With carbon dioxide ppm reaching an all-time high and the time ticking down for us to reduce the most severe effects on climate change, carbon sequestration is arguably needed now more than ever. It essentially pulls carbon dioxide out of the air and holds it in solid or liquid form. And current estimates have the industry on a track to be worth $1 trillion by 2030.
Big companies like Microsoft have begun to pour billions in carbon sequestration technologies. But despite the futuristic and high potential impact of carbon sequestration, investors haven’t exactly flocked to invest. Carbon capture has countless critics. And many say the tech is years away from reaching the market. Not to mention, we recognize the benefits but seemingly nobody wants to pay for it.
Why aren’t investors pouring money into carbon sequestration?
From a legislative perspective, politicians aren’t heavily advocating for carbon sequestration. On the Republican side, climate solutions have largely been made at best a second-rate concern. On the other hand, the idea that oil companies could potentially benefit from carbon capture doesn’t excite Democrats much either.
As it relates to commercializing the technology, carbon sequestration’s big selling point is helping us tackle climate change. The problem is nobody wants to pay for it. If businesses can’t make money implementing it, then it may not matter to them. It’s a big tough nut to crack. We want to save the environment but that in and of itself won’t get people to pull out their wallets.
The IRS proposing new guidelines for carbon capture tax credits
Recently, the IRS proposed changing the 45Q tax credit to make it easier for businesses to receive incentives for implementing carbon sequestration.
The proposed regulations involve two tax credits implemented in 2018: “$50 per metric ton of qualified carbon oxide for permanent sequestration, and up to $35 for Enhanced Oil Recovery purposes,” according to the IRS.
In short, these guidelines should make it easier for businesses to utilize these tax credits, increasing incentives for investors to back companies advancing the technology.
What this means for carbon sequestration
With economic incentives in place, carbon sequestration may be a business opportunity as opposed to just a technology. Favorable legislation may excite investors, who could provide companies with the capital they need to bring the technology to market.
Companies are already investing billions in carbon capture and the technology is controversial but promising. Certainly, it will be a topic we continue to hear about for the years to come. Who knows if it’s the next trillion-dollar market or the next wave of cleantech to fall flat.
Lauren Beauban is an Editorial Fellow at theRising, where she covers sustainability news and influential people in the industry. She is also interested in environmental policy and how it affects people. You can pitch her stories at firstname.lastname@example.org