John Barrasso

09/25/2024 | Press release | Distributed by Public on 09/25/2024 16:22

Barrasso Introduces Enhanced Energy Recovery Act

WASHINGTON, D.C. - Today, U.S. Senator John Barrasso (R-Wyo.) was joined by U.S. Senators James Lankford (R-Okla.) and Bill Cassidy (R-La.) in introducing legislation to enhance carbon capture incentives and energy production.

The Enhanced Energy Recovery Act (S. 5212) would create parity under the Section 45Q carbon capture tax credit by giving across-the-board, equal treatment for carbon captured for increased energy production, utilization, and sequestration.

"For years, Wyoming has proudly led the way on carbon capture projects," said Sen. Barrasso. "We've successfully used this technology to take carbon out of the air and find productive uses for it. One of those uses includes enhanced oil and natural gas recovery - a technique that significantly increases energy production while reducing carbon emissions. Recent changes to Section 45Q have made it harder for American energy producers and manufacturers to use this credit. The Enhanced Energy Recovery Act fixes this policy by ensuring equal treatment for energy production, utilization, and sequestration. This will bolster our nation's energy security, support Wyoming's energy workers, and help lower costs for American families."

"Building the infrastructure to capture carbon in Louisiana will create tens of thousands of jobs and there will be tens of billions of dollars of investment," said Dr. Cassidy. "This will help Louisiana continue to lead as an energy and manufacturing state."

"Long before carbon storage became national buzzwords, Wyoming's oil and gas workers were already permanently storing CO2 in enhanced oil recovery projects. For over 30 years CO2 injection has not only sequestered carbon in Wyoming but also helped produce millions of barrels of oil that the United States requires to meet energy demand. Senator Barrasso's bill recognizes that enhanced oil recovery using CO2 deserves equal treatment to non-productive sequestration not only to create a level playing field in the tax code, but also because it supports high-paying oil and gas careers and pumps revenue into state and federal coffers. We applaud Senator Barrasso and urge speedy passage of the Enhanced Energy Recovery Act." - Pete Obermueller, President, Petroleum Association of Wyoming

"At a time where energy demand is soaring, it is more important than ever to ensure that the United States relies on domestic energy sources for our security. Wyoming has long been a leader in carbon management, whether it be using CO2 as a commodity for enhanced oil recovery or paving the way with CCUS technologies. Capturing CO2 and using it to increase our domestic production, keeping energy reliable and affordable for all Americans, is a win for our nation. This bill is a crucial piece of legislation to ensure a level playing field for the growing markets that use CO2. We applaud Senator Barrasso's continued leadership and efforts to support Wyoming's energy industry." - Rob Creager, Executive Director of the Wyoming Energy Authority

"The Independent Petroleum Association of America (IPAA) supports Senator Barrasso's Enhanced Energy Recovery Act. Providing parity between carbon sequestration and utilization within the tax code ensures that CO2 is captured and stored in the most economically viable manner possible. The bill further incentivizes companies to continue to use direct air capture technology, fostering ongoing development and deployment of these cutting-edge emissions reduction technologies with the promise of working toward the goals of overall emissions reduction in the United States. IPAA thanks Senator Barrasso for taking a pragmatic, forward looking approach to management of carbon dioxide emissions." - Jeff Eshelman, President & CEO, Independent Petroleum Association of America

"We are pleased to express our strong support for Senator Barrasso's Enhanced Energy Recovery Act, which takes a critical step forward in leveling the playing field for carbon oxide sequestration. This balanced approach provides a powerful incentive for the oil and gas industry to continue its leadership in carbon capture, utilization, and storage (CCUS) while also recognizing the role of EOR in safely managing carbon dioxide and extending the productive life of oil fields. Senator Barrasso's vision for equitable treatment of carbon management technologies aligns with the industry's commitment to reducing emissions, enhancing energy security, and delivering economic benefits to rural communities." - Jerry R. Simmons, President & CEO, Domestic Energy Producers Alliance

Full text of the legislation can be found here.

Background:

The Enhanced Energy Recovery Act increases the effective value of the 45Q tax credit for captured carbon used in enhanced oil recovery and utilization to match that of sequestration.

Currently, the full tax credit incentive for carbon used in enhanced oil recovery (EOR) and utilization is $60/metric ton, while the value for sequestration is $85/metric ton. This bill sets all three values at $85/metric ton for EOR, utilization, and sequestration.

Additionally, the bill creates equal treatment for carbon captured through Direct Air Capture (DAC). It increases the value of DAC-captured carbon used for EOR and utilization by increasing the incentive from $130/metric ton, up to $180/ton, consistent with the current value of captured carbon used in sequestration.

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