The progress report is in for one of the biggest drivers of U.S. carbon capture deployment, two years after it was revamped by President Joe Biden’s signature climate law. The outcome is mixed and depends on who you ask. The number of operating projects in the United States has grown — increasing by 23 percent from October 2022 — but there is still only one commercial-scale carbon capture project on a U.S. power plant today. Up-and-running projects are still concentrated on ethanol, natural gas processing and ammonia facilities, and the U.S. needs to be capture far more carbon dioxide to achieve the administration’s goal of net-zero greenhouse gas emissions economywide by 2050. Planned projects are affected by everything from inflation to permitting challenges to the complex nature of development, observers said. Driving the growth is 45Q, a tax credit for carbon capture and storage (CCS) projects that got a refresh in the Inflation Reduction Act. The name comes from 45Q’s place in the tax code. While CCS deployment in the domestic power sector remains limited, the technology’s proponents note that applications for carbon storage wells have jumped since Biden signed the Inflation Reduction Act, as have the number of proposed projects. The Department of Energy, for example, told POLITICO’s E&E News that 45Q’s influence is “undeniable.” The agency referenced a “rapid expansion” in project announcements and an “uptick in investment” since the IRA was passed and signed. The sweeping law made several enhancements to 45Q, a performance-based tax credit that provides money per metric ton of stored CO2. The changes, which included tweaks like raising the credit value for stored CO2 and pushing out the deadline for developers to begin construction, were heralded at the time by supporters, who maintain that the modifications are crucial to the sector’s continued growth. Developers of CCS projects need an incentive like 45Q to capture CO2, they told me, as it’s cheaper to let the greenhouse gas escape into the atmosphere. Critics of the technology said while projects have been announced, what’s more important is if capture facilities are ultimately built, how well they perform and how much it costs to trap CO2. For 45Q to be a success, projects will need to capture almost all of the CO2 they produce, said David Schlissel, director of resource planning analysis at the Institute for Energy Economics and Financial Analysis. But he said there's "no evidence" that projects will capture as much as they claim and that trapping CO2 will be expensive.
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