US Senate considering tax breaks for carbon capture, storage

Washington (Platts)--26Apr2007

The US Senate Finance Subcommittee on Energy, Natural Resources and
Infrastructure on Thursday spent time grappling with how and whether to offer
tax incentives for carbon capture and storage as it contemplated new climate
policies to tackle global warming.

The debate over offering incentives for carbon emission cuts came as the
subcommittee's chairman Jeff Bingaman, Democrat-New Mexico, who also chairs
the Senate Energy and Natural Resources Committee, mulls a cap-and-trade
global warming bill that would lead to commercialization of carbon capture and
storage facilities.

Bingaman said at a subcommittee hearing on coal that he was collecting
information on ideas, but did not know when a bill encouraging incentives
might be drafted. At issue, in part, is whether to offer tax incentives for
both the capture and storage of carbon dioxide, and whether the tax breaks
should be split into one for each.

"Would you structure a tax credit for capture and a different one for
sequestering carbon dioxide?" Bingaman asked. "There is no policy reason for
wanting them to just capture it. We want it out of the atmosphere but they've
got to do both to get them to accomplish what we want to get accomplished
here," Bingaman said.

Brian McPherson, director of the Southwest Regional Partnership for
Carbon Sequestration, said the high cost of carbon capture and the wide range
of technologies needed to capture carbon from a coal plant or a
coal-to-liquids facility or a biofuels plant warrants a tax incentive for
capture and a different tax break for storage.