Latest IRS rules could clear the way for carbon capture
Several projects had been put on hold over questions surrounding eligibility for tax credits
WASHINGTON — A delay in getting new carbon-capture projects under construction appeared to move closer to an end last week when the IRS released long-awaited rules for companies to claim an expanded tax credit for the projects.
Two years after Congress passed a measure more than doubling tax credits for power and industrial plants that build systems to prevent carbon dioxide emissions, more than 20 carbon-capture projects are on hold awaiting IRS guidance on how they could claim the credit.
The rules released Wednesday initially appeared to satisfy many of the companies’ questions, said Brad Crabtree, director of Carbon Capture Coalition, an industry group.
“We are still actively reviewing the details at this time. However, we are very pleased to see that the IRS has taken into account key recommendations of the Carbon Capture Coalition,” Crabtree said in a statement. “Nevertheless, this work took far too long and has delayed hundreds of millions, if not billions of dollars in investments.”
More than five carbon capture projects are under study in Texas alone. Among the companies leading the way is the Houston oil and gas company Occidental Petroleum, which relies on carbon dioxide to aid crude production at its wells in West Texas and New Mexico.
Last month, Occidental and French energy major Total announced they were moving ahead on a carbon-capture project at a cement plant in Colorado. With plans to capture more than 700,000 tons of carbon a year, the new tax credit could be worth more than $25 million a year to the project.
Even after Wednesday’s announcement, the matter of carbon-capture tax credits isn’t settled. In a statement Wednesday, the IRS said it was still working on regulations for issues such as the storage of carbon underground.
“The IRS anticipates issuing further guidance in the near future,” the agency said.
Chevron invests in carbon capture
Through its startup technology arm, Chevron is joining two other firms in investing in Carbon Clean Solutions, which provides portable carbon capture technology for the oil field and other industrial facilities.
Chevron Technology Ventures, Tokyo industrial conglomerate Marubeni Corp. and Wave, a Boston clean energy private equity firm, are injecting $16 million into Carbon Clean Solutions, a London company. Carbon Clean Solutions is developing a carbon capture system that can be shipped to a remote sites, where it will remove carbon dioxide at a price of $30 per ton. A prototype is expected to be delivered by 2021.
“Chevron is committed to producing affordable, reliable, and ever-cleaner energy,” Chevron Technology Ventures President Barbara Burger said in a statement. “We invest in breakthrough technologies that both lower emissions in oil and gas and are integral to low carbon value chains. Our investment in Carbon Clean Solutions aims to help commercialize and scale carbon capture utilization and storage technologies, a key part of delivering on our commitment.”
Although a modest investment by industry standards, the project comes at a time when oil and natural gas companies are seeking to reduce their environmental effects and reduce emissions of carbon dioxide and other greenhouse gases.