POLICY
New Solutions in Carbon Capture for Age-Old Problems By: Aniruddha Sharma, Chair and CEO of Carbon Clean
T
he Inflation Reduction Act (IRA), recently signed into law by President Biden, is a wide-reaching piece of legislation that includes the largest climate investment ever made by Congress. With $369 billion allocated for cutting emissions, developing clean energy technology, and advancing environmental initiatives, the IRA is projected to reduce the country’s carbon emissions by around 40% by 2030. Currently, 30% of global emissions are from hard-to-abate industrial sources, such as cement, steel, refineries, and energy from waste, and the industrial and power generation sectors together make up around half of U.S. emissions. Any comprehensive undertaking to curb carbon emissions and tackle climate change in the country must involve capping the emissions coming from these traditional heavy industries. However, for many of these industries, there are few currently available options to decarbonize. This is where carbon capture, utilization, and storage (CCUS) comes in. Post-combustion, point source carbon capture, in particular, will be crucial to achieving the IRA’s goals, as it is often the only realistic means of decarbonizing certain heavy industries, especially for those industries with significant process emissions (where CO2 is released from chemical reactions in the manufacturing process e.g. cement). But the rollout of CCUS projects has been slow, primarily due to the high costs of conventional carbon capture, and the uncertainty that so often exists in new markets. This is where the IRA will play a significant role. The IRA provides both the necessary financial incentives and market certainty that are required to develop the projects, transportation, and storage needed for a thriving industrial carbon capture sector. Of particular note are the substantial increases in the availability of 45Q credits – the federal income tax credit program available for domestic CCUS projects. Other changes include: • Allowing companies with smaller tax liabilities to take advantage of 45Q by permitting the tax credit to be collected as a direct cash payment, rather than a tax deduction, for the first five years that a project operates. • Dramatically lowering the total amount of CO2 that a project must capture each year to qualify for the tax credits. • Extending the deadline to begin construction on 45Q credit-eligible projects from 2026 to 2033. These changes will stimulate innovation and the necessary scaling of the carbon capture sector in the coming decade. For example, lowering tonnage thresholds will improve the investment opportunity
Any comprehensive undertaking to curb carbon emissions and tackle climate change in the country must involve capping the emissions coming from these traditional heavy industries. BLUE PLANET STUDIO, TADA IMAGES/STOCK.ADOBE.COM
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SHALE MAGAZINE NOVEMBER/DECEMBER 2022
