Anyone reading our ESG and climate work will know that a very limited number of producers of CO2 in the US can make money from the 45Q credit and the linked article is also technically wrong in its definition. 45Q is a tax credit and will create no revenue for those able to apply for the credit. It will create a tax saving, but there are very few situations in which the tax credit is high enough to cover the CCS costs. It will work where CO2 streams are pure (fermentation would be a good example – but so would gas clean up for LNG), and where there is low-cost sequestration capacity local to the source. Cleaning up a dilute CO2 stream is very expensive – and incentives close to $100 per ton would be needed to get immediate movement (45Q peaks at $50 per ton in 2026). Even with a clean stream, compression costs are high but would depend on the dynamics of the pore space being used for sequestration.
It is a timely headline – even if it is largely inaccurate – because we have bills in both the Senate and the House that focus on CCS. We need to find either an incentive program that raises the interest in CCS and whether it is a higher tax credit, or an additive carbon tax, or some sort of carbon offset scheme, a further kick start is needed. There is a strong consensus building – something we have been talking about since September 2020 that you cannot achieve the Sustainable goals suggested below without substantial carbon capture and storage. The incentive landscape needs action soon, as developing sequestration sites could take years, given the need to find the right geologies.
