Despite increasing efforts to decarbonize
the power sector, the
utilization of natural gas-fired power plants is anticipated to continue.
This study models existing solvent-based carbon capture technologies
on natural gas-fired power plants, using site-specific emissions and
regionally defined cost parameters to calculate the cost of CO2 avoided for two scenarios: delivery to and injection within
reliable sequestration sites, and delivery and injection for the purpose
of CO2-enhanced oil recovery (EOR). Despite the application
of credits from the existing federal tax code 45Q, a minimum incentive
gap of roughly $38/tCO2 remains for the geologic sequestration
of CO2 and $56/tCO2 for CO2-EOR (before
consideration of revenue generated from delivered CO2 contracts).
At full escalation of 45Q, delivered CO2 costs from this
sector for geologic sequestration could reach as low as $22/tCO2. However, given the capital investment required in the near-term,
it would be beneficial if the credit provided the greatest economic
benefit early on and decreasing over time as deployment continues
to ramp up. Additionally, due to the high qualifying limit of 45Q
for the power sector, e.g., 500 ktCO2/yr, the tax credit
incentivizes the capture of roughly 397 MtCO2/yr at a 90%
capture efficiency or 75% of the emissions in this sector, with missed
opportunities equating to roughly 118 MtCO2. Advancing
the scale of carbon capture and sequestration (CCS) will require both
technological advances in the capture technology, cost reductions
through the leveraging of existing infrastructure, and increased policy
incentives in terms of cost along with the reduction of qualifying
limits.