There has been a lot of turmoil among lawmakers lately regarding climate change legislation. Officials from the White House including Senators Ron Wyden and Sheldon Whitehouse and some of their counterparts have agreed to boost the 45Q tax credit for industrial carbon capture projects.
It will apply for heavy industries such as cement and steel plants and the credit will be raised to $85 per metric ton of CO2 sequestered – up from the previous $50. The carbon capture credit does not yet cover the power sector – coal and natural gas plants.
Senator Joe Manchin, a Democrat from large coal-producing state West Virginia, is insisting on coal and natural gas-burning power plants to be allowed incentives for carbon capture in the $3.5 trillion bill.
As his vote is critical to passing the legislation in the Senate, discussions are underway on boosting the carbon capture credit for power plants – a move that could get him on board. Senator Manchin has previously called the reconciliation bill far too costly.
45Q Tax Credit Boosts Carbon Capture Investment
The 45Q tax credit also waives the “capture rate” that requires plants to sequester a high percentage of carbon to be eligible. That could allow more plants to get credits for investing in initial carbon credit units.
The increase of the carbon capture credit also aims to boost carbon capture investment and expand the available capacity by 2035. Some environmentalists, however, claim that the technology is too expensive, therefore, it may never enter wide commercial use, referring to unsuccessful projects like Petra Nova in Texas.
According to some market reports, the carbon capture and storage market is forecasted to reach $6.13 billion by 2027 – up from $1.75 billion in 2019. That means the increasing widespread deployment would inevitably reflect on prices and push them down. Many companies are joining forces to invest in carbon capture projects to share costs which is also propelling future growth.