Congress Considers A Variety Of Programs To Incentivize Carbon Capture Projects
by Jim Magill (Forbes) As industry leaders and policy makers increasingly confront the challenges of battling climate change triggered by an excess amount of carbon dioxide (CO₂) and other greenhouse gases in the atmosphere, they are increasingly turning to an old idea whose time seems to have come – removing emitted CO₂ from the air and storing it where it can’t do any damage, or turning it to some useful purpose.
Carbon capture technology has been used for years to extract CO₂ from point sources, such as ethanol plants. The CO₂ can be used in industrial applications — such as being injected into the ground to aid in the production of oil — or food processing — such as adding fizz to sodas.
However, climate experts warn that much more has to be done to remove CO₂ from the atmosphere. The Intergovernmental Panel on Climate Change (IPCC) in a 2018 report said that in addition to limiting greenhouse gas emissions, the world’s industrial nations will need to adopt carbon-capture technologies on a massive scale, in order to achieve the goal of limiting global warming to 1.5 degrees Celsius above pre-industrial levels by 2050 as outlined in the Paris climate accord.
45Q tax credit
Building carbon capture plants on a scale that would meet the IPCC goal has remained an elusive target for U.S. industries, as without government subsidies, such projects are far from being economical. In 2018 Congress enhanced the existing 45Q tax credit to incentivize companies to build commercial-scale carbon capture plants. More than two dozen projects have been proposed to take advantage of the credit, but experts say more federal incentives are needed to really kick-start the build-out of CO₂ projects. To that end congressional lawmakers have proposed several bipartisan bills to provide those additional incentives.
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In addition to the proposed extension of the 45Q credit, Congress is considering several other bipartisan bills to provide incentives for carbon capture projects.
One such bill is the Launching Energy Advancement and Development through Innovations for Natural Gas LEADING Act, sponsored in the Senate by Texas Republican Senator John Cornyn and Chris Coons, a Democrat from Delaware, and in the House by two Texas representatives, Republican Dan Crenshaw and Democrat Henry Cuellar.
The bill would direct the secretary of Energy to establish a program for the research, development and demonstration of commercially viable carbon capture technologies for natural gas-fired power plants, with pilot projects to be built by September 30, 2025.
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Other bills pending before Congress would provide additional sweeteners for carbon capture project developers. The Growing Renewable Energy and Efficiency Now (GREEN) Act, sponsored by Rep. Mike Thompson, a conservative California Democrat, would allow project developers to take 85% of the 45Q tax credit and request a refund of any resulting overpayment of tax, rather than opting to carry forward credits to years when their credits exceed their tax liability.
The Redeeming Effectiveness to Carbon Oxide Utilization Plus Sequestration Act of 2020 or the RECOUPS Act, sponsored by Michigan Republican Representative Jack Bergman, would allow project developers who claim a CO2 sequestration tax credit to elect to treat the credit as a payment in excess of their tax liability. This would allow the developer to receive a direct payment of 90% of the dollar amount of the credit.
In addition, Chapter 12 of the Moving Forward Act, the ambitious $1.5 trillion energy and infrastructure legislation, calls on the secretary of Energy to establish a carbon capture and utilization technology commercialization program. The bill would establish funding for front end engineering design (FEED) studies for commercial demonstration projects for at least three types of advanced carbon capture technologies and at least one type of direct-air capture technology. READ MORE