Old White Men Are Sacrificing the Future of Young People

By Peter Montague, SEHN Fellow

Moderate Democrats got very excited in August when President Biden signed into law the Inflation Reduction Act of 2022 (IRA). On paper, the new law provides some real benefits for the general public: slightly higher taxes on corporations, money to cut pollution and improve health in overburdened communities of color or of low income, subsidies for solar and wind power, and more.

Unfortunately, the new law also contains a major poison pill that can undermine U.S. efforts to control climate change. And, if climate change continues uncontrolled, no one will be safe or secure from the climate chaos now unfolding all around us. Young people’s future is at stake.

To avert climate catastrophe, authoritative agencies and scientific institutions have issued stark warnings: to keep the climate emergency manageable, no new oil, gas or coal projects can be developed. None. In April 2022 United Nations Secretary General António Guterres said, “This is a climate emergency…. Investing in new fossil fuels infrastructure is moral and economic madness.”  And he accused fossil executives of “lying” about their intentions.

Of course, Mr. Guterres was right about those executives. While claiming to address the climate emergency, they are planning massive expansions. 

Oil executives—who have been lying openly about climate change for 50 years—now say their increasing carbon emissions will be eliminated by a Rube Goldberg plan to capture carbon dioxide gas (CO2) from a thousand smokestacks, send it through 66 thousand miles of not-yet-built pipeline, then pump the CO2 a mile below ground into salt-water (“saline”) aquifers, hoping it will stay there forever. This is called “carbon capture and storage” or CCS for short.

The other way to supposedly “eliminate” CO2 emissions is to capture them from smokestacks, send them through yet-to-be-built pipelines, then inject them into depleted oil fields to produce more oil for sale. This is called “enhanced oil recovery” or CO2-EOR for short.

CCS and CO2-EOR are now the centerpiece of U.S. climate policy, and Congress is encouraging both technologies by subsidizing them with free public money. The new IRA law provides a subsidy of $85 for every metric tonne of CO2 pumped into a saline aquifer (CCS) and $60 for every tonne of CO2 buried in an old oil field (CO2-EOR). 

These public subsidies for CCS and CO2-EOR are known as “45Q” tax credits, named for a section of the federal tax code. Tax credits are money deducted from taxes owed, so they are cash in the bank for wealthy carbon polluters. 

Oil executives have been using CO2-EOR successfully since 1972, so they know it produces oil. However, CO2-EOR was never intended to store CO2 permanently underground, so that’s new. Can it work?  Old oil fields are like Swiss cheese, peppered with dozens or hundreds of old wells that provide leakage pathways to the surface. Can these old wells be plugged “forever” to stop CO2 leakage? CO2 plus water creates carbonic acid. In an acid environment, how long can pipes and plugs prevent CO2 from leaking out?

As for CCS—burying CO2 deep in saline aquifers—oil executives have been claiming for two decades that they’ll get it to work any day now, but there’s little evidence that they believe it themselves; they have invested very little corporate money to develop the technology. Uncle Sam, on the other hand, has spent at least $11 billion since 1997 trying to make CCS work, with little success. As the Wall Street Journal said in April, CCS has a “dismal record” of failure.

From the viewpoint of oil executives, it doesn’t really matter whether CCS works or not. So long as they can convince Congress that it will work someday, Congress obediently provides free money, which gives the technology credibility, which makes CCS an effective “talking point” to undercut demands that oil and gas be phased out.

Will CCS ever work as advertised? As Sandra Steingraber has shown, the geology of the Earth a mile below our feet is complex and poorly understood, to say the least. (See also Anderson [2017] and Alcalde [2018].) CO2 pumped into the ground under high pressure is less dense than the saline water it displaces, so it is buoyant, always trying to move upward, unless it hits a barrier, in which case it tends to move sideways. According to the National Academies of Sciences, Engineering, and Medicine, CO2 can remain mobile for “thousands of years” (pg. 335). During that time, it may move hundreds of kilometers from where it was initially buried. How will anyone know where it has gone? Like radioactive waste, CCS and CO2-EOR will create dangerous, expensive problems for young people to manage and pay for, essentially forever.

Have oil executives asked young people, do they want these problems? Or do they want fossil fuels phased out?

The 45Q subsidies favor CO2-EOR, not CCS

A tonne of CO2 pumped into an oil field typically retrieves three barrels of oil, which usually sell for about $66 each. Therefore, one tonne of CO2 used for CO2-EOR brings 3 times $66, plus the $60 subsidy, for a total of $258 per tonne of CO2 versus a mere $85 for burying a tonne of CO2 in a saline aquifer. As you can see, the 45Q tax credits create a powerful incentive to pump CO2 into a depleted oil field to retrieve more oil, rather than bury CO2 in a saline aquifer.

Of course, after oil is retrieved via CO2-EOR, the oil is sold and eventually burned, releasing CO2 into the atmosphere. In recent years, real-world projects using CO2-EOR have released two to five tonnes of CO2 into the atmosphere for every tonne of CO2 kept in the ground. So, the new 45Q subsidies have created a compelling incentive for oil executives to make the climate emergency worse, not better, and get bundles of free public money for doing it.

But it gets even darker:

To justify awarding a 45Q tax credit to a carbon polluter, someone needs to measure and verify how much CO2 has been buried in the ground and has remained there. In the 45Q rules, the Internal Revenue Service (IRS) has given that responsibility to U.S. Environmental Protection Agency (USEPA). A close reading of IRS and USEPA regulations by attorney Paul Blackburn has revealed that, in the case of CCS (burying CO2 in saline aquifers), whoever is claiming the tax credit will do their own measuring, verifying, and reporting. They merely must certify that their numbers are true and correct, which all income tax filers are already required to do. 

Attorney Blackburn also found that, in the case of CO2-EOR, “the USEPA regulations also do not actually require any formal verification of the amounts of carbon captured and injected.”

In sum, 45Q provides a powerful incentive for oil executives to claim billions of dollars in free money for simply reporting that they have buried CO2 in the ground – and no one will routinely check up on them.

But it gets even more bizarre:

The public subsidies for CCS and CO2-EOR are claimed as part of an income tax return. Income tax returns are not public documents, so public subsidies for CCS and CO2-EOR occur in secret. Very large sums of money—potentially hundreds of billions of dollars—will be given to carbon polluters in secret. No one outside the IRS will ever know how many 45Q claims have been made, by whom, for what quantities of CO2 allegedly buried via CCS or CO2-EOR. It is a perfectly closed system with no one routinely verifying claims by carbon polluters. 

And finally, oil executives claiming free money under 45Q are only required to retain their internal records of CO2 burial for three years, after which “the records get shredded, along with any real chance of enforcement,” as Paul Blackburn puts it. He concludes, 45Q claimants “will probably be able to ship their CO2 wherever they want and then cook their books so as to maximize their wealth.” 

In short, by enacting the new IRA law, Congress has given oil executives an incentive to produce more CO2 each year, not less, so they can claim they buried it via CCS or CO2-EOR, which entitles them to take home large bundles of free money.

It is a major scam and scandal that the corporate media has, so far, chosen to ignore.

How is this astonishing level of corruption possible?

It is possible because of the power of “dark money” sloshing around in our political system, thanks to U.S. Supreme Court decisions starting in 1976. 

Here’s how dark money works: U.S. federal elections are almost all privately funded. In order to get re-elected, members of Congress must spend half their time—an average of 30 hours per week—on the phone, dialing for dollars from wealthy donors. In 2022 Senators facing re-election had to raise $16,200 per day and House members facing re-election had to raise $3,500 per day—day after day after day, to stay in office.

This desperate need for cash creates an opportunity for oil tycoons to swoop in with big checks and demand big favors in return.  

Public financing of elections would eliminate this major corruption of our federal election system but, of course, corporate executives benefitting from the current system will never let that happen.  

Because of the entrenched power of corrupt money, our system can no longer be reformed from within, as we elders knew it could be before 1976. 

Reform now will require massive outside pressure—something big, surprising, perhaps even outrageous—something so big that “the system” cannot ignore it. A general strike by people under 40 comes to mind. The outrageous possibilities are endless and young people are already getting organized. 

People under 40 are having their future sacrificed by old white male oil executives and their old white male flunkies in Congress. Outrageous action may seem far-fetched today, but as the sacrifice of young people’s future unfolds in horrifying reality, all of us may be forced to consider desperate measures.