There is strong bipartisan support in Congress behind a bill that would improve an existing federal tax credit to promote and spur carbon capture, utilization, and storage (CCUS) technologies and processes.
The Furthering Carbon Capture, Utilization, Technology, Underground Storage, and Reduced Emissions Act ((FUTURE Act), S. 1535) was introduced by Senator Shelley Moore Capito (R-WV) and now has 25 cosponsors, including Republicans John Barrasso (WY) and Roy Blunt (MO), as well as 15 Democrats, among them liberals Cory Booker (NJ) and Al Franken (MN). It is rare to find these lawmakers, who probably cannot get any farther apart on the political spectrum, agreeing on environmental and energy legislation. But the FUTURE Act achieves the equally rare feat of supporting both the traditional oil and gas industries and reducing emissions of carbon dioxide (CO2) and other pollutants into the atmosphere.
CCUS involves collecting CO2 emissions from power plants and industrial facilities and condensing them into liquid that is injected into underground geologic formations either for permanent storage or for enhanced oil recovery (EOR). Commercialization of CCUS has been slow, which prompted Congress several years ago to pass an addition to the Internal Revenue Code, called the 45Q tax credit. This provision provides two incentives—a $10/ton credit for CO2 used in EOR and a $20/ton credit for CO2 injected into geological reservoirs without application for EOR.
As it now works, the 45Q credit has not met all expectations. The primary problem is a cap of 75 million tons of CO2 than can be sequestered. It is estimated that more than half that amount has been expended; this creates uncertainty for businesses that look for long-term certainty for CCUS construction projects. The FUTURE Act and companion legislation in the House makes the 45Q tax credit permanent and also extends use of the credit for carbon that is captured and used in the production of commercial products, provided the carbon is securely stored in those products. This means that more industries and facilities will consider participating in CCUS. The bills would also widen the commence-construction window for projects from 5 to 7 years and increase the number of years to claim the credit from 10 to 12.
The bills have drawn support from diverse parties.
- “Western Governors stand behind federal policies—like the FUTURE Act—that enable cost-effective development of new commercial carbon capture and pipeline projects.”—Western Governors Association.
- “This commendable bill would help make financing carbon capture plants easier, and increase the availability and use of this technology,”—David Hawkins, director of Climate Programs, Natural Resources Defense Council.
- “If adopted by Congress, this bill will be a cornerstone of support for helping make carbon capture affordable and widely deployed in the U.S. and around the world. The boost from this bill will contribute to growing the relatively small carbon capture industry, developed here in the U.S., into a major industry and source of technology innovation.”—Kurt Waltzer, managing director of Clean Air Task Force.
- “This legislation has broad support from both sides of the aisle and is a positive step toward creating policy parity for use of carbon capture over time in the energy and industrial sectors.”—Michael Flannigan, Senior Vice President for Global Government Affairs, Peabody Energy. Peabody is the largest private sector coal company in the world.
Text of the bill is here.