Dive Brief:
- A 14-state working group issued a new report last week calling for expanded tax support for capturing carbon dioxide for use in enhanced oil recovery (CO2-EOR) with geologic storage.
- The working group, launched by Wyoming Governor Matt Mead (R) and Montana Governor Steve Bullock (D) in 2015, was facilitated by the Great Plains Institute.
- The group's recommendations include federal incentives for CO2-EOR, expanding existing tax credits for carbon capture, and deploying a "revenue neutral mechanism" to stabilize carbon prices.
Dive Insight:
A new report last week added to the growing body of interest in carbon capture technology, arguing that CO2-EOR "compares cost-effectively with other emissions reduction options."
The analysis advocates for several incentives for carbon capture, including offering tax-exempt private activity bonds and master limited partnership tax status to provide project financing on better terms. At the state level, carbon capture and storage can be incentivized by "optimizing existing taxes commonly levied by states to complement federal incentives in helping carbon capture projects achieve commercial viability," the group said in a statement.
According to the analysis, an optimized approach to state taxes would add the equivalent of roughly $8/barrel of oil to the economics of a carbon capture project.
Brad Crabtree, Great Plains Institute vice president for fossil energy, called the work "timely." He said that based on modeling results and qualitative criteria, the Work Group identified the reform and expansion of the Section 45Q tax credit as its top federal priority for stimulating commercial deployment of carbon capture projects at power plants and industrial facilities.
"Congress has a narrow window right now to pass Section 45Q tax credit reforms before year’s end,” Crabtree said.
A piece of legislation, the Carbon Capture, Utilization and Storage Act (S. 3179), has been introduced by Sen. Heidi Heitkamp (D-ND), and bipartisan companion legislation in the U.S. House, the Carbon Capture Act (H.R. 4622), was introduced by Rep. Mike Conaway (R-TX), has attracted 47 co-sponsors.
Both Gov. Mead and Gov. Bullock have endorsed the bills.
"I have advocated for an all-inclusive energy mix and believe that the responsible development of hydrocarbons is critically important. This report makes recommendations that will enhance our nation’s energy and economic security," Mead said in a statement.
Carbon capture has been gaining attention lately as a way to meet increasingly-stringent environmental goals. Last month, 10 of the largest oil and gas companies in the world began a new, 10-year, $1 billion effort to reduce emissions, largely focused on carbon capture and storage technologies.
