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US Congress approves most significant pro-CCS national policy in a decade

Published by
World Coal,

On 9 February, the US Congress approved the most significant pro-carbon capture and storage (CCS) national policy in a decade, a tax credit for CO2 storage, known as 45Q for its section number in the US tax code. The new law is widely expected to stimulate the development of new CCS projects.

The policy change culminates a six year effort broadly supported by stakeholders in the US and members of both political parties. Institute members of Great Plains Institute and the Clean Air Task Force led an advocacy coalition with strong support from Occidental Petroleum, ClearPath and Cloud Peak Energy.

Global CCS Institute CEO Brad Page said project developers strongly believe the 45Q programme dramatically improves the future CCS financing picture.

“We believe the intersection of better economics with the exciting technology advancements that the US Department of Energy has supported and developed will accelerate the critical deployment of CCS in North America.”

“Financial instruments have always been an essential part of getting any new clean technology deployed and this is the kind of incentive that is needed.”

While government incentives and subsidies dating back to 1992 have pushed a rapid rise in US wind and solar energy, US national support for CCS came later and with more limited application.

A CO2 storage tax credit beginning at US$10/t was enacted only in 2009 and capped at 75 million t. With that limit effectively now reached, project development in North America has stalled as developers and stakeholders awaited action by the US to reconsider policy.

The new law both extends and expands upon the original.

Firstly, it includes no cap on storage available for the credit, providing more certainty for projects that may take years to plan and develop.

Secondly, over time the law increases values for geological storage to US$50/t and for utilisation, such as enhanced oil recovery to US$35/t.

Thirdly, it lowers the eligibility threshold from 500 000 - 100 000 t of CO2 stored on an annual basis. The higher level in the existing law has prevented smaller industrial projects from using the credit.

Page said the Institute believes the new 45Q law can be a win on all counts.

“This is potentially a boom for business, for global CCS deployment, for energy security and certainly for the climate. Its sponsors in the US Congress are to be commended for their tireless work as are stakeholders and our Institute members.”

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