The Potential Impact of the U.S. Carbon Capture and Storage Tax Credit Expansion on the Economic Feasibility of Industrial Carbon Capture and Storage

In early 2018, the U.S. Congress expanded the 45Q tax credit program for the capture, storage, and utilization of CO2. The 45Q tax credit expansion creates a financial incentive of $50 for each tonne of CO2 placed in long-term storage, a significant increase from the $20 per tonne that was originally authorized in the Energy Policy Act of 2008. Here, we estimate the net present value of industrial carbon capture and storage with the $50 per tonne credit and find that in some industrial systems, the costs of capturing, transporting, and storing one tonne of CO2 is less than $50. For systems in which the $50 tax credit is not cost effective, economies of scale associated with small emissions quantities are limiting, and a simple gaseous transportation solution which saves on CO2 compression costs improves economics in some cases. However, the $50 tax credit is unlikely to be sufficient to stimulate changes in the management of most industrial CO2 emissions.