Luján, Barrasso Spearhead Bipartisan Legislation to Harness Carbon Capture’s Full Potential to Reach Net-Zero Emissions and Create New Jobs

October 03, 2024

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(Office of US Ben Ray Luján (R-NM) U.S. Senators Ben Ray Luján (D-N.M.) and John Barrasso (R-Wyo.) led the introduction of the bipartisan Coordinated Action to Capture Harmful (CATCH) Emissions Act to enhance the federal Section 45Q tax credit to commercialize and deploy much needed technologies to reach net-zero emissions by mid-century and create new, good-paying jobs across the United States. The bipartisan legislation is co-sponsored by U.S. Senators Tina Smith (D-Minn.), Chuck Grassley (R-Iowa), Chris Coons (D-Del.), Kevin Cramer (R-ND), and Debbie Stabenow (D-MI).

The 2018 reform and expansion of the 45Q tax credit has led to the development of more than 40 publicly announced projects to capture and manage emissions from industrial facilities, power plants, and from ambient air through direct air capture. Recent analyses by the Rhodium Group show that deployment of carbon capture and direct air capture projects and associated CO2 transport infrastructure will generate tens to hundreds of thousands of good-paying jobs.

The CATCH Act increases the 45Q credit value for carbon capture projects at industrial facilities and power plants to incentivize wider adoption. The legislation also eliminates the annual CO2 capture thresholds in the 45Q program to enable more facilities and industries to participate and qualify for the credit.

Eliminating the arbitrary thresholds would foster greater carbon capture, direct air capture and carbon utilization project development, technology innovation, and cost reductions across sectors, as the United States works to meet net-zero emissions targets. According to recent Environmental Protection Agency (EPA) data, approximately 54 percent of power plants and 75 percent of industrial facilities fall below the current 45Q eligibility thresholds.

“The bipartisan CATCH Act will help the United States reach net-zero emissions while creating thousands of new, good-paying jobs. This bipartisan legislation will create a commercialization pathway for hard-to-decarbonize industrial facilities and spur the deployment of emissions-capturing technology at power plants, which will be critical to meet international climate goals,” said Luján. “ By eliminating the threshold, this legislation will provide access to credit for new technologies, including the growing hydrogen industry in New Mexico. I’m proud to introduce this legislation to help lead on climate and build a clean energy economy.”

“America is the world’s leader of carbon capture technology, and we want to keep it that way,” said Barrasso. “In Wyoming and across America, carbon capture and other clean energy sources create jobs and grow our economy. The 45Q tax credit is already helping to spur innovation in the coal industry and create new technologies that transform carbon emissions into a useful product. Our bipartisan CATCH Act builds on this success by increasing the credit value and making it easier for projects of all sizes to take advantage of this important tax credit.”

The CATCH Act is endorsed by 30 leading labor, environmental, and industry organizations:

“Accelerating the large-scale deployment of carbon capture, removal, utilization, transport and storage technologies is critical to meeting President Biden’s goals of reaching net-zero emissions in the power sector by 2035 and economywide by 2050. The increased credit values for carbon capture at industrial facilities and power plants offered in this bipartisan bill enable the deployment of these technologies on the scale necessary to reach our midcentury climate goals, preserve existing energy and industrial employment and create many new high-wage jobs that American families count on,” said Brad Markell, Executive Director of the Industrial Union Council, AFL-CIO. “Together with the inclusion of labor and domestic content standards, the provisions outlined in this bill will help put American industry firmly on the path toward deep emissions reductions, and continue to promote American technology leadership and economic competitiveness.”

“Members of Congress on both sides of the aisle recognize that policies to reduce emissions, including the use of carbon capture, and removal of atmospheric CO2 will be required to address climate change. Effective federal incentives for carbon capture, utilization, and storage (CCUS) and direct air capture (DAC) are critical to achieving our climate goals,” said Christina DeConcini, Director of Government Affairs for the World Resources Institute. “This legislation would be an important step in improving the efficacy and impact of the 45Q tax credit by eliminating project thresholds and increasing the credit value for carbon capture, utilization, and storage, which will be essential to decarbonizing the industrial sector, as a complement to efforts that would increase the credit value for DAC.”

“These amendments strengthen our collective vision of hydrogen as a necessary component of a sustainable future. Ensuring that all projects, big or small, can have access to increased credits will give us a leg up towards innovating and achieving our environmental goals in an economically sustainable pathway,” said Roxana Bekemohammadi, Executive Director of Western States Hydrogen Alliance.

Full text of the legislation can be found HERE. Additional quotes of support can be found HERE. READ MORE

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Barrasso Introduces Enhanced Energy Recovery Act (Office of US Senator John Barasso (R-WY))

Excerpt from KODI Radio: U.S. Senator John Barrasso (R-WY) is joining U.S. Senators James Lankford (R-OK) and Bill Cassidy (R-LA) in introducing legislation to enhance carbon capture incentives and energy production.

The Enhanced Energy Recovery Act (S. 5212) would create parity under the Section 45Q carbon capture tax credit by giving across-the-board, equal treatment for carbon captured for increased energy production, utilization, and sequestration.

“For years, Wyoming has proudly led the way on carbon capture projects,” said Sen. Barrasso. “We’ve successfully used this technology to take carbon out of the air and find productive uses for it. One of those uses includes enhanced oil and natural gas recovery – a technique that significantly increases energy production while reducing carbon emissions. Recent changes to Section 45Q have made it harder for American energy producers and manufacturers to use this credit. The Enhanced Energy Recovery Act fixes this policy by ensuring equal treatment for energy production, utilization, and sequestration. This will bolster our nation’s energy security, support Wyoming’s energy workers, and help lower costs for American families.”

“Building the infrastructure to capture carbon in Louisiana will create tens of thousands of jobs and there will be tens of billions of dollars of investment,” said Dr. Cassidy. “This will help Louisiana continue to lead as an energy and manufacturing state.”

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Full text of the legislation can be found here.

Background:

The Enhanced Energy Recovery Act increases the effective value of the 45Q tax credit for captured carbon used in enhanced oil recovery and utilization to match that of sequestration.

Currently, the full tax credit incentive for carbon used in enhanced oil recovery (EOR) and utilization is $60/metric ton, while the value for sequestration is $85/metric ton. This bill sets all three values at $85/metric ton for EOR, utilization, and sequestration.

Additionally, the bill creates equal treatment for carbon captured through Direct Air Capture (DAC). It increases the value of DAC-captured carbon used for EOR and utilization by increasing the incentive from $130/metric ton, up to $180/ton, consistent with the current value of captured carbon used in sequestration. READ MORE

Excerpt from E&E Daily: President Joe Biden’s signature climate law boosted the amount of money that companies can get under the federal 45Q tax credit, a major incentive for the carbon capture and storage (CCS) industry. The credit provides a monetary value per metric ton of CO2 that is stored — either via dedicated geologic storage, in products or through EOR.

The new bill — known as the “Enhanced Energy Recovery Act” — would create “parity” under 45Q by “giving across-the-board, equal treatment for carbon captured for increased energy production, utilization, and sequestration,” according to a news release from Barrasso, ranking member of the Energy and Natural Resources Committee. READ MORE

Excerpt from Office of US Senator John Barasso (R-WY):

U.S. Senator John Barrasso (R-Wyo.) was joined by U.S. Senators James Lankford (R-Okla.) and Bill Cassidy (R-La.) in introducing legislation to enhance carbon capture incentives and energy production.

“For years, Wyoming has proudly led the way on carbon capture projects,” said Sen. Barrasso. “We’ve successfully used this technology to take carbon out of the air and find productive uses for it. One of those uses includes enhanced oil and natural gas recovery – a technique that significantly increases energy production while reducing carbon emissions. Recent changes to Section 45Q have made it harder for American energy producers and manufacturers to use this credit. The Enhanced Energy Recovery Act fixes this policy by ensuring equal treatment for energy production, utilization, and sequestration. This will bolster our nation’s energy security, support Wyoming’s energy workers, and help lower costs for American families.”

“Building the infrastructure to capture carbon in Louisiana will create tens of thousands of jobs and there will be tens of billions of dollars of investment,” said Dr. Cassidy. “This will help Louisiana continue to lead as an energy and manufacturing state.”

“Long before carbon storage became national buzzwords, Wyoming’s oil and gas workers were already permanently storing CO2 in enhanced oil recovery projects. For over 30 years CO2 injection has not only sequestered carbon in Wyoming but also helped produce millions of barrels of oil that the United States requires to meet energy demand. Senator Barrasso’s bill recognizes that enhanced oil recovery using CO2 deserves equal treatment to non-productive sequestration not only to create a level playing field in the tax code, but also because it supports high-paying oil and gas careers and pumps revenue into state and federal coffers. We applaud Senator Barrasso and urge speedy passage of the Enhanced Energy Recovery Act.” – Pete Obermueller, President, Petroleum Association of Wyoming

“At a time where energy demand is soaring, it is more important than ever to ensure that the United States relies on domestic energy sources for our security. Wyoming has long been a leader in carbon management, whether it be using CO2 as a commodity for enhanced oil recovery or paving the way with CCUS technologies. Capturing CO2 and using it to increase our domestic production, keeping energy reliable and affordable for all Americans, is a win for our nation. This bill is a crucial piece of legislation to ensure a level playing field for the growing markets that use CO2. We applaud Senator Barrasso’s continued leadership and efforts to support Wyoming's energy industry.” – Rob Creager, Executive Director of the Wyoming Energy Authority

“The Independent Petroleum Association of America (IPAA) supports Senator Barrasso’s Enhanced Energy Recovery Act. Providing parity between carbon sequestration and utilization within the tax code ensures that CO2 is captured and stored in the most economically viable manner possible. The bill further incentivizes companies to continue to use direct air capture technology, fostering ongoing development and deployment of these cutting-edge emissions reduction technologies with the promise of working toward the goals of overall emissions reduction in the United States. IPAA thanks Senator Barrasso for taking a pragmatic, forward looking approach to management of carbon dioxide emissions.” - Jeff Eshelman, President & CEO, Independent Petroleum Association of America

“We are pleased to express our strong support for Senator Barrasso's Enhanced Energy Recovery Act, which takes a critical step forward in leveling the playing field for carbon oxide sequestration. This balanced approach provides a powerful incentive for the oil and gas industry to continue its leadership in carbon capture, utilization, and storage (CCUS) while also recognizing the role of EOR in safely managing carbon dioxide and extending the productive life of oil fields. Senator Barrasso’s vision for equitable treatment of carbon management technologies aligns with the industry's commitment to reducing emissions, enhancing energy security, and delivering economic benefits to rural communities.” – Jerry R. Simmons, President & CEO, Domestic Energy Producers Alliance

Full text of the legislation can be found here.

Background:

The Enhanced Energy Recovery Act increases the effective value of the 45Q tax credit for captured carbon used in enhanced oil recovery and utilization to match that of sequestration.