Incentives for Bio-Sequestration



The potential for biological sequestration of CO2 emissions should not be overlooked. If forests and soils in the United States were restored to their historical potential, they could sequester an additional 39 Gt CO2 annually—around 7 times the United States’ yearly emissions and more than the entire world’s annual anthropogenic emissions.


Simply through basic changes in land-use, agricultural, and forestry practices, the United States has the technological potential to sequester an additional 40-60 Gt CO2 over 50 years and a “few tens of billions over the next half-century.” This works out to approximately 1 Gt CO2 per year. Less conventional forms of biological sequestration, such as the manufacture of biochar to store carbon in soils, also should be embraced.


If incentives for biological sequestration are incorporated into the GHG fee, biological sequestration could help offset emissions by at least 10-20% below 2005 levels in 2020 and 5-10% below 2005 levels in 2050.

Remove the Corn Ethanol Standard

Corn ethanol has lifecycle greenhouse gas emissions 20% lower than conventional gasoline at best, and in some cases can be worse for the climate–eliminating the standard would allow substantially lower-carbon alternatives to compete on a level playing field. Additionally, removing the corn ethanol mandate of 15 billion gallons per year in 2015 could lower corn prices by around 24%. 

Loan Guarantees


Secretary Moniz and President Obama have agreed to release up to $8 billion in federal loan guarantees for “advanced fossil energy projects” as authorized under Section 1703 of the Energy Policy Act of 2005. However, these funds can be allocated to any innovative technologies that “avoid, reduce, or sequester… anthropogenic emissions of greenhouse gases.”


Earmarking these funds exclusively for fossil energy projects is an unnecessary handout to the fossil fuel industry that ignores the potential of many firms with advanced ideas in renewable energy, energy efficiency, energy delivery, and transportation solutions. Instead, the president can and should allow other innovations to compete on a level playing field to receive loans as the law authorizes.

“We will continue to lead by the power of our example, because that’s what the United States of America has always done.”President Barack Obama, June 25 2013

Eliminate Fossil Fuel Subsidies


Fossil Fuel Subsidies, although comprising only a small fraction of GDP, are nevertheless large in magnitude. Eliminating wasteful portions of the $13.15 billion in fossil fuel subsidies would have no discernable effect on gas prices and raise $40 billion over 10 years, revenue that could be more effectively spent in R&D, clean energy deployment, or reducing the deficit.


Most importantly, removing fossil fuel subsidies in the U.S. would send a strong signal to the international community to engage in responsible subsidy reform (link), where larger 

emissions reductions could be achieved.



No New Nuclear Subsidies


Given the limited scope of nuclear subsidies, we advocate for no new incentive changes for the nuclear industry. Pervasive cost overruns provide enough reason for the private sector to shy away from nuclear investments. Current subsidies will not provide the boost the nuclear industry needs to increase its share of generation capacity, but removing subsidies already in place would only harm ratepayers.


There exists a production tax credit of 1.8cents/kWh available to 24 nuclear units currently in the planning phase. However, the total benefit is capped at $6 billion over 8 years, and no nuclear power plants that applied after December 31st, 2008 can claim the credit. This upper limit means that nuclear plants are competing for portions of a fixed pie; the greater the number of reactors, the smaller the slice of the subsidy each receives.


There are, then, disincentives for an increase in the number of reactors. Given the risks associated with significant expansion of nuclear power, we think this is a good thing. The optimal energy strategy is to maintain the current incentive structure and allow the nuclear industry to compete with other sources of energy in the electricity market.