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Build Back Better Act offers a once-in-a-generation opportunity to advance carbon capture

November 23, 2021 Work Area: Carbon Capture

On Friday, November 19th, after 7-months of negotiation, days of debate and a year of planning, the House of Representatives passed the Build Back Better Act (BBBA). The BBBA, conjunction with the signing into law of the Infrastructure Investment and Jobs Act (IIJA), offers a once-in-a-generation opportunity to advance carbon capture, removal, use and storage, which the world’s leading energy modelers and climate scientists agree are required to meet midcentury decarbonization goals.

While IIJA’s carbon management provisions took a holistic approach to building out the carbon management ecosystem by providing $12.1 billion in funding for a combination of carbon capture, utilization and storage (CCUS) infrastructure, RD&D, and permitting provisions, BBBA focuses on deploying carbon capture at scale by improving the critical lever of U.S. carbon management market development: the 45Q tax credits. While the IIJA provides the infrastructure to store carbon, 45Q will enable more emitters to capture their carbon. Working together, this suite of policies will enable a diversity of carbon management projects.

What are the BBBA’s Carbon Management provisions?

If passed:  

  • Carbon capture project developers could receive 45Q funds as a fully refundable direct pay option that will provide the full value of the credit directly to projects, ensuring the efficient use of taxpayer dollars;
  • 45Q’s commence construction deadline would be extended six years to December 31, 2031. The credit could also be realized for 12 years after construction is finished;
  • The carbon threshold for credit-eligible carbon capture facilities would decrease, leading to a significant increase in carbon capture projects;
  • The value of 45Q would increase to $85/tonne for storage in saline geologic formations from industrial and power generation carbon capture;
  • 45Q’s value would increase to $180/tonne for storage in saline geologic formations from direct air capture.

Four reasons why the BBBA’s carbon management provisions are so important to pass right now in order to meet the U.S.’s midcentury climate goals

  • It is nearly impossible to decarbonize the industrial sector with all of its process emissions without carbon capture. Raising the credit values to BBBA levels will lead to millions of tonnes of annual carbon emissions reductions from the hardest-to-abate industrial sectors, including steel, cement and refineries. Without the credit enhancements, it’s likely that that industrial sector will be unable to decarbonize.
  • The BBBA’s carbon management provisions combined with those in IIJA could fuel a 13-fold growth of U.S. carbon management capacity by the mid-2030s.
  • Unlike carbon markets, which fluctuate daily and are not always easy to access, 45Q offers certainty and stability to project developers. If developers build the project, capture carbon, and comply with the rules, they receive the credit for 12 years. With BBBA’s enhancements, the playing field would be significantly more competitive for small companies and small facilities.
  • The BBBA’s carbon management provisions still retain perhaps the most bipartisan political support of any climate technology. This opportune political moment to rally around a technology may not come again.

Where to go from here? 

With the House’s passage of BBBA, the bill now heads to the Senate for debate. Given the critical role of carbon capture in decarbonization, the future of U.S. midcentury carbon management goals may rest on it. The Senate must pass the bill now.

US: American Jobs Plan biggest proposed investment into carbon capture commercialization ever put forward by a single government

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