A bipartisan group of U.S. senators has announced plans to reintroduce legislation called the FUTURE Act, which would extend and expand the federal 45Q tax credit for carbon dioxide capture and sequestration.
The bill has the support of both fossil fuel companies and environmental groups. At present, the 45Q provision awards $10 per metric ton of stored industrial CO₂ used in enhanced oil recovery (EOR) projects, and $20 per metric ton for CO₂ stored in underground reservoirs. The new legislation calls for an increase to $35 and $50 per metric ton, respectively.
“I think everyone understands that we need to develop and expand this technology,” said Sen. Heidi Heitkamp (D-N.D.), one of the sponsors of the bill, which supports carbon capture utilization and storage (CCUS). Heitkamp and other sponsors of the legislation spoke July 12 at a news conference on Capitol Hill.
“This is one of the rare, bipartisan carbon bills that we believe presents the sweet spot in America for getting the job done,” said Heitkamp. “We come with different motivations but with the same vision. We want to provide certainty for our energy community and our environmental community.”
The FUTURE Act would extend the 45Q tax credit and incentivize the development of carbon capture technologies, while also reducing emissions. FUTURE stands for Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions.
Sens. John Barrasso (R-Wyo.), Sheldon Whitehouse (D-R.I.), and Shelley Moore Capito (R-W.Va.) also spoke in support of the bill. Several coal companies, including Arch Coal, Peabody Energy, and Cloud Peak, and environmental groups including the Clean Air Task Force and the Natural Resources Defense Council (NRDC), also support the legislation. Labor groups including the AFL-CIO and United Mine Workers of America (UMWA) also back the bill.
“This bill represents a diversity of ideology,” Heitkamp said, noting that opinions on the future of U.S. energy differ broadly on other issues related to coal and fossil fuels.
Colin Marshall, president and CEO of Cloud Peak, in a statement said “This legislation is critical to creating the programs, incentives, and tools necessary to ensure the development and deployment of technology vital to the future of coal in a society where there are serious concerns about CO2 and climate.”
“We want this [bill] to send a market signal that we will pay you to use this technology, whether you’re a power plant or an industrial manufacturer,” said Sen. Whitehouse. “I do see a world in which we have a proper price on carbon, that can support coal and also our environmental goals.”
The 45Q tax credit has existed since 2008, when it was enacted as part of the Energy Improvement and Extension Act of 2008. It was amended by the American Recovery and Reinvestment Act of 2009. To qualify a facility must capture and store a minimum of 500,000 tons of qualified CO2 in a taxable year.
Heitkamp said “the credit amounts have been too anemic to drive a lot of innovation” in enhanced oil recovery and carbon sequestration, noting that CCUS projects have had little success and the credit does not include industrial sources and utilization technologies beyond EOR. Capito said the increases are needed “in order to spur that research.”
Heitkamp cited the Petra Nova Carbon Capture project in Texas as an example of a facility that shows the potential of CCUS. The plant, which began operating late in 2016 and sits next to NRG Energy’s 3.7-GW W.A. Parish power plant, is the world’s largest post-combustion CO2
capture facility. The CO2 it captures is moved by pipe to an oil field near Houston for EOR.
“We can have energy growth and environmental stewardship,” said Barrasso, who has a particular interest in maintaining coal industry jobs since his home state of Wyoming includes the vast coal resources of the Powder River Basin. He characterized his state as “the Saudi Arabia” of coal.
“We want [technologies] to make energy as clean as we can as fast as we can, and not raise [energy] prices for people across the country,” Barrasso said.
-Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine)