Ideology Accidentally Aligns with Reality: US $3.7B CCS Cancellation Explained

Once again, the Trump administration has swung its ideological axe at clean energy initiatives, cutting $3.7 billion in funding previously earmarked by the Department of Energy (DOE) for carbon capture and storage (CCS), hydrogen fuels, synthetic fuels, and a variety of other industrial decarbonization technologies. Predictably, the knee-jerk cancellations were driven more by political signaling than careful analysis.

But in this instance, undoubtedly unintentionally, the administration’s broad-brush approach landed mostly in the right places. Indeed, a surprising majority of the canceled projects should never have seen funding in the first place, given their dubious economics, shaky technological readiness, and fundamentally misguided assumptions. While it’s unfortunate that some genuinely innovative ventures were caught in the ideological crossfire, most of these initiatives were dead on arrival. The administration’s blunt ideological hostility toward Biden-era decarbonization projects, paradoxically, ended up saving taxpayers from throwing good money after bad.

To be clear, the Inflation Reduction Act had mostly good intentions, and often adequate things that it funded. But hydrogen for energy, blue hydrogen, and carbon capture — things the fossil fuel industry loves — featured prominently along with battery factories, EV factories, critical minerals processing, and other actually useful things.

The first category deserving scrutiny — carbon capture at fossil-fueled power plants — has a track record littered with expensive failures and miscalculations. The economic and technological hurdles involved in retrofitting coal and natural gas plants with CCS technology are staggering. Even where massive public subsidies have been deployed, as was the case with the much-publicized Petra Nova CCS plant in Texas, operations rarely approach their advertised efficiency, reliability, or cost-effectiveness. Petra Nova, once celebrated as a flagship CCS project, was ultimately mothballed when oil prices dropped, eliminating its primary revenue stream from selling captured carbon dioxide for enhanced oil recovery.

Canada’s Boundary Dam project similarly suffered endless operational and financial headaches, proving that retrofitting old fossil plants with CCS remains prohibitively expensive and rarely meets performance expectations. As a result, the Trump administration’s cancellation of projects like Calpine’s large-scale CCS retrofits in California and Texas, and PPL’s smaller CCS pilot at its Kentucky gas plant, while clearly ideologically driven, inadvertently spared taxpayers from another costly CCS debacle.

The story is equally dire for hydrogen-based energy projects, particularly those involving fossil-derived hydrogen coupled with CCS. Hydrogen’s appeal as an energy carrier has always been more theoretical than practical. Despite decades of optimism, the reality remains stubbornly resistant to scale, efficiency, and economics. Projects like ExxonMobil’s Baytown, Texas petrochemical plant, where natural gas was set to be replaced with supposedly clean blue hydrogen in industrial furnaces, epitomize the misguided logic underpinning many hydrogen initiatives. Such ventures rarely deliver meaningful net emissions reductions at reasonable costs, due primarily to the inherently energy-intensive nature of hydrogen production and distribution.

Similarly, Ørsted’s proposed e-methanol initiative on the Texas Gulf Coast sought to blend captured carbon dioxide with hydrogen to produce synthetic fuels. This approach, despite its superficially appealing narrative of circular carbon economy, depends heavily on complex, expensive inputs and supply chains that rarely add up to a sustainable or cost-effective business model. Ultimately, these synthetic fuel projects remain far more appealing in PowerPoint presentations than they ever do on balance sheets. Canceling these hydrogen and synthetic fuels projects, though intended as political theater, once again represented an inadvertently correct decision. There’s a reason why the majority of green methanol produced today is made from biomass, and there’s a reason why very little methanol is used as an energy carrier.

Despite the mostly justified nature of the cancellations, several promising technologies and companies were also swept up in the administration’s blanket hostility. Sublime Systems, for example, is developing an innovative electrochemical method of producing cement, a genuinely transformative approach capable of dramatically cutting emissions in one of the hardest-to-abate sectors. It’s a firm I’m keeping an eye on as its approach and target of using concrete from demolition debris to create new cement is strongly aligned with reality, and could provide a significant percentage of US cement requirements.

Brimstone Energy offered another alternative cement process that avoided direct carbon emissions without needing CCS, providing a pathway to cleaner cement production. Though Brimstone’s technology faced more substantial execution risks, mainly because its targeted feedstock has a tenth the quicklime as limestone, it still represented precisely the type of high-risk, high-reward innovation that public investment is meant to encourage.

The cancellation of Diageo’s battery storage installation at its Kentucky distillery plant, a modest yet genuinely beneficial local decarbonization project, was regrettable. These cancellations underscore the administration’s indiscriminate hostility toward decarbonization investments rather than careful analysis or rational prioritization. As is often the case, valuable, innovative ventures paid the price for this blunt approach.

Beyond individual projects, the broader economic impacts of these funding cuts should not be overlooked. Ironically, the majority of canceled projects targeted facilities located in traditionally Republican-leaning states and counties, such as Texas, Kentucky, Louisiana, Wyoming, and Alabama. These areas stood to gain significant local economic boosts from project construction, ongoing operations, and innovation clusters associated with CCS and industrial decarbonization investments. Texas alone lost multiple major industrial decarbonization initiatives, including ExxonMobil’s hydrogen retrofit, Ørsted’s synthetic fuel plant, and Dow Chemical’s project converting carbon dioxide into battery materials.

Louisiana’s cancellation of Heidelberg Materials’ massive cement plant CCS project eliminated an opportunity to create high-paying local jobs and bolster the regional economy. Kentucky saw its local CCS pilot canceled, undermining not just potential decarbonization progress but also local employment opportunities and economic resilience. While some communities may quietly applaud the cancellation of infrastructure they viewed skeptically, the overwhelming impact is negative: these ideological funding cuts primarily harm regions that are traditionally supportive of Trump-era policies, reflecting a short-sightedness that undermines long-term regional economic development.

I’ve often said both that what the USA needs is a Marshall Plan for its red states and counties, and that the Inflation Reduction Act was the closest thing to that Marshall Plan. The majority of IRA money was flowing to the less affluent states and counties where grievance politics is strongest due in large part to decades of wage stagnation. As always with America, the Democratic Party was punished for doing the right thing, the Republicans are now making the lives of members of their base worse, and they will undoubtedly capitalize on it to attack Democrats next time around. Leveraging grievance by pointing it at purported enemies appears to be all that Republicans have to offer these days. It’s a pity, as they really were the Grand Old Party once, however every decade since the 1950s they’ve chose the wide gate and the broad road, with predictable consequences.

You’ll also note how much of this money was flowing to the fossil fuel industry. That’s another group of actors strongly supporting Trump and the Republicans who aren’t going to be getting the largesse they expected. They’ll be harder to sway with Democrat-blaming propaganda in the mid-terms and the next major election, as they are also suffering significant fiscal hits from Trump’s tariffs.

Ultimately, the Trump administration’s cancellation spree is a textbook example of ideology trumping rational economic and political analysis. However, this round of cuts ended up resembling a broken clock, i.e accurate twice a day, despite fundamentally flawed reasoning. While taxpayers were inadvertently spared from subsidizing another round of uneconomic CCS and hydrogen energy projects, the tragedy remains that genuinely innovative ventures like Sublime, Brimstone, and targeted battery-storage initiatives were also lost in the crossfire.

The administration’s ham-fisted approach underscores a persistent problem in U.S. energy policy: policy decisions driven by political theater rather than careful, evidence-based analysis rarely achieve sustainable long-term outcomes. While we acknowledge that, for once, ideology inadvertently got it right, the broader pattern remains troubling. Real innovation—and the communities set to benefit from it—deserve more than accidental correctness.