Reconsidering CCS in the US fossil‐fuel fired electricity industry under section 45Q tax credits

CO2 capture and storage (CCS) can be an important feature of a decarbonization strategy involving electricity generation. According to the recently revised Section 45Q tax credits, said credits will be provided for implementing CCS, which is motivating some United States (US) electricity generation companies to revisit their business strategies for CCS. This paper discusses alternative business models being considered by companies for undertaking CCS, including providing a ‘template’ for evaluating the cost‐effectiveness of CCS with Section 45Q tax credits and storage in saline reservoirs. Using stylized illustrative examples, the paper indicates how use of Section 45Q tax credits should be expected to change dispatch at an electricity generating unit. For situations similar to the examples, the paper suggests that Section 45Q tax credits may need to be modified to achieve its intended impact. Modifications can include extending the time period of tax credit availability beyond the current 12 years. In addition, continued R&D investments in CCS and specific support for first‐of‐a‐kind CCS demonstrations would be valuable complements for the deployment of the Section 45Q tax credit. © 2019 Society of Chemical Industry and John Wiley & Sons, Ltd.