Industrial giants stand to gain $3.5B in tax credits for carbon capture – The Center Square

Report on Carbon Capture Initiatives in Louisiana and Alignment with Sustainable Development Goals

Executive Summary

Industrial sectors in Louisiana are positioned to utilize over $3.5 billion in federal tax credits to advance large-scale carbon capture and sequestration (CCS) projects. These initiatives, driven by the 45Q tax credit program, represent a substantial commitment to decarbonization and align directly with several United Nations Sustainable Development Goals (SDGs), particularly those concerning climate action, industry innovation, and clean energy.

Alignment with Sustainable Development Goals (SDGs)

The planned CCS projects in Louisiana provide a direct pathway to achieving key sustainability targets through technological investment and public-private partnerships.

• SDG 13: Climate Action: The primary objective of these projects is to mitigate climate change. By capturing an estimated 42 million metric tons of carbon dioxide annually from industrial sources, these initiatives directly contribute to reducing greenhouse gas emissions.
• SDG 9: Industry, Innovation, and Infrastructure: The development involves a significant infrastructural investment, including 43 distinct carbon capture projects, 10 dedicated transport pipelines, and 22 regional hubs. This fosters resilient infrastructure and promotes inclusive and sustainable industrialization.
• SDG 7: Affordable and Clean Energy: Captured carbon is designated for use in producing low-carbon fuels and chemicals, such as blue ammonia. This supports the transition towards cleaner and more sustainable energy systems.
• SDG 17: Partnerships for the Goals: The 45Q tax credit program exemplifies a critical partnership between the public sector (government) and the private sector (industry) to mobilize financial resources and technology for achieving sustainable development.

Financial Framework and Project Scale

The 45Q Tax Credit Incentive

The financial viability of these projects is underpinned by the federal 45Q tax credit program, which was enhanced by the 2022 Inflation Reduction Act. The program provides a significant incentive for decarbonization efforts.

1. Credit Value: Companies receive $85 per metric ton of carbon dioxide that is captured from industrial and power facilities and permanently stored in approved geological formations.
2. Utilization: The credit also applies when captured carbon is utilized as an input for manufacturing low-carbon products, including fuels, chemicals, or construction materials.

Projected Economic and Environmental Impact

A total of 17 announced projects in the chemical, refining, and liquified natural gas (LNG) sectors are expected to capture approximately 42 million tons of CO2 annually. This translates into a collective potential of over $3.5 billion in annual tax credits, driving substantial investment in climate technology.

Key Projects and Estimated Annual Credits

Several large-scale facilities account for a significant portion of the projected carbon capture capacity and associated financial incentives.

• Ascension Clean Energy Facility: Over $1 billion (based on 12 million tons/year)
• Air Products Darrow Blue Energy Facility: Approximately $425 million
• St. Rose Blue Ammonia Facility: Approximately $425 million
• G2 Net-Zero Energy Complex: Approximately $340 million
• Other Major Facilities: Between $85 million and $170 million each, including:
  • Donaldsonville Nitrogen Complex
  • Cameron LNG Facility
  • CF Industries/Mitsui Gulf Coast Blue Ammonia Plant

The total potential value of these credits may increase further, as several other planned ventures, such as Commonwealth LNG, Big Lake Fuels, and Methanex Geismar Methanol, have not yet disclosed their projected capture volumes.

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 13: Climate Action

  The article’s central theme is the implementation of carbon capture and sequestration (CCS) projects to mitigate climate change. The entire initiative is aimed at reducing greenhouse gas emissions from industrial sources, which directly aligns with the goal of taking urgent action to combat climate change and its impacts.

• SDG 9: Industry, Innovation, and Infrastructure

  The text details significant investments in new, innovative technology (carbon capture) and the development of resilient infrastructure to support it. It mentions “43 carbon capture and storage projects and 10 pipelines” and regional “hubs,” which represent a major upgrade to industrial infrastructure to make it more environmentally sound.

• SDG 7: Affordable and Clean Energy

  The article discusses projects in the “power facilities” and liquified natural gas (LNG) sectors, such as the “Ascension Clean Energy Facility” and “G2 Net-Zero Energy Complex.” By capturing carbon from these sources and creating “low-carbon fuels,” the initiative contributes to making the energy sector cleaner and more sustainable.

• SDG 12: Responsible Consumption and Production

  The article mentions that captured carbon can be put “to work as an input for making low-carbon fuels, chemicals, or construction materials.” This reflects a shift towards more sustainable production patterns by reusing an industrial waste product (CO2) and creating a circular economy model, thereby reducing the release of pollutants into the atmosphere.

• SDG 17: Partnerships for the Goals

  The mechanism driving these projects is a public-private partnership. The U.S. federal government provides financial incentives (“$3.5 billion in federal tax credits” through the 45Q program and the Inflation Reduction Act), and private “industrial giants” implement the technology and infrastructure projects. This collaboration is essential for achieving the large-scale environmental goals discussed.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 13.2: Integrate climate change measures into national policies, strategies and planning.

  The article highlights the “45Q tax credit,” a federal program strengthened by the “2022 Inflation Reduction Act.” This is a clear example of a national policy designed to incentivize private sector action on climate change.

• Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.

  The article is centered on this target. It describes how Louisiana’s “chemical, refining, and liquified natural gas sectors” are planning to adopt carbon capture technology. The creation of “regional ‘hubs'” and pipelines is a direct reference to upgrading infrastructure to support these clean industrial processes.

• Target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology… and promote investment in energy infrastructure and clean energy technology.

  The article details a massive financial mobilization (“more than $3.5 billion”) to promote investment in clean energy technology (CCS) and the associated infrastructure. This investment is aimed at reducing the carbon footprint of energy-related facilities.

• Target 17.17: Encourage and promote effective public, public-private and civil society partnerships.

  The entire initiative described is a public-private partnership. The federal government’s tax credit policy is the public component that enables and encourages private companies (“Louisiana’s industrial giants”) to invest in and operate carbon capture projects.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Volume of Greenhouse Gases Captured: The most direct indicator is the amount of CO2 emissions prevented from entering the atmosphere. The article explicitly states a projected figure: “some 42 million tons of carbon dioxide would be captured.” This directly measures progress for targets under SDG 13 and SDG 9.
• Financial Investment Mobilized: The article quantifies the public financial incentive, which serves as an indicator of the resources being directed towards clean technology. It states that projects could “net more than $3.5 billion in federal tax credits.” This measures progress for Target 7.a and Target 17.17.
• Number of Projects and Scale of Infrastructure: The article provides concrete numbers on the adoption of the technology and the build-out of supporting infrastructure. It mentions “17 announced projects,” “43 carbon capture and storage projects,” and “10 pipelines.” These figures serve as indicators for the upgrading of industry and infrastructure as per Target 9.4.
• Value of Incentive per Ton of CO2: The article specifies the rate of the tax credit: “$85 per metric ton of carbon dioxide captured and stored.” This value acts as an indicator of the economic incentive created by policy (Target 13.2) to drive climate action.

4. Summary Table of SDGs, Targets, and Indicators

Source: thecentersquare.com