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45Q LATEST: Industry and advocacy groups are calling for changes to a carbon sequestration tax credit, otherwise known as “45Q,” citing gaps in federal policy that could threaten the rollout of the nascent technology.
More than 50 groups – led by the Carbon Capture Coalition – are calling for “small-scale” changes to the tax credit, which works to incentivize investment into carbon capture and sequestration projects. They asked congressional leadership in a letter to include changes to the provision in any forthcoming legislative package, as they argue missing elements within the provision could ”impede the economywide deployment of these technologies.”
Here’s what they’re asking for:
- To index the tax credit for inflation. The groups argue that much of the value realized within the provision has been eroded by higher energy prices and capital goods costs. To fix this, the letter implores members of Congress to adjust the tax credit for inflation “immediately” instead of until 2027, which is when it’s scheduled to be modified.
- To create parity between different uses of the tax credit. The letter cites a monetary disparity between projects that qualify for the tax credit, and asks lawmakers to alleviate the difference. The groups state that certain projects are receiving more funding than others, threatening to “disincentivize the development and deployment of relatively nascent carbon reuse technologies.” According to the letter, there’s a $25 per ton disparity between projects reusing carbon emissions to manufacture products and those storing carbon capture, and an even larger disparity when referencing direct air capture projects.
If you’ll recall: Democrats’ Inflation Reduction Act included an expansion of the tax credit (read more on that from the International Energy Agency). However, the Treasury Department has yet to finalize guidance on the expansion – but much of these changes would still require congressional authorization.
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COP28 DRAFT TEXT AVOIDS FOSSIL FUEL ‘PHASE OUT’: The United Nations climate conference published a draft agreement today that stopped short of calling on countries to phase out their use of fossil fuels.
Details: The long-awaited text is the first global stocktake put forth by the U.N.’s Framework Convention on Climate Change under the 2015 Paris Climate Agreement. It calls for governments to proceed with a “just” and “orderly” reduction in the use and production of fossil fuels, but does not call outright for their phase-out, which had been included in a previous draft at this year’s climate conference.
It also called for “rapidly phasing down” the use of “unabated coal,” or coal that does not include technology to capture carbon emissions. The text also endorses tripling renewable energy growth by 2030 and ramping up carbon capture technologies and technologies to help reduce emissions from the atmosphere.
Backlash: The draft deal drew opposition from smaller nations and those considered the most vulnerable to climate change, as well as environmentalists.
Without a call to phase out fossil fuels, it’s “difficult to see how this text will help to achieve the deep and rapid cut in emissions we need by 2030 to keep 1.5c alive,” said former COP26 president Alok Sharma.
And former Vice President Al Gore said the “obsequious” text read “as if OPEC dictated it word for word.” COP28, he said, “is now on the verge of complete failure.”
Ministers for the Alliance of Small Islands, which represents 39 countries, described the draft as “completely insufficient,” accusing leaders at a morning press conference of putting “profit over people.”
“We will not sign our death certificate,” said Samoa’s natural resources minister, Toeolesulusulu Cedric Schuster. Read more from Breanne here.
THE UN’S PLAN TO END WORLD HUNGER WHILE LIMITING CARBON EMISSIONS: The U.N. Food and Agriculture Organization published a global food systems’ roadmap that would aim to reduce world hunger while keeping in line with the Paris climate agreement, Bloomberg reports.
The plan outlines 10 priority areas that the FAO says would need immediate funding in order to combat climate change. These areas include livestock, food waste and loss, soil and water, crops, and healthy diets and fisheries. Some recommendations include reducing overconsumption of animal-based products in developed countries, curbing food waste and the overuse of fertilizers, and capturing carbon in soil – efforts that represent the United Nations’ latest moves to bring the global agrifood industry in line with the 2015 Paris Accords.
“The overarching objective over the next three decades is to transition from being a net-emitter to a carbon sink,” the FAO said. “This ambitious transformation hinges on altering production methods, adjusting consumption patterns, refining forestry management practices, and integrating innovative technologies such as carbon capture.”
Although the plan is non-binding, the FAO’s proposal is expected to inform policy and investment decisions while giving a push to the food industry’s climate transition – which has lagged in commitments, funding and action, compared to other sectors. The agency is looking to strike a balance between achieving a zero-hunger goal by 2030 while avoiding crossing the 1.5 degrees celsius global warming threshold. More on that here.
OCCIDENTAL MAKES A MOVE TO BUY CROWNROCK: Occidental Petroleum has agreed to buy CrownRock, a private energy major operating in the Permian Basin, for $12 billion, CNBC reports.
The deal is the latest in a pattern of consolidation within the U.S. energy sector, particularly in the Permian. It is expected to close in the first quarter of 2024.
The deal will add 170,000 barrels of oil equivalent per day to Occidental’s production, along with 1,700 undeveloped locations to the company’s operations in the region.
The company’s CEO, Vicki Hollub, said the company is purchasing Crownrock to increase its scale within the Midland Basin.
“It’s the scale, it’s the inventory, and all of that has helped now for us also to step up our dividend,” Hollub told CNBC’s “Squawk Box” this morning.
The significance: Occidental is the ninth-largest energy company in the U.S., with a market capitalization of $49.7 billion. The company’s last major acquisition was its purchase of Anadarko Petroleum for $55 billion in 2019. However, the buy saddled the company with debt, and sparked a bitter dispute with activist investor Carl Icahn, who sold the remainder of his stake in the company in 2022.
The move also follows the path of other oil majors that have been acquiring companies to expand their reach. Back in October, Exxon Mobil announced that it would be acquiring Pioneer Natural Resources for about $60 billion. Weeks later, Chevron announced it agreed to purchase Hess for $53 billion. More on that here.
SECOND FEDERAL CHALLENGE FROM OUR CHILDREN’S TRUST: The law firm that won a landmark legal climate victory on behalf of young Montanans is filing its second lawsuit against the federal government, accusing the Environmental Protection Agency of violating young Californians’ constitutional rights to a healthy life.
As E&E News reports, 18 young California residents between the ages of 8 and 17 are alleging that the agency discriminates against children by allowing dangerous levels of greenhouse gas emissions.
Children’s Trust executive director Julia Olson said that “it’s time the EPA is held accountable by our courts for violating the U.S. Constitution and misappropriating its congressionally delegated authority.”
The lawsuit claims that regulators “forged an unlawful path” by failing to contain climate pollution at a level that protects children, who they argue are more vulnerable to the effects of a warming planet.
Why it’s important: The lawsuit, Genesis B. v. EPA, is the second federal challenge and the latest in a series of youth climate cases handled by Our Children’s Trust – including the successful effort against the government of Montana. More on that here.
The Rundown
Financial Times Saudi Arabia piles pressure on UAE to shift COP28 focus away from oil and gas
The Hill ‘Morally, this is obscene’: GOP divided over stripping compensation for radiation victims from NDAA
Bloomberg The US could remove 1 billion tons of carbon from the air — for $130 billion
