The Inflation Reduction Act (IRA) increases 45Q tax credits for point source capture from $35/tonne for CO2 utilization and $50/tonne for permanent sequestration to $60/tonne and $85/tonne, respectively. While changes to the credit certainly help economics, a more important change to the definition of a “qualified facility” significantly expands opportunities for carbon capture.
Under previous minimum threshold requirements, projects had to register as a “qualified facility.” Industrial facilities generating less than 500,000 tonnes CO2 per year had to capture a minimum 25,000 tonnes CO2 per year. Electricity generating facilities were required to capture a minimum of 500,000 tonnes CO2 per year. For perspective, the U.S. EIA estimates for CO2 emissions from power generation are found in Table 1:
The IRA changes the definition of an electricity-generating qualified facility to one capturing at least 18,750 tonnes/year and at least 75% of the CO2 in the stack. For non-power facilities (e.g., ethanol fermentation), the minimum to qualify has been lowered to 12,500 tonne/year.
These changes have more plant owners and process managers weighing the benefits of carbon capture and 45Q, but there are five considerations that need to be addressed early in the project scoping phase.
(1) Meeting the other requirements
To qualify for 45Q, the taxpayer must demonstrate through lifecycle greenhouse gas analysis that the CO2 is (i) captured or permanently isolated from the atmosphere, or (ii) displaced from being emitted into the atmosphere. The IRA also introduced eligibility requirements for prevailing wage and apprenticeships.
(2) Goals for the project
Early in project planning, the objectives of the carbon capture project should be well defined. Plant owners should be asking themselves questions like:
- What will the CO2 be used for? 45Q? Enhanced oil recovery? Sale into a pipeline? Use on site?
- What is the size of the project? What fraction of CO2 emissions do we hope to capture?
- Can the process afford to support the parasitic load from carbon capture?
- What are the repercussions if we don’t meet our CO2 capture targets?
(3) Getting CO2 “beyond the gate”
Integrating carbon capture into a process requires a lot of thoughtful effort. Likewise, what happens to the CO2 “beyond the gate” requires equal amounts of effort. The amount of CO2 being captured dictates how the CO2 is handled.
Pipeline is the most efficient method of transporting large volumes of CO2. There are over 5,000 miles of existing pipeline infrastructure in the U.S., with most of the pipelines in the mid-continent and central plains for enhanced oil recovery. Pipeline operators have quality requirements for CO2 with strict limits on moisture, sulfur, and oxygen. Pipeline requirements might require additional CO2 cleanup steps. If a CO2 pipeline isn’t immediately accessible, a spur might be needed to tie into the main.
Truck transport is an option for small capture projects. CO2 is transported as a cryogenic liquid at around 20 bar to keep it in its liquid state. Cryogenic tailers are capable of hauling 20 tonnes CO2.
Co-locating carbon capture with utilization eliminates the need for transportation. There are already examples of carbonated beverage plants using captured carbon on-site.
(4) The source of CO2
Not all CO2 sources are created equal. Generally, the higher partial pressure of CO2, the easier it is to capture. Example CO2 partial pressures for different sources are found in Table 2. It should come as no surprise that most of the CO2 captured today comes from hydrogen and ethanol production and processing natural gas.
The partial pressure along with contaminants dictate which carbon capture technologies are suitable. In the context of carbon capture from flue gas, oxygen is considered a contaminant because it accelerates the degradation of some carbon capture solvents. Other contaminants include flyash and sulfur.
(5) Emerging technologies
Traditionally, carbon capture from small scale combustion (10’s MW) hasn’t had many options, but emerging technologies are changing the landscape for small point capture. Consider that if there isn’t a suitable carbon capture option for your process now, that doesn’t eliminate the possibility in the future.
Takeaway
Changes to the 45Q tax credit in the Inflation Reduction Act has more owners and managers considering carbon capture for their processes, but carbon capture is a complicated topic requiring lots of thoughtful planning. For example, some carbon capture technologies are more suitable for certain processes than others. Other things that need to be figured out are the size of the project and what are the intentions for the captured CO2. These considerations should be addressed early in the scope definition phase of the project to best manage risk.
Article originally published on the POWER Engineers website.