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Carbon Removal Final Report

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Carbon Removal Final Report ( carbon-removal-final-report )

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creates carbon dioxide pollution, including burning fossil fuels—rather than removing carbon from the atmosphere once the pollution has been released into the air. Nonetheless, the carbon capture process overlaps with direct air capture—progress in one area can inform and benefit the other. Both are attractive to businesses, investors, governments, and environmentalists because of their ability to slow climate change. For the purpose of this paper, we will discuss CCUS and companies using this process as it relates to technological CDR. Despite the private sector’s progress on technological CDR, uncertainty still persists surrounding its long- term viability. Most mainstream financial analysts, private equity firms, asset managers, fossil fuel companies, and venture capitalists see CDR as a high-risk investment, keeping some on the sidelines. Given the high up-front infrastructure costs and the long timeframe to see positive financial returns from technological CDR, many of these investors will likely remain hesitant. The marketplace needs to mature in order for more capital to enter, and critics question whether the industry can scale up quickly enough to become profitable and significantly draw down emissions this century. DAC costs have been estimated as being too high to be economical. Even though company analysis and peer-reviewed studies say the cost is as low as approximately $100 per ton and may fall further, business prospects remain uncertain and challenging in a purely private-sector driven investment environment. Because technological CDR is essential and yet far from guaranteed, governments should adopt policies that speed progress while also managing potential economic, financial and environmental risks from these untested technologies. In the United States, the federal government has a large role to play in advancing technological CDR. Startups need resources to determine viable long-term business models and investors see the sector as high risk. Moreover, technological CDR technology needs to advance to a more mature stage before it can significantly impact emissions. Experts argue that public-private partnerships are crucial to developing a mature marketplace. Just as critical is the importance of the U.S. government-led action to export appropriate CDR technologies and strategies for deployment to other countries. Given that combatting climate change is a global effort, other markets will need to scale up alongside the United States. This report includes recommendations for policymakers to facilitate the widespread use of technological CDR in the United States. A tax credit passed in the 2018 Budget Act to support deployment of carbon capture projects, including direct air capture, in the United States could be the catalyst for government action on fostering the growth of technological CDR. Policymakers should understand that achieving both climate and commercial goals will require long-term commitments and safeguards to mitigate unintended consequences of using technological CDR. Despite polarization in the U.S. Congress, particularly with regards to climate change, lawmakers mostly agree on the potential and benefits of CDR technology. Amid bipartisan support for technological CDR in Washington, D.C., now is an opportune time to enact more policy levers, which could include carbon pricing, research and development programs, direct funding to startups and universities, government procurement of products with CO2, extension of tax credits, technology transfer to other countries, and other measures. 5

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