Broad Industry, Labor, NGO Coalition Supports Bipartisan Private Activity Bond Legislation to Finance Deployment of CC Infrastructure
April 5, 2017 | News
The National Enhanced Oil Recovery Initiative (NEORI) today hailed the leadership of Senators Rob Portman (R-OH) and Michael Bennet (D-CO) in introducing bipartisan legislation to accelerate the deployment of carbon capture technologies at power plants and industrial facilities. The Carbon Capture Improvement Act was introduced in the Senate today.
“Fifty years of carbon capture experience in multiple industries, combined with the recent successful commercial-scale demonstration of carbon capture at an existing coal power plant in Texas, shows that the technology works,” said Brad Crabtree, vice president for fossil energy at the Great Plains Institute, which co-convenes NEORI. “Pairing tax-exempt private activity bonds with the 45Q tax credit can unleash private capital to scale up further deployment of carbon capture and bring costs down.”
The Carbon Capture Improvement Act will authorize states to use private activity bonds to help finance the purchase and installation of carbon capture equipment. Private activity bonds are widely used to help develop U.S. infrastructure, such as airports and water and sewer projects, including through public-private partnerships. The bonds will reduce financing costs for carbon capture projects because interest payments to bondholders are exempt from federal tax and the bonds typically have longer repayment terms than bank debt.
Access to private activity bonds, together with extension and reform of the Section 45Q tax credit, will give carbon capture project developers another important incentive in what NEORI members hope will be a toolkit of financing mechanisms enacted as part of comprehensive tax reform legislation expected to be considered by Congress later this year.
“We’ve seen bipartisan support for incentivizing carbon capture infrastructure because it’s a practical way to create skilled jobs and protect the environment,” said Bob Perciasepe, president of the Center for Climate and Energy Solutions. “Leadership in carbon capture technologies also gives the United States a first-mover advantage in a globally important market.”
For over 40 years, the U.S. independent oil and gas industry has led the world in CO2-EOR and could produce billions of barrels of additional domestic oil from existing fields, while safely and permanently storing billions of tons of CO2. CO2-EOR currently provides nearly four percent of domestic oil production and utilizes roughly 65 million tons of CO2 annually. According to a recent U.S. Department of Energy study, an increased supply of CO2 could enable the EOR industry to produce an additional 21-63 billion barrels of oil with today’s technology and store 10-20 billion tons of CO2, or up to four years’ worth of national emissions.
Carbon capture can play a critical role in reducing carbon emissions from the use of our nation’s oil, coal, natural gas and biomass resources in electric power generation and a wide range of industrial activities, including natural gas processing, ethanol, fertilizer and hydrogen production, refining, and the manufacture of cement, steel and chemicals.
“Carbon capture and storage technology can reduce harmful carbon pollution from power plants and industrial sources, create jobs at home and increase American competitiveness. As a complement to critical actions to use energy more efficiently and to switch to renewable energy sources, carbon capture technology can make important contributions to our efforts to limit damaging climate change. This bill would help make financing carbon capture plants easier and increase the availability and use of this technology.”
– David Hawkins, Director of Climate Programs, Natural Resources Defense Council