Biden’s $1.75 trillion infrastructure bill, trimmed down from the original $3.5 trillion, receives criticism from environmental groups that it delays the retirement of dozens of coal-fired plants.
Under President Joe Biden’s climate change policy, power plants using carbon capture technologies to decrease their emissions are eligible for a tax credit of $85 per metric ton, which is an increase from the previous $50 per ton.
According to estimates, the tax credit rise could bring $6 billion in payments over 12 years to a single 1,000-megawatt coal plant. That would result in a quarter of the nation’s coal-fleet delaying retirement.
Another concern among environmental groups is that the increase could also extend the life of a coal-fired plant by a decade since carbon capture facilities can take years to construct. Since the credit only requires 75% of the emissions of the plants to be captured, the profile emissions of any coal plant that uses the credit to install carbon capture technology would be the same as those of an unmitigated natural gas plant.
“The provision, as written, delays the transition from fossil fuels — and emissions reductions — in the electric sector by throwing a decade-long lifeline to uneconomic coal plants…Even with the lower costs of renewable energy that will be spurred by Build Back Better, utilities will find carbon capture with these payments to be too attractive to pursue clean energy alternatives,” said an analyst from the Sierra Club environmental organization.
One of the main concerns of the Sierra Club is that utilities that end up not installing carbon capture technology could delay the plant’s retirement by years while it’s under consideration. According to the organization, two coal-fired power plants in North Dakota and New Mexico have already announced plans to postpone planned retirements while they consider the economics of installing carbon-capture technology.
Biden’s Carbon Capture Policy Aftermaths
Apart from prolonging the life of coal, another argument against the carbon capture policy is that it could steer financing away from wind and solar investments.
On the other hand, the increase in the credit is necessary for scaling the technology of carbon capture. It is also critical for reducing the emissions of industries like cement and refineries that are hard to decarbonize. The Boston-based environmental group Clean Air Task Force has estimated that the rise in the tax credit could result in a 125 million metric ton reduction in carbon dioxide emissions a year by 2031.
It is a heated debate whether carbon capture is used by the fossil fuel industry only as an excuse to keep pumping coal, oil, and gas from the ground. More specific guidelines and restrictions for coal plants need to be included in the tax credit that make sure the funding is used in the most optimal way to reduce emissions rather than to delay phasing out of fossil fuels altogether.