45Q: Unlocking a positive feedback loop we actually want

     In response to an article from Greentech Media (Can Updated Tax Credits Bring Carbon Capture Into the Mainstream?)

     More great analysis of the 45Q tax credits. It’s hard to overstate how important this tax credit is for the CCUS community. We’ve been stuck in what Jesse Jenkins of MIT describes as a negative feedback loop - where “high cost barriers to entry prevented companies from pushing forward on innovation, which in turn prevented the technology from getting cheaper.” 

     This is spot on. Innovation and the wider adoption of a technology makes it cheaper. Think about the first computer; it was the size of a large room, only performed the most basic tasks, and was incredibly expensive (only governments and large companies could afford them). Now, we have computers in our back pockets that are millions of times faster than the total computing power of NASA in the 1960s. Your smartphone is even more powerful than IBM’s 1997 supercomputer, Deep Blue, that beat Garry Kasparov at chess. This pace of innovation was driven by investment in research and development - which led to a decrease in price - which led to the technology becoming more accessible and used - which led to more research - which led to a further drop in price…and so on. 

     Many carbon capture technologies are at the stage where computers were 40 years ago. Now that investing in carbon capture won’t be as risky for companies, these technologies can begin to take off. We must do everything in our power to make sure it doesn’t take 30-40 years though!

     Remember, investment and research -> drop in price -> wider use of a technology -> more research and development into that technology -> further drop in price -> even wider use of the technology. A positive feedback loop we actually want!*

     *As opposed to the positive feedback loop where climate change causes the tundra to thaw, which releases more methane and CO2, which speeds up climate change, which causes more methane and CO2 to be released.....and so on.

Exciting news out of Washington: The passage of the FUTURE Act

          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.