The Economic Impacts of CCUS Tax Credits

Figure 1 illustrates a major finding: The 45Q sunset provisions make a huge difference in tax credit costs. Specifically, the tax expenditures of the ETC will likely be $10 billion to $20 billion, whereas the tax expenditures of the PTC will likely be $100 billion to $140 billion.

 

Figures 2 and 3 show the annual job creation of each of the tax credits combined with the DOE CCUS R&D program. They illustrate that: (i) the PTC with the R&D program creates substantially more jobs each year than does the ETC with R&D program; (ii) the PTC creates substantially more jobs in 2050 than in 2020, which is not true for the ETC.

 

Figure 4 shows that without the R&D program, the ETC will create 14 million to 15 million jobs, whereas the PTC will create 16 million to 18 million jobs. Thus, the 45Q sunset provisions could result in four million fewer jobs.

 

Figure 5 shows that combining CCUS tax credits with the R&D program creates the most jobs – potentially 10 million more jobs than under the Reference Case.

 

Figure 6 illustrates the incremental benefits of adding the R&D program to the ETC: Creation of an additional two million jobs.

 

Figure 7 summarizes the findings. It shows that (i) combining tax credits with R&D creates three million to 10 million more jobs than the Reference Case; (ii) a 3-percent growth scenario combined with tax credits and R&D creates nearly 25 million jobs – more than twice as many as under the Reference Case – 13 million more jobs.

 

Findings and Conclusions

Adding CCUS tax credits to DOE R&D creates three million to six million additional job-years. Further, adding CCUS tax credits to DOE R&D generates an additional $2.5 trillion in benefits, including:

  • Five billion to six billion tons of coal.
  • $200 to $300 billion in coal revenues.
  • $600 to $1,700 billion in new coal plant investments.
  • More than four billion barrels of EOR.
  • More than $400 billion EOR revenues.
  • $30 billion to $90 billion in pipeline expenditures.

 

In the scenarios using Reference Case oil and gas prices, the economic impacts are reduced somewhat – for example, by about one million job-years over the forecast period, depending on the other assumptions made. However, we found that the CCUS tax credits (PTC and ETC) and the DOE R&D program each had much greater economic and job impacts than the oil and gas price assumptions.

 

Our major conclusions are:

  1. The PTC will create substantially more jobs, both in total and in every year from 2020 to 2050, than the ETC, and the number of additional cumulative jobs created could total seven million.
  2. Both the ETC and the PTC will create substantially more jobs every year than the Reference case – potentially almost twice as many cumulative jobs.
  3. The ETC’s sunset provisions greatly decrease costs, but also the economic and job benefits created compared to those of the PTC.
  4. The marginal job impacts of the DOE R&D program are substantial and could total more than three million additional jobs.
  5. The DOE R&D program will create a large number of jobs irrespective of the specific CCUS tax credit program:  From three million to 9.4 million more jobs.
  6. To maximize job creation, both tax credits and DOE R&D need to be implemented.  This will stimulate economic growth and will, in turn, create even more jobs.
  7. The administration’s goal of achieving 3 percent GDP growth could create an additional three million coal-generated jobs, for a total of nearly 25 million total cumulative jobs.

 

Figure 1:  CCUS Tax Credit Costs, 2020 – 2050

Source:  MISI and NETL.

 

Figure 2:  Coal-Related Jobs Created Annually:

2.6% Growth, High O&G Prices, 45Q TC + R&D

Source:  MISI and NETL.

 

Figure 3:  Coal-Related Jobs Created Annually:

2.6% Growth, High O&G Prices, 2017 Prop. TC + R&D

Source:  MISI and NETL.

 

Figure 4:  Cumulative Job Years Created

by Tax Credits without DOE R&D, 2020 – 2050

Source:  MISI and NETL.

 

Figure 5:  Cumulative Coal-Related Job Years Created, 2020 – 2050

Source:  MISI and NETL.

 

Figure 6:  Cumulative Coal-Related Job Years Created, 2020 – 2050

Source:  MISI and NETL.

 

Figure 7:  Cumulative Coal-Related Job Years Created, 2020 – 2050

Source:  MISI and NETL.