SF Bay Area Tech Giants ask for 5-Year Tax Abatement in TD for Carbon Capture
280 Earth’s test facility site at 4375 River Trail Way in The Dalles, OR. Photo: Joshuah Albert
By Cole Goodwin and Tom Peterson
The Dalles, Ore., April 24, 2024 – 280 Earth is seeking a 5-year Enterprise Zone Tax Abatement in Wasco County.
The CO2 reduction company owned by Google, Inc., Bayshore Global Management, Yu Capital and Builders VC is looking at $ 40 million in investment in the second phase of the project and is asking locals for a boost in the form of reduced property taxes from the Port of The Dalles, The City of The Dalles and Wasco County.
That could mean the loss of approximately $720,000 annually in Wasco County property taxes in the years of 100 percent abatement. CCCNews utilized a tax rate of $18 per $1,000 of assessed property value to get this estimate.
“Five-year abatement means the company would not pay property taxes for the first three years of operation provided they meet certain requirements, such as job creation. In the fourth year, they'd receive a 50% abatement, and a 25% abatement in the fifth year. They contribute the balance (50% and 75%) to the city, county and port in those final two years. Details of how that happens would be negotiated,” said Dan Spatz, from the City of The Dalles Economic Development Office.
Spatz and Jill Amery, Wasco County Assessor presented a pre-tax abatement application report to Wasco County Commissioners on April 17, 2024, detailing their multi-phase project aimed at capturing atmospheric CO2 and converting it into a storable liquid form.
New Technology to Tackle Climate Challenges
Screenshot of 280 Earth’s website.
The carbon extracting technology, developed over five years at Google X Labs and spun off in 2022, uses a proprietary adsorbent material to capture CO2 directly from the air. This innovative approach was validated through bench-scale testing and a nine-ton prototype at Google X labs. If successful, the captured CO2 would be transported by rail from the facility to Class VI injection wells in the Midwest for permanent storage, leveraging federal tax credits.
Graph from 280 Earth shows the global atmospheric carbon dioxide compared to annual emissions.
The project has been planned to roll out in three phases.
The initial phase of the project involves a $20-million investment into a prototype research and development facility capable of capturing 500 tons of CO2 annually. This phase is already underway at 4375 River Trail Way in The Dalles, OR. The demonstration model, which is nearing completion, is not designed for profitability but to prove the concept's feasibility. 280 Earth will know whether the proprietary technology is feasible within weeks.
The first test run is scheduled to take place in May.
“280 Earth begins operations at our pilot Direct Air Capture (DAC) plant in The Dalles in May, where we will capture carbon dioxide (CO2) from ambient air to help mitigate climate change,” said a 280 Earth representative.
December 15, 2023. Workers in full swing of construction on the Earth 280 demonstration facility in the Port of The Dalles. Photo: Tom Peterson
Phase two, which 280 Earth is seeking tax abatement for, is a $40 million investment that involves building a second module, scaling up the project to increase CO2 reduction to 5,000 tons annually. 280 Earth hopes to break ground on the 2nd facility in 2025.
Phase three is a $90 million investment in building three additional production models to increase that capacity to 15,000-tons annually.
Their long-term goal is to develop a 1 million-ton carbon sequestering facility, the Port of The Dalles does not have the acreage to support such a large facility, which would mean that a large-scale facility would have to be built elsewhere.
The report also discussed the possibility of leveraging waste heat from nearby Google data centers to meet most of the system's energy requirements, a move that would improve efficiency and align with sustainable practices by utilizing existing resources.
The project has the potential for significant economic impact, with an estimated overall contribution of $195 million from the full implementation of the project phases.
The project is as ambitious as it is expensive.
Spatz shared that while 280 Earth is confident in their carbon sequestering technologies they are less confident in the economics. Thus, their primary concern is finding ways to conserve financial resources by applying for a 3- to 5-year Enterprise Zone tax abatement.
Spatz's recommendation to Commissioners was to approve the 5-year abatement application being proposed for phase two of the project.
280 Earth was previously denied an application for tax abatement during phase one of their project due to a “cart before the horse” type scenario. The company had already broken ground at the time of the tax abatement application. Due to this fact, it was determined by the County that the project did not meet the Business Oregon requirements for tax abatement. 280 Earth appealed the decision but was not successful.
The crux of the discussion however is on whether the City of The Dalles, Wasco County and The Port of The Dalles will support taking a chance on the new technology outfit without knowing if the business model is feasible. All three agencies must approve the application for the abatement to be approved.
”We’re committed to scaling up DAC to protect the climate—but in order to grow, we have to start with research and technology validation. Frankly, the pilot-scale project is not intended to, and will not, turn a profit. We’re excited to have The Dalles as our home base for this learning phase of our project. We have established relationships with great local partners and educators, and we hope to stay and grow here for the long haul.” said a 280 Earth representative.
Commissioner Phil Brady said that he feels the purchasing of carbon credits by companies that produce carbon dioxide could make the project financially feasible in the future, but not at this point. (One carbon credit equals one ton of CO2.)
If the gamble pays off, it could make a tangible dent in lowering CO2 in the atmosphere and encourage further investment in the County.
Company officials had this to say.
“Should 280 Earth’s business model prove feasible, certain factors argue in favor of continued local expansion, not at Port of The Dalles but elsewhere in Wasco County or perhaps even at the Columbia Gorge Regional Airport industrial park. Former industrial sites at Tygh Valley and Maupin, for instance, might be considered. And, while not in Oregon, the (Dallesport) airport would have sufficient room for a one-million-ton production facility. It has rail transport and proximity to BPA transmission lines. Solar power, if required, can be developed there. Finally, as noted earlier, 280 Earth’s sequestration produces water as a byproduct. A one-million-ton CO2 capture facility would produce an estimated 480 million gallons of water annually, which could be used to offset the airport’s water requirements… Long-term lease revenues, shared with Klickitat County, could be used for continuing airport improvements and to reduce the City’s current subsidy to the airport,” reads the 280 Earth report presented by Spatz.
280 Earth emphasized their commitment to fostering both local and global solutions to climate challenges:
“In Oregon, climate change causes warmer and drier weather, drought and wildfire risks, and declines in snowpack and glacial ice. Local industries such as agriculture, fisheries, and timber production are especially vulnerable to these effects. At 280 Earth we build CO2 Direct Air Capture systems, the first of which is located right here in The Dalles, that will help protect both the environment and local industries against climate change.
Construction and operation of our DAC systems add good green jobs to the local economy, and we’re also collaborating with a local college to provide scholarships and training opportunities. Globally, our mission is to grow this technology so we can permanently remove large volumes of CO2 from the atmosphere and improve the climate for generations to come,” said a 280 Earth representative.
Commissioner Brady also noted that climate challenges have a tangible cost to locals. Saying locals have felt the effect of rising fire insurance and health costs partially because of increased average temperatures spurring larger wildfires in the region in recent years.
The benefit in reducing greenhouse gasses such as CO2 to reduce extreme weather events that cost the US economy billions of dollars annually very well could be worth the gamble.
But it's cash up front to save tomorrow in Brady’s eyes.
“Based on health benefits a ton of carbon will accumulate about $190 in future costs,” said Brady, further noting that “Economies have a difficult time dealing with future costs because we discount the future.”
Brady also spoke to the long-term nature of projects such as this, summarizing 280 Earth’s current hurdles.
“The businesses that go into this face a number of challenges that they call the valley of death. First, they have to do the concept development, the funding for that. Their funding runs out. Then they have to start all over with the prototype. They get the funding for that and that runs out. So, that each phase and now they're into a, uh, demonstration project before they finally get to a commercial development. So it's a long haul. With a lot of difficult points in between,” Brady said.
Commissioner Steve Kramer added to the discussion saying he felt that it was unlikely 280 Earths investors would pull out of the project.
Ultimately Commissioners Scott Hege, Steve Kramer and Phil Brady reached consensus to support 280 Earth’s application for tax abatement.
“What they're asking for us here is really support. It's not a huge ask. It’s something that's tangible and I'll just say that for a town that has the nickname of Dirty D to be known as a place that is a test place for climate solutions is something that I think is really very good publicity and would be worthwhile for us to support,” said Brady.
The road forward:
Spatz said that following his presentation to The Port of The Dalles, the Port felt they needed more information to make a decision, with their primary concern being about which parcels of Port property 280 Earth would hope to purchase and develop in the future.
While an official decision regarding tax abatement is pending further discussion, the strong inclination to support 280 Earth’s bid for a tax abatement is a vote of confidence in its potential and could ensure that Earth 280 remains in The Dalles, providing long-term economic benefits and positioning the city at the forefront of a revolutionary industry. And although no tax abatement has been granted, the County consensus allows 280 Earth some idea of what to expect moving forward.
In the meantime, Spatz is scheduled to present the tax abatement issue to The Dalles City Council on May 28, 2024.
