A US carbon-capture tax credit that has allowed oil drillers to tap depleted wells would also help the power and industrial sectors under a US House of Representatives proposal to increase payments and make the program permanent.
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The so-called 45Q carbon sequestration program currently expires in 2025.
The bill introduced April 19 would increase credits to $85/mt of trapped carbon for industrial facilities, power plants and direct air capture plants that store carbon in salt caverns, up from the current $50/mt. Carbon stored in oil and gas fields would generate credits of $50/mt, up from $35/mt, under the proposal.
Drillers like Occidental Petroleum have relied on the tax credits in recent years for enhanced oil recovery, which pumps captured CO2 into reservoirs to re-pressurize them and increase production.
ExxonMobil announced a $100 billion project April 19 to capture carbon emissions from petrochemical plants along the Houston Ship Channel and pipe it to reservoirs deep beneath the Gulf of Mexico, although the plan would depend on a public-private partnership whose outlook is uncertain. The company said it could eventually store 100 million mt/year of carbon, equivalent to the emissions of 20 million cars.
LEAD TIME AN ISSUE
Energy legislation passed in December 2020 extended the program to projects that start construction by the end of 2025, but the Carbon Capture Coalition said developers need more lead time to take advantage of the incentive.
"While this extension is helpful, substantially more time is required for carbon capture, carbon utilization and direct air capture projects to reach economywide deployment and help achieve net-zero emissions by midcentury," said Brad Crabtree, director of the coalition of more than 80 companies and groups that support CCS.
"This legislation would provide the long-term financial certainty needed to drive significantly greater levels of private investment in the deployment of such projects," he added.
US AS CCS LEADER
Republican Representatives David Schweikert of Arizona, Brad Wenstrup of Ohio and Carol Miller of West Virginia introduced the bill.
Carbon sequestration and the 45Q program have received rare bipartisan support in the energy and climate discussions in Congress.
In 2020, the US had the highest number of operational CCS facilities and continued its lead in the global CCS league, hosting 12 of the 17 new commercial facilities added to the project pipeline, according to a December report by think tank Global CCS Institute.
The report said the US has some of the most advanced CCS-supportive policies in the world, including the enhanced 45Q tax credit, the California Low-Carbon Fuel Standard and support from the US Department of Energy, which committed or awarded over $270 million in co-funding agreements in 2020.