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A year ago, the US government began to encourage the mass adoption of low carbon solutions through its groundbreaking Inflation Reduction Act (IRA). The legislation pledged to provide billions in tax credits across various decarbonisation measures, including carbon capture, utilisation and storage (CCUS).
The IRA increases the value of the previous 45Q tax credit for CO2 captured for utilisation and enhanced oil recovery (EOR) from USD 35/tonne to USD 60/tonne for point-source capture and USD 130/tonne for direct air capture. CO2 captured for dedicated geological storage increases from USD 50/tonne to USD 85/tonne for point-source capture and USD 180/tonne for direct air capture.
The legislation has faced some criticism but is undoubtedly the biggest incentive so far for energy companies to target net zero to be offered by any government. One criticism the IRA faces is that its proposed billions of savings on tax credits will unlikely cover the extremely high cost of infrastructure development required for CCS. Despite this, the energy sector’s interest has been piqued and the shift into CCS has moved into the mainstream.
