Background/Objectives
A meta-analysis study conducted by Zhuang et al. (2021) reflects a noted shift in contemporary consumer behavior being increasingly predicated upon sustainability as a decisive factor in purchasing decisions. In response to this companies are increasingly aligning with the evolving demands towards remaining competitive. As part of its substantial contributions to reducing greenhouse gas emissions, the United States government enacted a vast series of supportive policies and legislations like the Inflation Reduction Act (IRA) as well as the Section 45Q tax credit towards promote efficient carbon capture and storage (CCS) technologies.
However, while it is acknowledged that there has been reasonable progress, all of these efforts by stakeholders still fall short of meeting global sustainability goals. It has been suggested that this less-than-efficient reduction of greenhouse emissions in the United States is due to a discordancy in operation and lack of coordination of related policies (Lattanzio et al., 2021).
Approach/Activities
Basseches et al. (2022) highlighted significant institutional issues like the politics-based conflicts between federal and state policies (on pollution, wages, and taxation) as well as conflicting mutually excluding environmental credits. Clean energy credits like the Clean Vehicle Credits and Alternative Fuel Vehicle Refueling Property Credit as well as the Energy Efficient Commercial Building Deduction and Energy Efficient Home Improvement Credit incentivize alternatives to the establishment of carbon capture technology.
These conflicts pose significant compliance and investment complications for interested stakeholders and impede a cohesive framework for effective CCS implementation. With a focus on the Inflation Reduction Act and Section 45Q tax credit, this study will exhaustively examine conflicts in clean energy legislation and carbon credits while proposing solutions to harmonize incentives toward a unified approach for CCS.
Results/Lessons Learned
As of September 2022, there were 196 CCS projects worldwide which shows a growth of 44 percent in the number of CCS facilities from 2021. Recent US governmental initiatives have been crucial to enable continued momentum of CCS projects. Amendments to Internal Revenue Service Section 45Q, which was part of the US Inflation Reduction Act of 2022, provided $369 billion in funding for climate change along with other provisions such as extending the start of construction date of these plants to 2032 while lowering capture thresholds. Additionally, the US Infrastructure Investment and Jobs Act calls for $12 billion for CCS projects over the next 5 years.
Harmonizing all regulations and policies will significantly boost the growth of CCS projects through credits and de-risking logistics and storage to meet sustainability and net-zero objectives. This study will recommend the integration of industry stakeholders and the IRS towards streamlining policies and legislation. This will facilitate dialogue, enhance regulatory coherence, and ensure a conducive environment for increased and profitable stakeholder participation and investment in CCS initiatives.