SIDNEY, Mont. — U.S. Senator Steve Daines and U.S. Representive Ryan Zinke today announced that they have introduced legislation to encourage carbon sequestration.
The CO2 Regulatory Certainty Act of 2016 aligns tax guidelines with existing federal regulations to ensure taxpayers are better able to utilize the Section 45Q carbon sequestration tax credit. By accelerating work on carbon sequestration projects, this bill is helping to provide one of the energy technologies needed to utilize America’s abundant coal resources.
Currently, project developers can claim credit for CO2 sequestration, however, Internal Revenue Service (IRS) guidance does not reflect differences between the two existing sequestration methods, permanent or geological storage and enhanced oil and gas recovery. The IRS guidelines subject enhanced oil and gas recovery applications to regulations meant for geological storage, making it difficult to access the tax credit.
The bill clarifies and aligns IRS guidelines with current Environmental Protection Agency (EPA) regulations that already reflect operational and legal differences between enhanced oil and gas recovery and geological storage under the Clean Air Act and the Safe Drinking Water Act.
“This bill will help ensure carbon captured from places like Colstrip using a Section 45Q tax credit can be used in a responsible, innovative, and economical way to unlock made-in-Montana energy,” Daines stated. “I am proud to join Representative Zinke in stopping yet another misguided, and backward policy guidance from the Obama administration that obstructs commonsense innovative solutions to save Montana’s coal jobs and produce more American energy.”
“Despite this Administration’s perpetual war on fossil fuels, we need coal more than ever to keep energy costs reliable and affordable,” said Zinke. “We as a Congress must find more ways to utilize Montana’s coal reserves with innovative, clean technologies. This is why the CO2 Regulatory Certainty Act of 2016 is crucial. The current 45Q tax credit, which incentivizes carbon capture technologies, is unusable to companies who want to sequester carbon through geological storage. I am supportive of 45Q, but I want for companies in Montana to actually be able to utilize it. We introduced this legislation to create new economic opportunities, protect our environment, and keep our coal, oil, and gas communities viable for generations to come.”
Attorney General Time Fox: “The so-called Clean Power Plan rule contains a provision that makes it impossible for carbon dioxide captured in power plant operations to be sequestered underground by being used in enhanced oil and gas recovery operations. This makes no sense, and that’s why my office petitioned EPA to reconsider the rule and brought it to the Court’s attention in the Clean Power Plan litigation, which was argued before the DC Circuit Court of Appeals last week. This bill would make it more likely that captured carbon could be put to an economic use. That would be beneficial to Montana, and I commend Senators Daines and Hoeven, and Rep. Zinke, for taking this action.”
Alan Olson Executive Director of Montana Petroleum Association: “The Montana Petroleum Association appreciates Senator Daines’ and Representative Zinke’s support of this legislation. We support the effort to clarify 45Q in tax code so that it allows CO2 EOR to be counted as a means to achieve compliance under the credit. The legislation appropriately recognizes the states’ role in oil and gas regulation and protects private property mineral interests. In so doing, the legislation opens up new opportunities to utilize captured CO2 for EOR while protecting the environment. Carbon Dioxide used for enhanced oil recovery in compliance with conditions of the Safe Drinking Water Act and Underground injection Control (UIC) rules governing class two injection wells does provide for the safe injection of carbon dioxide used in enhanced oil recovery.”