US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential
The United States’ (US) largest-ever investment in expected climate mitigation, through 2022’s Inflation Reduction Act (IRA), relies heavily on subsidies. One major subsidy, the 45Q tax credit for carbon oxide sequestration, incentivizes emitters to maximize production and sequestration of carbon ox...
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| Format: | Article |
| Language: | English |
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IOP Publishing
2023-01-01
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| Series: | Environmental Research: Infrastructure and Sustainability |
| Subjects: | |
| Online Access: | https://doi.org/10.1088/2634-4505/acbed9 |
| _version_ | 1797844577033388032 |
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| author | Emily Grubert Frances Sawyer |
| author_facet | Emily Grubert Frances Sawyer |
| author_sort | Emily Grubert |
| collection | DOAJ |
| description | The United States’ (US) largest-ever investment in expected climate mitigation, through 2022’s Inflation Reduction Act (IRA), relies heavily on subsidies. One major subsidy, the 45Q tax credit for carbon oxide sequestration, incentivizes emitters to maximize production and sequestration of carbon oxides, not abatement. Under IRA’s 45Q changes, carbon capture and storage (CCS) is expected to be profitable for coal- and natural gas-based electricity generator owners, particularly regulated utilities that earn a guaranteed rate of return on capital expenditures, despite being costlier than zero-carbon resources like wind or solar. This analysis explores investment decisions driven by profitability rather than system cost minimization, particularly where investments enhance existing assets with an incumbent workforce, existing supplier relationships, and internal knowledge-base. This analysis introduces a model and investigates six scenarios for lifespan extension and capacity factor changes to show that US CCS fossil power sector retrofits could demand $0.4–$3.6 trillion in 45Q tax credits to alter greenhouse gas emissions by −24% ($0.4 trillion) to +82% ($3.6 trillion) versus business-as-usual for affected generators. Particularly given long lead times, limited experience, and the potential for CCS projects to crowd or defer more effective alternatives, regulators should be extremely cautious about power sector CCS proposals. |
| first_indexed | 2024-04-09T17:24:34Z |
| format | Article |
| id | doaj.art-18152aa5d3e94c73ae1a739fa15843b7 |
| institution | Directory Open Access Journal |
| issn | 2634-4505 |
| language | English |
| last_indexed | 2024-04-09T17:24:34Z |
| publishDate | 2023-01-01 |
| publisher | IOP Publishing |
| record_format | Article |
| series | Environmental Research: Infrastructure and Sustainability |
| spelling | doaj.art-18152aa5d3e94c73ae1a739fa15843b72023-04-18T13:53:42ZengIOP PublishingEnvironmental Research: Infrastructure and Sustainability2634-45052023-01-013101500810.1088/2634-4505/acbed9US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potentialEmily Grubert0https://orcid.org/0000-0003-2196-7571Frances Sawyer1Keough School of Global Affairs, University of Notre Dame , Notre Dame, IN, United States of AmericaPleiades Strategy , San Francisco, CA, United States of AmericaThe United States’ (US) largest-ever investment in expected climate mitigation, through 2022’s Inflation Reduction Act (IRA), relies heavily on subsidies. One major subsidy, the 45Q tax credit for carbon oxide sequestration, incentivizes emitters to maximize production and sequestration of carbon oxides, not abatement. Under IRA’s 45Q changes, carbon capture and storage (CCS) is expected to be profitable for coal- and natural gas-based electricity generator owners, particularly regulated utilities that earn a guaranteed rate of return on capital expenditures, despite being costlier than zero-carbon resources like wind or solar. This analysis explores investment decisions driven by profitability rather than system cost minimization, particularly where investments enhance existing assets with an incumbent workforce, existing supplier relationships, and internal knowledge-base. This analysis introduces a model and investigates six scenarios for lifespan extension and capacity factor changes to show that US CCS fossil power sector retrofits could demand $0.4–$3.6 trillion in 45Q tax credits to alter greenhouse gas emissions by −24% ($0.4 trillion) to +82% ($3.6 trillion) versus business-as-usual for affected generators. Particularly given long lead times, limited experience, and the potential for CCS projects to crowd or defer more effective alternatives, regulators should be extremely cautious about power sector CCS proposals.https://doi.org/10.1088/2634-4505/acbed9carbon capture and storagecoalnatural gaselectricityInflation Reduction Actscenario modeling |
| spellingShingle | Emily Grubert Frances Sawyer US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential Environmental Research: Infrastructure and Sustainability carbon capture and storage coal natural gas electricity Inflation Reduction Act scenario modeling |
| title | US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential |
| title_full | US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential |
| title_fullStr | US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential |
| title_full_unstemmed | US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential |
| title_short | US power sector carbon capture and storage under the Inflation Reduction Act could be costly with limited or negative abatement potential |
| title_sort | us power sector carbon capture and storage under the inflation reduction act could be costly with limited or negative abatement potential |
| topic | carbon capture and storage coal natural gas electricity Inflation Reduction Act scenario modeling |
| url | https://doi.org/10.1088/2634-4505/acbed9 |
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