When U.S. lawmakers introduced the 45Q tax credit in 2008, they were planting a seed they hoped would one day sprout into a flourishing carbon-capture industry. As the years wore on and the number of successful projects remained small, they added a little fertilizer in 2018, not only enhancing the value of the credits but easing some of the limitations in the earlier legislation. It’s now 2022 and, with climate concerns and the energy transition at top of mind, Washington is again looking at ways to make the tax credit more effective and spur new growth in carbon-capture projects. In today’s RBN blog, we look at how economic and technological challenges have so far limited the success of carbon-capture initiatives.
We’ve written a lot about carbon capture at RBN over the last few months as part of this series, starting with the basics of carbon capture and sequestration (CCS) and the carbon dioxide (CO2) value chain, then continuing by taking an extensive look at the federal 45Q tax credit, including how it was designed and why the cost to capture CO2 from some industrial sources is uneconomic even at higher incentive levels. We’ve also examined legislation that could expand the size and reach of those credits, along with some underlying reasons why the credit hasn’t been more successful. The tax credit was also the subject of our latest Drill Down Report.
From the way the tax credit was designed, to the level of incentives offered, to technological readiness, there are a number of reasons for the lack of notable carbon-capture successes. In part due to these limitations along with the cost of capturing CO2 noted in Part 4, the 45Q tax credit may have been insufficient to overcome some of the other obstacles of carbon-capture projects. Two obstacles that we’re going to look at today are the difficulties in scaling up some of the newer technology that came out of pilot and demonstration projects, as well as economic factors other than the value of the 45Q credit itself.
There were 27 commercial-scale carbon-capture projects operating worldwide in 2021, with 12 of those in the U.S. across a variety of sectors: the production of fertilizer, ethanol (a subject of a future blog in this series), petrochemicals and hydrogen, as well as natural gas processing. (That doesn’t include two projects that have been suspended, one that aimed to capture CO2 from coal-fired power generation, the other involving natural gas processing. We’ll touch on those shortly.) Globally, there are also projects in operation to capture emissions from iron and steel production and coal-fired power generation, with most of the 31 projects currently under construction or in advanced development centered on gas-fired power, coal-fired power, and hydrogen or ethanol production, with still others that focus on cement production or feature direct air capture (DAC) technology.
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About the song
“Way Down in the Hole” was written by Tom Waits and appears as the second song on side two of Waits' 10th studio album, Franks Wild Years. The song was used as the theme song for the HBO crime drama series, The Wire. The series ran for five seasons from 2002-08. In addition to Waits’ version, a different recording of “Way Down in the Hole” was used for each season, including versions by The Blind Boys of Alabama, The Neville Brothers, DoMaJe, and Steve Earle. Personnel on the Waits record were: Tom Waits (vocals, pump organ), Marc Ribot (guitar), Greg Cohen (bass), Michael Blair (drums, percussion), Ralph Carney (sax), and Angela Brown, Leslie Holland, and Lynne Jordan (backing vocals).
Franks Wild Years was recorded during 1987 at Universal Recording in Chicago, and The Sound Factory and Sunset Sound in Hollywood. The album contains songs written for a play of the same name. Several songs from the album have appeared in television shows, movies, and stage productions. Produced by Waits, the album was released in August 1987 and went to #115 on the Billboard Top 200 Albums chart.
Tom Waits is an American songwriter, singer, musician, and actor. He began his professional career performing on the San Diego folk circuit as a teen in the late 1960s. He moved to Los Angeles in 1972, where he worked as a songwriter before securing his first record deal with Asylum Records. He has released 17 studio albums, three live albums, seven compilation albums, two soundtrack albums, and 24 singles. His songs have been covered by many artists from different genres. Waits has appeared in over two dozen motion pictures. He was inducted into the Rock and Roll Hall of Fame in 2011. His last tour was in 2008 and his last LP, Bad as Me, was released the same year. He has a featured role in the movie Licorice Pizza, which was released in the U.S. in November 2021 and received an Oscar nomination for Best Picture.
