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Industrial carbon capture: Reducing emissions with higher 45Q values

November 3, 2021 Work Area: Carbon Capture

How much carbon dioxide will the industrial sector capture if Congress raises the value of 45Q tax credits? The answer matters because carbon capture removes emissions from the industrial sector that can’t easily be addressed otherwise. It is the only option to decarbonize process emissions from cement and one of two main pathways to decarbonize steel production, both accounting for around 12% of global emissions.

Current law provides industrial sources $50 for each metric ton of CO2 permanently stored deep underground in saline formations. As the figure below shows, the current 45Q support will lead to about 12 million metric tons of CO2 sequestration by 2031. However, if Congress raises 45Q to $85 per metric ton, CO2 captured jumps to 48 million metric tons. This total includes the impact of building CO2 pipelines and storage sites included in the bipartisan infrastructure bill. That’s an increase of 36 million metric tons per year by 2031. In April, the Rhodium Group estimated the benefit of 45Q on the industrial sector to be the addition of about 22 million metric tons of stored carbon dioxide per year in 2031. Conservatively, raising 45Q to $85 decreases industrial CO2 emissions between 22 and 36 million metric tons annually in 2031.

Raising the value of 45Q has one additional important climate benefit. The reductions in the industrial sector begin to come from the most challenging sectors to decarbonize, including steel, cement, and refineries.

We will learn if Congress passes both the budget reconciliation bill and bipartisan infrastructure bill in the coming weeks. Both bills represent critical opportunities to advance carbon capture.

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