Carbon Capture & Storage in The United States Power Sector: The Impact of 45Q Federal Tax Credits

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In February 2018, the United States (U.S.) Congress passed the Bipartisan
Budget Act of 2018, expanding the corporate income tax credit for carbon
capture and storage (CCS). This tax credit, known as 45Q,
was adopted to enable additional deployment of CCS projects in the U.S. – both to achieve economic goals such as meeting energy needs and supporting jobs as well as
carbon emission reductions.

CCS is an essential technology in the climate solution toolbox but has not yet been deployed widely enough to meet its full potential. CATF advocated for the
expansion of 45Q for several years as a way to provide a performance-based financial incentive to increase deployment of the technology. In June 2018, after
the adoption of the expanded 45Q tax credits, CATF retained Charles River Associates (CRA) to perform a modeling analysis, based on assumptions developed
in conjunction with CATF, that estimates the impact of this new incentive on CCS deployment in the U.S. power sector by 2030.

The modeling results show that 45Q leads to significant deployment of CCS,  capturing and storing approximately 49 million metric tonnes (tonnes) of
CO2 annually in 2030. The estimated CO2 that will be captured and stored is equivalent to removing roughly 7 million cars from U.S. roads. For perspective, this is greater than the number of new cars sold in the U.S. in all of 2017.



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