The bipartisan Infrastructure Investment and Jobs Act was passed by the US Senate, calling for $550 billion in new spending over the next five years. For utility companies, some of the highlights are $73 billion for Grid Modernization and $7.5 billion for EV Charging Infrastructure. Another interesting inclusion is the $65 billion for high-speed internet infrastructure – required for connected homes etc. – and digital equity. The graph below provides an overview of how the bill matches up with the ambitions set by President Biden in the American Jobs Plan (AJP).

Figure 1. American Jobs Act vs Infrastructure Investment and Jobs Act

Total funding for CCUS adds up to $12 Billion in the Infrastrcuture Bill. In the American Job Plan, the President called on the Congress to invest some $35 Billion on breakthrough technologies to fight climate change and position the USA as a leader in that fight. As this $35 billion is not further specificied in the AJP, it is hard to say if the expectations from President Biden were met in the Infrastructure Bill. But there are some clear provisions around CCS in the Bill, and the ongoing conversations on Budget Reconciliation might add even more funding.

The bill recognizes the value and importance of CCS including Direct Air Capture (DAC) in the near-term future: "Carbon capture and storage technologies are necessary for reducing hard-to-abate emissions from the industrial sector, which emits nearly 25 percent of carbon dioxide emissions in the United States; carbon removal and storage technologies, including direct air capture, must be deployed at large-scale in the coming decades to remove carbon dioxide directly from the atmosphere… (p. 1491)" and includes mention of the pressing importance of cooperative work for shared CO2 transportation and storage infrastructure to enable "large-scale deployment, economies of scale and create an interconnected carbon management market (Carbon Hubs)." A broad Carbon Capture Technology Program (Sec. 40303) is developed with funding of $100 million per year for activities under the front-end engineering and design program for CO2 transport infrastructure necessary to enable deployment of CCUS technologies. Research, development and implementation in the different parts of the value chain are mentioned in several specific provisions:

• Capture: Demonstration and pilot projects are funded with $940 million (Sec. 41004).
• Storage (and Transport): $2.5 billion is made available for new or expanded commercial large-scale projects for carbon transportation and sequestration (Sec. 40305), including funding for the feasibility, site characterization, permitting, and construction stages of project development. $2.1 billion is available till 2026 for loans for projects to support carbon capture infrastructure (Sec. 40304). Another $5 million is available for secure geologic storage permitting in Class VI wells. (Sec. 40306).
• Utilization: $310 million is available for utilization of CO2 that can demonstrate significant net reductions in lifecycle GHG emissions compared to incumbent technologies, processes, and products (Sec. 40302).
• Removal/Sequestration: $3.5 Billion is provided for projects that have the capacity to capture and sequester, utilize, or both at least 1 Mtpa CO2 from the atmosphere from a single or multiple interconnected units (Sec. 40308). In addition, there is are prize competitions specifically with regards to Direct Air Capture (DAC) for a total of $115 Million (Sec. 41005).

Other regulations currently in the House/Senate

As mentioned in our latest Energy Transition Forum, there is also push for changes in the 45Q tax credit for CCS. Congress reformed the 45Q tax credit in 2018 to increase its value and broaden its applicability. These changes created new momentum for carbon capture and have led to the announcement of more than 40 new projects in development, demonstrating its potential impact for climate. Now new regulations aim to tackle 4 of the main challenges/limitations presented by the 45Q:

• Add Direct Pay Option for clean Energy Tax credits: an option that provides the full value of the credit directly to projects and eliminates costly losses of the incentive value to financial third parties.
• Increase the 45Q credit value: from $35 for carbon utilization to $60 per ton and from $50 for carbon sequestration to $85 per ton.
• Expand the commence construction window: To be eligible for 45Q, they currently have to commence construction by the end of 2025, meaning there is not sufficient runway for new projects to begin development with confidence they will be eligible for the credit. The commence construction window for 45Q credit eligibility should be extended by 10 years to the end of 2035.
• Eliminate the Eligibility Threshold: this will expand the pool of eligible projects and spur innovation.

The following graph summarizes the bills that search to improve investment in CCUS:

Figure 2. CCS bills in the Senate & the House. Source: The Clean Air Task Force.

In the next Energy Transition Forum, on September 23rd, we will be discussing about the importance and challenges of Carbon Hubs and cooperation for a clean future. Don’t forget to register to keep the conversation going!

We would love to hear your thoughts on the CCUS policy/funding landscape or any other questions about the Infrastructure Bill in the comments below. We’ll be diving into other areas of the bill – like Hydrogen – in future articles.

If you are interested in further coverage of the Bill please follow these links:

• Transportation Electrification
• Renewable Energies & Energy Storage