On Friday, February 9th, President Donald Trump signed the Bipartisan Budget Act of 2018 - H.R. 1892. This bill, the result of both parties compromising to reach a deal and avoid yet another government shutdown, included a wide range of extra spending to gain enough support to pass - including the extension and expansion of the 45Q tax credit. This is particularly important for the development and wider use of CCUS technologies. The 45Q tax credit provides a financial incentive for sequestering CO2 by storing it underground, using it in enhanced oil recovery (EOR) operations, or by recycling it to make products we use every day.
Senators Heidi Heitkamp (D-ND), Shelley Moore Capito (R-WV), Sheldon Whitehouse (D-RI) and John Barrasso (R-WY), along with the bill’s 24 original cosponsors, had been attempting to pass S. 1535 - the Furthering carbon capture, Utilization, Technology, Underground storage, and Reduced Emissions (FUTURE) Act - to improve on the original 45Q credits that were passed in 2008 as part of the Energy Improvement and Extension Act.
This credit, which is available to taxpayers that capture and sequester (or utilize) CO2 emissions, is a rare example of bipartisan cooperation on energy and the climate. It also corrects a problem with the original 45Q which had a cap on the amount of carbon dioxide that could be sequestered. The removal of the cap will not only allow for more CO2 to be captured and sequestered, but makes the incentive more attractive financially.
All of this will help the economic case for using CCUS technologies. Just as with the take-off of wind and solar, two industries that now create tens of thousands of jobs for the US economy, the government is providing an extra “kick-start” to help these important technologies stand on their own faster. This tax credit is a big step in the right direction in bringing down the cost of CCUS tech - which is still too expensive in its current forms for many actors to use. As CCUS tech is more widely used and researched, its cost will come down - allowing it to be used economically on a large scale. As Barbara Waltz of the Carbon Utilization Resource Council said, “This bill provides the critical federal government support necessary to bring costs down and spur the development and deployment of CCUS projects.”
The bill is also a win for other forms of renewable energy and for nuclear power. There’s little doubt it will allow for more CO2 to be captured and for US greenhouse gas emissions to drop - which, as we know, is not a priority of the Trump administration.
The FUTURE Act shows us that CCUS has backers on both sides of the aisle. It’s a tool in the arsenal in the fight against climate change that we can all agree benefits the country and the planet. The United States should be at the forefront of this exciting technology; and policies like the 45Q will help us get there. As dysfunctional as Washington has been lately, its support is needed in this fight. Hopefully, supporting CCUS can help serve as a way for our government to function properly again. We look forward to seeing what comes next.