Energy News Network Covers the 45Q Tax Credits
A federal tax credit passed earlier this year could increase the amount of carbon being stored underground. The revamped “45Q” tax credit boosts the amount of money available to companies willing to capture and store carbon emissions in geologic formations or use CO2 to extract oil from existing wells.
Support for the legislation was led by the Carbon Capture Coalition, a project of the Minneapolis-based Great Plains Institute and the Center for Climate and Energy Solutions. The coalition has members from business, labor and environmental communities.
The Great Plains Institute’s vice president of fossil energy, Brad Crabtree, leads the coalition. Getting legislation through Congress as part of the tax bill proved to be a test of will and time, he said.
“I spent six years of my life on this piece of the U.S. tax code,” Crabtree said with a laugh. “When you’re young, you think what will you do with your life? You don’t think of working on an obscure part of the tax code for six years.”
The result of the credit, he believes, is that the United States now has an “incentive policy for a technology that is proven and can be brought into the marketplace and deployed at scale.”
The credit likely will be used by power plants, factories, ethanol producers and companies pulling greenhouse gases out of the atmosphere. Crabtree recently spoke to the Energy News Network about how 45Q could be a catalyst for reducing carbon emissions in the Midwest. The conversation has been lightly edited for length and clarity.
“Q: How does the 45Q tax credit work?
It’s like the wind production tax credit in how it functions. Instead of offering a credit for wind production it offers the credit for the capture and geologic storage of a ton of CO2 that would otherwise be emitted by an industrial facility or power plant.
Q: How much is the credit?
The tax credit offered $10 per metric ton for enhanced oil recovery previously. That will ramp up to $35 a ton by 2024. A $50 a ton tax credit will be available for companies doing carbon capture and storage (CCS) in geologic formations.”
The US Department of Energy created a fact sheet summarizing the key points of the 45Q Tax Credit
“DOE has conducted analyses to evaluate the economic and job impacts of implementation of a successful FE and National Energy Technology Laboratory (NETL) research and development (R&D) program. The analyses indicate that implementation of a successful FE R&D program, in conjunction with high economic growth and a 45Q tax credit1 will offer these results:
- Achieving DOE R&D goals will create 500,000– 3.3 million additional jobs.
- Using CCUS tax credits will create 4.3–6.1 million additional jobs”