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Trump Gets the Chance to Make His Coal Rhetoric Reality



By Dino Grandoni

July 12, 2017 - While President Trump has rolled back several Obama-era rules regulating the coal industry, his push specifically for "clean coal" — "we’re going to have clean coal, really clean coal," he said in March — has so far been largely rhetorical.

Now a bipartisan group of senators are introducing legislation that would give President Trump the chance to put his bill-signing hand where his mouth has been.

On Wednesday, Sens. Heidi Heitkamp (D-N.D.), Shelley Moore Capito (R-W.Va.), Sheldon Whitehouse (D-R.I.) and John Barrasso (R-Wyo.) will introduce a bill to strengthen tax credits for “carbon capture and storage" projects -- or CCS for short.

The group of 25 co-sponsors of the bill includes both some of the strongest advocates for action to reduce greenhouse-gas emissions, such as Richard J. Durbin (D-Ill.) and Al Franken (D-Minn.), along with senators who have doubted the link between human activity and climate change, like Thad Cochran (R-Miss.) and Barrasso.

Developing CCS technology -- and making it economically viable -- is one of the few climate-related issues that corrals across-the-aisle support. That's because not only does the sequestered carbon dioxide mitigate the impact humans are having on warming the planet, but that captured carbon can be useful to industry. Commercial uses for captured carbon dioxide include injecting it into the ground to push out difficult-to-reach pockets of oil -- a process called "enhanced oil recovery" -- and using it as a raw material in the manufacturing of cement, steel and some industrial chemicals.

"One thing I've discovered since being here is that with almost every issue you can find that lane everybody can agree on," Heitkamp said in an interview. "You may not still have the same motivations, but we may be able to find a path forward to actually achieve a result."

Still, some environmental groups, such as the Sierra Club, say the technological challenge of making CCS work at scale is too great and that there is no guarantee any carbon dioxide stored deep in the Earth won't one day leak and still warm the planet.

To boot, the economic viability of carbon-capture technology, even with government support, remains an open question. Last month, a flagship power plant in Mississippi meant to showcase "clean coal" with Energy Department grant money shuttered its carbon-capture operation after years of financial difficulties.

But carbon-capture advocates say the original credit in the tax code, passed in 2008 and listed in Section 45Q, failed to motivate private companies to thoroughly invest in and develop the technology.

"It was a well-intentioned tax credit, but it never worked out as intended," said Brad Crabtree, vice president of the Great Plains Institute, an advocacy group.

The existing law gives firms a $20 tax credit for each metric ton of carbon dioxide stored underground and $10 for each metric ton used in enhanced oil recovery — amounts, Crabtree said, that were not enough to spark private research and development.

The bill would up the current tax credit values to $50 and $35 per metric ton, respectively. Indeed, modeling from the Energy Department suggests that tax credits that high will boost CCS deployment. 

The legislation also lifts a cap on the number of tons of CO2 that can receive a tax credit over the lifetime of the program. With at least 35 million of the 75 million authorized tons already claimed by 2014, according to the Internal Revenue Service, many power plants and other carbon emitters are unsure of purchasing and deploying CCS equipment lest the tax credit runs out before they can recoup that investment. The proposal would guarantee that companies receive the tax credit for 12 years.

Heitkamp and Whitehouse have taken a stab at reforming the 45Q tax credits with a similar bill proposed last year, picking up co-sponsorships from Capito and, importantly, Senate Majority Leader Mitch McConnell from the coal-producing state of Kentucky.

But McConnell, who is interested in passing a broad tax reform bill, is not a co-sponsor this time around. 

The majority leader "continues to be interested in the progress of carbon capture technology," McConnell spokesman Robert Steurer wrote in an email. "He is currently focused on comprehensive tax reform but this is one of many items that may be discussed during debate."

In separate interviews, both Heitkamp and Capito said the best shot at bolstering the carbon-capture tax credits will likely be through incorporating their proposal in a tax overhaul that has taken a backseat to health care efforts so far.

A similar CCS tax credit bill introduced last year in the House has 50 co-sponsors from both parties. But in the past, House Speaker Paul D. Ryan (R-Wis.) has bucked popular proposals to expand or extend energy tax credits. In late 2016, for example, Ryan chose not to include extensions of tax credits for geothermal pumps and fuel cells backed by McConnell in an end-of-year tax and spending bill.

As for Trump, the president's budget proposed deep cuts into another key way the federal government supports carbon capture and storage -- research done through the Energy Department's Office of Fossil Energy. Under the Trump budget, research and development into carbon capture would be slashed to $16 million from $101 million while research and development funds for carbon storage would be cut to $15 million from $106 million. 

Capito called those proposed budget cuts to CCS a "red flag."

"We've expressed that to the administration and that we know that the future for these kind of technologies lies with the research," Capito said in an interview. 

As for the tax credit proposal itself, Heitkamp said that when she met with the then-president-elect in December, she mentioned the bipartisan proposal to strengthen the CCS tax credit.

"He seemed interested," she said.