Diverse Coalition Hails Introduction of Carbon Capture, Utilization and Storage Incentive Bill
Legislation Introduced in the U.S. House by Representative Mike Conaway Would Extend and Revise the 45Q Tax Credit
February 25, 2016 – Federal legislation to spur commercial deployment of technologies to capture carbon dioxide emissions from power plants and industrial facilities for use in enhanced oil recovery (CO2-EOR) was introduced today by US Representative Mike Conaway with 18 co-sponsors from both political parties. The National Enhanced Oil Recovery Initiative (NEORI) and Coal Utilization Resource Council (CURC) are hailing introduction of the bill.
“We commend House Agriculture Committee Chairman Conaway for introducing the Carbon Capture and Enhanced Oil Recovery Act in the U.S. House of Representatives. This legislation will increase American oil production, create jobs and boost economic development, all while reducing emissions from the use of our domestic energy resources,” said Brad Crabtree, co-director of NEORI, and Shannon Angielski, Executive Director of CURC.
The legislation will make the existing federal carbon capture and storage incentive—known as the Section 45Q tax credit—permanent, thereby providing certainty that project developers need to obtain private sector financing of carbon capture projects. The current 45Q tax credit expires upon reaching its current cap of 75 million tons of CO2, meaning that investors in projects under development cannot count on the credit being available.
“By making the 45Q tax credit permanent and increasing its value, this legislation provides a critically-needed incentive for industry to invest in carbon capture technologies at power plants and industrial facilities that rely on coal, which will benefit both our nation’s energy security and the environment,” said Angielski of CURC.
The bill would also gradually increase the credit value for CO2 storage through enhanced oil recovery or other types of geologic storage (from $10/ton and $20/ton, respectively) to $30 per ton by 2025.
For over 40 years, the U.S. independent oil and gas industry has led the world in using CO2 for oil production and geologic storage of carbon, and CO2-EOR currently provides around 4 percent of domestic oil production and utilizes roughly 65 million tons of CO2 annually.
“This legislation will enhance U.S. leadership and innovation in carbon capture technology across a wide range of industries by providing a performance-based incentive to capture CO2, put it to productive use in enhanced oil recovery, and store it safely and permanently underground in the process,” explained Crabtree of NEORI.
According to a recent U.S. Department of Energy study, an increased supply of CO2 could enable the EOR industry to produce an additional 21-63 billion barrels of oil with today’s technology and store 10-20 billion tons of CO2, or up to four years’ worth of national emissions. The U.S. consumes more than 19 million barrels of oil per day, of which 5 million (net) are imported. CO2-EOR could help displace those imports, further increasing our domestic energy production and independence.
“The members of our coalitions look forward to working jointly with Chairman Conaway and the other House sponsors to secure passage of this legislation,” concluded Angielski of CURC and Crabtree of NEORI.
The National Enhanced Oil Recovery Initiative (NEORI) and Coal Utilization Resource Council (CURC) are the two leading national coalitions actively calling for federal incentives to accelerate commercial deployment of carbon capture and storage. Their members share a common goal: extending and reforming a federal policy to help sustain production of our nation’s abundant domestic energy resources, while reducing our carbon emissions.
Additional Quotations from Industry, NGO and Labor Leaders
“Using CO2 enhanced oil recovery technology can increase ultimate recovery of US oil reserves in fields where it is employed. Accomplishing this will require a significant increase in the supply of CO2 that is captured, transported by pipeline and available for purchase by the oil industry – and part of that additional CO2 will have to come from power plants and industrial sources.” Jody Elliott, President, Oxy Oil & Gas – Domestic
“Commercializing carbon capture, use and storage (CCUS) technology is essential for meeting the world’s energy and economic goals. The Section 45Q provision is one of several policy measures that are critical to advance broad deployment of this technology.” Glenn Kellow, Peabody Energy President and Chief Executive Officer
“The nations of the world recently committed to limiting average temperature growth on our planet to two degrees Celsius above pre-industrial conditions. There’s no practical way to meet this target without carbon capture and storage, and Congress needs to provide incentives to help deploy additional commercial CCS projects.” Kurt Waltzer, Managing Director of the Clean Air Task Force
“CCS is absolutely critical to preserving good-paying jobs in manufacturing and industrial and energy production, while reducing the environmental footprint of these activities. The financial incentives in this legislation will also support much-needed construction jobs as we build projects and infrastructure for CCS. Representative Conaway has proposed a win-win for our economy and environment.” Brad Markell, Executive Director of the AFL-CIO’s Industrial Union Council
“There are few real examples of technology that are both good for the economy and good for the environment. Carbon capture technology is one true example. Incentives to develop and deploy carbon capture will have a positive effect on our economy while at the same time, reduce greenhouse gas emissions. A permanent extension of tax credits for Section 45Q of the Tax Code will be essential in building a twenty first century economy that provides large numbers good paying jobs while addressing environmental concerns.” D. Michael Langford, National President, Utility Workers Union of America, AFL-CIO
“Putting CO2 to work to enhance the recovery of America’s oil resources makes sense on multiple levels. It promises to boost domestic oil production from existing fields, drive advances in carbon capture and storage technology, and provide a least-cost option for reducing carbon emissions.” Deck Slone, Senior Vice President, Strategy and Public Policy, Arch Coal
“Organizations like the IPCC and International Energy Agency have made it perfectly clear: the world needs more CCS deployment in order to meet our climate goals. Washington can encourage additional private sector investment in CCS by improving the 45Q tax credit. It’s a smart way to get more projects built and bring down the cost of this critical piece of the climate puzzle.” Josh Freed, Vice President for Clean Energy, Third Way
“CCS can substantially lower the carbon emissions from the use of fossil fuels. Congressman Conaway’s proposal to improve the 45Q tax credit is crucial for supporting CCS projects that will deliver important climate benefits while maintaining fuel diversity and enhancing electricity reliability in the United States.” Sasha Mackler, Vice President, Summit Carbon Capture, Summit Power Group, LLC
“If America is serious about reducing carbon emissions, then we need to develop technology that will cost effectively capture and store it. Representative Conaway’s proposal is the best legislative opportunity out there. It’s time for Congress to enact it.” John Risch, SMART Transportation, National Legislative Director
“The Conaway proposal to provide certainty for Section 45Q of the tax code is absolutely necessary to provide incentives for industrial projects that plan to capture CO2 for use in EOR. Construction costs for large industrial projects are the biggest risk factor in refinancing and implementation of projects. The Lake Charles Methanol Project, which plans to capture 4 million tons of CO2 annually, cannot count on Section 45Q credits because the program is limited and has expired for practical purposes because of the years it takes to build such a large project. The Conaway Bill would restore this valuable incentive to capture large amounts of CO2 and ameliorate construction costs of this multi-billion industrial project.” Hunter Johnston, Counsel, Lake Charles Methanol, LLC
“Cloud Peak Energy strongly advocates for coherent federal legislation that will allow the US to enjoy the long-term benefits of safe, reliable, and low-cost energy while addressing environmental concerns in an achievable timeframe. This legislation is an important step towards ensuring that Carbon Capture Utilization and Storage is developed on a commercial scale so that this technology can eventually be deployed both domestically and around the world.” Richard P. Reavey, Vice President Public Affairs, Cloud Peak Energy Resources LLC
“Carbon capture from and industrial source using petcoke as a feedstock represents a huge business opportunity for the Port of Lake Charles. Presently, the Port handles millions of tons of petroleum coke for export to overseas customers. If petroleum petcoke could be used locally in a clean way that captures CO2, like the Lake Charles Methanol project intends at the Port’s facility, it will have a major positive impact on local jobs and the environment. This tax credit proposal will encourage more projects such as this, creating thousands of jobs and improving our environment, while also producing more oil through enhanced recovery techniques. We encourage Congress to pass this legislation to provide a predictable incentive to developers to offset the huge investment risks of implementing these new technologies.” Bill Rase, Executive Director of the Port of Lake Charles, Louisiana
“Providing incentives to capture CO2 for use in EOR will help get more commercial-scale carbon capture
projects under construction so that we can bring down the costs of the technology. Carbon capture has to be
part of the effort to address climate change.” Bob Perciasepe, President, Center for Climate and Energy Solutions (C2ES)
Contact: Ben Finzel, 202-277-6286, email@example.com