A federal tax credit that supports carbon capture and storage could help the US reach its climate goals and bring economic benefits, particularly to the Gulf coast, according to a new study.
Companies could save as much as $60mn a year from the so-called 45Q credit which compensates them for capturing and storing greenhouse gas emissions, researchers at the University of Texas-Austin found.
The analysis of President Joe Biden's climate plan suggest the US will need to drastically ramp up carbon capture, utilization and storage (CCUS) to meet its end-of-decade climate goals, given deployment has been slow so far.
"CCUS could provide a bipartisan solution to early gains in carbon reduction as it potentially slows climate change and provides an opportunity to keep and even grow jobs from an important economic sector," said Andrew Waxman, one of the study's authors and an environmental economist at the LBJ School of Public Affairs.
Tax credits from 45Q are set to ramp up between now and 2030, at the same time the Texas and Louisiana Gulf coast is poised to see an expansion in industrial emissions with several new facilities likely to start up. There's been a renewed interest in such projects of late, with ExxonMobil unveiling plans in April to build a $100bn carbon capture and storage hub that would depend on government funding.
The Texas study estimated the costs of using CCUS to reduce emissions from current and planned industrial facilities in the region. At the upper end, CCUS could yield economic benefits of as much as $4.6bn a year in terms of avoided climate damage. Current benefits surpass government outlays for the credit, which are estimated to be $3.9bn at the high end.
Biden has committed to cutting US greenhouse gas emissions in half from 2005 levels by the end of the decade.
