GHG Daily Monitor Vol. 1 No. 222
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December 05, 2016

Coalition of States Lays out Potential Path for Carbon Capture Deployment

By ExchangeMonitor

Wide-scale deployment of carbon capture, utilization, and storage (CCUS) technology with enhanced oil recovery (EOR) offers several benefits to the U.S., including emissions reductions and increased energy security, but current policy at the federal and state level is not adequate to reach that end, a report out Friday by a group of 14 states says.

“Further deployment of carbon capture faces challenges, including high capital costs, low revenues from CO2 sales due to low oil prices, limited availability of debt and equity for projects due to policy uncertainty and market risk. A targeted package of federal incentives will help address these challenges,” the report says.

Led by Montana and Wyoming, the states suggest three key facets of a CCUS-friendly package of federal incentives: improving and expanding the 45Q tax credit for carbon storage; deploying a mechanism to stabilize the price of CO2; and offering tax-exempt bonds and master limited partnership status to improve the terms of project financing.

States should also take action to improve their tax policies, the report says. “Complementary federal and state incentives will narrow the gap between the cost of carbon capture and revenue received from the sale of CO2 for EOR, spur commercial project deployment by enticing private investment in projects, and bring down the cost of carbon capture technology,” the report says.

The working group that developed the report, titled “Putting the Puzzle Together: State & Federal Policy Drivers for Growing America’s Carbon Capture & CO2-EOR Industry,” includes representatives from: Montana; Wyoming; Kansas; Colorado; Kentucky; Mississippi; New Mexico; Pennsylvania; Texas; Utah; Oklahoma; Arkansas; Ohio; and Indiana.

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