Industrial Companies Seek Key 45Q Enhancements in Budget Reconciliation Package

October 1, 2021 | Legislation

On September 30, 18 industrial companies and organizations, including members of the Carbon Capture Coalition and the Industrial Innovation Initiative sent a letter to House and Senate Democratic leadership, expressing their support for the enactment of carbon management provisions in several bipartisan infrastructure and tax bills before the 117th Congress. Signatories span steel, cement, refining, the waste management industry, carbon utilization and other industry sectors.

Key enhancements to the 45Q tax credit will be essential to decarbonizing hard-to-abate sectors and putting American industry on a path to net-zero emissions, while creating and retaining jobs that pay above prevailing wages, providing environmental and other benefits to communities, and safeguarding the long-term viability of America’s domestic, trade-exposed industries.

Specifically, the signatories requested Congressional leadership address three critical problems in budget reconciliation language that, if unaddressed, risks the deployment of the carbon management industry.

  1. Increase 45Q credit values from all industrial sectors and power generation to at least $85 per metric ton for saline geologic storage, $85 per ton for carbon utilization and $50 per ton for geologic storage in oil and gas fields.
  2. Remove a new annual facility-level percentage capture requirement for industrial and power plant carbon capture projects.  This provision would be deeply harmful to project deployment.
  3. Remove the Section 103(d)(4) credit reduction provision in the Senate Clean Energy for America Act.

These changes, along with provisions in the infrastructure and budget reconciliation legislation would achieve annual emission reductions of roughly 210 – 250 million tons of CO2 by 2035 and create tens of thousands of high-wage jobs. Additionally, the fiscal score for 45Q direct pay and extension is less than one-half of one percent of the entire House clean energy tax title, meaning that these priority requests can be accommodated at de minimus cost.