The carbon capture and storage industry (CCS) has been seeing unprecedented interest in the wake of the Inflation Reduction Act which created new mechanisms to bolster the industry, while turbocharging already existing ones. This has generated and an influx of new projects and investment but what will the impact be for companies already working in this area like Carbon America?
We sat down with Carbon America CEO Brent Lewis to discuss the company’s new ethanol carbon capture project with Bridgeport Ethanol in Nebraska (the first in the state using this technology) and how he thinks the Inflation Reduction Act will impact the CCS industry.
What is your reaction to the Inflation Reduction Act (IRA)? It feels like a big shift for the burgeoning carbon capture and storage (CCS) industry.
It’s a game changer for the industry. We believe that a lot of a lot of key elements of the IRA are going to drive a much larger total addressable market in the US. We can now move beyond some of the easiest to abate industries like ethanol and natural gas processing plants, and we can start tackling the carbon dioxide emissions from flue gas power plants and others.
I think the market has gotten much bigger and part of it has to do with the increase in the value of the 45Q for permanent sequestration going from $50 to now at $85 per ton captured and sequestered. That’s a material change in the revenues for a CCS project. We’re seeing a lot more opportunity there for projects to really be economic with currently available technologies.
Are there specific aspects of the IRA that will help develop the market for CCS?
Yes, another thing about the IRA, that is especially beneficial when you’re talking about creating a very large market, is the direct pay. Direct pay provides the ability for the project owner to file their tax return, and the IRS effectively pays cash credit worthy for the 45Q in the following year. Now there are ways you can structure a transaction to monetize the future value of those credits. Instead of having to rely on tax