Bipartisan US bill proposes tax credits for carbon storage

A bipartisan measure drafted by US legislators fills the gap in tax legislation for credits on carbon capture, representatives said May 25.

“This is a pivotal time in this country to address the existential climate crisis, and we must take an active role in meeting the moment,” Tim Ryan, a Democratic member of the House of Representatives for Ohio, said. “That means leveraging the might of the US government and the ingenuity and strength of American businesses to meaningfully lower US emissions.”

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Ryan was joined by three fellow Democrats and four Republicans in introducing the Coordinated Action to Capture Harmful Emissions Act, which would offer more tax credits for industrial facilities and power plants that find ways to capture carbon from their facilities.

Lawmakers backing the measure say it fills policy gaps by boosting so-called 45Q tax credit values.

“The 45Q tax credit is the single-most useful tool in spurring the development of carbon capture projects,” David McKinley, a Republican representative from West Virginia, said.

The industrial and power sectors, if the measure is passed, would be eligible for tax credits if they find ways to securely store CO₂ in saline geological formations, find new uses for CO₂ or store it in oil and gas fields.

This is the second such legislation to emerge this year. Kevin Cramer, a Republican senator from shale-rich North Dakota, said March 29 he was adding his voice to a bipartisan chorus expressing support for carbon capture technology through the Carbon Capture Utilization and Storage Tax Credit Amendments Act.

That bill also called for enhancements to 45Q tax credits that allow companies to get financial relief for every ton of carbon they sequester.

Supporters of Ryan’s legislation said that “eliminating thresholds under 45Q would foster greater carbon capture, direct air capture and carbon utilisation project development, technology innovation and cost reductions across sectors, as we work to meet net-zero emissions targets.”

The industry is already advancing on similar efforts, with or without the additional tax credits.

A few days before Joe Biden was sworn as president on January 20, US major Chevron signed a letter of intent with San Jose-based startup Blue Planet Systems to explore carbon capture and utilisation technologies. And ExxonMobil recently advanced the idea of a $100bn CCS hub in Houston that could capture and store up to 100mn mt/yr of CO₂ by 2050