environment
The ‘45Q’ carbon capture tax credit: Catching fog with a tweezer
For years, it has seemed that policymakers were far more focused on lining the pockets of climate activists than they were about actually helping the environment. The “45Q” tax credit, created by the Energy Improvement and Extension Act of 2008, and increased by the Inflation Reduction Act, is one of many examples, and one of the more egregious.
TL;DR
- The '45Q' tax credit, expanded by the Inflation Reduction Act, subsidizes direct air capture (DAC) of CO2.
- DAC is criticized for being energy-intensive, potentially negating CO2 reductions if fossil fuels are used for power.
- Powering DAC with emissions-free electricity (nuclear, wind, solar) would require vast land areas and trillions in investment.
- Storing captured CO2 underground carries risks of leakage, as evidenced by a past disaster in Cameroon.
- DAC's impact on global temperature is minuscule, estimated at 0.003 °C, a fraction of the margin of error in temperature estimates.
- Taxpayers are estimated to spend $46 billion annually on carbon sequestration under 45Q, with costs projected to reach $2 trillion.
- The subsidies are seen as incentivizing inefficiency and benefiting special interests, funding a 'futility' that exceeds the social cost of carbon.