Why the IRA’s Carbon Capture Tax Credit Could Increase Greenhouse Emissions

New research raises doubt around the climate benefits of the 45Q tax credit for carbon capture and storage for fossil fuel powerplants.

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The Inflation Reduction Act earmarks billions of dollars of incentives for carbon capture and storage from coal and gas-fired powerplants. Ideally, the incentive will provide a path for fossil generators to reduce their greenhouse gas emissions as the electric grid transitions to cleaner resources and to net zero.

Yet recent research calls into question the climate impact of the IRA’s carbon capture tax credit, known as 45Q. The report, co-authored by a former deputy assistant secretary for the Department of Energy’s Office of Carbon Management, finds that 45Q could lead to an increase in greenhouse gas emissions by incentivizing coal and gas generators to extend their working lives and maximize their output. The result could be billions of dollars of taxpayer money spent with no climate benefit.

Emily Grubert, report co-author and now an associate professor of sustainable energy policy at the Keough School of Global Affairs at the University of Notre Dame, examines the costs and climate impacts of carbon capture and storage under the IRA. Grubert explains how the 45Q tax credit could lead to unintended climate impacts. She also discusses the need for robust review of proposed carbon capture projects, and strong regulatory guardrails, if 45Q and CCS are to deliver climate benefits.

Emily Grubert is an associate professor of sustainable energy policy at the Keough School of Global Affairs at the University of Notre Dame, and former deputy assistant secretary in the Office of Carbon Management at the U.S. Department of Energy.

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