Tuesday, June 3, 2014

Alternating Fortunes for CCS

At long last the EPA has released its proposed rule for existing fossil-fuel power plants, following up on its proposed rule for new fossil-fuel plants released last year (see EPA Releases Revised Performance Standard Requiring CCS, 9/23/13).  Unlike the previous rule, yesterday's proposal does not call for mandatory CCS for coal-fired plants.  Instead, EPA would allow states maximum flexibility in devising plans to meet new carbon pollution limits.  EPA has prescribed state-specific CO2 goals which, if met collectively, would achieve a 30 percent reduction in power sector carbon emissions (relative to 2005 levels) by 2030.

Some had hoped that EPA would require CCS retrofits for existing coal plants, but cost and other concerns led the agency to pursue a more flexible approach.  Three new legislative proposals, however, would deliver some additional support to CCS.  The Advanced Clean Coal Technology Investment in Our Nation (ACCTION) bill, introduced by Sen. Heidi Heitkamp (D-ND), would provide an additional $2 billion in loan guarantees to CCS projects, increase the existing "45Q" tax credit for carbon sequestration to 30 percent, and create price supports for CO2 used in EOR.

Sen. Jay Rockefeller (D-WV) has introduced his own twin CCS bills.  The Carbon Capture and Sequestration Deployment Act would stabilize the 45Q sequestration tax credit, establish a new investment tax credit covering up to 30 percent of incremental CCS costs, and authorize an additional $20 billion in loan guarantees.  The Expanding Carbon Capture through Enhanced Oil Recovery Act would expand and reform the 45Q tax credit to increase oil production and carbon sequestration via EOR, along lines recommended by the National EOR Initiative (NEORI) two years ago (see DAC and EOR, 4/22/12).

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