The Treasury Department is moving too slowly to implement expanded carbon capture tax credits, keeping many potential projects in suspension, a top Energy Department official said.
“There are billions of dollars waiting,” said Steven Winberg, the Energy Department’s assistant secretary of fossil energy, during remarks on Tuesday, kicking off a cross-country carbon capture roadshow. “Let me repeat that: There are billions of dollars waiting. It has capital we need to get out into the marketplace.”
It’s been nearly two years since Congress passed enhanced bipartisan tax incentives for carbon capture technology. Advocates of the technology say that the credits, known as 45Q tax credits, could encourage a host of new projects and thus help decrease the cost of capturing carbon significantly, facilitating the cooperation of fossil fuel companies, environmentalist groups, and others.
Boosters have high hopes for the incentives because Congress included what Winberg called “hefty increases” to the credit amounts. The new incentives more than doubled the amount companies can claim for captured carbon — from $10 per metric ton to $35 per metric ton for carbon capture paired with enhanced oil recovery and from $20 per metric ton to $50 per metric ton for projects storing carbon underground in saline reservoirs.
But carbon capture backers also say a lack of implementation guidance from the Internal Revenue Service has paralyzed project development as investors are hesitant to commit capital without knowing the rules of the road.
Winberg said the Energy Department has been “very active” in attempting to speed along the IRS process. Former Energy Secretary Rick Perry, during his tenure, twice urged Treasury Secretary Steve Mnuchin to push the 45Q rules through.
Nonetheless, little has happened so far. The IRS last spring released a request for information, asking stakeholders to weigh in on how the rules should be crafted, but the agency hasn’t advanced anything since then.
The Energy Department hasn’t put public pressure on the Treasury Department since Perry’s exit, but Winberg’s remarks could signal that the department, along with many carbon capture advocates, is getting impatient. Winberg’s office in particular has made cutting the cost of capturing carbon a key priority.
“It needs to get out,” Winberg said of the IRS guidance. “They’ve been at it for two years, so if you happen to be around talking to the folks at Treasury, I would encourage you to encourage them to get the ball moving.”
