Abby L. Harvey
GHG Monitor
2/6/2015
Carbon capture, utilization and storage projects could receive a boost in the form of new tax incentives proposed in the Obama Administration’s Fiscal Year 2016 budget request, released this week. The request calls for $2 billion worth of new refundable investment tax credits for new-build and retrofit projects, as well as a new refundable sequestration tax credit totaling $50 per metric ton of CO2 for non-utilization storage and $10 per metric ton for utilization-based storage such as enhanced oil recovery. “I’m very encouraged about our ongoing collaboration with industry, and with all our projects, we’re going to do everything we can to make sure that they succeed and as warranted we bring out new tools. We bring out new efforts, just like this new preferential tax treatment that we’re putting in place for carbon capture and sequestration,” Assistant Secretary of Energy for Fossil Energy Chris Smith said during the Global CCS Institute’s Americas Forum this week.
To be eligible for the credits for new-build and retrofit projects, new plants would be required to capture more than 75 percent of their carbon dioxide (CO2) emissions; and retrofits would be required to capture more than 75 percent of the CO2 emissions from the set of units to which the eligible investment is applied, according to the request. Retrofits would be required to apply to existing plant units that have capacities greater than 250 megawatts and that capture and store more than one million metric tons CO2 per year. The new sequestration credit would apply to qualified projects “at a rate of (1) $50 per metric ton of CO2 permanently sequestered and not beneficially reused (e.g., in an enhanced oil recovery operation) and (2) $10 per metric ton for CO2 that is permanently sequestered and beneficially reused. The credit would be indexed for inflation and would be allowed for a maximum of 20 years of production,” the request says.
The new favorable tax treatment could serve to enable new projects to get off the ground, Smith said. “We focus on research. We’re fortunate to have the National Energy Technology Laboratory … that focuses on the [research and development] that underpins all these efforts,” he said. “At the end of the day you have to move from the laboratory to the field and that requires national and international collaboration. It requires collaboration between government and industry and we’ve got some great industry partners that are moving forward too to build these projects, so this additional favorable tax treatment is just another tool that we have in our arsenal to help make sure we’re pushing forward new major demonstration.”
