Bipartisan Carbon Capture Tax Incentive Legislation Introduced in the U.S. House
September 14, 2017 | Legislation
Bill from House Agriculture Chairman Mike Conaway Would Extend an Existing Program – Section 45Q – to Boost Carbon Capture in the U.S.
Continued deployment of carbon capture technologies received additional momentum today with the introduction of bipartisan legislation in the U.S. House to extend and reform an existing tax credit for carbon capture projects. The Carbon Capture Act will promote commercial deployment of technologies to capture carbon dioxide (CO2) emissions from power plants and industrial facilities for use in enhanced oil recovery (CO2-EOR) with geologic storage.
House Agriculture Chairman Mike Conaway (R-TX) introduced the legislation along with a bipartisan group of 29 cosponsors. Introduction of the House bill follows the July introduction of the FUTURE Act in the U.S. Senate by Senators Heidi Heitkamp (D-ND), Shelley Moore Capito (R-WV), Sheldon Whitehouse (D-RI), John Barrasso (R-WY), Tim Kaine (D-VA), Lindsey Graham (R-SC) and 19 other original cosponsors.
“This jobs, infrastructure, economic development and emissions reduction legislation is smart, bipartisan energy policy that should be enacted quickly,” said Brad Crabtree, Vice President for Fossil Energy at the Great Plains Institute and co-director of the National Enhanced Oil Recovery Initiative (NEORI), the leading national coalition in support of carbon capture. “Chairman Conaway is to be commended for his leadership in promoting a fiscally responsible, performance-based policy that will drive private investment in technology that supports American energy production and job creation, while reducing emissions.”
The Carbon Capture Act provides a performance-based incentive to capture CO2, put it to productive use, and store it safely and permanently underground. It would provide financial certainty for private investors and stimulate commercial deployment of carbon capture projects by extending the current federal Section 45Q tax credit incentive and increasing its value for each ton of CO2 that is captured from power plants and industrial facilities for storage through EOR or other methods. Only projects that successfully capture and store CO2 can claim the credit. The legislation also expands eligibility for the credit, so that more industries and facilities in more states can participate, and it extends CO2 capture and use to new beneficial commercial applications beyond oil recovery.
“There is an opportunity here to make the most of bipartisan support for carbon capture technology on power plants and industrial sources. When both sides of the aisle come together, we can find solutions that work for the environment and our economy,” said Bob Perciasepe, president of the Center for Climate and Energy Solutions (C2ES), which co-convenes NEORI. “Here is an area of consensus where we can reduce emissions and invest in energy infrastructure at the same time.”
Carbon capture legislation has received strong support again in the 115th Session of Congress. In addition to the FUTURE Act introduced in the U.S. Senate in July, bipartisan sponsors in the House and Senate earlier this year introduced the Carbon Capture Improvement Act, legislation that authorizes states to use tax-exempt private activity bonds to help finance the purchase and installation of carbon capture equipment.
For nearly a half century, the U.S. independent oil and gas industry has led the world in using CO2 for oil production, and 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 domestic oil with today’s technology and store 10-20 billion tons of CO2, or up to four years’ worth of national emissions. Additionally, the International Energy Agency has highlighted the critical role that carbon capture must play to meet global mid-century goals for mitigating carbon emissions from electric power generation and a wide range of industrial activities, including natural gas processing, fertilizer and hydrogen production, refining, and the manufacture of cement, steel and chemicals.
“U.S. leadership is needed to advance carbon capture to commercial scale, which is essential to the world’s environmental goals. This legislation has broad support from both sides of the aisle and is a positive step toward creating policy parity for use of carbon capture over time in the energy and industrial sectors.”
– Michael Flannigan, Senior Vice President for Global Government Affairs, Peabody Energy