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Senate Democrats push for tax breaks for carbon capture, industry balks

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Senate Democrats push for tax breaks for carbon capture, industry balks

Apair of Democratic senators teamed up to support continued coal use in the U.S.with the introduction of a bill aimed at expanding tax breaks and eligibilityfor companies pursuing carbon capture and storage, or CCS, projects on July 13.

Introducedby Sen. Heidi Heitkamp, D-N.D. and Sheldon Whitehouse, D-R.I., the CarbonCapture Utilization and Storage Act would increase existing 45Q tax breaks forpermanently stored CO2 and carbon dioxide used for enhanced oil recovery.

Additionally,the bill would expand the applicability of the cap for the credit, whileestablishing different thresholds for different stages of CCS projects.

"CCUS,[Carbon Capture Utilization and Storage] is a vital component to addressingglobal climate change through increased carbon reduction – as stated by theEIA, IEA, IPCC, U.S. Secretary of Energy Ernest Moniz and most recently by U.S.President Obama, Mexican President Nieto, and Canadian Prime Minister Trudeauat the North American Leaders Summit," Heitkamp's office said in a summaryof the bill. "It is imperative that we invest and continue to enhanceexisting — and develop new — technologies while also encouraging innovation andutilization if we are to provide a viable path forward for CCUS on a nationaland global scale."

Thebill would also allow those who qualify to claim the credit for 12 years.

Whilethe bill marks a rare move of support for continued coal use from Democrats,both senators have been vocalsupporters of CCStechnology and increased funding in the past, with Whitehouse casting the issueas an environmental protection solution.

"Preventingthe worst of climate change will mean deploying a broad range of technologiesto reduce carbon emissions," Whitehouse said in a statement. "Thisbill would provide a boost for entrepreneurs in Rhode Island and across thecountry who turn harmful carbon pollution into useful products. That incentivewill spur economic growth and help protect our environment and public health."

Industry doubts effectivenessof legislation

Taxbreaks for CCS and other technologies aimed at reducing emissions from coalfired power plants have been citedby industry advocates as a necessary step in supporting coal use in the U.S.,especially in light of environmental policies introduced by the Obamaadministration.

However,some industry advocates have expressed doubt that increased support in the formof tax incentives would be enough to overcome those policies. In April, LauraSheehan, senior vice president of communications for the American Coalition forClean Coal Electricity told S&P Global Market Intelligence that anyprogress in supporting CCS efforts would be ineffective due to parts of theClean Air Act. When reached for comment onJuly 13 regarding the Heitkamp/Whitehouse bill, Sheehan said her assessment ofthe issue remains the same.

NationalMining Association spokesman Luke Popovich praised the aim of supporting suchtechnology, but said the regulatory environment made progress on the issuedifficult.

"Itcertainly makes sense to incentivize low emissions technologies for an energysource that the entire world will continue to use massively for decades,"Popovich said. "But the gale force regulatory headwinds blowing in theface of industries interested in deploying this technology suggest a policyschizophrenia here. The right is not working in concert with the left."

Longpromoted as a way to extend the life of coal-fired power plants while meetingincreasingly stringent emissions rules, most notably those included in the U.S.EPA Clean Power Plan, CCS has struggled to find strong backing as critics havechallenged it on financial and environmental grounds.

Lastyear, the technology receiveda hit on the federal level when the U.S. Department of Energy pulled financialsupport for the FutureGen 2.0 project in Illinois, a planned carbon capturecoal-fired plant, after organizers failed to generate sufficient privatecapital to move the project along.

Shortlyafter, Heitkamp proposed legislation that would support CCS projects throughDOE funding, acknowledging the uphill battle such projects currently face. Thebill failed to make it out of committee.