The Inflation Reduction Act that was passed by Congress and Signed by President Biden last month has been hailed as a milestone in climate progress for the United States, especially for the aid that the new legislation will provide for technology development. Several provisions should be of interest to algae and seaweed producers and processors.
Improvement in Tax Credits for Carbon Capture:
Some of the most exciting changes come to the section 45Q tax credit that can incentivize projects that capture and sequester carbon dioxide. ABO was an early supporter of this credit when it was first introduced, and we have been advocating for improvements we now see in the IRA. Some of those include:
- A multiyear extension of the commence construction window. The qualifying date for carbon capture projects has been adjusted to January 1, 2033. This new date will benefit potential algae and seaweed projects that need a more realistic timeframe to become operational.
- Enhanced values for carbon credits from direct air capture. Direct air capture (utilization) credits will now be valued at $130 per ton, making algae and seaweed projects even more attractive due to their unique ability to transform huge quantities of CO2 into biomass. Values for carbon storage and enhanced oil an recovery were also increased.
- Lower capture thresholds. The change to allow direct air capture projects as low at 1000 metric tons to qualify for this tax credit is especially interesting to early-stage algae and seaweed projects.. It should make investments in these projects much more attractive, and give them an opportunity to prove an approach that can eventually make a much, much larger scale..
ABO’s partner the Carbon Capture Coalition has an excellent breakdown of even more adjustments that IRA makes to the 45Q tax credit.
This innovative tax credit is still in its early days, and we expect to learn as it begins to play a role in projects around the country. ABO will continue to work closely with industry stakeholders, carbon capture allies, and elected officials that are committed to building robust carbon capture technologies.
For those interested in learning more about 45Q and how algae and seaweed projects can position themselves to take advantage of carbon credits be sure to check out ABO’s recent webinar on the topic. ABO members can reach out to get their free recording of the webinar.
Accelerated Sustainable Aviation Fuels
Algae and seaweed can both be used to produce low-carbon, high-performing aviation fuels. Aviation stands out as one of the most difficult sectors to decarbonize, and new policies that can accelerate technologies like liquid fuels that come from sustainable biomass sources have been a longtime priority of ABO.
The IRA includes a blender tax credit for sustainable aviation fuel (SAF) and a standalone investment tax credit for energy storage. Both of these are welcome news for SAF developers. Yet at the same time, the duration of the IRA’s incentives only run through 2027. This is much shorter than what will be needed for SAFs to scale up and become cost competitive with conventional jet fuel. ABO is hopeful that more policy windows will open to give SAFs the degree of support they need.
For the latest on ABO’s position on sustainable aviation fuels be sure to read our recent op-ed in Biofuels Digest.
Still a Need for R&D Support
These changes won’t take the place of robust R&D funding for SAFs, and they will likely need to be adjusted before we will see SAFs become more commercially available. However, the momentum is clearly in the direction that is needed. ABO will continue to support SAF policies that can accelerate the efforts of algae and seaweed scientists, project developers and investors.
ABO is grateful for the support of its members and partner organizations that have helped make these important milestones possible. If you are ready to get involved with our efforts to support algae and seaweed as sustainable platforms for the future, be sure to become an ABO member and join one of our committees.
And be sure to connect with our global network at the 2022 Algae Biomass Summit. See you there!