That Giant Sucking Sound

For decades, growing numbers of scientists have warned that burning fossil fuels is pumping dangerous amounts of greenhouse gases into the Earth’s atmosphere. Nations across the planet are grudgingly joining forces to reduce emissions and head off the supposed danger from rising sea levels, more severe storms, and loss of biodiversity. But many experts say we aren’t acting fast enough. This is prompting research into “geoengineering” – using technology to manipulate the environment to offset the alleged effects of climate change. (Just remember, every fictional disaster movie starts with someone not listening to a scientist.)

Naturally, capitalism would like a word or two about solving the “problem.” Elon Musk made himself the world’s richest man by building cars that don’t pump carbon out their engines. (Of course, if the electricity powering your shiny new Tesla comes from coal, you may not be as virtuous as you think.) John D. Rockefeller became the world’s first billionaire by harnessing the power of pollutants. Will the world’s first trillionaire be the man or woman who geoengineers a way out of Rockefeller’s legacy? (Or will it be Taylor Swift?)

Last week, a California startup named Heirloom Carbon Technologies opened a new facility to join that effort. The New York Times reports they’ve built an open-air warehouse where “40-foot-tall racks hold hundreds of trays filled with a white powder that turns crusty as it absorbs carbon dioxide from the sky.” Next step: “sealing it permanently in concrete, where it can’t heat the planet.” Energy Secretary Jennifer Granholm describes it as “giant vacuums that can suck decades of old carbon pollution straight out of the sky.”

And how will Heirloom make its money, you ask? By selling the concrete? No, pumping concrete full of carbon doesn’t make it more valuable. Instead, they’re selling carbon removal tax credits to other companies to offset their emissions. It’s an indirect way to harness the tax code to monetize the new technology.

Heirloom is one of dozens of companies joining the carbon capture gold rush. Last year’s Inflation Reduction Act raised the credit to as much as $180 per ton, which makes the business case more attractive. It made the credit refundable, meaning developers can claim cash payments without having tax to offset. And it made the credit transferable, creating a market for outside investors. In Heirloom’s case, that investor is Microsoft, which signed a long-term contract to buy up to 315,000 metric tons of carbon removal to meet their own goal of going “carbon-negative” by 2030.

Heirloom’s technology won’t change the world overnight. The technology is actually a surprisingly simple process – in Heirloom’s case, it involves heating limestone to remove existing CO2, pumping the gas into a storage tank, then spreading the leftover calcium oxide onto trays, where it sucks more CO2 from the atmosphere. But like any new technology, it’s going to be pricey until economies of scale kick in.

The process also has detractors. Al Gore and others object that it raises a “moral hazard” by rescuing fossil fuel producers from the consequences of pumping carbon into the atmosphere. They would rather see us eliminate those emissions in the first place. But if global warming really poses an existential danger to civilization (spoiler alert: it doesn’t), can we afford to be picky about how we stop it in its tracks?

Our economy is built around free markets. But no economist would argue that markets are perfect. Sometimes markets need a helping hand to jumpstart a worthy activity. And sometimes Uncle Sam uses the tax code to extend that helping hand. Whenever that happens, you need a smart tax planner on your side to help you use that code to your maximum benefit!