4

Policy and Regulatory Frameworks Needed for Economically Viable and Sustainable CO₂ Utilization

4.1 INTRODUCTION

Most forms of carbon dioxide (CO₂) utilization will not be competitive without a price on carbon or a subsidy-based model to support a market for CO₂-derived products. Recent federal subsidies signal the beginning of this growing market, but more policy is required to encourage demand for products and to support businesses entering this emerging sector. Developing goal-oriented, adaptable policy that encourages innovative technology could strengthen the impact of a carbon price. The CO₂ utilization sector can become an exemplar for policy that supports a quickly changing industry. Additionally, significant opportunity exists to prioritize justice goals and drive the build-out and implementation of the CO₂ utilization sector while ensuring that its outcomes are multifaceted and equitable.

This chapter addresses policy and regulatory frameworks needed to support the increased development and use of CO₂-derived products, including the societal considerations that policy can incorporate into project development, siting, and selecting processes—with the assumption that there will be an implicit price on carbon for the policy recommendations made. A variety of considerations can be categorized as economic and noneconomic drivers, which can be broken down further into demand- and supply-side considerations, and sector and societal impacts, respectively (see Figure 4-1). The combined impact of the economic and noneconomic drivers can create a sector with economically viable products, a sustainable market, adaptable policy and regulations, and equitable access to sector benefits.

This chapter reviews the existing policy landscape for CO₂ utilization and identifies the gaps and opportunities for policy to shape a market for CO₂-derived products. It then highlights opportunities for the federal government to support business development, particularly for small businesses, to diversify the market. Next, the chapter identifies key equity and justice considerations and best practices for public discourse and community engagement to help ensure that injustices are not created or exacerbated by the emerging sector. The chapter concludes with findings and recommendations related to the policy and regulatory frameworks needed for an economically viable and sustainable CO₂ utilization sector.

4.2 POLICY AND REGULATORY FRAMEWORKS

The committee’s first report outlined the regulation and policy that would be needed to support CO₂ capture, utilization, storage, and transportation (NASEM 2023d). The committee identified key barriers and recommended solutions that policy and regulation could address, including internalizing carbon externalities (e.g., with a carbon tax) and subsidizing knowledge creation with grants for fundamental research and tax credits for pilot plants and

demonstration units (NASEM 2023d, Finding 5.1); signaling a commitment to create a market for low-carbon technologies (NASEM 2023d, Finding 5.3); and accounting for distributional impacts of CO₂ utilization projects through processes that include community engagement (NASEM 2023d, Finding 5.9 and Recommendation 5.6). The committee continues to elevate Findings 5.1, 5.3, and 5.9 and Recommendation 5.6 from its first report as critical policy considerations for the CO₂ utilization sector.

This section discusses the existing policy frameworks for CO₂ utilization that aim to make CO₂-derived products economically viable. It reviews the economic and noneconomic drivers that exist and can be utilized as the sector builds out. It then identifies gaps in policy and makes recommendations that will support the production and ongoing market of CO₂-derived products, focusing on policies that deal with both environmental externalities and economic incentives.

4.2.1 Existing Incentives for CO₂ Utilization

4.2.1.1 Economic Drivers

The current cost of CO₂-derived products is greater than their incumbent equivalents in all cases considered by the committee (see Chapter 2). Most of these products are identical commodities and traded on world markets. However, a key difference between CO₂-derived products and their incumbent equivalents is carbon intensity (CI)—the measurement

of a product’s life cycle CO₂ emissions per unit. The economic rationale for consumers becomes more complex when CO₂-derived products display characteristics superior to incumbents, which provides an additional dimension of value to drive purchasing decisions beyond cost and CI (e.g., cured concrete has demonstrated enhanced structural performance compared to conventional concrete). In the absence of carbon border adjustment mechanisms (CBAMs)¹—or other public or private policy that ascribes an economic value or promulgates a standard for CI—incentives that consider all dimensions of purchasing decisions are needed to prompt consumer demand.

Both identical substitutes and superior incumbent products are currently in the earliest stages of commercialization. Sustained demand signals and efficiency gains in production will be needed to drive down costs to approach current market prices for incumbents. To support the formation of commercial-scale markets for CO₂-derived products, this section discusses two broad categories of economic drivers: demand-side tools and supply-side tools. Both need to be applied simultaneously to scale up CO₂-derived products in a timely fashion and achieve meaningful market share.

4.2.1.1.1 Demand-Side Tools

Demand-side tools largely focus on CI-based thresholds for products and/or economic offsets for the purchase of CO₂-derived products. The consumers targeted by demand-side tools are mostly government agencies or private sector businesses. However, individual households can benefit from tools that decrease the cost of some CO₂-derived products, such as cleaning supplies.

A tool used to support demand in the private sector is procurement strategy, the purchase of upstream commodities used within a firm’s value chain based on CI. This approach has been observed in cases like “green steel,” where the European automotive industry finds it economically advantageous to pay a premium for lower-CI steel to meet customer preferences and corporate carbon climate ambitions (e.g., see Boston 2021 and Muslemani et al. 2022). However, it has not been observed for CO₂-derived products, given the abatement cost associated with these products compared to other strategies to meet corporate climate commitments (Comello et al. 2023; Fan and Friedmann 2021). For example, in maritime shipping, it may be less costly to first take energy efficiency measures to reduce emissions than to consider e-methanol or other CO₂-derived fuels (IRENA 2021).

Under current conditions, it is more cost-effective to pursue carbon abatement strategies other than CO₂derived products to decarbonize scope emissions within a value chain, although this is industry- and brand-specific. For example, an industry standard that goes into effect in 2027 will drive demand for lower-CI aviation fuels (a scope 1 emission for the industry), especially for sustainable aviation fuels (SAFs), which can be derived from CO₂ (ICAO Environment 2023). In contrast, the availability of modular concrete blocks (a scope 3 emission for the housing industry) may not increase demand in the short term if alternative emissions reduction strategies (e.g., more efficient heating and cooling, upgraded insulation, and fuel switching from natural gas to electric) remain more cost-effective (Malinowski 2023). Moreover, even in the case of low-embodied carbon structures, there are lower-cost approaches to meeting design targets than using CO₂-derived products, such as material reuse (Malinowski 2023). Therefore, purchasing CO₂-derived products typically is not a preferred method in the private sector, given that other strategies to abate or transfer emissions are more cost-effective.

Within the public sector, various local, state, and federal programs are creating a demand signal for CO₂derived products. Across existing “green initiatives,” a few policies explicitly mention life cycle factors for product procurement (e.g., the U.S. Environmental Protection Agency [EPA] Environmentally Preferable Purchasing Program [EPA 2024, n.d.(g)]; the Federal Sustainability Plan [CEQ n.d.(a)]; and Orange County, California’s Environmentally Preferable Purchasing Policy [Orange County Procurement Office 2022]). Only two federal initiatives explicitly mention CI considerations: the Federal Buy Clean Initiative—which partners with states to consolidate data sources and material standards for a more consistent market for lower-carbon materials²—and

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¹ CBAM is an emerging policy tool that aims to cut global and national industry emission (e.g., see EU n.d.). However, currently, CO₂ utilization is not the lowest-cost approach to decarbonizing products in many cases and is therefore unlikely to be deployed as a first option for CBAM compliance.

² Beyond existing initiatives like Buy Clean, NASEM (2023a) recommended that DOE, EPA, and the National Institute of Standards and Technology develop standardized approaches for determining the CI of industrial products, with associated labeling program for consumer awareness (Recommendation 10-6, NASEM 2023a). Additionally, EPA should establish a tradeable performance standard for domestic and imported industrial products based on declining CI benchmarks for major product families, to be determined by DOE and the Department of Commerce (Recommendation 10-9, NASEM 2023a).

the Department of Energy’s (DOE’s) Utilization Procurement Grants (UPGrants) program—an economic-based incentive mechanism that provides grants to states, local governments, and public utilities to support the commercialization of technologies that reduce carbon emissions while also procuring and using commercial or industrial products derived from captured carbon emissions (NETL n.d.(b); White House 2023). The UPGrants are unique because they focus on creating a durable demand signal for CO₂-derived products by lowering the relative cost of those products and offering flexibility in how grant money can be used (e.g., a contract-for-difference, auction, reverse auction, or other structure can be employed). As the UPGrants are awarded, actual costs data will be revealed and collected, which will help to inform the potential of various products derived from captured carbon emissions and shape or expand the program to induce a further demand signal.

4.2.1.1.2 Supply-Side Tools

Supply-side tools are largely focused on reducing the cost to produce CO₂-derived products. The 45Q tax credit offered through the Inflation Reduction Act (IRA), which provides $60/tonne CO₂ captured and utilized, is the most well-known supply-side incentive (H.R. 5376 2022). However, the value of the 45Q tax credit for utilization is less than that for CO₂ captured and permanently sequestered in geologic storage, which has a value of $85/tonne. The disparity between the two credit values is not directly ascribed to permanence of CO₂ captured that would otherwise have been emitted to the atmosphere. For example, a project converting CO₂ to a long-lived product would still receive a lower tax credit than a project that geologically sequesters CO₂, despite the outcome of both being durable storage of CO₂.

While 45Q is useful in reducing the unit economics of CO₂ utilization, the Infrastructure Investment and Jobs Act (IIJA) offers various cost-share grants to offset the cost of plant, property, and equipment to demonstrate and/or deploy CO₂ utilization technologies at scale (H.R. 3684 2021). See Table 4-1 for a list of IIJA funding for carbon management programs and projects, totaling to about $20 billion in new funding. These grants largely fall within the carbon management funding opportunities managed by DOE’s Office of Fossil Energy and Carbon Management (FECM), of which up to $46 million is available to develop technologies to remove, capture, and convert or store CO₂ from utility and industrial sources or the atmosphere (DOE 2022a; DOE-FECM n.d.(a)).³

Outside of these CO₂ utilization-specific supply-side tools, DOE’s Loan Programs Office provides access to low-cost debt, which can significantly reduce the overall unit economics of CO₂-derived products (DOE-LPO n.d.). However, a project cannot receive both a grant and a loan from DOE. To prevent a “double benefit” from occurring, project development requires careful structuring and sequencing. There is no conflict in using a federal grant or a loan in combination with the 45Q tax credit (or any tax credit for that matter) to reduce the supply cost of CO₂-derived products.

4.2.1.2 Noneconomic Drivers

4.2.1.2.1 Existing Workforce and Translational Skill Sets

At present, the CO₂ sourced for utilization relies largely on point-source carbon capture technologies retrofitted onto existing polluting facilities such as industrial or power plants. An analysis of carbon capture retrofits found that more than 70 percent of coal plant retrofits will occur in the near term (by 2035), while about 70 percent of gas plant retrofits will occur in the long term (by 2050) (Larsen et al. 2021). Furthermore, Larsen et al. (2021) project that retrofit operations across the industrial and power sectors in the next 15 years will create up to 43,000 on- and off-site jobs, including installation, maintenance, labor, and chemical and water treatment. See Section 4.3.3 below for more about the upstream labor needs for the CO₂ utilization sector. This workforce will need to be maintained and, in some cases, grown as the facilities expand their capabilities.

Aspects of the CO₂ utilization value chain parallel those in the oil and gas sector, including the siting and development of facilities to capture, maintain, and prepare a resource for subsequent phases of production, transport, and transformation of the resource to a final product or end use. These similar value chain mechanisms mean

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³ DOE has a living list of funding and award announcements related to the IIJA and the IRA here: https://www.energy.gov/infrastructure/clean-energy-infrastructure-program-and-funding-announcements.

TABLE 4-1 Carbon Management Investments from the Infrastructure Investment and Jobs Act

SOURCES: Adapted from Clean Air Task Force (2021) and DOE-FECM (2022).

there is high transferability across existing professional, technical, and labor sector jobs. For example, Okoroafor et al. (2022) found that a variety of “noncore” technical skill sets—for example, project management, health and safety, and business development—in the oil and gas sector are transferrable to the carbon capture and storage, hydrogen storage, and geothermal energy sectors. Additionally, skills needed to perform extraction activities such as mining, electricity generation, pipeline construction, and manufacturing are prevalent in the fossil fuel sector (Tomer et al. 2021). If coordinated with the build-out of the CO₂ removal industry, the CO₂ utilization sector could develop in a more streamlined and accelerated manner through a reliance on similar workforces. (See Finding 4-2.)

The geography-specific nature of fossil infrastructure and jobs is also an existing incentive for the budding CO₂ utilization industry. Because point-source CO₂ capture relies on heavy-emitting industries, most of the jobs requiring workers with transferable skills from oil and gas will likely exist in similar locations. A survey of oil and gas workers found that Texas, Louisiana, and California have the most workers and residents in the United States in addition to 131 petroleum refineries (as of January 2022) (Biven and Lindner 2023). Furthermore, in states considered for carbon management infrastructure (e.g., North Dakota, Oklahoma, Texas, West Virginia, and Wyoming), fossil-based jobs represent a significant portion of the labor force within smaller counties (30 to 50 percent of all workers are employed in the fossil fuel industry) (Tomer et al. 2021). Carbon management investments can be made in counties where transferable skills and expertise from fossil fuel jobs exist to scale up projects with the speed needed for the energy transition to net zero (Greenspon and Raimi 2022; Pett-Ridge et al. 2023; see Figure 4-2).

Workers in the oil and gas community may be eager to find work that builds on existing skill sets in locales where they have been historically successful, which could bode well for the carbon management industry, and therefore CO₂ utilization. Biven and Liner (2023) found that survey respondents would transition to jobs in well plugging and abandonment (34 percent), pipeline removal (30 percent), or carbon capture and storage (CCS) (15 percent) if skills training and education were free. Increasing the workforce’s awareness of declining opportunities in oil and gas, offering more training focused on developing translational skills, and ensuring that these opportunities are accessible to all would support CO₂ utilization workforce pathways. (See Finding 4-2.)

4.2.1.2.2 Environmental Justice Considerations

The federal government’s response to environmental justice (EJ) began in 1994 with the Executive Order on Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations (E.O. 12898 1994). Over the next decade, EPA (e.g., the National Environmental Policy Act [NEPA] and Considering Environmental Justice During the Development of a Regulatory Action) and the establishment of EPA’s Office of Environmental Justice advanced federal EJ considerations (CEQ 1997; EPA 2010). Simultaneously, several states established task forces, commissions, advisory boards, and state offices to address the environmental injustice experienced by minority, low-income, and Indigenous populations. The early adopters include California, Colorado,

Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Oregon, Pennsylvania, South Carolina, Vermont, Virginia, and Washington (National Conference of State Legislatures 2023).⁴ More recently, the robust response of DOE to meet the goals outlined in the Justice40 Initiative creates specific areas of interest through which action eventually can incentivize the continued development of CO₂ utilization (E.O. 14008 2021; White House n.d.(b)). DOE identified eight policy priorities to guide the implementation of EJ across deployment of their programming (DOE n.d.(d)). Of those eight, the carbon management value chain and CO₂ utilization infrastructure have the potential to impact and be impacted by the following:

• Decrease environmental exposure and burdens for disadvantaged communities.⁵ Low-income communities or communities of color are disproportionately impacted by air pollution and thus are more likely to experience adverse health effects (EPA n.d.(c)). Therefore, the potential for carbon capture equipment to directly address co-pollutants has drawn attention in the larger carbon management and EJ conversation. DOE’s Justice40-covered programs, if implemented as intended, may result in a larger build-out of carbon management infrastructure that can support CO₂ utilization and decrease air pollution in affected communities (See Section 4.2.1.2.3.)

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⁴ See NASEM (2023a, 2023e) for a discussion about current state and federal initiatives to advance the energy transition through holistic programs that seek multifaceted outcomes, including advancing EJ through risk-management planning for stormwater management (e.g., see LA SAFE 2019); applying prices to industrial pollution (e.g., see Cap-and-Invest n.d.); creating working groups to advise policy related to EJ communities (e.g., see IWG 2021 and New York State 2022); and evaluating policy impacts on disadvantaged communities (e.g., see DOE 2023).

⁵ Under Justice40, a “disadvantaged community” is a community that is marginalized, underserved, and overburdened by pollution (White House n.d.(b); see also Box 4-3 below).

• Increase clean energy enterprise creation and contracting in disadvantaged communities. Owing to the nature of the carbon management value chain and its economics, there are limited opportunities for smaller players, including minority-owned businesses, to partake in the build-out of this sector. The development of small minority and disadvantaged business enterprises has the potential to bring economic development to a disadvantaged community and diversify the carbon management value chain. In particular, the development of these enterprises can create diverse CO₂ utilization opportunities.
• Increase clean energy jobs, job pipeline, and job training for individuals from disadvantaged communities. Both racial minorities and women are underrepresented in the U.S. clean energy sector, and racial minorities are less likely to hold executive or leadership roles (DOE-OEJ 2023; E2 et al. 2021; Lehmann et al. 2021). To support the carbon management sector, between 390,000 and 1.8 million jobs are projected to be created in raw materials, engineering and design, construction, and operation and maintenance (Suter et al. 2022). The expansion of the carbon management sector provides an opportunity to diversify the workforce with a focus on offering workforce development opportunities to underserved communities.

It has yet to be determined if Justice40 is a durable policy or if 40 percent of benefits is an achievable target for federal investment, but significant opportunity exists to prioritize these EJ goals to drive the build-out and implementation of the CO₂ utilization sector, while ensuring its outcomes are multifaceted and more equitable. For example, carbon management falls largely under the climate change and clean energy topics of Justice40, but the administrative motivation to create a robust workforce and diversify supply chains also provides incentive to build up CO₂ utilization opportunities in regions transitioning from oil and gas production. Policies that seek to enshrine EJ considerations into CO₂ utilization investments can support the emerging sector in collecting and reporting the outcomes of investments for adaptive management (see Section 4.2.2.1) and by providing direct benefits to overburdened communities (see Section 4.4.3.3).

4.2.1.2.3 Health Co-Benefits from Carbon Management

Once emitted, greenhouse gases (GHGs) last up to thousands of years in the atmosphere and, in addition to climate change, contribute to adverse environmental effects, including air pollution, which leads to an estimated 53,200–355,000 premature deaths annually in the United States (EPA 2022; Mailloux et al. 2022; Vohra et al. 2021). Impacts of air pollution are disproportionately experienced across the nation. For example, near source pollution⁶ has been found to lead to higher exposures to air contaminants, negatively impacting public health in these areas (EPA n.d.(e)). Emissions mitigation approaches—including carbon capture, focus on reducing emissions, and removing GHGs from the atmosphere—are expected to benefit human and public health. (See Finding 4-3.) Furthermore, replacing processes and products that emit GHGs with low-carbon alternatives will prevent the continued release of GHGs into the atmosphere. Box 4-1 summarizes a study conducted to analyze the potential health benefits from deploying carbon capture technologies on certain facilities.

Providing quantitative data to affected communities and policy makers about how carbon capture technologies can reduce criteria air pollutant emissions, and consequently benefit human health, will further inform the dialogue that is necessary to deploy carbon management technologies (see Section 4.4.1). Furthermore, the results of future-looking reports describing expected health benefits from carbon management can support deployment of CO₂ utilization technologies at the scale necessary to meet climate objectives. (See Recommendation 4-2.)

4.2.2 CO₂ Utilization Policy Gaps

Climate change policies need to be stable and durable such that investments and incentives are maintained while also evolving with new information and changing conditions (NRC 2010). Policy uncertainty hinders investment and adoption of technologies and limits otherwise profitable investments (NASEM 2023d, Finding 5.3). However, because developing a net-zero or circular economy at the scale required to address climate change is a

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⁶ Living near sources of air pollution, including major roadways, ports, rail yards, and industrial facilities.

novel task, there is limited ability to anticipate the ways in which this process can fail, which adds difficulty to policy design (NASEM 2023c). The lack of adaptable policy serves as barrier to the adoption of carbon management infrastructure and CO₂ utilization by creating roadblocks to economic development. For example, there are legislative barriers to updating the 45Q tax credit to include a variety of eligible technology pathways, development, and deployment.

As it stands, the main policy mechanisms for the CO₂ utilization sector are tax credits, permitting and regulatory frameworks, and large omnibus legislation—all of which under the current system are slow moving and difficult to modify, especially when bipartisan consensus is required. (See Finding 4-4.) Adaptable policies can serve the CO₂ utilization sector by matching the pace of market and infrastructure development, and the science as it evolves. Adaptive management, an iterative learning process that produces improved understanding and management over time, is critical to the development of flexible policies (NASEM 2023c). Adaptive management can help identify and avoid unintended consequences like disincentivizing certain capture and removal pathways, while also leading to broader societal acceptance. For example, as more CO₂ utilization technologies and products become commercially available, there will be more data about the direct and indirect impacts experienced by the general public and communities hosting infrastructure. Analysis of these data can be used to modify CO₂ utilization policy to avoid unjust consequences to communities and the environment. The following section outlines how policy for CO₂-derived products can be designed and implemented to support and adapt to an emerging market and identifies potential economic and noneconomic tools to address gaps and barriers. (See Recommendation 4-3.)

4.2.2.1 Economic Tools

As discussed above, the current policy portfolio incentivizes CO₂ capture and production of CO₂-derived products through tax credits such as 45Q and 45V that lower the cost of supply.⁷ However, it lacks demand incentives for CO₂-derived product uses or markets, especially relative to other carbon abatement approaches. The lack of a sufficient cost benefit for use of CO₂-derived products prevents uptake. For example, under current policies and prices, the use of SAF from captured CO₂ is more expensive than continuing to use aviation fuel derived directly from fossil sources (Bose 2023). Without financial justification or specific policies incentivizing the use of CO₂-derived products, there will be no economic rationale to drive market adoption. (See Finding 4-1 and Recommendation 4-1.)

Policy needs to create the conditions to both lower the costs and market frictions to produce CO₂-derived products and decrease barriers to demand, at least initially so that a minimal industry can be established. The latter has an analogy in the rise in demand for carbon-free electricity, driven by state-level policies to achieve increasingly less carbon-intensive generation. The rise in demand is accelerated by increasing electrification of economic sectors, like transportation through incentives for and adoption of electric vehicles. The direct policy target for clean grids coupled with increased demand for electricity is creating an enormous demand for the build-out of generation sources like solar and wind energy (e.g., see Motyka et al. n.d. and Wilson and Zimmerman 2023). Economic tools for the consumption of products include policies that support cost parity for consumers between CO₂-derived products and their carbon-intensive alternatives. This section outlines how economic tools can support CO₂ utilization development, including tools that encourage product uptake.

4.2.2.1.1 Energy Mix Uncertainties

There is still significant need and opportunity to grow the zero-carbon electricity share; in 2023, 60 percent of electricity generated by utility-scale facilities in the United States was from fossil fuels (e.g., coal, natural gas, petroleum), while 21 percent was from renewable energy, and 17 percent was from nuclear energy (EIA n.d.). Without first decarbonizing the energy system, an emerging CO₂ utilization sector using CO₂ sourced from carbon capture or removal strategies could be reliant on fossil energy, preventing the desired impact on the nation’s climate goals from a life cycle assessment (LCA) perspective. The U.S. grid must continue to diversify while research and

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⁷ The 45V tax credit for clean hydrogen production has a base rate of $0.60/kg of qualified clean hydrogen produced (H.R. 5376 Sec. 13204).

development (R&D) on low-carbon technologies seeks ways to reduce energy requirements. Both diversification of the U.S. energy portfolio and R&D will support a CO₂ utilization sector that does not rely on fossil fuel combustion.

Recent U.S. legislative vehicles (e.g., the IIJA and the IRA) contain opportunities that encourage the build-out of renewable energy, including investment and production tax credits for installing solar and wind technologies, geothermal, tidal, and hydroelectric energy, and technology agnostic tax credits for clean energy production and investment (EPA n.d.(f)). Global projections show that renewable energy is becoming cost-competitive with fossil fuels, with around 187 gigawatts of all newly commissioned renewable capacity in 2022 having lower costs than fossil fuel–fired electricity (IRENA 2023). Nonetheless, a continual push to decarbonize the electricity mix is needed to develop an ethical and climate-impactful CO₂ utilization market that is less reliant on fossil energy production, providing opportunities for lower-CI pathways.

Regardless of how the carbon capture, removal, and utilization value chain acquires energy and whether the energy is low-carbon, the cost of electricity may be high if facilities do not have access to a wholesale utility-regulated market. The committee’s first report discussed how uncertainty around the cost of electricity will influence CO₂ utilization market growth by directly impacting the potential to develop a CO₂ value chain (NASEM 2023d). It also identified that clustering energy supplies (i.e., hubs) could be more cost-effective for carbon capture, utilization, and storage (CCUS) processes and less likely to negatively impact other resources (NASEM 2023b).

4.2.2.1.2 Product Certification Processes and Reporting

Catalyzing CO₂ utilization markets via federal procurement necessitates clear standards and regulation of use for these products. The programs and policies encouraging procurement of CO₂-derived products do not yet have the transparency needed to advance procurement, including the creation of pilot programs or standardization guidelines. EPA has taken steps toward transparency with the Reducing Embodied Greenhouse Gas Emissions for Construction Materials and Products grant program, which helps businesses develop and verify Environmental Product Declarations (EPDs),⁸ and create user-friendly standardized labels for products (GSA n.d.(b)). Grants are awarded to projects that fall under five categories, including projects that develop robust, standardized product category standards and projects that support EPD reporting, availability, and verification; standardization of EPD systems; and EPD integration into construction design and procurement systems (GSA n.d.(b)). Grant awardees can help standardize the CO₂-derived product industry by providing transparency on standardized data collection and analysis processes and developing tools and resources for EPD disclosures. However, further policy to support widespread adoption and standardization of CO₂-derived products is necessary.

4.2.2.2 Noneconomic Tools

This section outlines the noneconomic policy tools that can support CO₂ utilization development—namely, common carrier status, clarity regarding LCA standards, building materials standards, and workforce development.

4.2.2.2.1 Absence of Common Carrier Status Rules for CO₂ Transportation

Robust siting frameworks will be needed as demand for CO₂ transport infrastructure increases to support the sector. Historical trends for natural gas and electricity have shown that increased demand led to the development of regulatory frameworks for approving and evaluating infrastructure projects (Brown et al. 2023). State and federal agencies have been granted clear jurisdiction over siting gas pipelines and electricity transmission and have developed processes that are well defined, but not always streamlined. However, CO₂ pipelines may pose greater permitting challenges than gas pipelines or electricity transmission (Brown et al. 2023). For CO₂ midstream, there is uncertainty regarding common carrier rules and status⁹ for interstate transportation because common carrier

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⁸ An EPD is an environmental report that provides that quantified environmental data using predetermined parameters and environmental information is consistent with ISO 14025:2006 (EPA n.d.(d)).

⁹ Common carrier status means that conveyance of CO₂ for a fee is made open to the public by the operator, as opposed to private operation, where only specific actors may access such infrastructure.

status varies by state. It is unclear whether the entire pipeline is required to act as a common carrier when it passes through a state with common carrier requirement and a state without the requirement.

The lack of clear rules surrounding pipeline transportation of CO₂ may not be an immediate constraint on market growth, but it will limit the unit economics and ongoing market maturity if not resolved as soon as possible. A significant challenge associated with common carrier status is that pipeline owners have concerns about the chemical composition and potential reactivity of what others may inject for transport in their infrastructure—especially given the many potential sources of CO₂. Chemical impurities can lead to mechanical and metallurgical failures, which would be the responsibility of the pipeline owner. There is a space here for some type of policy or regulatory mechanism to certify CO₂ streams in a common carrier system. However, currently no agreed-upon approach exists to common carrier status that allows certification to happen, and more intentional work is needed to address this.

4.2.2.2.2 Clarity Regarding Assessment Standards

Owing to the myriad pathways CO₂ utilization can take, there is an ongoing discussion around monitoring, reporting, and verification (MRV) and how to standardize “best” practices. Because these practices could change with the development of new techniques and technologies, creating adaptable MRV frameworks is increasingly important.

As key aspects of MRV, LCAs for CO₂ utilization processes need to be better defined and standardized. LCA requirements often lack widespread adoption or clarification outside of these frameworks for federal tax credits or funding opportunities. For example, after an open comment period, the Internal Revenue Service (IRS 2021) determined that an LCA of GHGs—consistent with ISO 14044:2006—has to be submitted in writing and “either performed or verified by a professionally-licensed independent third party,” along with the third party’s documented qualifications for 45Q tax credit applicants.¹⁰ Ultimately, the LCA needs to quantify the metric tonnes of qualified carbon oxide captured and permanently isolated from the atmosphere or displaced from being emitted into the atmosphere through use of eligible processes. Another example is DOE’s Carbon Utilization Program, which requires eligible entities to show significant reductions in life cycle GHG emissions for CO₂-derived products compared to incumbent products using the National Energy Technology Laboratory’s (NETL’s) LCA Guidance Toolkit as a baseline (DOE n.d.(b); NETL n.d.(a); Skone et al. 2022). Creating standardized processes around LCA requirements and expectations is difficult, and nearly impossible if the purpose is not for a federal credit or funding opportunity.

There are also gaps in the use of social life cycle assessments (s-LCAs), which consider social impacts from a more quantitative perspective, as a part of federal frameworks or other standardized processes.¹¹ s-LCAs, along with other ways to integrate equity and justice concerns, are not comprehensive or a replacement for community engagement. However, the results of the assessment may enable clear communication of social benefits or the pathway’s role in climate mitigation strategies in a way that a more traditional LCA may not. Therefore, these frameworks could play a role in addressing public acceptance issues while integrating social considerations into the traditionally high-level quantitative MRV discussion. Clarity around these systems and consistent regulatory and permitting processes will allow for more transparency among research entities, industry, government, and the public, while creating easier pathways for integrating CO₂ utilization processes and products in our economic system. See Chapter 3 for more information about LCAs and s-LCAs.

4.2.2.2.3 Flexible Policy for CO₂-Derived Building Materials

Strong demand signals exist to produce CO₂-derived building materials—concrete, carbon black additives, and drywall—owing to incentives and requirements for low-embodied carbon in new buildings. These new materials

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¹⁰ For these requirements, the IRS defined life cycle GHG emissions using the cradle-to-grave boundary, considering the entire product life cycle from raw material extraction until end of life (IRS 2021).

¹¹ See Ashley et al. (2022) for a proposed equity assessment framework that provides sufficient quantitative information about the effects of federal legislation to inform federal processes.

seek to reduce carbon emissions and minimize adverse environmental impacts from the construction industry. The increasing number of patent applications for CO₂ utilization technologies (a roughly 60 percent increase internationally between 2007 and 2017) reflects the interest from researchers and industries, with investment facilitating technologies to be developed at scale (Norhasyima and Mahlia 2018).¹² The committee’s first report identified that CO₂-derived construction materials would motivate the “testing and validation of the new materials, creation of new environmental product declarations, and adaptation of building codes and standards” to support the consumption of these products (NASEM 2023d, p. 64).

Innovative solutions are emerging to address these challenges from different perspectives, such as using renewable energy to produce clinkers for cement, applying alternative materials with lower carbon footprint, capturing CO₂ produced from cement plants, and upcycling construction and demolition materials. (See Box 4-4 below for information about concerns expressed by construction professionals about CO₂-derived materials.) In addition to supporting R&D for construction materials, future policy could incentivize the development of building codes and regulations that are flexible and adaptable as new CO₂- and coal waste–derived materials are validated for use in buildings. For example, Bowles et at. (2022) provides sample language for building codes that could decrease the carbon impacts from the construction industry and support low-CI business models.

4.2.2.2.4 Workforce Development Considerations for Policy

As discussed above, there is an abundant workforce opportunity for carbon management infrastructure as the sector builds out and new prospects for career pathways develop. CO₂ policy design could incorporate the following workforce development considerations:

• Facilitate localized development of workforce opportunities. Jobs are frequently cited as an economic benefit to bring communities on board with new projects and investment, position the United States as a leader in manufacturing, and reduce GHG emissions (e.g., see Larsen et al. 2021 and White House 2021). Developing workforce standards and requirements can create measurable benchmarks that can be strategized around. Furthermore, a dedicated commitment at a larger level of workforce development needs to occur simultaneously with a skill building framework implemented through local actors (i.e., providing classes and certifications, and facilitating job placements through a national public university, community college, or trade school) (Coleman 2023).
• Balance training the new workforce with upgrading the existing workforce. Skills development is integral to bringing new laborers into the workforce and supporting incumbent workers through the transition. Strategies that will reach both groups of workers include targeted outreach for occupation types and cross-industry partnerships and apprenticeships (Zabin 2020). Opportunities to grow the sector include targeting young people interested in the green economy, which can benefit youth in underserved communities to provide them with a variety of career trajectories. For example, future iterations of the American Climate Corps could include opportunities around carbon management (White House n.d.(a)). Reaching both groups of workers will take intentional and effective outreach to meet the specific needs of the present and future workforce.

4.3 MECHANISMS FOR BUSINESS DEVELOPMENT

Discovering, developing, and commercializing CO₂ utilization processes and products are necessary as the nation transitions to a net-zero economy. This section highlights various considerations for business development, including market fit and access, available federal resources and programs, and potential workforce uncertainties.

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¹² See Chapter 2 for more about the market for cement and construction aggregates, Chapter 5 for more about CO₂-derived building materials and the environmental impact of the processes to produce them, and Chapter 9 for more about coal waste–derived building materials.

4.3.1 Market Fit and Access for CO₂-Derived Products

CO₂-derived products have to be considered on a continuum with respect to market fit—the alignment between the specifications of the CO₂-derived product and the needs and preferences of the purchasing consumers and market access—the ability of a product to enter and operate in a particular market successfully (i.e., in an economically sustainable manner) (Aaker and Moorman 2017). This section considers elements of market fit and access, including upstream and downstream partners and commodity gatekeepers.

4.3.1.1 Market Fit

Market fit in the context of CO₂-derived products largely relies on the ability of products to satisfy the claims that they have lower CI than otherwise functionally identical products. For example, SAFs will not be chemically identical to current jet fuels but will have the same functionality and lower CI. Market fit becomes more complex in situations where product performance beyond CI is altered (e.g., concrete blocks that have been cured with CO₂ and thus exhibit greater load-bearing characteristics). Such cases create a new submarket in which customers appropriately pay for functional performance that is greater—or less—than the baseline.

In strict replacement cases, the market fit of CO₂-derived products mostly has been established already by the incumbent. Projections for the evolution of existing markets have to be considered to determine the long-term viability of the CO₂-derived product. In cases where new products cannot be strictly considered replacements, product–market fit analysis has to be continually conducted to determine if—and at what point in time—a sufficiently sized demand signal will emerge to support the economic case of a CO₂-derived product. It may take time for a unique and durable demand signal for new products to appear, as prospective customers need to accumulate knowledge and experience the product. For example, for CO₂-cured concrete blocks, customers must determine if the price premium justifies a one-for-one replacement with existing markets; if new applications can be found that push out incumbent solutions; and if new products perform in the field as expected given standards tests. These considerations require time and experience on the parts of both customers and producers to make informed judgments about the product.

Co-piloting and partnerships are crucial for products to move up the adoption-readiness level ladder. Key upstream partners for CO₂-derived product development include CO₂ supply, specialized capital equipment providers, and specific co-input providers (e.g., providers of emissions-free electricity and clean hydrogen). While production volumes are currently small and uncertain for most CO₂-derived products, key downstream partners are the direct customers that will help prove the commercialization and business case of the company producing the CO₂-derived product. Such agreements are especially beneficial for commodity products where consistent, intentional effort will be required to make the CO₂-derived product relatively cost-competitive with the incumbent that has decades of accumulated knowledge, resources, and market access (DOE n.d.(a)). At-volume, predictable demand over a long timeframe supported by a creditworthy off-taker creates the conditions for cost reductions and market adoption of CO₂-derived products (e.g., see Saiyid 2023).

For the CO₂ utilization company, a partnership agreement provides predictable demand over a long period, which could substantially support capital and operational planning, and a meaningful production/volume target that through accumulated learning effects, know-how, and value-engineering could reduce unit costs. In a sense, a downstream buyer’s contract could pave the way for cost reductions in a product, not only for the company with the contract but also for other customers. This, in turn, could create greater demand for products like SAFs (bolstered in part by the International Civil Aviation Organization’s emission targets), leading to wider market adoption. Continued engagement between upstream and downstream partners will support both the supply and demand for CO₂-derived products, thus setting the foundation for a CO₂ utilization market.

4.3.1.2 Market Access

Market access relates more to external factors and conditions beyond demand for product features, such as regulatory, legal, competitive, and economic factors that affect product entry into a market. Depending on the product and sector, businesses introducing CO₂-derived materials will need to identify and address the relevant gatekeepers to different commodity markets to gain commercial traction (Ahn 2019). For example, adherence to

management requirements such as international quality management standards (e.g., see ASTM International n.d. and ISO 2015) and national chemical purity grading (e.g., see P.L. No. 94-469 1976 and Schieving 2018) assure customers of product reliability. Other gatekeepers for all CO₂-derived products include:

• Price: In the absence of sufficient demand driven by incentives or strategic differentiation strategies, price will be the most salient factor affecting market access. Included in this is the concept of margin (price minus cost), which must be sufficient to keep suppliers economically motivated and allow for reinvestment in product improvements. CO₂-derived products will need to have competitive prices, while maintaining adequate margins, to access commodity markets, which are differentiated (e.g., the price of fuels in California versus Texas may create an opportunity for CO₂-derived fuels in the former).
• Volume: In commodity markets, volume and production volume certainty are other gating factors to market access. Downstream users of commodities generally optimize their processes around a guaranteed supply through multiple vendors to increase cost efficiency and capacity utilization. Producers of CO₂-derived products will either need the ability to supply sufficient volumes at the onset of entering a market to satisfy procurement needs of customers or have a clear pathway to achieving such through a partnership with an offtaker.
• Quality: For a commodity product to be considered marketable, certain standards have to be achieved—typically, a combination of presence or absence criteria and/or tolerance bands with which the product has to comply. For example, the ASTM has several standards specifying, testing, and assessing the physical, mechanical, and chemical properties of plastics that CO₂-derived products would be required to meet.
• Distribution channels: Depending on the product, distribution channels can take the form of commodity exchanges, wholesalers and distributors, brokers and agents, or government agencies. Each type is comprised of multiple actors with their own requirements for production volumes, price, insurance, hedging mechanisms, and quality audits. The factors affecting market access for new products are more complex, given the likely need for new submarket formation.

4.3.2 Resources for Emerging CO₂ Utilization Businesses

4.3.2.1 Opportunities Through Federal Funding and Programs

CO₂ utilization may use only a fraction of the total capturable CO₂ otherwise destined for geologic sequestration, as discussed elsewhere in this report. Several funding opportunity announcements (FOAs) support carbon management interfacing with CO₂ utilization, including those for the Regional Direct Air Capture Hubs (DOE-FECM n.d.(b)) and Carbon Capture Demonstration Projects Program (DOE-OCED n.d.). Despite being large in sum, these FOAs may not be the best source of funding for commercializing CO₂ utilization because of focus and time lag to produce usable CO₂. For example, the FOA for Carbon Management is positioned to help demonstrate conversion technologies, but the funding is more similar to R&D than commercial demonstration because it is spread across numerous pathways (DOE-FECM n.d.(c)). Moreover, this funding is unlikely to be sufficient for CO₂ purchase for demonstration purposes.

The need for a demonstration project to claim the available tax credits incentivizes the development of CO₂ utilization demonstration partners. The IIJA contains many funding opportunities to support the build-out of CO₂ utilization infrastructure and R&D on CO₂-derived products (see Table 4-1). For funding to be appropriately used, businesses will need to know the application and reporting criteria to secure funding. Additionally, to take advantage of multiple funding opportunities at once, multiple businesses develop partnerships and site facilities within the same region (i.e., hub design infrastructure). For example, program funding can be used to set up demonstration hubs centered close to ethanol production facilities, which would allow CO₂ utilization to be demonstrated using carbon capture technology that is already commercially proven and available. The CO₂ captured at these hubs would be eligible for the $60/tonne (or $130/tonne CO₂ captured using direct air capture [DAC] technologies) tax credit through 45Q, and there is no requirement to geologically sequester. Given that the cost of CO₂ capture from an ethanol facility is $0–$55/tonne (Bennett et al. 2023; GAO 2022; Hughes et al. 2022; Moniz et al. 2023;

National Petroleum Council 2019),¹³ a CO₂ utilization demonstration hub centered close to ethanol production could offer the CO₂ needed at zero cost. Developing demonstration partners and using hub designs when possible can stretch grant funds by eliminating operational costs from CO₂ utilization unit economics. See Chapter 10 for more on CCUS infrastructure development opportunities.

4.3.2.2 Federal Programs for Building Knowledge About and Skills for CO₂ Utilization

Federal agencies provide business leaders and stakeholders the opportunity to answer questions about proposed programs through various mechanisms like Requests for Information (RFIs) in order to alert the agency to gaps and opportunities in the sector. Frequently, RFIs are used to identify typically underrepresented stakeholders for collaboration, with the purpose of requesting feedback from a variety of stakeholders “all while considering environmental justice, energy transition, tribal, and other impacted communities” (DOE-FECM 2021, p. 3). Responses from small and disadvantaged CO₂ utilization businesses, declaring the need for attention and collaboration, would likely result in additional opportunities in future funding processes.

Similarly, if businesses diversify their collaborations or aim to meet commitments, they improve their odds of success in the CO₂ utilization market. Initiatives such as these create opportunities for businesses to access broader knowledge, perspectives, and skill sets, which can lead to further collaborative possibilities. (See Finding 4-5.) For example, the submission of Promoting Inclusive and Equitable Research Plans, which outline diversification tools such as engagement and collaboration with underserved populations, organizations, and institutions, and provision of professional and learning opportunities for underrepresented populations, such as Black, Indigenous, and other people of color (BIPOC) professionals with science and engineering expertise, are now required for some DOE FOAs (DOE n.d.(e)). These plans seek to advance the federal Small Business Innovation Research/Small Business Technology Transfer (SBIR/STTR) program goal to foster and encourage participation by socially or economically disadvantaged groups in innovation and entrepreneurship.

4.3.2.3 DOE Resources for Small Business Partners

In 2021, Sick et al. (2022) estimated that, of 160 developers active in CO₂ capture and utilization, 39 were new start-ups that had emerged since 2016. Small businesses and start-ups can enter and thrive in the nascent field of CO₂ utilization, and their participation is critical to the development and diversification of CO₂-derived product markets. For example, within the design of hubs, small businesses would have to build their own niche based on what is needed in the system, which provides both a challenge and an opportunity. By securing a specialized role in a hub, small businesses can expect to develop an expanded role as the sector grows and more capacity is required.

The federal government has initiatives that target small businesses and encourage opportunities that will grow the CO₂ utilization sector. For example, through cross-agency coordination, the General Services Administration (GSA) administers awards on behalf of clients in participating agencies and provides information on its website about how to undergo certification processes (GSA n.d.(a), n.d.(c)). The SBIR and STTR programs are another opportunity, and can help small businesses or start-ups initiate relationships with DOE. Projects are awarded in three distinct phases: Phases I and II provide R&D funding, and Phase III—during which federal agencies may award follow-on grants or contracts for products or processes that meet the mission needs of those agencies, or for further R&D—provides nonfederal capital to pursue commercial applications of that earlier R&D (SBIR n.d.). Small businesses experience various challenges to accessing these opportunities or being successful in this nascent sector, including limited awareness of relevant funding calls; limited ability to access facilities that could help their business development and/or result in meaningful partnerships to close gaps in their processes; and barriers in navigating available federal funding and required reporting. More support is needed for small businesses to overcome issues with accessing a broader market in addition to federal funding and resources.

DOE national laboratories provide a unique entry point for business leaders to engage with federal initiatives and programs while developing their business to better meet the needs of the sector. For example, Argonne National Laboratory’s Small Business Program provides business owners with technical assistance related to procurement and

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¹³ Range includes first-of-a-kind and nth-of-a-kind facilities.

development, and access to a streamlined registration and certification system (ANL n.d.). While no overarching organization provides cross-laboratory information for businesses, most national laboratories provide internal programming with collaboration opportunities. Sandia National Laboratories (SNL), for example, consistently exceeds its small business collaboration goals, reporting $1.1 billion in subcontracts to small and diverse businesses in FY 22, including small disadvantaged, woman-owned, veteran-owned, and service-disabled-veteran-owned businesses and businesses located in Historically Underutilized Business Zones (HUBZones)¹⁴ (Peery 2023; see Figure 4-3). These data are particularly encouraging representations of the opportunity that currently exists, and the potential trajectory for collaboration between national laboratories and small businesses, indicating that the Sandia model could perhaps be mapped successfully to other national laboratories across the country.

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¹⁴ HUBZone businesses are part of the U.S. Small Business Administration’s program for small companies that operate and employ those in “Historically Under-Utilized Business Zones” (SBA n.d.).

DOE also works with third-party organizations to support the accelerated deployment of technologies. For example, ENERGYWERX, DOE’s first intermediary partner, works to increase joint activities between the agency and small business, higher-education institutions, and nontraditional partners to expand the deployment of clean energy solutions (DOE-OTT n.d.(b)). In growing the carbon management and CO₂ utilization sectors, DOE can capitalize on the important role of national laboratories and third-party organizations in developing and commercializing new technologies and MRV methods. Box 4-2 highlights existing opportunities for small businesses to partner with national laboratories and third-party organizations for technology development and deployment support: the Gateway for Accelerated Innovation in Nuclear (GAIN) program and the Voucher Program. The best practices, beneficial components, and lessons learned from both of these programs can be applied to a program developed to aid businesses entering the CO₂ utilization sector. (See Recommendation 4-4.)

For emerging CO₂ utilization businesses, especially small ones, the available DOE resources and funding need to be appropriately communicated so that diverse types of businesses can access them. Additionally, using programs for other energy-related technologies, like the GAIN and Voucher programs, as a model for CO₂ utilization programs can support the entrance of small businesses into this space by connecting them with market and technology experts.

4.3.3 Workforce Uncertainties for CO₂ Utilization Businesses

CCUS at scale has been estimated to support 177,000 to 295,000 jobs, while, for comparison, 3.1 million clean energy jobs are aligned with DOE’s net-zero definition¹⁵ (DOE-OEJ 2023; MacNair and Callihan 2019). However, regardless of the industry, there are not enough employees in the upstream labor force to support the infrastructure build-out that investors seek to fund. This is not owing to a lack of available jobs. The Bureau of Labor Statistics reported an average of 438,000 open construction jobs per month for November 2023 through January 2024 (BLS 2024). Despite the high number of job openings, contractors have reported difficulty finding willing and skilled workers in recent years (NASEM 2023g). For example, the Associated General Contractors of America and Autodesk Cloud Construction (2023) workforce survey found that 68 percent of firms surveyed had trouble filling openings because candidates lacked the skills to work in the industry. This employment trend will persist even without a transition to cleaner energy and products.

Figure 4-4 compares the upstream labor needs predicted for the DAC and SAF workforces. The Rhodium Group estimates that once a facility is built, DAC facilities will need 340 ongoing jobs, and SAF facilities will need 1440 ongoing jobs to support operations (Jones et al. 2023; O’Rear et al. 2023). Beyond the ongoing jobs related to maintenance, executive and business operations will comprise 11 percent of the ongoing employment for DAC facilities, and agricultural workers and managers will comprise 25 percent of the ongoing employment for SAF production (Jones et al. 2023; O’Rear et al. 2023). Small businesses aiming to participate in either field will need to match the skilled labor required to maintain facilities if they hope to compete with larger, more developed businesses.

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¹⁵ DOE defines clean energy jobs aligned with a net-zero future as relating to “renewable energy; grid technologies and storage; traditional electricity transmission and distribution for electricity; nuclear energy; a subset of energy efficiency that does not involve fossil fuel burning equipment; biofuels; and plug-in hybrid, battery electric, and hydrogen fuel cell vehicles and components” (DOE-OEJ 2023, p. viii).

Very little research has been done to predict the workforce needs for CO₂ utilization-specific businesses. However, the skill sets required for CO₂ utilization projects are expected to translate from existing processes and skill sets for fossil fuel refining and chemical industries, as discussed in Section 4.2.1.2.1. Specialized training—which may be required for R&D-related workforces—will play a key role in workforce development for the growing sector, especially depending on its accessibility or lack thereof. Individuals with specialized skills tend to make more money while being a lower percentage of a sector’s workforce. For example, in oil and gas extraction in 2022, 1700 geoscientists (a specialized occupation in the field) were employed with an average annual salary of $145,660, compared to the 9340 wellhead pumpers employed with an average annual salary of $69,770 (BLS n.d.). This presents a challenge for small businesses because they likely will have to hire highly skilled employees at a high cost. Incentives are needed to encourage the development of a sustainable labor force for CO₂ utilization that additionally support the access of small businesses to these skill sets. Special attention will need to be paid at federal and state levels to address the challenges and barriers and allow for the diversification of the CO₂ utilization sector as it builds out.

4.4 SOCIETAL CONSIDERATIONS FOR THE EMERGING CO₂ UTILIZATION SECTOR

Societal dimensions need to be considered and appropriately addressed in CO₂ utilization policy, project design, and workforce development as the sector continues to build out. These considerations include the meaningful engagement of publics and communities, intentional focus on remediating and avoiding environmental harms, and equitable access to economic and workforce benefits of the emerging sector. Without these societal considerations, the CO₂ utilization sector runs the risk of perpetuating past and current environmental and social injustices. This section defines relevant equity and justice terms, summarizes best practices for public and community engagement, elevates select principles of EJ, and identifies key economic considerations. Box 4-3, modified from the first report’s Box 5-1, includes definitions of key concepts of justice and equity discussed throughout this section.

4.4.1 Public and Community Engagement Considerations

CO₂ utilization is part of a suite of carbon management practices that are being designed to support the nation’s net-zero goals. In general, decarbonization pathways face a spectrum of responses from the public—from acceptance to opposition—which is common for emerging technologies (Boudet 2019; NASEM 2023f). Opposition to technologies can be broken into two dimensions: (1) concerns inherent to a technology (e.g., how will a project impact everyday life?); and (2) concerns related to the institutions that govern the technology (e.g., are the regulatory systems effective and competent and is a community being meaningfully consulted in deployment?) (NASEM 2023f, Table 8-1). Figure 4-5 illustrates the factors that affect public perceptions of and related responses

to new technologies.¹⁶ Studies show that providing the public with more information can lead to a shift in public support of new technologies (Stedman et al. 2016; Stoutenborough and Vedlitz 2016). However, the views of the media, peers, and trusted messengers (i.e., academics or social movement activists) also shape public responses to energy technologies (Boudet 2019).

Carbon management technologies and processes as a whole have been described as “false solutions”¹⁷ by EJ advocates (e.g., see Chemnick 2023a; Earthjustice and Clean Energy Program 2023; Just Transition Alliance 2020; New Energy Economy n.d.). Additionally, there is a public perception that investment in carbon management is outsized compared to the limited contribution that such technologies are expected to make to climate change mitigation (Jones et al. 2017). Skepticism that investment in CO₂ utilization and its value chain is disproportionately large relative to its climate mitigation potential motivates negative public discourse. However, Seltzer (2021) found that 80 percent of the U.S. public either does not know of CCUS technology or cannot definitively recognize it. Transparency about how products are made, how widely used CO₂-derived products are, and how R&D investments compare to the products’ GHG impacts can support the public’s understanding of CO₂ utilization in relation to carbon management efforts. This section examines opportunities to use public and community engagement to (1) expand public understanding of CO₂ utilization; (2) confront justice and equity questions that shape perceptions of the sector; and (3) communicate CO₂-derived product pathways that align with public and community needs. (See Finding 4-7.)

4.4.1.1 Current Public Discourse Around Utilization

Most societal acceptance research about carbon management uses CCS to gauge an individual’s understanding before following up with questions on CO₂ utilization, either because carbon capture is a source for CO₂derived products or because CCS is more widely discussed. For example, Offermann-van Heek et al. (2018) used semistandardized interviews to identify the most important factors concerning trust and acceptance of CO₂ utilization. The results of the qualitative study were incorporated in a quantitative online survey of 127 participants, which found that a lack of knowledge or awareness of CCS was owing to misconceptions, misleading information, or pseudo-opinions. When questions focused on CO₂ utilization, Offermann-van Heek et al. (2018) found individual differences in preferences for end products (e.g., long-lasting cement versus fuels), skepticism about whether investment in CCS and CO₂ utilization is worthwhile (e.g., preventing actual societal change, maintaining business as usual), and the acceptable amount of risk for health, sustainability, product quality, and the environment.

Offermann-van Heek et al. (2018) also found that customers have concerns about manufacturing considerations (e.g., the sustainability of production) and company considerations (e.g., company environmental management) for CO₂-derived products. These concerns align with public considerations for conventional products, suggesting that customers do not view CO₂-derived products differently. However, there are some challenges within the construction industry for using CO₂-derived building materials (see Box 4-4).¹⁸ The concerns of both consumers and the construction industry can be addressed through low-stress testing projects, such as sidewalks and driveways (Derouin 2023). The transparency of testing products in public spaces can also support public communication of results.

Studies specific to CO₂ utilization are sparse, and findings vary greatly. According to a meta-narrative review of 53 peer-reviewed publications by Nielsen et al. (2022), this variance of findings results from a lack of cohesive definitions—and therefore, a lack of cohesive metrics—for acceptance, community, and impacts. For example, a study that conceptualized acceptance as a lack of public resistance would frame their questions differently from

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¹⁶ For examples of EJ concerns about decarbonization technologies, see Appendix E in NASEM (2023b).

¹⁷ The term false solutions is used to connote pathways that are viewed as continually extractive, leading to concentration of political and economic power, likely to continue poisoning or displacing communities, and reductive of the climate crisis to a solely carbon-based focus (Climate Justice Alliance 2019).

¹⁸ See Chapter 9, Section 9.3.5 for information about the safety of coal waste applications. See also Bhide and Sengupta (2024) for an overview of insurance sector considerations for the net-zero transition, including considerations about CO₂ utilization technologies.

a study that conceptualized acceptance as consensus within a group (Nielsen et al. 2022). Figure 4-6 shows the major underlying dynamics of acceptance, community, and impacts, and the related conceptualization for each that influence public perception of CO₂ utilization projects. Future studies on acceptance of CO₂ utilization will have to consider not only the origins of the CO₂ but also the impacts of the CO₂ utilization sector itself, especially as they intersect with communities, to gain a better understanding of what characteristics are integral to defining public acceptance. (See Recommendation 4-6.)

4.4.1.2 Strengthening Public Understanding of CO₂ Utilization Through Engagement

As the CO₂ utilization sector continues to build out, meaningful public engagement can help to address public concerns about and strengthen public perception of CO₂ utilization. NASEM 2023f found that generative dialogue—conversations that expand understanding through inclusive engagement—have the potential to facilitate early understanding of concerns and values of technologies and projects being proposed, make information more accessible and digestible, and allow the public to form their own views about a technology through interactions with experts. For example, a conjoint experiment-based study by Offermann-van Heek et al. (2020) found that carefully designed information allowed respondents without any technical knowledge about CO₂ utilization to

formulate informed decisions and update their preferences. However, the authors underscored that while people may update their preferences when presented with new, technically correct, comprehensible, and timely information, public perception is typically formed based on heuristics derived from deeply ingrained social preferences (Offermann-van Heek et al. 2020). Hence, perceptions and public acceptance need to be assessed early in the development cycle of new technologies to learn which decisions can be modified by providing new information.

In contrast, Buttorff et al. (2020) assessed public opinion and attitudes toward carbon management, support for carbon mitigation policies and R&D for decarbonization, and the willingness to pay for energy and products derived from carbon management. The online survey–based study did not provide CCS-based context and found support for the adoption of carbon management and its incentivization through governmental action and policy changes (Buttorff et al. 2020). The study also found that respondents were willing to pay higher prices—to the extent they are considered affordable and without internalizing the full cost of low-carbon alternatives—when presented with information on how carbon management technologies would impact the price they pay for electricity and other products like low-carbon fuels. Another study surveyed likely voters in Wyoming, Texas, Louisiana, and Colorado and found that most respondents supported turning captured CO₂ into long-lived materials and were more skeptical of permanent underground storage (National Wildlife Federation 2024).

Effective and meaningful public engagement can ensure that relevant information is shared with the public, beyond the communities impacted by projects, including “How are the benefits of CO₂ utilization market demand distributed?” and “What are the potential negative impacts and burdens of CO₂ utilization?” However, engagement practices and strategies have to be location-specific and consider the history of and identities that exist in a region.

Such engagement, especially through public awareness and education efforts, can help empower people with the right technical information and help them form heuristics for decision making on new technologies incentivized by public money (Chailleux 2019; Offermann-van Heek et al. 2020). Furthermore, building public support through larger community education will develop trust, accountability, and transparency between project designers and developers and the general public and potential host communities (Meckling et al 2022). Holistic public engagement approaches that recognize a larger social movement to advance equity and justice across sectors—such as housing, education, and health care—facilitate a truly just cross-society transition and are foundational to any strategy. (See Finding 4-8 and Recommendation 4-6.)

4.4.1.3 Engagement of Affected Communities and Project Consent

A lack of engagement with affected communities, in particular, may result in reluctance to adopt or rejection and opposition to new low-carbon technologies, especially if there are perceived high costs and negative social impacts (NASEM 2023b). Meaningful community engagement, especially in the project development period, can provide on-the-ground knowledge that can shape projects to meet community needs, respect the rights and boundaries of underserved populations within those communities, and retool procedures that might pose barriers to overburdened communities (WHEJAC 2022a). Recommendations around community engagement emphasize accountability of federal agencies and project developers to the community—promises need to be delivered on if they are made, and the better a developer or government entity can track the dissemination of benefits, the more enfranchised community members can be (BW Research Partnership and Climate Equity Initiative 2023; WHEJAC 2022a). These recommended practices will not ensure that a project is selected by a community; instead, they can support community and public engagement during the design and build-out of projects, as appropriate.¹⁹ (See Recommendation 4-7.)

Within meaningful community engagement, consent—a collective decision made by those being engaged with—has to be sought from and granted or withheld by a community based on the unique relationship between elected officials and representatives within each community (FAO et al. 2016). Collective consent can be subject to change upon receiving new information about the project and can be given or withheld in phases of the project while also giving the community rights to govern what occurs after the decision is made (FAO et al. 2016; IHRB 2022). In support of consent, successful community engagement processes are designed to collect and address feedback. The outcome of the feedback process, which needs to continue into the implementation phase of a project, can be defined by how well project managers incorporate community concerns and solutions into the agreement (FAO et al. 2016). Both consent-seeking actions and feedback processes need to be place-based and flexible to match the needs of a community.

While no comprehensive list of “best” practices for community engagement exists, below are high-level themes and principles for meaningful public engagement. These practices are not formal guidance but promising engagement strategies. Elements can be incorporated into existing efforts by developers with federal funding for CO₂ utilization projects and can provide the foundation for future projects seeking to expand the sector.

• Avoid past mistakes. Historically, disenfranchised communities have been forced to live with the impacts of decisions made without their input. To move forward and create space for a dialogue around CO₂ utilization infrastructure, mistakes of past energy and technology transitions need to be avoided, especially mistakes specific to a potential host community. NASEM (2023f) identified two categories of failed communication strategies: (1) the “engineer’s myth”—the idea that technical modifications can alter the risk calculation and change public attitudes to a technology’s deployment—which has not been shown to be true; and (2) a lack of understanding or information rather than a lack of public trust. Early and frequent

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¹⁹ Note that engagement, with the public or communities, is not appropriate for early technology readiness level (TRL) due to the uncertainty about what the impact of a process or project will be, what and where a project will be, and who will be impacted. For lower-TRL projects (e.g., those with small amounts of funding or compressed timelines), community engagement opportunities may not be meaningful and may act as a barrier to the project. For higher-TRL projects (e.g., those with extensive timelines), community engagement opportunities can be additive to the process. See Chapter 3, Section 3.4.2 for more about uses of s-LCA at different TRLs.

• engagement facilitates communication between developers and communities through which project intent and community benefits can be discussed and negotiated (see Section 4.4.2.3.2). Awareness of factors that lead to poor public engagement and focused efforts to improve engagement center principles of recognitional and procedural justice, allowing new projects to avoid failures of the past.
• Build trust and maintain relationships. Trust is fundamental to any type of community-based project and is especially necessary for the deployment of emerging technologies. To build trust, developers can (1) avoid using scientists, engineers, regulators, and policy makers who aggressively support the technology when engaging with potential host communities; (2) compare new technology to what communities are familiar with to support individual judgments about whether scientific knowledge is trustworthy; and (3) avoid the parachute method, in which developers drop into communities for the express purpose of developing a project and then disappear once the project is complete (NASEM 2023f). Outsiders, whether developers or scholars, need to avoid approaching the community with predetermined solutions or methodologies, and instead co-create strategies with the community (Deaton 2022). Often, trust-building results from developing long-standing relationships with reliable actors within the community.
• Center enfranchising frameworks. Communities can be reticent to engage during development processes because they are often met with an approach focused on what they lack—whether information, infrastructure, or democratic power. Two frameworks that instead seek to enfranchise communities are
  • Asset-Based Community Development (ABCD). The ABCD framework builds on a community’s assets through mobilized action from community members and local institutions (CNT n.d.). Fundamentally, ABCD highlights that communities can drive development processes by responding to and creating economic opportunities at a local level (CNT n.d.).
  • Free, Prior, and Informed Consent (FPIC). The FPIC framework is centered on the fact that all people have the right to self-determination (FAO et al. 2016). FPIC, often discussed in the context of development on Tribal lands, allows a group to give consent to a project (see Section 4.4.2.3.2). While the process does not guarantee consent, it allows a group to conduct its own independent, collective decision making with project information that is continually provided and discussed (FOA et al. 2016).
• Provide resources for engagement. Communities, especially underserved populations, often do not have the bandwidth to engage on every single development issue they may face, while also confronting barriers to participation such as insufficient housing, employment and familial responsibilities, clothing, and food (Donnelly et al. 2015). As such, providing honorariums, transportation to and from events, food or vouchers at events, and wrap-around services like childcare for participating in engagement, acknowledges that engagement strategies do not exist in a vacuum and encourages them to reflect the complexity of the larger cultural ecosystem in which the project is operating (Barnes and Schmitz 2016; Donnelly et al. 2015; Langness et al. 2023). Additionally, providing access to mapping products, data, or community science frameworks may increase their ability to engage (Kimmell et al. 2021).
• Employ various ownership models. While the entire carbon management sector may not lend itself to ownership models similar to community solar or neighborhood cooperatives, it is worth considering how to transform traditionally corporate capitalist systems into more community-centered models with direct benefits. For example, a model in which local stakeholders own most of the project and define expected collective benefits can be adapted to CO₂ utilization projects.
• Transparent reporting and information sharing for meeting metrics. Working alongside the community to develop metrics and goals to measure progress can provide clear benchmarks for project accountability. This could involve convening project-specific community advisory committees to identify potential impacts; preparing documents to communicate findings with community members; and using clear language to support understanding at varied levels of knowledge and reading proficiency (EJ IWG and NEPA Committee 2016). Goals and metrics have to be consistently revisited to ensure that they are being met, with the ability for community input to update and inform those outcomes.

Figure 4-7 illustrates how the outlined themes and principles can be integrated into a standard project cycle: project identification, project formulation, project selection, project implementation, and project closure.

4.4.2 Environmental Justice Considerations

The mainstream environmental movement has historically neglected social justice and equity issues (DeLuca 2007). For example, critics assert that early work in the environmental movement had “little regard to underlying social inequalities that drive differential exposures to pollution and did not incorporate voices of people of color and the working classes in solving them” (Mohai et al. 2009, p. 3). Even as it attempts to prioritize discussion on and address racial inequality, the scholarly EJ movement has often neglected to highlight well-established social scientific theories of race and racism or focused on race and class as dividing lines without acknowledging the context from which they emerged (Park and Pellow 2004). There is still scholarly and practical debate about how both environmental and social justice movements can and should work together to achieve common goals. As the CO₂ utilization sector expands and considers EJ in the creation of environmental and industrial policy, it is imperative to recognize that EJ is inextricably linked to racism, in addition to other socioeconomic factors that lead to the marginalization of communities and groups.

EJ does not just apply to the creation of new infrastructure; part of the consideration of the movement is repairing historic harm, which includes existing and historic infrastructure. One example is mine remediation efforts, which thus far largely have focused on the technical aspects of clean-up but have important political, social, and cultural implications in addition to environmental ones (Beckett and Keeling 2019). Similar parallels may exist in the context of coal waste utilization as a method to commercialize carbon-based goods while also cleaning up existing mines. The value chain that supports CO₂ utilization processes will also undoubtedly include sites that represent historical burdens in certain communities. Principles of justice, both historical and forward-looking, need to be continually applied as the CO₂ utilization sector builds out to strive toward EJ as an outcome. This section discusses how to operationalize foundational principles of EJ, how to measure EJ in projects, and EJ considerations for project selection and siting.

4.4.2.1 Operationalizing Foundational Principles of EJ

A defining moment in the EJ movement with significant relevance to infrastructure development was the creation of the 17 Principles of Environmental Justice at the 1991 National People of Color Environmental Leadership Summit. The goals for the principles include to build a national and international movement to fight the destruction of land and communities; to respect and celebrate cultures and beliefs about the natural world; and to promote economic alternatives that contribute to the development of environmentally safe livelihoods (Madison et al. 1992). These principles are still considered foundational in the climate movement and can be used as guidelines to evaluate specific projects (e.g., see O’Laughlin 2021). Given the substantial opportunity for developing CO₂ utilization and the accompanying capture and removal infrastructure, the sector has to develop in the most just way possible, not only to bolster public acceptance but also to do good for the public. Table 4-2 describes how Principles 3, 5, 6, 7, 8, 11, and 16 can be incorporated into considerations for the emerging CO₂ utilization sector. (See Finding 4-9 and Recommendation 4-8.)

While the principles serve as a rubric through which communities can evaluate specific projects, the EJ movement has also served communities by enlarging the constituency through the incorporation of more disadvantaged communities; building community capacity through educational campaigns that draw direct connections between the EJ movement and the surrounding environment of many disadvantaged communities; and facilitating community empowerment through grassroots efforts (Faber and McCarthy 2001). These structures enfranchise communities as decision makers and reflect the nature of EJ as a dynamic movement, constantly pushing against antiquated and often exclusionary processes to ensure equity across all aspects of the project value chain.

4.4.2.2 Holistically Measuring EJ

Federal and state agencies designed and implemented policies and initiatives to advance EJ as early as 1994 (see Section 4.2.1.2.2). However, there is no standard way to measure elements of EJ or to locate communities impacted by environmental injustices. For example, CEQ’s new Climate and Economic Justice Screening Tool (CEJST; Version 1.0) is one of more than 30 EJ screening tools that exist across federal, state, and local agencies (Dean and Esling 2023).²⁰ Assessment tools—such as CEJST and EPA’s EJScreen—can be beneficial for the process of deciding where infrastructure and retrofits are sited and can be used to track EJ outcomes (CEQ n.d.(b); DOE n.d.(d); EPA n.d.(a)). However, there are criticisms about how sufficiently these tools address certain factors, such as weighing race as a key demographic that indicates disproportionate impact or “disadvantaged” categorization (Sadasivam 2023; WHEJAC 2022b). Additionally, while environmental impact assessments are useful and integral to the siting process, they are better suited to address “potential harm and cumulative impacts of a proposed project, and supporting a decision to relocate, mitigate, or even stop a project” (Wang et al. 2023, p. 73). This results in the lack of ability to identify and address actual adverse outcomes of project and demonstrates that while these assessment tools have a place in the design and siting process, they alone are not comprehensive enough to be used without additional community considerations that often involve the history, racial makeup, and concentration of power in a community.²¹

While a lack of standardization makes quantitative measurement of EJ challenging, there exist foundational framings of holistic benefits that might flow into communities in response to direct investments in EJ-related projects. For example, Dr. Bunyan Bryant, a former University of Michigan School for Environment and Sustainability professor and noted EJ leader, stated that EJ is “supported by decent paying and safe jobs; quality schools and recreation; decent housing and adequate health care; democratic decision-making and personal empowerment; and communities free of violence, drugs, and poverty” (Bryant 1995, p. 6). Because communities are not monolithic, the specific benefits a community wants and experiences will differ from project to project. Federal agencies have recommended that programs work with stakeholders to define program and project benefits, specifically in the context of Justice40-covered programs (e.g., see WHEJAC 2021 and Young et al. 2021). These recommendations seek to avoid harm and maximize federal investments, including directing investments in geography and

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²⁰ For more information about how these screening tools intersect, see the Environmental Policy Innovation Center’s EJ Tools Map at https://epic-tech.shinyapps.io/ej-tools-beta, accessed August 5, 2024.

²¹ See Chapter 3 for more information about assessment tools.

TABLE 4-2 How to Operationalize the Principles of Environmental Justice in the CO₂ Utilization Sector

SOURCE: Based on data from Madison et al. (1992).

people, making indirect and direct investments in a community, and providing essential services to a community by external direct investments (WHEJAC 2021). Efforts to advance EJ can benefit from a core set of overarching benefit types from which projects can outline specific benefits to potential host communities.²² (See Finding 4-6 and Recommendation 4-5.)

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²² For example, NASEM (2023b) recommended that federal legislation require the collection and reporting of standardized metrics for direct impacts on jobs, public health, and access to technologies and programs (see NASEM 2023a, Recommendation 2-1). For more about direct benefits from initiatives focused on equity and justice, see NASEM (2023a).

4.4.2.3 Considerations for Selecting Projects

When considering the role of EJ practices in societal and community acceptance of proposed projects, the mechanisms and processes producing inequities across various institutions, industries, and frameworks for deployment need to be evaluated, as do the interaction of rules, attitudes, and politics (Foster 1998). This section outlines factors that impact acceptance of projects, EJ considerations for resource consumption, and procedural justice in selection processes.

4.4.2.3.1 EJ Considerations for CO₂ Utilization Resource Consumption

Avoiding adverse impacts of CO₂ utilization infrastructure on communities requires consideration of the facilities’ resource consumption, especially for geographies where shared resources might be particularly scarce. The committee’s first report included discussion of the electricity, hydrogen, water, and energy storage needed to support CO₂ utilization infrastructure (see NASEM 2023b, p. 96). While LCAs are adept at predicting resource consumption for a particular deployment scenario, the specific location where infrastructure might be sited also has to be studied during project design—for example, via an environmental impact assessment.²³

Energy is one of the driving factors of GHG emissions and is therefore integral to the boundary considerations of the system (Terlouw et al. 2021). While the United States has advanced its commitments to deploy renewables, many underserved communities across the country still face substantial energy burdens and barriers to accessing zero-carbon energy infrastructure (DOE n.d.(c)). In these communities, energy justice—the goal of achieving equitable participation in the energy system while remediating the disproportionate social, economic, and health burdens of the current energy system—is integral for siting carbon management infrastructure, especially in cases where substantial energy requirements are necessary (DOE 2022b).²⁴ In addition to the land used for electricity and fuel production itself, the environmental impacts from transporting and storing electricity and chemical feedstocks have to be considered when developing CO₂ utilization projects. Similar to other renewable energy options (e.g., solar or wind), CO₂ utilization is estimated to require a lot of land for facilities and transport infrastructure. For example, one study estimates that 68,000 miles of CO₂ pipelines will be needed across the United States to meet the demand of a CO₂ utilization sector (Larson et al. 2020; Thomley 2023b).²⁵ While relying on a clean electricity grid can reduce the direct land transformation of a particular project, the externalities of this choice deserve acknowledgment, and co-locating electricity generation and storage facilities to minimize land use needs to be considered.

Water consumption for carbon management will vary across pathways, with biomass- and biochar-associated techniques typically resulting in intensive land use and water consumption (Rosa et al. 2021; Terlouw et al. 2021). Water as a resource has a long history in EJ communities, receiving more attention in recent years owing to events like the Flint, Michigan, water crisis, which led to contaminated drinking water and eroded trust of the local government, and the Jackson, Mississippi, water treatment facility failure, which left 150,00 residents without drinkable water (Denchak 2018; O’Neill 2023).²⁶ Water is a highly scrutinized resource in many resource-scarce communities, with nearly 2.2 million Americans living in homes without running water or basic plumbing (O’Neill 2023).

For the carbon management sector, there are growing concerns about how the technologies will impact communities with scarce water resources. For example, the Central Valley—which has seen substantial oil, gas, and agricultural booms—is being considered for several DOE-funded DAC projects announced in fall 2023 (California Resources Corporation 2023). However, droughts in 2021 put “a massive strain on many households and farms in the area,” leading to losses of $1.7 billion and more than 14,000 jobs (Alonso and Ferrell 2023; DeLonge 2022) and creating competition for necessary resources like water and nonpolluted air (Cox 2020). Because recent analyses demonstrate that high water use hinders certain DAC approaches, trying to site facilities in drier regions is common (Küng et al. 2023). However, with existing burdens and competition of resources as a result of climate change in the Central Valley, any project development that could potentially increase resource insecurity in the region needs to be meaningfully considered (e.g., see Chemnick 2023b and Fernandez-Bou et al. 2023).

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²³ See Chapter 3 for more on LCAs and environmental impact assessments.

²⁴ Although zero-carbon energy sources are favorable for carbon management infrastructure nationwide, these pathways come with their own resource costs on communities, such as the mining of critical minerals for lithium-ion batteries, or the potential air quality impacts resulting from the production of cement and steel needed for wind energy deployment (IEA 2021).

²⁵ See Chapter 10 for more on pipeline development.

²⁶ See also Tabuchi and Migliozzi (2023) for more about the impact fracking has made on water availability.

The committee’s first report identified that, while water requirements for CO₂ utilization processes will not significantly increase water demand at a national level, local water impacts will vary based on geographical region (NASEM 2023b, Finding 4.14). Thus, DOE should work with its national laboratories to analyze the effect of CO₂ utilization on local water demands and identify the regions where there are opportunities for water infrastructure to serve multiple projects while considering local and EJ impacts (NASEM 2023b, Recommendation 4.6).²⁷ The committee still recommends that these analyses be conducted for CO₂ utilization processes that require water, including waste mineralization, vacuum production, product rinsing, dilution, and distillation, and that the results are appropriately considered during the planning stage for CO₂ utilization infrastructure.

4.4.2.3.2 Incorporating Procedural Justice in Project Selection

To address societal acceptance, several organizations outline engagement frameworks rooted in themes of justice and equity. For example, the Jemez Principles for Democratic Organizing feature agreements for organizing across diverse cultures, organizations, and politics (Solís 1997). These principles can help lay foundations for positive partnerships and engagement with communities that build trust and might, therefore, result in higher rates of acceptance of the CO₂ utilization sector as it builds out. (See also the Just Transition Principles outlined by the Climate Justice Alliance 2019 and the Principles of Working Together adopted at the Second People of Color Environmental Leadership Summit [see Energy Justice Network n.d.].) Engagement processes with justice practices prioritized early can result in iterative learning processes and may prevent community rejection. However, if consent is not reached, the aspects of the project that the community rejects need to be identified and, where possible, updated and modified to address objections. Box 4-5 describes how a feedback process can be developed to approach a situation in which a community says “no.”

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²⁷ As noted in the committee’s first report, these analyses are being conducted for algal cultivation systems by Argonne National Laboratory, with support from DOE’s Bioenergy Technology Office and Office of Fossil Energy, and for different mineralization processes that take place under aqueous conditions. For more information about these analyses, see DOE-BETO (2021), Naraharisetti et al. (2017), and Xu et al. (2019).

4.4.2.4 Just Practices for Permitting of CO₂ Utilization Infrastructure

While widespread permitting gaps still exist and need to be prioritized for the development of the CO₂ utilization sector, permitting may not result in the accountability communities seek from what is ultimately supposed to be a protective process. Permitting processes can be analyzed at both the federal and state level; some permitting will need federal guidance when infrastructure for carbon management, hydrogen, and utilization intersect with other sectors, with the understanding that states have significant knowledge of their own localities. Upon reviewing permitting processes for CO₂ utilization in its first report, the committee recommended that these processes be coordinated by a single agency or entity that would also guide developers through the process of engaging with states and localities (NASEM 2023d, Recommendation 5.4).²⁸ For technical information about CO₂ utilization infrastructure, see Chapter 10.

To advance community voice in a permitting process, developers can share examples of the expected, place-based impact the CO₂ infrastructure might have and allow time for community members to ask questions and express their concerns related to the information provided. The incorporation of just practices is a critical part of permitting, as these permits can ultimately determine impactful outcomes (Guana 2015). For example, employing the pillars of procedural justice—neutrality, respect, voice, and trustworthiness—can ensure that all necessary parties are respected and heard throughout the permitting process (Yale Law School n.d.). Procedural justice strategies in infrastructure planning, however, do not guarantee community endorsement or acceptance. NASEM (2023e) identified key siting features that could reduce conflict and delays in the permitting process and highlighted the necessary inclusion of stakeholders that otherwise would not be included in the process, the need to elevate Indigenous knowledge, and requirements for following federal guidance memos.²⁹ Ultimately, for communities to build further trust with permitting entities, there has to be evidence of fair and equitably distributed outcomes alongside the integration of community perspective throughout the permitting process and its ongoing reassessment.

4.4.2.4.1 New and Existing Industrial Facilities

The procurement of CO₂ is a good starting point when considering how to center justice practices in the CO₂ utilization value chain. There are two categories in which this infrastructure can be placed: (1) existing infrastructure, such as industrial facilities that produce CO₂ as a by-product, and (2) new infrastructure, such as the DAC and hydrogen (H₂) hubs that, respectively, will remove atmospheric CO₂ or capture CO₂ from natural gas-based H₂ production. While existing infrastructure still has opportunities to address long-standing EJ issues in the surrounding community and employ reparative and restorative justice principles, new infrastructure should be considered carefully throughout the design and project development stages to address community concerns and needs.

Existing facilities.

Studies have linked historical racist policies and practices to the fact that sources of air pollution are disproportionately located in and adversely impact communities of color (Bravo et al. 2016; Cushing et al. 2023; Lane et al. 2022; Liu et al. 2021; Ringquist 2005; Rothstein 2017; Tessum et al. 2019; Woodruff et al. 2023). In particular, racial zoning, redlining, and segregation have isolated racial and ethnic minorities within built environments with inadequate physical infrastructure (e.g., stormwater drainage, green space, and energy systems)

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²⁸ For more information, see Section 5.2.1 through Section 5.2.3 in NASEM (2023d).

²⁹ Appendix G describes key features of effective siting and permitting processes from scholars and practitioners as outlined in NASEM (2023e).

(Bullard 2020; Hendricks and Van Zandt 2021) or near hazardous industrial facilities (Agyeman et al. 2002; GAO 1983; James et al. 2012; Linder et al. 2008; Mohai et al. 2009). These patterns of environmental injustice were “shaped by power and privilege” and created “areas of both prosperity and disadvantage” (Hendricks and Van Zandt 2021, p. 1). These historic inequities have laid the foundation for the industrial sector that persists to this day.

While an existing industrial facility’s location will not necessarily be revisited, retrofitting the facility with new technology can strive to incorporate EJ and democratic community organizing principles. An important first step is for the developers and advocates to familiarize themselves with the historical experience of the most disenfranchised in the immediately impacted community. Then, restorative justice can be considered; before new work can begin at an existing site where harm has taken place, especially if that harm is generational, the actors that have perpetuated harm accept responsibility and act to repair the harm done while reducing the likelihood of creating new injustices (Hazrati and Heffron 2021). Beyond just capturing CO₂ from the facility, additional infrastructure in these locations can seek to alleviate existing burdens in the community where possible. For example, new infrastructure can pursue pollution reduction and include provisions for people’s science to conduct data MRV for the outcomes of retrofits.

New facilities.

While new developments featuring emerging technologies benefit from widespread site selection, they also face similar public acceptance challenges to other climate-mitigation technologies.³⁰ In the case of DOE’s hub programs, developers are often encouraged to look at or partner with Opportunity Zones—economically distressed areas of the United States—with the goal of “[spurring] economic growth and job creation in low-income communities while providing tax benefits to investors” (IRS n.d.). While siting of new CO₂-based infrastructure in Opportunity Zones may bring positive economic impacts, the fact that these communities are already economically depressed or overburdened indicates the presence of disenfranchised groups and potential structural inequities. Advocates and developers will need to center community history and EJ practices in site selection for hubs. The process of designing hubs is intricate and complex owing to the variety of potential industries, actors, and build-out involved, and could benefit from ongoing studies around social understanding and acceptance (Gough and Mander 2022; Upham et al. 2022). General pros and cons of clustered siting that could apply to DAC, H₂, or CO₂ facilities are listed in Table 4-3. See Chapter 10 for more discussion of infrastructure co-location.

TABLE 4-3 Pros and Cons of New Clustered Siting

SOURCES: Based on data from Gough and Mander (2022), Sovacool et al. (2023), and Upham et al. (2022).

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³⁰ For example, see NASEM (2022) for a summary of the societal challenges facing advanced nuclear.

New infrastructure does not necessarily connote good infrastructure. Practices that do not address the social and spatial impacts that remain within communities that have experienced adverse and extractive industry or infrastructure risk reproducing harms (Heck 2021). For example, in 2011, a St. Louis utility negotiated with EPA to reduce the cost of a redevelopment project for the St. Louis wastewater infrastructure. This negotiation resulted in a $1.3 million decrease in the project’s cost by eliminating the need to improve existing infrastructure, which resulted in a lack of benefits to marginalized communities directly impacted by failing sewer and stormwater infrastructure (Heck 2021). The siting of new infrastructure, especially on the scale of hubs, which will cross state lines and impact a variety of geographies, has to be considered in the context of “a progressive lens that views physical infrastructure as an extension of social circumstances,” thus reflecting historically racialized frameworks and policies that target disenfranchised groups (Hendricks and Van Zandt 2021, p. 1).

An example of a progressive lens is the social construction of technology framework, which states that technology and society are mutually constructed together (Bijker and Law 1994). This framework identifies the complex nature of projects in which the relevant social groups have different ideas about what a technology does; therefore, a project’s negotiation will have to acknowledge different technological frames—the goals, theories, and solutions that capture the interactions between social groups and the unique ideas about a proposed technology or project—before coming to consensus about a project (Sovacool et al. 2023). The complex relationship between social groups, technological frames, technology, solutions, and risks within a social construction of technology framework (see Figure 4-8) highlights that the design and implementation of net-zero megaprojects, such as CCUS hubs, have economic, political, and socioenvironmental dimensions that need to be identified and addressed throughout the project’s life cycle.

4.4.2.4.2 Pipelines

Pipelines are a critical part of energy infrastructure development and have controversial perceptions among the public, especially related to oil and gas development in the United States owing to the potential localized environmental and social impacts (e.g., land transformation and safety risks) (Jensen 2017). Responses to pipelines are often a result of factors such as technology (e.g., risks and benefits), process, place (e.g., physical infrastructure), and people (Boudet 2019; Janzwood 2023; see also Figure 4-5). Given that overburdened and disenfranchised communities are often impacted by harmful infrastructure, the intersection between pipeline infrastructure and environmental injustice has to be analyzed. The connection between pipelines and autonomy is especially pertinent in the case of Indigenous nations and communities who are vulnerable to and have limited capacity to mitigate pipeline-related incidents (Datta and Hurlbert 2020).

Concerns around pipelines—whether transporting oil, natural gas, or CO₂—remain the same: impact on community resources (e.g., water and air); protection of culturally valuable sites (e.g., prayer and grave sites); impact on public and environmental safety and health; and adequate approval from local groups (Strube et al. 2021). The cancellation of the Mackenzie Valley Pipeline after the Berger Inquiry in 1974 is a notable example that voiced the concerns of Indigenous tribes. The proposed pipeline would have brought Canadian natural gas to U.S. markets, but a comprehensive social, environmental, and economic assessment recommended that no pipelines should be built in the Northern Yukon region inhabited by Tribes. More recently, Indigenous Tribes in the United States protested the Keystone XL and Dakota Access pipelines (Suls 2017). In the case of Dakota Access, protesters stated that the U.S. Army Corps of Engineers had failed to adequately consult Tribe members before approving the pipeline and had violated the National Historic Preservation Act (Herscher 2017).³¹ The general public reticence around CO₂ pipelines is markedly similar. The cancellation of a 1300-mile CO₂ pipeline across five Midwestern states in October 2023 was the outcome of public opposition and citations of a lack of certainty in the regulatory and permitting processes (Phillips 2023). Another Iowa-based CO₂ pipeline project faces delays from comparable opposition and an unclear and difficult regulatory process (Tomich et al. 2023).³² There is also the overarching sentiment that pipelines are a part of the infrastructure that furthers the lifetime of fossil-based industries (e.g., see Earthjustice 2021).

Public health and safety are also important considerations when it comes to pipeline siting and practices. Public attention was drawn to safety and regulation of CO₂ pipelines in February 2020 when a pipeline carrying CO₂ and other chemicals ruptured in Satartia, Mississippi. While the failure was a consequence of natural force damage and did not result in any fatalities, the inadequate response by the pipeline operator led to an evacuation of 200 people and 45 hospitalizations. This event eroded public trust in CO₂ pipelines and raised concerns about the safety and regulatory capabilities of the Pipeline and Hazardous Materials Safety Association (PHMSA). PHMSA’s official failure investigation report pointed to technical shortcomings—such as the failure of pipeline owner Denbury’s atmospheric models for emergencies to consider the locality of incident—and critical problems with the response to the incident (DOT-PHMSA 2022). Specifically, “[l]ocal emergency responders were not informed by Denbury of the rupture and the nature of the unique safety risks of the CO₂ pipeline” (DOT-PHMSA 2022, p. 2). Because emergency responders were not trained to handle CO₂ leaks, mitigation measures were not sufficient to prevent hospitalizations. This incident prompted PHMSA to improve its pipeline and emergency regulations.

While pipeline safety is left up to federal regulators, there are opportunities to learn from the Satartia incident to encourage community engagement and education on pipeline safety protocols, including what to do in the event of a rupture. Resources and funding for emergency training are possible preventative measures that might create “awareness of nearby CO₂ pipeline and pipeline facilities and what to do if a CO₂ release occurs” (DOT-PHMSA 2022, p. 2). Box 4-6 outlines lessons learned in Indigenous–Canadian communities from pipeline spills. These strategies, which have been recommended for Canadian government and Indigenous community interaction, could

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³¹ Following the May 2021 announcement that the pipeline would remain in operation, another environmental impact statement was court-ordered. The Army Corps of Engineers received 200,000 comments during the open comment period of the trial, which ended in March 2024 without the presentation of closing arguments (Dalrymple 2024; Streurer and Dalrymple 2024). A final decision is expected in late 2024.

³² See Chapter 10 for more information about these proposed CO₂ pipelines and recommended solutions to overcome the barriers public sentiment creates.

be a valuable addition to U.S. siting processes to ensure the incorporation of community perspectives in remedying pipeline hazards and developing pipeline safety plans. CO₂ pipeline safety is discussed further in Chapter 10.

Federal review procedures conducted under the National Historic Preservation Act (NHPA) and the NEPA have been criticized for failing to adequately advance EJ or result in environmentally just outcomes, despite having EJ considerations built in. For example, there are concerns that the outcomes of the NHPA are based on the level of public engagement and thus will not ensure the preservation of culturally relevant or significant locations and that the NEPA has been implemented through guidance documents, not legally binding processes (Lockman 2023; Sassman 2021). Furthermore, these federal processes do not capture state-level nuances that need to be identified to achieve granular critiques of the siting and its impacts (e.g., the use of “Natural Resource for Public Purpose” or “Enhanced Oil Recovery for Public Purpose” in Idaho, Wyoming, and Colorado, or “Eminent Domain for Public Purpose” in North Dakota, Montana, or “Common Carriers” in Texas [Righetti 2017]).

Public transparency around pipeline protocols is imperative to ensure the health and safety of surrounding communities and increase their preparedness in the case of an incident. Models that evaluate technical, environmental, and social impacts can be used to expand accurate and transparent information about protocols. Studies have shown that “the optimal path is very sensitive to environmental and social impact considerations at even low weights, in that a small increase in pipeline length (and cost) significantly avoids large environmental and social impacts” (Shih et al. 2022, p. 1). With a procedurally just approach focusing on restorative principles, consensus

may be reached for the siting of a pipeline, especially if existing rights of way might be repurposed for CO₂. However, consensus is not guaranteed just because certain practices are employed. Ultimately, when it comes to pipeline siting, developers need to consider the relationship of the pipeline to potential resources and culturally relevant sites. (See Finding 4-10 and Recommendation 4-9.)

The committee’s first report identified that special consideration is needed when selecting pipeline materials to ensure that appropriate mechanical properties are used to resist ductile and brittle propagating fractures (NASEM 2023b). The committee recommended, and still recommends, that DOE collaborate with national laboratories, university researchers, PHMSA (which is responsible for regulating liquid pipelines, including their design, construction, operation, corrosion control, and testing, maintenance, and reporting requirements), and industry to develop and test rigorous fluid-structure models (NASEM 2023b, Recommendation 4.3).

4.4.3 Just Economic Considerations

The CO₂ utilization sector will have to consider how to equitably distribute economics in its planning. Otherwise, the potential capabilities for the nation’s workforce can become a missed opportunity, resulting in the loss of growth and productivity for the nation (Jacobs 2013). This section lays out how CO₂-derived products contribute to a circular economy, what workforce considerations the sector needs to acknowledge, and how the economic benefits of the sector should be equitable distributed.

4.4.3.1 Product End Use and Contributing to a Circular Economy

Historically, underserved communities have hosted facilities that contribute to the linear economy, which is fundamentally based in extraction and waste, and then have been burdened with the climate impacts derived from these decisions (Berry et al. 2021; Schröder 2020). Aspects of these injustices can be addressed with a well-designed and inclusive circular economy (EPA n.d.(h)). Integral to creating a more just circular economy is considering the end-use impact of that CO₂, in addition to the selection of which facilities go in what communities. For example, enhanced oil recovery, the primary current use of CO₂ in industrial processes, is an economically useful and viable practice but does not create materials and products with a long lifetime, thus offering minimal contribution to a circular economy. See Chapter 2 for more about how CO₂ utilization contributes to a circular economy.

Acceptance of CO₂ utilization projects is likely to be determined by the level of trust that facilities will be run safely and the extent to which a project and its processes contribute to a more circular economy (Jones et al. 2017; Schröder 2020). Additionally, public acceptance will depend on policies and practices identifying the long-term consequences of the sector and how public investment aligns with the perceived rationale for CO₂ utilization as it relates to climate mitigation strategies (Jones et al. 2017). As the transition to a circular economy is a response to climate change, further alignment of the CO₂ utilization sector with goals the public understands is critical. These goals include sustainable practices that restore natural systems, design waste out, and choose biological or renewable materials over nonrenewable ones (Schröder 2020). Furthermore, a circular economy needs to include frameworks that incorporate principles of procedural and distributive justice for it to be just (Berry et al. 2021).

4.4.3.2 Workforce Considerations

Communities have shown particular concern that extractive industries and carbon management infrastructure will inflict ongoing harm on disenfranchised communities. Specifically, “concrete examples of environmental inequity leading directly to unequal health status can be found in occupational health literature and among . . . clinics which serve populations that include low wage workers and workers of color” (Friedman-Jiménez 1994, p. 605). To reform perceptions and experiences with the carbon management sector and set a more equitable tone for CO₂ utilization, a breakdown of the jobs versus environment paradigm, which consistently pits the health and well-being of workers in potentially dangerous industrial jobs against their need for economic stability, needs to occur. This dichotomy has hindered the development of “efforts to build solidarity amongst local environmental justice goals on the one hand, and workers and union aspirations for secure, quality jobs on the other” (Evans and

Phelan 2016, p. 529). Providing workers with safe and healthy work environments needs to be prioritized in the build-out and siting of CO₂ utilization projects.

An emerging CO₂ utilization sector is also an opportunity to diversify the workforce, in terms of race and class, across the entire CO₂ utilization value chain (Taylor 2011). Whether it is the skilled-labor force or positions that require higher education, there is room to further reflect the diversity of the U.S. population. The DOE Research Experience in Carbon Sequestration program, for example, promotes diversity and inclusion strategies like mentorship programs between program alumni and BIPOC graduates and early-career professionals, targeted recruitment strategies, intensive short courses, and internships (Cao and Tomski 2023). The intentional targeting of historically marginalized communities aims to overcome barriers to access to career pathways for unemployed adults, workers with low-wage jobs, and high-school-to-career transitions with significant data showing that “workforce development strategies can build pathways out of poverty” (Zabin 2020, p. 116). The inclusion of underserved and disenfranchised populations also can shape the future development of the CO₂ utilization sector, encouraging an emphasis on a just economy moving forward.

Principles of developing a robust workforce that supports an inclusive economy include the following (Coleman 2023):

• Ground the workforce system. This requires both a more precise and a more expansive definition of individuals’ skills and needs based on the diverse needs of the population.
• Provide access to services and resources. To support adult learners who may face daily challenges that affect program participation and completion, workforce systems need to mitigate the personal and financial constraints that make training and education difficult to sustain.
• Coordinate cross-sector action. An effective workforce system—one that advances inclusive economic growth—engages with multiple institutions and sectors to meet the skill and transparency requirements necessary to produce economic mobility at scale.

While the CO₂ utilization sector will vary by location, the preceding principles are important considerations for increasing access and cementing impactful workforce philosophies.

4.4.3.3 Working to Ensure Just Economic Outcomes

The distribution of infrastructure, benefits, and resources that come from building out the sector is another important consideration when selecting projects, especially given the U.S. history of toxic infrastructure disproportionately impacting underrepresented communities. Frameworks of distributive justice, a key principle of EJ, acting in cohesion with recognitional and procedural justice, have to be incorporated into processes that identify potential costs and benefits of proposed projects.

Increasing opportunities exist for businesses to incorporate social justice principles into their dealings, including through community benefits from the development and build-out of the CO₂ utilization sector, which can include jobs and educational opportunities, preservation of natural resources, contributions to local trust funds, guarantees to pay workers local living wages, and reduction of toxic pollutants. Two types of community benefit frameworks that can be part of project negotiations are community benefits agreements (CBAs), which provide a transparent way for community members to work with developers to determine clear benefits the project will bring the community, and project labor agreements (PLAs),³³ which are agreements between a developer and relevant labor unions to set terms for labor requirements on a project (Fraser 2023). There is evidence to suggest that voters across party lines, and especially those of color, support the use of these agreements in project design in their communities. In particular, Fraser (2023) found that support for CBAs is highest for Latino (86 percent) and

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³³ For example, the Memorandum of Understanding between the United Association of Union Plumbers and Pipefitters and Texas-based carbon capture company CapturePoint Solutions LLC created direct-entry career and technical education pathways for high schoolers to train in pipeline, plumbing, and steam-fitting industries, including providing updated facilities and workshops, student transportation, and instructors (Contractor 2023).

Black (77 percent) voters.³⁴ These plans, when designed through a collaborative framework that is legally binding and adaptable, can serve as a pulse check on a project and can support distributive justice and equitable outcomes.

Community benefits frameworks also offer up obligations meant to diversify the value chain of a project, which can create and solidify inroads for underrepresented groups. For example, a small business developing partnerships with underserved groups might find it particularly beneficial to negotiate a PLA to ensure equitable access to employment opportunities. Additionally, as a start-up begins to develop its initial relationships across the supply chain, choices regarding company principles and workforce decisions have the potential to diversify the CO₂ utilization supply chain and increase small business participation. However, the rights of people and communities need to be recognized and protected during a project’s selection process. Important considerations around these rights and just cross-sectoral distribution include “How are marginalized circular economy views and narratives, knowledge and values recognized and integrated into dominant narratives? How can competing development interests be resolved through participatory processes? And which institutions can guarantee recognition and protection of rights during the transition processes?” (Schröder 2020, p. 14).

The distributive implications of the CO₂ utilization sector go beyond the U.S. domestic context, as the sector is globally connected across extensive supply chains. Sectors like textiles, chemicals, and waste management and recycling—in which CO₂ utilization could play a key role as it develops—are intertwined globally. Holistic approaches and multistakeholder collaboration are required to create “decent, high value work throughout the value chain and with a focus on vulnerable communities and regions” affected by the transition to a more circular economy (Smith 2017, p. 18). Therefore, consideration of impacts from CO₂ utilization will have a global element, of which the rights of countries and cultures will need to be protected.

4.5 CONCLUSIONS

The right combination of policy, regulatory, and engagement frameworks can supplement existing opportunities for the CO₂ utilization sector to be economically viable and sustainable and to contribute to a circular economy. This chapter reviewed existing policy and regulatory mechanisms for the CO₂ utilization sector. Passage of congressional legislation such as the IIJA and the IRA provided economic and noneconomic incentives to build out this sector. The IIJA alone appropriates about $20 billion to support R&D and commercialization for carbon management technologies, including CO₂ utilization. Additionally, federal- and state-level efforts to incorporate EJ goals into policy can ensure that communities receive the public health (e.g., Justice40) and workforce benefits that may stem from investment in carbon management. In addition to developing more robust and adaptable policy mechanisms through which to incorporate EJ, opportunities also exist to develop more demand-side policy for CO₂-derived products.

Because discovering, developing, and commercializing CO₂ utilization processes and CO₂-derived products will be necessary as the nation transitions to a net-zero economy, integrating business development opportunities into the expansion of the CO₂ utilization sector is critical. The chapter identified key areas where policy can continue to support businesses—including small businesses—pursuing CO₂ utilization. Additionally, programs that support partnerships among businesses, customers, and national laboratories will advance the market for CO₂-derived products during R&D and commercialization phases. At the federal level, existing R&D programs, such as the GAIN Program and the Voucher Program, can serve as models for CO₂-utilization-specific programs. Such a CO₂-utilization-specific program could be especially beneficial for small businesses trying to find their niche in the emerging CO₂ utilization sector.

The chapter identified an opportunity for project developers to address the lack of public awareness of CO₂ utilization through public engagement and education practices that include meaningful engagement with impacted communities, which can provide substantial guidance on how to invest in communities holistically, regardless of

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³⁴ Columbia University’s Sabin Center for Climate Change Law compiled a database of publicly available CBAs and released a report with best practices for developing and implementing CBAs (Columbia University Sabin Center n.d.). Additionally, there is a wealth of scholarly literature around the efficacy of CBAs as a positive tool when implemented thoughtfully and as a drawback when actual community views are not reflected (e.g., see Been 2010; De Barbieri 2016; Fraser 2022, 2023; Marantz 2015; Wolf-Powers 2010).

infrastructure type (see Figure 4-7). The nascency of the CO₂ utilization sector means that EJ principles can be meaningfully considered and appropriately incorporated into sector project and workforce development, as well as policy. Specifically, consideration of the 3rd, 5th, 6th, 7th, 8th, 11th, and 16th Principles of Environmental Justice can help ensure that the CO₂ sector advances ethical and responsible uses of land and renewable resources; ensures all communities the right to self-determination; ameliorates waste products and potential pollutants; actively integrates community input into project design; provides workers and communities with access to new job opportunities and related benefits; incorporates community approaches into decision making and implementation; and provides education opportunities emphasizing social perspectives and histories on environmental issues. Furthermore, through the consideration of just economic outcomes, the emerging CO₂ utilization sector can advance equitable access to the circular economy, new jobs associated with the emerging sector, and direct benefits to communities from projects.

This section enumerates the findings and recommendations related to the policy and regulatory frameworks needed for economically viable and sustainable CO₂ utilization and concludes with the research agenda item associated with this chapter.

4.5.1 Findings and Recommendations

Finding 4-1: Demand incentives—Various supply-side economic incentives support carbon utilization, in contrast to minimal demand-side policy incentives. Multiple approaches to lower the carbon intensity (CI) of purchased commodities have been shown to be more cost effective than manufacture of CO₂-derived products, given the current levels of decarbonization required by corporate goals in the private and public sectors. Adopting low-CI products produced from captured CO₂ can support private and public sector decarbonization goals and also support the development of a CO₂ market, especially as decarbonization targets become more stringent. Without the simultaneous incentivization of the demand for CO₂-derived products or the imposition of low CI requirements for new products, CO₂-derived products will remain costly compared to incumbents.

Recommendation 4-1: Targeted procurement standards—The General Services Administration (GSA) should implement and provide guidance to state and local procurement offices to ensure that programs are designed to motivate CO₂-derived product demand. The GSA guidance should outline the benefits of procurement programs that either set product quotas or set a scoring system based on the prevalence of products procured through CO₂ utilization processes, taking into consideration locally relevant conditions as appropriate, for state and local offices to consider. At least in the short term, these products may have higher costs and potentially higher carbon intensity (CI) than non-CO₂derived products, but demonstrations are critical to obtain the necessary learnings to drive down costs through scaling. If the products continue to have higher CI, then a progressive CI target per carbon utilized that rachets down over time should be considered.

Finding 4-2: Workforce development—The workforce needed to support carbon utilization will be small in comparison with that for other clean energy jobs, but there are not enough employees in the upstream labor force to support the infrastructure build-out that investors seek to fund. To support the expansion of a market for CO₂derived products, a sustainable workforce is needed for upstream labor for the deployment and maintenance of CO₂ utilization facilities and technologies. Creating this workforce will require innovative approaches to make the labor force appealing and competitive to prospective employees. The development of a CO₂ utilization workforce can use the existing oil and gas workforce that has transferable professional, technical, and labor skill sets, including project management, business development, pipeline construction, and manufacturing. The CO₂ utilization sector can develop a diverse workforce by building on the awareness that opportunities in oil and gas are declining, offering more training focused on developing and using translatable skills that evolve with the industry, and ensuring emerging workforce opportunities are accessible to all.

Finding 4-3: Co-benefits—Preventing emissions of greenhouse gases and short-lived climate pollutants, including carbon dioxide, black carbon, and methane, is expected to have positive impacts on human and public health,

especially in communities and regions most adversely impacted by harmful emissions and air pollutants. Assessing and communicating the expected health impacts of carbon management technologies and developments will help inform project developers and potential host communities about what can be achieved and, in turn, will better inform decisions made during project selection and program implementation.

Recommendation 4-2: Disclosure of health impacts—The Department of Energy (DOE) should require the use of the U.S. Environmental Protection Agency’s Co-Benefits Risk Assessment Health Impacts Screening and Mapping Tool (COBRA) to analyze and communicate the projected health impacts of carbon capture, utilization, and sequestration technologies for DOE projects. The specificity of COBRA’s estimates will ensure that the maximum health benefits are achieved when siting and selecting carbon management projects.

Finding 4-4: Policy drivers—The main policy mechanisms for the CO₂ utilization sector are tax credits, permitting and regulatory frameworks, and large omnibus legislation. These mechanisms largely incentivize the supply of CO₂-utilization-derived materials and products and are difficult to modify as market conditions change. Both supply- and demand-side mechanisms need to be applied simultaneously to scale up CO₂-derived products in a timely fashion and achieve meaningful market share. The absence of durable and adaptable policy serves as a barrier to successful market and infrastructure development for the CO₂ utilization sector, because there is no clear and consistent direction for carbon management, which hinders the investment in CO₂ utilization infrastructure or markets and the adoption of CO₂ utilization technologies. The novel task of developing a circular economy at the scale required to meet the nation’s net-zero targets creates the opportunity to implement innovative policy that is flexible to meet targets and adaptable to course correct when relevant.

Recommendation 4-3: Policy flexibility—Congress and federal agencies that work on carbon management (e.g., the Department of Energy and the U.S. Environmental Protection Agency) should include a variety of directionally consistent policy mechanisms to support ongoing research, development, demonstration, and deployment; allow flexibility for updating and changing information used to shape incentives based on evolving market conditions; and develop financial mechanism alternatives to corporate tax credits to support adaptive policy development. These federal-level mechanisms should be further flexible to state- and local-level conditions for carbon management infrastructure to support decarbonization and/or economic development goals and enable a stable utilization market.

Finding 4-5: Emerging business support—There is an opportunity to diversify supply chains and types of small businesses that participate across the carbon management value chain as the market for CO₂-derived products is created. Support through policy mechanisms or incentives for local, and veteran-, woman-, or minority-owned companies and start-ups to participate will allow new CO₂ utilization opportunities to be more accessible than incumbent industries. Co-piloting and demonstration partnerships between key upstream and downstream partners of CO₂ utilization will help prove the commercialization of emerging businesses of any kind. However, there is a lack of programs that connect emerging CO₂ utilization businesses with the facilities and technologies needed to upscale.

Recommendation 4-4: Small business support—The General Services Administration, in collaboration with the Department of Energy (DOE), should develop opportunities for small businesses to upscale, modeled on the Gateway for Accelerated Innovation in Nuclear (GAIN) program run by the DOE national laboratories and DOE’s Voucher Program for energy technologies, to better support small businesses entering this field. The key components that should be adopted include:

1. From the GAIN program: Access to testing capabilities; use of demonstration facilities; and connection to experts in material science, licensing, and finance. Like the GAIN program, a voucher program should be established to fund time and effort for the national laboratories to work with businesses. Vouchers for laboratory time and effort should be awarded on a competitive basis with meaningful consideration of how applicants can diversify the supply chain.

2. From the Voucher Program: Predemonstration support to address key adoption risk areas; performance validation and certification support; commercialization support to access market research and business plan strategy assistance or to access independent monitoring, reporting, and verification technologies and practices. This support will enable small businesses to access information from subject-matter experts and opportunities through testing facilities that drive their businesses to the next level.

Finding 4-6: Host community impacts—The distribution of costs, benefits, and resources that stem from infrastructure need to be communicated to and considered by potential host communities of CO₂ utilization infrastructure projects. Meaningful engagement and communication between a project’s developers and potential host community members is required to determine what aspects are considered costs or benefits. To supplement community engagement, assessment frameworks that quantify societal impacts—such as social life cycle assessments—can be used to communicate the societal benefits and risks of a project’s role in climate mitigation to the public. The combination of engagement and assessment can address barriers to public understanding of the emerging CO₂ utilization sector.

Recommendation 4-5: Community impact tracking—The Department of Energy’s (DOE’s) Office of Energy Justice and Equity should work in partnership with community-centered councils and agencies like the White House Environmental Justice Advisory Council to develop robust pathways for defining, tracking, and measuring impacts of CO₂ utilization projects and infrastructure to determine whether and how those impacts are being equitably distributed, while communicating expected outcomes to communities. These pathways should be incorporated into community benefit and project labor agreements and plans as relevant. If the impacts are determined to be benefits by the community, DOE should work on developing a framework to track how these project benefits also meet environmental justice metrics (e.g., taking into account the guidance issued by Office of Management of Budget on Justice40 implementation).

Finding 4-7: Community education—There is limited public knowledge about CO₂ utilization compared with other technologies that will support a net-zero economy. Most of what the public understands is centered around limited familiarity with carbon management technologies, including opposition following similar concerns about other emerging technologies like hydrogen (now) and nuclear (decades ago). These concerns include how a project will impact everyday life in a community and if the required regulatory systems are effective and competent. Communities and consumers want to see connections between the contributions of CO₂ utilization infrastructure and its products and climate mitigation, proving that the technology investment is yielding worthwhile results while prioritizing processes that value public engagement. Additionally, because the narrative around CO₂ utilization is nascent, there are opportunities to confront justice-related challenges and shape a positive narrative by employing justice-centered practices.

Recommendation 4-6: Educational material development—Nongovernmental organizations and research-conducting entities—such as national laboratories, think tanks, and universities—should identify gaps in knowledge, sharing their data and findings about societal acceptance of or opposition to the CO₂ utilization sector through the following actions:

1. Nongovernmental organizations (including universities) and national laboratories should conduct targeted research to develop transparent resources to communicate findings and support improved education related to the direct impact of the CO₂ utilization sector on climate change mitigation.
2. Research-conducting entities should continue to conduct social analyses to determine what consumers and communities think about the CO₂ utilization sector, both in relation to and separate from the carbon management value chain, filling the gaps in knowledge about societal acceptance and potential opposition, to better understand and address the concerns of the public. These data and conclusions of this research should be shared through a centralized and broadly accessible framework.

3. Research-conducting entities should use analyses that combine techno-economic and life cycle assessment objectives to determine a levelized cost of CO₂ abatement to be used to assess the desirability of projects as a function of CO₂ source (fossil or biogenic point source, direct air capture, or direct ocean capture) and product durability. The results of these analyses and assessments should be communicated to the Department of Energy and other entities funding carbon utilization projects to inform them of factors that can influence community acceptance of projects and expected outcomes.

Finding 4-8: Public acceptance—To best support and fit into a circular economy, the CO₂ utilization sector faces and must overcome barriers to public acceptance. Holistic approaches to public and community engagement that acknowledge the intersection of identities and priorities within a community and recognize environmental justice as a facet of a larger social movement facilitate a just, cross-society transition to a circular economy. In particular, meaningful engagement across the value chain can include opportunities for public education about the benefits and risks of the sector, diversifying the sector’s workforce and business types (e.g., small versus start-up versus private business), incorporating labor and community benefits agreements into project design, and consent-based siting and selecting practices. The application of these practices will be diverse, based on differences in project scale and scope, impacted and engaged community, and context within the project cycle.

Recommendation 4-7: Meaningful community engagement—The Department of Energy (DOE) should prioritize projects that can prove that meaningful community engagement frameworks were incorporated into their decision-making processes, as appropriate for the technology readiness level of the project. Additionally, to support DOE’s efforts:

1. Private project designers that conduct life cycle assessments should communicate their findings transparently with community advocates as a part of planning and design processes. This protocol will ensure that a community is made aware of risks to shared resources such as energy, land, and water, and that any barriers are assessed before the project is selected so that place-based solutions can be developed.
2. Project designers and funders, in both the public and private sector, should maintain transparency when co-developing projects and reporting emergency protocols to a community. This will ensure that public health and safety are prioritized during siting and emergency response processes. If the site includes infrastructure that might have potential safety impacts, developers should fund community engagement specifically targeting first responders to equip them with the necessary understanding of safety protocols in the event of an emergency.
3. Project designers and funders, in both the public and private sector, should use diverse methods to incorporate community engagement into assessments to determine whether a project should move forward in a particular community. These methods include community benefits and project labor agreements (which are more robust if legally binding) and plans, and frameworks to employ elements of Free, Prior, and Informed Consent that incorporate vital community input into the decision-making process.

Finding 4-9: Environmental justice—It is critical for environmental justice considerations to be incorporated throughout the project process to ensure that the emerging CO₂ utilization sector develops justly and does good for the public. Although project siting and selecting processes need to be place-based and adaptable to each community and project, a just utilization sector can rely on incorporating the Principles of Environmental Justice, adopted at the National People of Color Environmental Leadership Summit in 1991, into project design processes. Of the 17 principles, seven principles can be particularly useful as guidelines through which communities evaluate proposed carbon utilization projects: Principles 3, 5, 6, 7, 8, 11, and 16.

Recommendation 4-8: Principles of environmental justice—New CO₂ utilization infrastructure development should apply justice principles and learn from other emerging technology pathways, while

seeking to deploy tangible benefits to surrounding communities beyond remediation of the climate, during the planning and design process. To support this, the Department of Energy should incorporate the Principles of Environmental Justice into the requirement for community benefit plans and the review of funding applications for CO₂ utilization projects that require infrastructure development or changes. Specifically, the following principles should be incorporated to prioritize the just prior and ongoing development of the carbon utilization sector:

1. Principle 3: Environmental Justice calls for the right to ethical, balanced, and responsible uses of land and renewable resources. Carbon management infrastructure, including for transport infrastructure to utilization facilities, should consider the most appropriate uses of energy, land, and related impacts through using this framework.
2. Principle 5: Environmental Justice affirms the right to cultural, political, economic, and environmental self-determination of all. The self-determination of the community should be considered and prioritized by project planners and designers to create just precedents for infrastructure build-out.
3. Principle 6: Environmental Justice calls for the end of hazardous wastes and radioactive materials production, while demanding past and current producers be held accountable to the public. The utilization sector should identify and plan to ameliorate waste products and potential pollutants from their facilities that might arise from the creation of CO₂-derived products or feedstocks.
4. Principle 7: Environmental Justice calls for the right to participate at every level of decision making as equal partners. The utilization sector should consider ways to actively integrate community input and reflect that input through adaptations of their project plans.
5. Principle 8: Environmental Justice affirms the right of all workers to a safe and healthy work environment. The utilization sector should ensure that workers and communities are provided with access to new job opportunities, healthy working conditions, and related benefits of the sector.
6. Principle 11: Environmental Justice must recognize a special legal and natural relationship of Indigenous nations to the U.S. government. The U.S. government should consider community approaches to decision making and implementation when engaging with Indigenous groups, as well as their authority over respective territories.
7. Principle 16: Environmental Justice calls for the holistic education of present and future generations, including relevant social perspectives and histories on environmental issues. Prioritizing education through appropriate social lenses allows for the participation of underrepresented communities and supports the development of project frameworks that call for just outcomes.

Finding 4-10: Host community engagement as a part of project development—Project designers need to consider the benefits of available engagement models and select one that ensures just outcomes, including project co-benefits, for the potential host community. When addressing community concerns around resources and culturally significant sites, tools that seek to model a variety of scenarios while weighing both social and environmental impacts are critical for just planning and siting. However, processes dictated by the National Historic Preservation Act or the National Environmental Policy Act may not address appropriately state-level and hyper-local nuances, especially for projects that cross state boundaries. CO₂ utilization developers can use lessons learned from infrastructure accidents (e.g., the 2020 pipeline rupture in Satartia, Mississippi) or failed siting processes (e.g., the terminated wind project in Sweden) to avoid past mistakes and apply successful models to CO₂ utilization projects. Furthermore, legal frameworks, such as community benefits agreements or project labor agreements, have the potential to support transparent project development and provide direct workforce benefits to a community.

Recommendation 4-9: Using past experience to develop new projects—The Department of Energy should develop standards and guidelines for other federal projects to encourage the co-siting of infrastructure based on lessons learned from their direct air capture and hydrogen hubs. Furthermore, the lessons learned from these hubs should be made public. These exemplars can be used by the private

sector looking to develop clustered CO₂ utilization infrastructure to ensure that specific considerations are made during siting processes and to minimize adverse impacts on communities. These considerations include the sharing of resources such as energy, land, and water; the development of pipelines; and synchronized construction periods.

4.5.2 Research Agenda for Policy and Regulatory Frameworks

The committee was tasked with (1) identifying and assessing the progress of technologies and approaches for carbon utilization that may play an important role in a circular carbon economy; (2) assessing and identifying gaps in research efforts to address barriers to commercialization of carbon utilization technologies; and (3) updating the 2019 National Academies’ report Gaseous Carbon Waste Streams Utilization: Status and Research Needs (NASEM 2019). Policy and regulatory considerations are considered enabling research items because they contribute to a net-zero future but are not research on CO₂ utilization technologies or processes themselves; therefore, the research agenda item from this chapter contributes to task (2).

While about 80 percent of the U.S. public either does not know what CCUS technology is or cannot definitively recognize it, there are polarizing opinions about the carbon management sector (see Section 4.4.1.1). As the CO₂ utilization sector emerges, there is an opportunity to invest in public engagement and education that contributes to an informed understanding of the technologies and the expected societal and environmental impacts of the processes. For example, there are opportunities to encourage public and community engagement and education around pipeline safety protocols through existing state-level initiatives. Table 4-4 describes the policy and regulatory

TABLE 4-4 Policy and Regulatory Frameworks Research Agenda

frameworks research agenda, including related research agenda recommendations. The table includes the relevant funding agencies or other actors; whether the need is basic research, applied research, technology demonstration, or enabling technologies and processes for CO₂ utilization, the research theme that the research need falls into; the relevant research area and product class covered by the research need; whether the relevant products are long- or short-lived; and the source of the research need. The committee’s full research agenda can be found in Chapter 11.

4.6 REFERENCES