By Corbin Robertson Jr.
Beaumont Enterprise, Nov. 4, 2022
The Texas energy industry is currently facing a myriad of issues. From a growing population that requires more power for home heating and cooling to intense pressure from financial institutions and the federal government to cut its carbon dioxide emissions, these challenges are not going away. The U.S. Energy Information Administration projects a nearly 50% increase in world energy use by 2050. If Texas is to continue its global energy dominance, we must adapt to these changing times that ensure an expanded industry which also protects our environment.
To do this, the state of Texas should incentivize Carbon Capture Utilization and Storage (CCUS). CCUS is the process of capturing carbon dioxide emissions produced from industrial sources to be used to increase hydrocarbon recovery, utilized for various industrial applications, or to be stored underground. Dedicated carbon storage is possible through the process of deep injection into secure geological formations, some of which may be depleted crude oil and natural gas reservoirs, brine-filled aquifers or mineralized basalt formations.
Just as the state of Texas has extended substantial tax benefits for sources of renewable energy (wind and solar), tax credits or property tax reductions that support CCUS makes eminent sense because they preserve and expand the backbone of the Texas economy while reducing carbon dioxide emissions.
In 2009, the Texas Legislature created a tax credit for clean energy projects aimed at coal power. Though now expired, the statute provides a good framework to build upon for incentive based CCUS projects. The statute provided a tax credit for the capital costs of installing carbon capture technology, limited to three projects. With input from industry, designating a required carbon capture rate could work to limit the number of eligible projects with different levels of incentives, capping the financial expense to the state while still supporting major CCUS projects that advance the twin objectives of a growing energy industry while capturing carbon. The added benefit is that it could help spur construction of more natural gas plants that would put more reliable power on the grid.
Another potential incentive falls under the Tax Relief for Pollution Control Property Program, called “Prop 2,” which provides tax relief for facilities using certain property or equipment for pollution control. The state program offers tax relief for pollution control property or facilities that are used to “meet or exceed laws, rules, or regulations adopted by any environmental protection agency of the United States, Texas or a political subdivision of Texas, for the prevention, monitoring, control or reduction of air, water, or land pollution.” A simple statutory change by the Texas Legislature, making CCUS projects eligible for this tax credit, would go a long way in incentivizing CCUS.
To make CCUS incentives feasible on a state level and ensure taxpayer accountability, limiting factors are necessary, especially as the industry is developing in the state. Various metrics could apply to limit the total funds expended by the state, such as the size of the project.
States such as Louisiana, Kansas and South Dakota are ahead of the game in incentivizing CCUS, and Texas cannot afford to be left behind as the energy industry innovates and moves toward carbon capture. That is why the Carbon Neutral Coalition is working with the Legislature and energy stakeholders to invest in these projects.
Texas has a strong energy and manufacturing industry that employs hundreds of thousands of people. Carbon capture will help to maintain and expand these businesses and jobs while protecting the environment.
Corbin Robertson Jr. is the Founder of the Carbon Neutral Coalition. If you have a possible guest column for The Enterprise, email your idea or the column itself to [email protected] If you have something to say, we want to hear from you!
Originally posted on Beaumont Enterprise.