This week, Carbon Engineering (CE) was thrilled to join the world in watching President Joe Biden sign the Inflation Reduction Act (IRA) into law.
With incentives that span various sectors of the clean energy industry, the United States has now created conditions for meaningful climate action that place Paris Agreement decarbonization goals within reach. For the first time in decades, many sectors across the United States will now find the business case for reducing or removing emissions more compelling than continuing with business as usual.
The IRA will bring $369 billion in incentives and tax credits to clean energy, and includes measures to support renewable electricity, electric vehicles, production of clean hydrogen, carbon capture and storage, energy efficiency, sustainable aviation fuel, and more. The bill is being widely recognized as the United States’ most significant climate action to date. According to several independent research firms, these new provisions are projected to cut annual emissions by roughly 40% by the end of this decade – that’s on track to more than double America’s current decarbonization pace1.
CE is pleased to see the act include key enhancements to the federal 45Q tax credit that will support emerging industries – like Direct Air Capture (DAC) – in reaching for their full potential. At a glance, these include increased tax credit values for removing carbon dioxide directly from the air – $180 per tonne securely stored in geologic formations and $130 per tonne utilized in ways that result in net emissions reductions. The act also provides access to direct payment for the full value of the credit for the first several years of the project’s life – which will effectively help break down barriers to financing commercial-scale projects.
We are eager to work alongside our global deployment partner, 1PointFive – a subsidiary of Occidental’s Low Carbon Ventures business – to put the IRA into action. In the years ahead, our teams will work diligently to drive the rapid deployment of large-scale DAC facilities across the United States. We expect support from the IRA to further accelerate CE, 1PointFive, and partners in our mission to address emissions at climate-relevant scale while creating thousands of high-value jobs and bringing economic benefits and investment to American communities.
This historic moment illustrates how governments can lead the way in kickstarting clean industries and shaping a path forward to meet climate goals. Although the work to meet these goals will continue, the IRA has positioned the United States to play a leading role in global efforts to decarbonize.
1 How the Manchin Climate Bill Will Slash Carbon Emissions – The Atlantic