Could congressionally mandated incentives lead to deployment of large-scale CO capture, facilities for enhanced oil recovery CO markets and geologic CO storage?
James Edmonds, Christopher Nichols, Misha Adamantiades, John Bistline, Jonathan Huster, Gokul Iyer, Nils Johnson, Pralit Patel, Sharon Showalter, Nadja Victor, Stephanie Waldhoff, Marshall Wise, Frances Wood
Author Information
James Edmonds: Pacific Northwest National Laboratory, USA.
Christopher Nichols: National Energy Technology Laboratory, USA.
Misha Adamantiades: U.S. Environmental Protection Agency, USA.
John Bistline: Electric Power Research Institute, USA.
Jonathan Huster: Pacific Northwest National Laboratory, USA.
Gokul Iyer: Pacific Northwest National Laboratory, USA.
Nils Johnson: Electric Power Research Institute, USA.
Pralit Patel: Pacific Northwest National Laboratory, USA.
Sharon Showalter: OnLocation, Inc, USA.
Nadja Victor: National Energy Technology Laboratory, USA.
Stephanie Waldhoff: Pacific Northwest National Laboratory, USA.
Marshall Wise: Pacific Northwest National Laboratory, USA.
In passing the Bipartisan Budget Act of 2018, Congress reformed and strengthened a section of the tax code, 45Q, which provides tax credits of up to $35/ton CO for the capture and utilization of CO in qualifying applications such as enhanced oil recovery (EOR) and up to $50/ton CO for CO that is captured and permanently stored in a geologic repository. Earlier versions of the tax credit with lower credit values generated limited interest. This change to the tax code could potentially alter U.S. energy systems. This paper examines the effect of the increased 45Q credits on CO capture, utilization and storage (CCUS) deployment in the United States and on petroleum and power production. A range of potential outcomes is explored using five modeling tools. The paper goes on to explore the potential impact of possible modifications of the current tax credit including extension of its availability in time, the period over which 45Q tax credits can be utilized for any given asset and increases in the value of the credit as well as interactions with technology availability and carbon taxation. The paper concludes that 45Q tax credits could stimulate additional CCUS beyond that which is already underway.
