Fossil-Fuel Options for Power Sector Net-Zero Emissions with Sequestration Tax Credits

Abstract

Three of the main challenges in achieving rapid decarbonization of the electric power sector in the near term are getting to net-zero while maintaining grid reliability and minimizing cost. In this policy analysis, we evaluate the performance of a variety of generation strategies using this “triple objective” including nuclear, renewables with different energy storage options, and carbon-emitting generation with carbon capture and storage (CCS) and direct air capture and storage (DACS) technologies. Given the current U.S. tax credits for carbon sequestration under Section 45Q of the Internal Revenue Code, we find that two options: (1) cofiring bioenergy in existing coal-fired assets equipped with CCS, and (2) coupling existing natural gas combined-cycle plants equipped with CCS and DACS, robustly dominate other generation strategies across many assumptions and uncertainties. As a result, capacity-expansion modelers, planners, and policymakers should consider such combinations of carbon-constrained fossil-fuel and negative emissions technologies, together with modifications of the current national incentives, when designing the pathways to a carbon-free economy.

Modifying the EPA’s New Power Plant Rules to Eliminate Unnecessary Reliability Risks

“…To that end, Congress created the Section 45Q tax credit in 2008, increasing the credit amount in 2018, and again recently in the Inflation Reduction Act (IRA). Our research suggests that the use of CCS for some existing coal power plants to remove ≥90% of CO 2 emissions is now economically viable. , …”

“…Our research suggests that the use of CCS for some existing coal power plants to remove ≥90% of CO 2 emissions is now economically viable. 15,16 However, while the IRA updated the Section 45Q program to reflect contemporary market realities for coal, it neglected to recognize that, since 2008, the nation's coal-fired generating capacity has been largely supplanted by natural gas power plants. For the Section 45Q credits to be effective going forward, additional modifications to the program are necessary.…”

“…Our research suggests that the use of CCS for some existing coal power plants to remove ≥90% of CO 2 emissions is now economically viable. 15 , 16 …”

Research on Carbon Emissions and Carbon Reduction Paths of Power Generation Enterprises under the Dual Carbon Target

“…Dindi A believed that the public power sector should produce a certain proportion of low-carbon electricity by 2030 [5]. Anderson J J proposed that the main challenge in achieving rapid decarbonization in the power sector in the short term is to achieve net zero emissions while maintaining grid reliability and reducing costs [6]. Borowski P F proposed innovative biomass that can utilize bamboo as a productivity energy source for power plants [7].…”