Senators Seek to Widen Tax Credit for Carbon Removal

Introduced by Senators Murkowski (R-AK) and Bennett (D-CO), the Carbon Removal Investment Act would widen eligibility for federal tax credits (much like 45Q) to allow more CDR methods.

Biomass and mineralization are among approaches that would qualify.

World Resources Institute published a good summary and clearly supports the measure (see link below). Also linked below are the bill text and a press release from Sen. Bennett, which contains some useful references.

This bill could move the needle in the right direction. Will this bill advance? Well, maybe. It seems to have several advantages in the coming Republican era:

1) Like 45Q it’s tax credit, so technically it’s cutting taxes.
2) Like 45Q, it will benefit companies in the energy sector, along with carbon removal folks of many stripes (some tribal projects may qualify).
3) It is technology-neutral, and thus likely to be useful to a broad coalition of interests.

Direct appropriations for climate solutions may be dead on arrival for a few years. But 45Q and “son of 45Q" tax beaks for other carbon management approaches have been expanding steadily since this tax break was created in 2008. Partisans on both sides of the aisle seem to consider the approach too useful to kill. And under Biden the 45Q tax credit became an advance payment.

When it was enacted, 45Q showed us what a nationwide carbon price would look like if folks from the oil patch designed it: we pay them to clean up the mess, not the other way round. Now that others have got hold of the policy and broadened it to support a wider array of carbon solutions (and more to come, if this new bill passes) this approach is starting to look like an unexpected evolutionary winner.

What do think: Does this tax break have staying power?

—Brad Warren


Text of the bill:
https://www.bennet.senate.gov/wp-content/uploads/2024/11/cache-files-b-4-b4e2a75c-18a5-427b-8f84-873f5ab5e8a9-9f5f16a422ce8ff0cae28d90d06a01466d8d1bb3f13f3c88b4179addb0447670-gai24488.pdf

Sen. Bennett’s release about it, which also cites some useful literature:
https://www.bennet.senate.gov/2024/11/21/bennet-murkowski-introduce-bill-to-support-wide-range-of-carbon-dioxide-removal-approaches/