Congress has recently passed legislation that will encourage a “surge” in carbon capture, utilisation and storage (CCUS), with projects expected to rise by 65%, according to a new International Energy Agency (IEA) report.
The IEA has conducted one of the first in depth reports into a bipartisan deal that resulted in an increase of more than double the amount of existing tax credits for carbon storage across the US.
According to the IEA, the tax credits under Section 45Q could provide $1 billion in capital investment over the next six years, which could lead to between 10 million and 30 million metric tonnes of additional CO2 capture capacity.
The IEA said: “This would increase total global carbon capture by around two thirds and, by incentivizing industry to find the lowest-cost projects, could be cheaper than projects already operating around the world”.
Jeremy Harrell, managing director of policy at the group ClearPath, said the CCUS incentives could assist some coal retrofits “Pencil out”.
However, it is expected that the majority of CCUS will be delayed until the “mid 2020s” as the value of the credits increases over time.