A federal bill introduced at the end of February could change the way the US tax code subsidizes carbon dioxide capture, utilization, and storage projects. The Captured Carbon Utilization Parity Act (S. 542 and H.R. 1262) would increase the value of tax credits available for using CO2, making them worth the same as credits for sequestering CO2 in geological formations.
The legislation seeks to amend a portion of the US Tax Code known as 45Q, which currently provides $85 per metric ton of CO2 injected into permanent underground storage after being captured from a point source but only $60 per metric ton if the CO2 is sold for industrial use. CO2 captured from ambient air earns a higher rate—$180 per metric ton for storage and $130 for use. The legislation would instead make utilization just as valuable as storage from a tax credit standpoint.
Reactions to the bill have been mixed. Jessie Stolark, executive director of the nonprofit Carbon Capture Coalition, endorses it. “This legislation marks a pivotal next step in the continued deployment of carbon management technologies focused on the beneficial reuse of captured carbon and we look forward to working with the bill sponsors to ensure its swift passage,” she says in a statement.
Many environmental groups are critical of the bill, however. One concern is that the change would encourage enhanced oil recovery (EOR), the practice of using CO2 to push petroleum out of otherwise-depleted oil and gas wells.
In materials promoting the bill, congressional sponsors highlight CO2-to-chemical technologies in need of R&D and commercialization support. But critics say the wording allows EOR to qualify as well. In a letter to Congress, a coalition of 135 environmental groups wrote, “The myth of a massive carbon management paradigm that uses and re-uses carbon dioxide on any large scale serves only to greenwash the reality of how carbon dioxide is used: for oil production.”