The Carbon Capture Coalition has two top priorities for the current session of Congress: providing a direct-pay option for the 45Q tax credit and expanding project eligibility for the credit via a multiyear extension of the deadline for beginning construction.

And the most likely vehicle for passage of one or both policies could be a bipartisan infrastructure bill, said Sen. Tina Smith (D-Minn.), speaking at a media preview of the coalition’s 2021-2022 Federal Policy Blueprint on Tuesday.

“My hope and, I think, the hope of many of us is that that big infrastructure package can address directly the needs we have to move toward a clean energy future, including technology-neutral tax credits and other infrastructure,” Smith said. “We are hoping to get to work on this in real time after we move through and get this COVID relief package done.”

Originally passed in 2018, 45Q is a tax credit specifically for carbon-capture technologies: $50/ton for carbon stored in underground saline formations, and $35/ton for carbon used to make other products. The credit got a two-year extension in the year-end omnibus legislation passed by Congress, and the IRS released final rules on it earlier this year.

But, the coalition argues in the blueprint, “direct pay is a more cost-effective and efficient way of incentivizing carbon-capture projects,” attracting more investment and increased deployment of projects. Similarly, according to the blueprint, the deadline extension is needed because “complex and capital-intensive carbon-capture projects can have lead times of several years before beginning construction” and still might not be able to qualify for the credit.

Smith and other speakers at the briefing focused on framing carbon capture as an essential tool for cutting emissions and addressing climate change across the economy, as well as a job creator and an issue that could garner strong bipartisan support.

“It isn’t a substitute for sharply reducing emissions; it’s a partner. We need to do both,” Smith said.

“Economy-wide and accelerated deployment of carbon capture is critical to achieve midcentury global temperature targets,” said Jessie Stolark, the coalition’s public policy and member relations manager. She pointed to a recent analysis from the International Energy Agency showing that carbon capture could provide up to 15% of emission reductions needed to get to net zero by 2070.

Anna Fendley, director of regulatory and state policy for the United Steelworkers, said the technology will be crucial in the industrial sector “where process emissions can’t be eliminated. We don’t have carbon-capture technology on our blast furnaces yet,” Fendley said. “The blueprint really speaks to some of the challenges in the industrial sector; namely that it’s so capital-intensive and trade-exposed.”

Fendley was referring to the coalition’s portfolio of other options for expanding the 45Q tax credit, such as eliminating thresholds for the amount of carbon a project must capture per year to qualify and upping the credit value for sectors in which the technology will have a higher cost.

The coalition is also backing the Storing CO2 and Lowering Emissions (SCALE) Act, which would provide low-interest loans and grants to help finance CO2 pipelines and other transport and storage infrastructure. Introduced in the House of Representatives last year, it would provide financial support for developing commercial-scale saline storage — large underground sediment formations containing brine and porous rock — and extra funding to EPA to speed up federal and state permitting of such sites.

“The federal government has a long-established role in transportation: automobiles, public transit and water,” said Charles Hernick, vice president of policy and advocacy at Citizens for a Responsible Energy Future, a conservative clean energy lobbying group. “When we think about the carbon-managed economy of the future, we need to think of CO2 pipelines as well. This is going to be an area that is important for investment, and there’s a unique role for the federal government to really make a difference and kick open the door for this growing economy.”

Big Coalition, Broad Goals

Founded in 2018, the Carbon Capture Coalition and its 80 members are themselves a reflection of the bipartisan, industry and federal support that have coalesced around carbon-capture technologies in recent years.

Last September, the Department of Energy announced $72 million in research and development funding for 27 carbon-capture projects, and the year-end energy legislation passed by Congress included a recommendation for an additional $1 billion in R&D funding.

At present, the U.S. has about a dozen commercial-scale carbon capture facilities in operation, Stolark said, and 30 more are in development across the country. Sen. Smith talked about a recently announced project billed as the world’s largest carbon capture and storage system, taking CO2 from ethanol plants in Minnesota and Iowa and shipping them via a proposed pipeline to saline storage sites in North Dakota. When fully built out, the project could capture and store up to 10 million tons of CO2 per year and “deliver truly low-carbon liquid fuels,” Smith said.

Carbon capture is also an integral part of President Biden’s plan to decarbonize the U.S economy and reassert the nation’s leadership in global efforts to tackle climate change, said Shuchi Talati, chief of staff of DOE’s Office of Fossil Energy.

“To reach our goal, we have to manage the carbon that comes from all sectors, including power and industry,” Talati said. “We want to leverage the work already done by the carbon management team in the Office of Fossil Energy and consider ways we can apply technologies to develop low-carbon cement and concrete, low-carbon steel, low-carbon paper and so many other important products.”

Hernick said increased R&D funding for carbon capture is also needed to keep the U.S. competitive in global markets. While older coal plants are closing in the U.S., newer, more efficient plants will stay online here and around the world. “There are still a lot of folks that need electricity and are looking to those coal assets in their country,” Hernick said. “The goal here is not just about U.S. emissions but really global technology and U.S. leadership to address a global issue.”

Talati also stressed that environmental justice will be a central part of the administration’s approach to carbon capture R&D. “It’s not just determining what technologies we need, but also we need to choose carefully where to site these projects,” she said. “They must be in locations where there is support for these projects, where there’s community involvement and benefits for the surrounding populations, including jobs.”

The challenge for the coalition and lawmakers like Smith is finding the most effective route to pass carbon capture-friendly policies — piecemeal or as a package. Smith is for a “holistic” approach, putting together “a broad coalition that can come together to support technology innovations that are going to create jobs and opportunities for people regardless of whether you live in a red state or a blue state.”

“Now is the moment for us to be thinking in bold ways, to be thinking bigger about what we can accomplish,” she said. “It will be easier to put together that big coalition if we are thinking broadly about what we need to do.”