As a party to the Paris Climate Agreement, the United States affirmed its continued commitment to significantly reducing carbon emissions by 2025. According to the Department of Energy and the International Energy Agency, achieving large CO2 reductions will require an “all of the above approach” with new and innovative energy technologies playing a primary role in any successful CO2 mitigation strategy.
One technology receiving bipartisan support from a number of policymakers is carbon capture and sequestration (CCS). In February Representative Mike Conaway (R-TX 11th Dist.) introduced a bill, which would expand and create a permanent tax credit for CCS. Senator Heidi Heitkamp (D-ND) also recently proposed that the CCS tax credit be expanded in order to provide greater access to federal funding for future coal projects. Supporters believe these policies would encourage development of large-scale CCS programs, revamp R&D efforts for carbon capture technologies and incentivize major CO2 producers to invest.
CCS advocates believe that a tax credit extension is critical since the current credits are capped preventing development of new projects. Fossil fuel coalitions and some environmental groups support the extension, arguing that CCS presents an opportunity to simultaneously continue production and curb emissions from coal and gas-fired power plants.
On the other hand, some view the tax break as an expensive subsidy for fossil fuels disguised as a climate solution, lacking the technology to back it up. Tax credit opponents issued a letter this month citing a number of examples where federal funding for CCS technologies proved to be a waste of taxpayer dollars yielding no environmental benefits. These opponents of the amendment forecast a $530 million cost in the next 10 years if the credit is expanded or the cap is removed. Other opponents of the tax credit argue that private investment in CCS is the best option for R&D and future energy markets.