CATF says we can keep costs down and innovation up.
The National Petroleum Council (NPC) released its new report on carbon capture, transport and storage this week. The report underscores the importance of carbon capture and identifies policies that would make the technology widespread across the industrial and power sectors.
In the short-term, the report suggests improvements in 45Q tax credits that reward facilities for injecting CO2 deep underground. These improvements include helping more projects get started by adding 6 years to the program’s eligibility window, lengthening the duration of the credit by eight years, and increasing its dollar value. Congress has a chance to address these improvements right now. Over the next month, Congress will consider extensions to existing tax incentives. According to the report, 45Q changes and other simple measures could double the amount of CO2 captured today to 40 million metric tons or more annually within 5-7 years.
To drive annual CO2 capture to several hundreds of millions of tons, the report asks Congress to enact economic policies equivalent to $110 per tonne price of CO2. We agree that a carbon price or requirements for emissions reductions are the right direction. But the price suggested by the NPC is higher than necessary and will discourage Congress from acting. Taking the right steps now will dramatically lower the effective carbon price needed from federal policy to address climate change. Expanding carbon capture on cheaper sources in the coming years and by selling the captured CO2 for enhanced oil recovery to offset costs will drive significant learning-by-doing, innovation, and development of cost-efficient pipelines and storage sites. These actions will slash the costs of CCS in the same way that wide use of renewables reduced their costs.
Smart actions today such as 45Q improvements will double the amount of CO2 captured in the near term. With more projects, costs fall. Lower capture costs will make a national climate policy more cost-effective and politically resilient.