Get Ready for Carbon Capture’s Second Act
October 19, 2023
- The largest climate policy contribution of the Inflation Reduction Act (IRA) will likely be the market incentives tied to carbon capture for high-emitting industries. While competition, replacement and regulation will continue to decarbonize other segments of the economy, the hardest-to-abate industries would see little progress without the significant government support that this legislation provides.
- Now, federal incentives are squarely in the “Goldilocks” range for point-source carbon capture projects. What’s more, IRA also supports greater options for recycling the carbon captured by these projects, opening the door to a circular carbon economy.
- Many high-purity CO2 management projects, such as ethanol and gas processing, appear to be financially attractive today. Over a longer-term horizon, expanded demonstration projects and technology cost declines will accelerate projects with lower-purity CO2 streams, including hard-to-abate industries (steel, cement, and refining) as well as power generation and hydrogen production. This is important, as the high-purity, quick-to-fund projects alone will not put the nation on a net-zero path.
- Just how big could carbon management’s second act prove? New research suggests that IRA could boost carbon capture capacity 13-fold by 2030 – finally legitimizing this technology in a net-zero world.
Disclaimer: The information provided in this report is not intended to be investment, tax, or legal advice and should not be relied upon by recipients for such purposes. The information contained in this report has been compiled from what CoBank regards as reliable sources. However, CoBank does not make any representation or warranty regarding the content, and disclaims any responsibility for the information, materials, third-party opinions, and data included in this report. In no event will CoBank be liable for any decision made or actions taken by any person or persons relying on the information contained in this report.
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