Carbon capture backers got almost everything they wanted in the bipartisan infrastructure bill moving in the Senate, and say another win is possible by expanding federal incentives in a budget reconciliation measure around the corner.
Tacked onto the $550 billion infrastructure bill (H. R. 3684) unveiled Sunday is the SCALE Act, which is touted as the biggest effort to date for scaling up projects that capture and store carbon dioxide. The legislation includes billions of dollars in demonstration projects to divert and store carbon dioxide, the most prevalent greenhouse gas.
Supporters say following up the increased federal funding for such projects with an expansion of carbon capture tax credits via budget reconciliation would make the U.S.—which is seen as slow to adopt big climate policies—a world leader in carbon capture and storage.
Carbon capture developers and some environmental groups are pushing House and Senate leadership to make boosting the incentives a priority in any next round of legislative packages moving after infrastructure. That includes the $3.5 trillion reconciliation package needing just a simple majority in the Senate.
“We’re way more than half a glass full” in already getting boosted carbon capture project funding in the infrastructure text released Sunday, said Brad Crabtree, director of the Carbon Capture Coalition leading the effort, “and we’re very excited” about prospects for increasing project incentives in reconciliation.
The reconciliation measure is being eyed for one of the more highly prized changes—making it easier for projects to monetize the value of the carbon capture credit immediately, through a “direct pay” option. Project developers say this would reduce the need for expensive outside tax equity financing typically required for such projects.
Backers are also pushing a multi-year extension of the Section 45Q carbon capture tax credit to give projects until the end of 2035 to break ground and still be eligible for the incentives, Crabtree said.
National Wildlife Federation President Collin O’Mara is optimistic that increased federal incentives can be rolled into the reconciliation measure, noting that carbon capture has bipartisan backing in Congress and support from the Biden administration. The Wildlife group backs carbon capture efforts and is among environmental groups in Crabtree’s Carbon Capture Coalition.
“I think Brad is right—you have good coverage for inclusion” of several key Democratic moderates who will be key to advancing any reconciliation bill,” including West Virginia Sen.
Bigger Tax Credit Sought
Supporters of the changes, which include companies building the projects, labor unions, and environmental groups, including the Clean Air Task Force and the National Wildlife Federation. They’re also looking to boost the credit to $85 per metric ton for permanent storage in saline geologic formations—to as much as $180 per ton for directly capturing carbon emissions from the air.
Other big items on their to-do list include removing project size limits that have essentially barred smaller efforts to capture carbon emissions from power plants and industrial facilities. This has left the U.S. without significant progress in capturing emissions from coal-fired and natural gas power plants.
Roughly 54% of power plants and 75% of industrial facilities fall below the current thresholds, as do next-generation direct air capture projects, according to EPA figures.
Plenty of obstacles remain to moving a reconciliation package given Democrats have the narrowest margin in the Senate. But Senate Budget Committee Chairman
But carbon capture and storage is particularly appealing to moderate Democrats, including Manchin and Arizona Sen.
Carbon capture has plenty of GOP backers, including Sen.
Its carbon capture provisions include nearly $1 billion in funding over the next four years for large-scale pilot projects and more than $2.5 billion over the same period for demonstration projects.