Momentum for Carbon Capture Grows with Introduction of Bipartisan Tax Incentive Legislation Co-Sponsored by One-Fourth of the U.S. Senate
July 12, 2017 | Legislation
A diverse coalition of energy, industrial and technology companies, labor unions, and environmental and energy policy organizations hailed bipartisan carbon capture legislation introduced today with support from one-fourth of the U.S. Senate. The Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions (FUTURE) Act will accelerate commercial deployment of technologies to capture carbon dioxide (CO2) emissions from power plants and industrial facilities for use in enhanced oil recovery (CO2-EOR). The FUTURE Act was introduced 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. The National Enhanced Oil Recovery Initiative (NEORI) praised the lead Senate sponsors and co-sponsors for their leadership in introducing this jobs, infrastructure, economic development and emissions reduction legislation.
“This commonsense bipartisan legislation will support good-paying jobs, boost development of American energy infrastructure, increase U.S. oil production and reduce emissions,” said Brad Crabtree, Vice President for Fossil Energy at the Great Plains Institute and co-director of NEORI. “Technology innovation is bipartisan: Americans want smart energy solutions such as carbon capture, which is why this legislation enjoys unusually broad support.”
The legislation 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 commercial applications beyond oil recovery.
“Bipartisan support is growing to accelerate carbon capture deployment on power plants and industrial sources. We have the technology. We just need help deploying more of it. There’s no cost-effective scenario for achieving the emission cuts we need globally without carbon capture. The U.S. could be a leader in this globally important market.”
– Bob Perciasepe, President of the Center for Climate and Energy Solutions (C2ES)
Introduction of the FUTURE Act provides the latest evidence of growing political momentum for policies that boost carbon capture technologies. The bill improves on Senate bill 3179 introduced in the last session of Congress that also drew broad, bipartisan support in the U.S. Senate. It is also similar to legislation expected to be introduced in the U.S. House by Congressman Mike Conaway (R-TX), a version of which garnered 50 House co-sponsors last year. And it follows introduction of the Carbon Capture Improvement Act in the U.S. Senate and U.S. House, 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 4 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.