Allows Facilities to use Tax-Exempt Private Activity Bonds
More CCS Technology would Boost our Energy Industry and Produce Cleaner Air
Washington, DC - U.S. Senators Michael Bennet (D-CO) and Rob Portman (R-OH) today introduced a bill to help power plants and industrial facilities finance the purchase and installation of carbon capture and storage equipment. The carbon that is captured can be used for Enhanced Oil Recovery (EOR) or stored underground.
The Bennet-Portman Carbon Capture Improvement Act would allow businesses to use tax-exempt private activity bonds to finance the high upfront capital costs associated with installing carbon capture equipment.
"This bill would reduce upfront costs, one of the largest impediments to carbon capture technology. It is good for the economy and good for the environment," Bennet said. "In Colorado it would enhance our diverse energy portfolio. The captured carbon dioxide can be used by oil producers to extract more oil out of current wells - improving our energy security and boosting domestic energy production. It also reduces emissions from power plants and industrial facilities to help keep our air clean - which is something that Coloradans value and makes our state an attractive place to live. This bipartisan bill is a market-based, technology-neutral approach to attacking the problem that carbon dioxide creates."
"I'm pleased to introduce this bipartisan legislation that will have real environmental benefits, but also allow states like Ohio to continue to utilize our natural resources," Portman stated. "We've developed a solution that will allow us to capture carbon, but also protect Ohio jobs. This is a commonsense idea and that's why it's supported by business groups, energy groups, and environmental groups alike. This is something that people on both sides of the aisle can get behind and I urge my colleagues to support this bill."
The Bennet-Portman bill allows businesses to use private activity bonds (PABs) issued by local or state governments to finance a carbon capture project. These bonds are beneficial to consumers and businesses because of their tax-exempt status and because they can be paid back over a longer period of time. If more than 65 percent of carbon dioxide emissions from a given facility are captured and injected underground, then 100 percent of the eligible equipment can be financed with PABs. If less than 65 percent is captured and sequestered, then tax-exempt financing is permitted on a pro-rated basis.
The Carbon Capture Improvement Act will:
- Make CCS projects more economically feasible: The ability to use tax-exempt PABs to retrofit power plants and industrial facilities will help decrease the costs for these types of projects.
- Boost oil production, while conserving land and reducing emissions: By conducting EOR with recycled carbon dioxide from power plants, we can increase oil production from already-drilled wells, using less new land. Additionally, carbon dioxide that would otherwise be emitted into the atmosphere is instead captured and stored.
- Provide greater energy security in the 21st century: The 21st Century Energy Institute at the U.S. Chamber of Commerce found in 2014 that Enhanced Oil Recovery already accounted for 350,000 barrels a day of domestic oil production.
"CCS is a crucial tool for reducing carbon emissions, and deploying additional projects will make it more affordable in the US and around the world," said Armond Cohen, Executive Director of the Clean Air Task Force. "Private activity bonds can reduce the cost of financing projects, which will help lower the hurdles to getting more steel in the ground."
"Enactment of this bill can help pave the way for carbon capture utilization and storage projects in the U.S. to be built which in turn will make more CO2 available for enhanced oil recovery and securely storing that CO2," said Mike Moore, Executive Director of the North American Carbon Capture Storage Association, which is comprised of entities including the American Petroleum Institute, Kinder-Morgan, Occidental Petroleum, Shell, British Petroleum, and the International Energy Association. "Just in the mature fields alone, recoverable oil with CO2 could be over an additional 20 billion barrels. In turn, these barrels add to the growing self-sufficiency of the U.S., augmenting national and economic security as well as the environmental benefits of building clean energy systems and capturing CO2 before it is released."
In addition, the National Enhanced Oil Recovery Initiative (NEORI), a coalition representing major energy producers, environmental, labor, and state representatives, said the following:
"We thank Senators Michael Bennet and Rob Portman for their leadership and support for deployment of carbon capture technologies at power plants and industrial facilities, and for their introduction of legislation to authorize private activity bonds (PABs) for carbon capture projects. Access to tax-exempt private activity bonds will provide project developers an important tool in a broader toolkit of measures needed to help attract private investment and finance carbon capture projects."
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