Wyoming Governor Matt Mead is pushing for the expansion of a tax credit that supports carbon capture and enhanced oil recovery.
The 45Q tax credit applies to carbon dioxide captured from power plants and other industrial facilities and used for enhanced oil recovery or permanently stored underground. The current credit is $10 for every ton of carbon dioxide used for enhanced oil recovery and $20 for every ton that is permanently sequestered. A bill backed by Senators Heidi Heitkamp (D-ND) and Sheldon Whitehouse (D-RI) that is currently working its way through Congress would increase that to $35 and $50 respectively.
Carbon dioxide flooding already happens at a number of oil fields in Wyoming, but according to the University of Wyoming's Enhanced Oil Recovery Institute, there are an additional 1.8 billion barrels of oil that could be recovered. Most of those projects would not be possible under current market conditions.
“Financing these projects is challenging based on the current volatility of CO2 prices, as well as oil prices, so these incentives would stabilize that for future investment,” said Matt Fry, a policy advisor to Governor Mead.
The report estimates that expanding 45Q would cost the government $1.5-3 billion over an unspecified time frame. Fry couldn't say exactly how the group arrived at that figure.
The environmental group Friends of the Earth calculated in a recent report that the bill expanding 45Q would make a single Mississippi power plant eligible for more than $1 billion in tax credits.
Under the existing law, companies have claimed the credits for more than 45 million tons of CO2, but because tax records are confidential, it is not clear who exactly has benefited or whether they would be capturing CO2 anyway, regardless of the credit.
“The implementation of 45Q has not been a paragon of transparency," said Lukas Ross, a climate and energy campaigner with Friends of the Earth.
There is an ongoing scientific debate over whether using carbon capture and enhanced oil recovery actually results in a net reduction in carbon emissions.
The report issued by Governor Mead and Montana Governor Steve Bullock also suggests a variety of other federal and state subsidies that could incentivize the carbon capture for use in enhanced oil recovery.
