One of the interesting, but logical conclusions in Exhibit 5 in our February 12th Daily, is that hydrogen availability and cost will not reach a point where it can be used in mid and high-grade industrial heating applications for at least another 20 years. This is very relevant for the chemicals industry, especially for cracking processes and large electric power consumers that currently rely on co-generation. Carbon Capture and Sequestration (CCS) may be the only way that these businesses have a credible path forward that addresses their high carbon footprint for the next 20 years.
From an Administration perspective, recognizing this limitation and making CCS more affordable – either through larger tax breaks or through making carbon more expensive – looks like the right move. While there are pockets of large carbon emissions scattered around the country (Eastman in Kingsport, TN would be an example), the bulk of the opportunity for CCS sits on the US Gulf Coast. We discuss CCS weekly in our
ESG and Climate research piece but we focused on it specifically in the
report linked here.