U.S. Climate Bill Gives Oil Industry a Push for Carbon Capture Projects

Supporters of the oil and gas industry claim that tax credits included in the $430 billion U.S. climate and tax bill expected to be signed into law this week will kickstart carbon sequestration projects, offsetting startup costs for green initiatives.

The energy sector has settled on carbon capture and storage hubs as the primary method to fight global warming. These hubs collect emissions from chemical, power, gas, and oil producers and refineries. However, extensive development has slowed due to high costs and unpredictable revenue.

The Inflation Reduction Act, proposed by the Biden administration, offers a tax credit of up to $85 per ton for sequestering CO2 from the air and up to $180 per ton for burying CO2 from industrial activities.

Additionally, the bill authorizes the leasing of additional federal land for oil and gas development without contemplating the potential climatic consequences of such a move.

According to the International Energy Agency (IEA), a huge expansion of carbon capture is essential to reaching net-zero emissions by 2050. The industry must increase annual storage capacity from the existing 40 million tonnes to 7.6 billion tonnes.

Carbon taxes and other initiatives will be required for larger projects, such as Exxon Mobil Corp’s $100 billion proposal for a huge carbon hub serving refineries and chemical plants, according to analysts.

CEO Tracy Evans of CapturePoint, which partnered with pipeline operator Energy Transfer for a Louisiana hub, said that smaller projects have a better chance of moving through despite still facing challenges such as underground pore rights and licenses. 

Original source material for this article taken from here