According to information reported by Reuters, the White House and top Democratic lawmakers agreed to boost a tax credit for industrial carbon capture projects. Accordingly, this deal could help solidify support for the budget reconciliation bill. Indeed, this legislation is at the heart of President Joe Biden’s economic agenda, two sources with knowledge of the matter said.
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About the agreement
The agreement was proposed by White House officials and lawmakers, including Senators Ron Wyden and Sheldon Whitehouse. Accordingly, it would raise the so-called 45-Q tax credit for carbon capture projects in heavy industry; including, for instance, cement and steel plants, to $85 per metric ton, up from $50.
According to Reuters, the White House and Senator Whitehouse did not immediately respond to requests for comment. Nevertheless, a spokesperson for Wyden said conversations are ongoing.
Thus, if the incentives pass, they could help President Biden with his climate goals; particularly, by getting more industrial plants to invest in heavy equipment that siphons off carbon dioxide (CO2) emissions for permanent storage underground, preventing the gas from reaching the atmosphere.
The deal would also waive “capture rate” requirements that establish plants must sock away a high percentage of carbon to be eligible. Therefore, that could allow more plants to begin to get some credit for investing; specifically, in initial carbon credit units.
Boosting carbon capture
However, some environmentalists say the technique may never enter wide commercial use as it is expensive to build, certify, and operate. For instance, many projects, such as Petra Nova in Texas, stopped operations in recent years.
Worth noting, current 45-Q tax credits allow polluting plants to claim $50 per ton of carbon dioxide they sequester. Also, $35 a ton for projects where carbon is captured and then used to push more crude oil from aging oilfields.
Nevertheless, the agreement does not cover the power sector, including coal and natural gas plants. Indeed, these are the source of about one-third of U.S. CO2 emissions.
As Reuters pointed out, Senator Joe Manchin has pushed Senate Majority Leader Chuck Schumer to allow coal and natural gas-burning power plants; particularly, to get incentives for carbon capture in the reconciliation bill.
Thus, discussions are progressing on boosting the carbon capture credit for power plants that could get Manchin on board. He also said that the original $3.5 trillion bill is far too costly.