Carbon Capture in Oil Industry Will Make Renewables ‘Price Competitive’: John Kerry

U.S. special presidential envoy for climate John Kerry in Glasgow, Scotland, on Nov. 13, 2021. Jeff J. Mitchell/Getty Images

John Kerry, the U.S. special presidential envoy for climate, is arguing that renewable energy will become “far more price competitive” provided the oil and gas energy industry is forced to follow expensive carbon capture and storage requirements.

“It is imperative that we meet our [climate] goals. And that will require capturing emissions which are the real problem, the real enemy,” Kerry said during an interview with MSNBC. He then pointed out that the price of renewable assets like wind, solar, and battery storage are coming down. The renewable options are going to be “far more price competitive than oil and gas if they have to spend huge amounts of money for carbon capture and storage and utilization.”

Carbon capture and storage (CCS) is a way of reducing carbon emissions, which involves capturing carbon dioxide resulting from industrial or power generation activity, transporting it, and storing it deep underground. This can be an expensive process.

Kerry’s statement suggests that renewable energy would become cheaper once carbon-capture requirements for fossil fuel industries are in place. However, an increase in oil prices will have widespread inflationary consequences.

Oil is a major economic input because it is used as a component in various industries as well as to transport goods. An increase in oil prices can thus raise the price of goods and commodities.

Back in March 2022, Federal Reserve chair Jerome Powell had said that, as a rule of thumb, a $10 increase in crude oil prices elevates inflation by 0.2 percent while cutting down economic growth by 0.1 percent. Brent crude oil was trading at around $80 per barrel as of 11:30 a.m. EDT, April 24.

A March 30 report by nonprofit Institute for Energy Economics and Financial Analysis (IEEFA) states that the levelized cost of electricity (LCOE) for power generation with CCS “is at least 1.5–2.0 times above current alternatives, which include renewable energy plus storage.”

Any significant government spending or the subsidization of CCS will ultimately have to be borne by the public through taxes. “Until a viable source of funding is available, who ends up paying for the cost of CCS in power generation is yet another uncertainty adding to the financing risk,” it said.

A February 2021 report by the International Energy Agency (IEA) also states that carbon capture and storage is “too expensive” and is unable to compete with solar and wind electricity.

Biden’s Flawed Policies

During his campaign trail, President Joe Biden had pledged to eliminate fossil fuel use. In a debate against former president Donald Trump, Biden committed to transition the United States away from oil.

Since becoming president, Biden has issued an executive order blocking new drilling leases on federal land and waters, discouraged financial firms from funding fossil fuel production, and canceled fossil fuel infrastructure projects like the Keystone pipeline that Trump had earlier revived.

During an April 20 hearing of the Senate Committee on Energy and Natural Resources (ENR), committee member Sen. John Barrasso (R-Wy.) called Biden’s energy policies “a disaster for our nation.” When Biden came to power, America was the world’s energy superpower, he pointed out.

“You’d think any president would want to build on that energy success. But no, not Joe Biden. He has spent the last two years surrendering those gains. He’s attacked America’s oil, natural gas, and coal producers at every turn and in every place he could,” Barrasso said.

“He’s staffed the administration with zealots more interested in appeasing political activists than in providing accessible, affordable, reliable energy. And he’s put countless roadblocks in every way on energy production. The result has been just what you would expect—record-high energy prices and stubbornly high inflation.”

IRA and Climate Goals, Energy Transition ‘Delusion’

During his interview, Kerry stressed that President Biden has been “very clear” about meeting America’s 2030 climate goals. Biden had pledged to reduce emissions by 50 percent by 2030.

According to Climate Action Tracker, America’s emission reduction will only range between 26–52 percent by 2030. Kerry dismissed such estimates.

Though “the Inflation Reduction Act [IRA] and the open efforts that are currently on the table represent about a 41–42 percent reduction in emissions,” Biden has initiated several steps that will “make up the difference to the 50–52 percent.” Kerry insisted that “we believe very strongly that we will meet the goals.”

In an Aug. 30, 2022, report titled, “The ‘Energy Transition’ Delusion: A Reality Reset,” by the Manhattan Institute, author Mark P. Mills pointed out that the “only path to significantly lower energy prices” while maintaining vibrant economies is to “radically” increase hydrocarbon production.

“Despite ever-escalating rhetoric, an ‘energy transition’ away from society’s dependence on hydrocarbons is not feasible in any meaningful time frame, and it is a dangerous delusion to base policies on the idea that such a transition is possible,” it said.

“Data, not aspirations, show just how critical hydrocarbons are and, in the wake of the Ukraine invasion, the consequences of failing to realize what reality permits.”

By boosting the production of hydrocarbons, the U.S. government can generate revenues, boost the country’s geopolitical soft power, and eventually save trillions of dollars for the world, the report said.

“The crucial question now is whether America has the political will to forge an energy path based on the lessons learned and the urgencies of the new geopolitical landscape.”