Posted on September 24, 2020 by Rich Powell, Justin Ong and Mitch Kersey
Study shows long-term certainty could yield more clean power and manufacturing,
more than 100,000 jobs, and gigatons of emission reductions
Prior blogs described why a federal carbon capture tax credit (affectionately known as “45Q”) has such broad support: robust energy security, skilled labor and environmental benefits.
Carbon capture projects are often billion-dollar investments that require long-term certainty to pencil out and attract investment. New modeling from the Rhodium Group, a leading research firm that’s partnered with BlackRock to analyze climate risk among other things, puts in perspective exactly how much of a difference long-term extension to 45Q can make. And it’s big.
The long-term extension of 45Q is consistent with a bill introduced by Reps. Schweikert (R-AZ) and Wenstrup (R-OH) – and endorsed by House Minority Leader Kevin McCarthy (R-CA) as part of his climate package – that would make the credit permanent. Rhodium also analyzed a five-year extension of the credit, which was previously put forth earlier this year by Sens. Capito (R-WV), Whitehouse (D-RI), Barrasso (R-WY), and Cramer (R-ND). Both a permanent extension and a 5-year extension were found to generate gigatons of emission reductions and new investments in both the power and industrial sectors.
We’ve boiled down their analysis into 5 fast facts:
- Up to 157,000 job-years by 2035. Deployment could encourage new construction and operations jobs at existing manufacturing facilities and new power plants.
New U.S. Carbon Capture Jobs by Source Facility
(Low-Cost, Permanent 45Q Scenario)
- Up to 52 GW by 2050. The 45Q credit could incentivize the build out of ultra-efficient fossil power plants with carbon capture, more than half the size of our current U.S. nuclear fleet. For a sense of scale, that’d be more than 170 zero-emission NET Power plants.
Projected Number of Power Plants with Carbon Capture
(Low-Cost, Permanent 45Q Scenario)
- Deployment in 30+ states. The 45Q credit could facilitate new carbon capture projects in a host of new states. The map below shows just the industrial sector opportunities. For reference, a plant that captures 0.1 million metric tons is a large facility by the Global CCS Institute’s standards and is eligible for claiming the credit.
Industrial Carbon Capture Deployment, Permanent Extension, Low-cost Case (2050)
- Up to 4 gigatons of emission reductions by 2050. That’s equivalent to the emissions produced by 29 million cars for 30 years, or more than all the emissions produced from all U.S. coal and natural gas power plants produced over the last two years.
Forecasted Cumulative Emission Reductions by 2050
- $42 per MWh. Advanced carbon capture is cost-competitive with many other clean energy sources. Unlike variable renewable energy sources, it also does not require additional batteries or other investments to provide around-the-clock electricity.
Projected 2030 Levelized Cost Electricity for New Capacity Additions
One reason 45Q is so effective: it can incentivize emissions reductions in both the power sector and the industrial sector, such as heavy industrial processes to reduce emissions such as cement, chemicals and the transportation fuel sectors – unlike renewable energy tax credits. Expected deployment could catalyze emission reductions totalling more than one-tenth of all U.S. industrial sector emissions.
Support for carbon capture is diverse. Many states have recently implemented enabling carbon capture policies — from Wyoming to California. A recent National Petroleum Council carbon capture report – led by companies like Shell, Valero, and Southern Company – highlighted 45Q extension as one of its top policy recommendations.
Carbon capture technology is on the cusp of a step change. And as you can see from the Rhodium analyses — building on 45Q can help make that goal a reality.
Check out a whiteboard video we made last week describing the future benefits 45Q can provide …
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