmental organization] leaders to work together to ensure recent progress moves into higher gear, and leads to further technology advancements, new applications and the construction of a new generation of capture projects in the ground,” said Jeff Bobeck, energy policy director at the Center for Climate and Energy Solutions and co-director of the Carbon Capture Coalition….

Progressive Left foundations are behind the effort to try to get political traction in the troubled climate crusade (and set up a beneficiary for a hoped-for federal carbon tax).

The William and Flora Hewlett Foundation, John D. and Catherine T. MacArthur Foundation, Bernard and Anne Spitzer Charitable Trust, and Energy Foundation are funding the group.The coalition, which includes more than 50 companies and organizations, formed in February to advance carbon capture technology (Greenwire, Feb. 23). It is supporting various bills introduced in Congress that would support carbon capture, utilization and storage projects, including through private activity bonds and master limited partnerships. The “USE IT Act” would amend the Clean Air Act and other federal laws to expedite permitting for CO2 pipelines and authorize new research

There is unlimited money for climate interventionism, as this organization follows another.

The council follows the creation in April of the Energy Advance Center, a lobbying group that includes Southern Co. and other oil interests aiming to promote [carbon capture, utilization and storage projects] technology. The center is also supporting the “USE IT Act” but is separate from the coalition and has not publicly announced its full legislative agenda.

Carbon Capture Coalition seems to be a something-for-everyone crony play–including promoting CO2 pipelines in their traditional use of aiding crude oil production. The “vast majority” of such pipelines carry carbon dioxide for enhanced oil recovery, according to US Department of Energy. Almost 60 percent of national CO2 pipeline mileage is concentrated in the Permian Basin. In their “About Carbon Capture” section, CCC states:

Carbon capture was first deployed at commercial scale in 1972, when CO2 was captured from natural gas processing and used for enhanced oil recovery (CO2-EOR) in west Texas. In a largely unheralded example of American innovation, U.S. industry has led the world over nearly a half century in successfully demonstrating large-scale carbon capture across a range of industries, including natural gas processing, fertilizer production, coal gasification, ethanol fermentation, refinery hydrogen production and coal-fired power generation.

To date, captured CO2 has been primarily used in EOR, producing additional domestic oil from existing, already-developed fields, while geologically storing the CO2 safely and permanently in the process. Expanding carbon capture at industrial facilities and power plants will enable further CO2-EOR, but also other forms of geologic storage and the beneficial use of CO2 as a feedstock in producing fuels, chemicals and products.

Climate alarmist Joe Romm will have little to do with CCS given its market niche, now and in the future. As he argued in his 2007 book, Hell and High Water (p. 158):

Tens of millions of tons of carbon dioxide have already been injected into oil fields to enhance recovery of oil–that’s one reason we know CCS works. But using carbon dioxide to increase recovery of oil does not help reduce net greenhouse gas emissions, since the oil itself is ultimately burned, releasing CO2.

But this free-market niche is a now being joined by a wholly new application for CO2 that is all about government mandates and subsidies. Ratepayers and taxpayers beware! As Wendall Phillips warned in 1852, “Eternal vigilance is the price of liberty. Power is ever stealing from the many to the few.”