Posted on February 18, 2021 by Jeffrey C. Fort
Climate is clearly an early priority of the Biden Administration. The array and breadth of executive orders surely demonstrates the vast power of the Federal bureaucracy to achieve reductions in GHG emissions and climate impact. While those measures would have been gladly received 4 years ago, the prior administrations retreat from climate leadership to climate denial has evoked a groundswell of actions by cities and states, and private citizens. “We’ re still in” and the Climate leadership states have stepped up their commitments. Indeed, even before the Clean Power Plan was replaced in 2019 by the American Clean Energy Rule, it was evident the private sector investment incentives from federal tax credits had substantially increased the use of solar and wind-powered electric generation, reducing US dependence on coal for power generation.
Other actions, including renewable portfolio requirements from almost 30 states, enhanced the results from the federal investment tax and production credits. To keep nuclear power as part of the solution, some states [e.g. Illinois and New York] crafted “zero-emission” incentives to keep nuclear, base-load power plants running.
But the largest potential reduction in carbon emissions is the geologic sequestration tax credit, which earns a tax credit of $50 per ton of CO2 stored in appropriate geologic formations. Even when used for enhanced oil recovery or Direct Air Capture, the credit is $35 per ton. Not only is this perhaps the largest emission reduction tax credit, but when implemented is a huge CO2 reduction strategy. Sources in the mid-South and mid-west may boast excellent geologic formations for such.
The federal tax credit [known as 45Q for its position in the tax code] has captured much attention, as it should. Getting the results expected of that tax credit will be difficult, but would go far beyond anything EPA assumed in the Clean Power Plan when adopted in 2015.
The 45Q tax credits for geologic sequestration and direct air capture have already stimulated as many as 30 projects announced to use geologic sequestration principles to remove CO2 from the troposphere. Credits from these kinds of projects also may be used as credits in the low carbon fuel standard credits, which is part of California’s suite of climate policies.
As important as these tax incentives are for geologic sequestration, and for climate benefit if implemented, there are other actions which private citizens and states can take. One of those is to incentive changes in industrial processes by chemical fixation of CO2 exhaust gases. The reaction processes are well known and established; but the cost of making existing products using this approach is more expensive than existing in-place technologies.
A potential incentive is to monetize the environmental attributes of such an approach by use of a carbon offset credit methodology. We have crafted such a methodology to quantify the saved emissions when certain conditions are met, and then create carbon offset credits to use elsewhere. A dozen or more end-use durable products in existing markets could be formulated using exhaust CO2 gas.[1]
Developed in consultataion with the American Carbon Registry and waiting to be put to public notice and peer review, this carbon offset methodology would do just that — earn carbon credits for the re-use of CO2 exhaust if used in beneficial products.[2]
This is an open invitation to ACOEL members to investigate this opportunity — to develop a peer-reviewed carbon offset methodology, and apply it to a particular client or business segment. Dentons and a client have done the heavy and creative initial lifting — the opportunity is too special not to share. See americancarbonregistry.org/carbon-accounting/standards-methodologies.
This is an opportunity to recover waste gases and convert into a wide range of commercial products, regardless of the extra market value from potential offset sales.
[1] A wide number of intermediate products could be created, which would then be used in appropriate products. End use products which we have found likely to be eligible under this draft Methodology include: Plastics, Polymers, Coatings, Paints, Adhesives, Rubber & leather, Textiles, Paper, Glass, Metals, Wood and Concrete.
[2] Fuels would likely not qualify, since the focus of such is to again combust and release the CO2 into the environment.
Tags: carbon offsets, circular economy, carbon tax, cap and trade, net zero