CASE STUDY
Comparative LCA:
Carbon Capture & Tax Credit
Our comparative LCA revealed the environmental benefits and potential tax credits of a proposed carbon capture system, providing our client crucial information for strategic business decisions.
THE CLIENT’S CHALLENGE
A company in the petroleum storage and distribution space was considering adding a carbon capture and purification system to their operations to reduce their carbon footprint and receive IRS 45Q tax credits. But in order to qualify for the tax credits, they needed a comparative life cycle assessment (LCA) to quantify the amount of carbon dioxide that would be captured by their desired carbon capture and purification system.
OUR SOLUTION
Being familiar with JBE from our oil and gas roots, the company chose to work with us due to our in-depth knowledge of the industry, expertise in conducting comparative LCAs, and understanding of the US Tax Code.
The Plan
The client planned to purify, liquify, and sell the captured CO2 to a distributor to be used in a wide range of industries, including food and beverage, packaging, and dry ice. Per the U.S. Department of Energy (DOE) National Energy Technology Laboratory (NETL) guidelines, our LCA needed to compare the impact of installing and operating the carbon capture system to the footprint of the existing system, including the impact of the CO2 captured by our client and used downstream compared to the impact of CO2 from existing sources that our client’s CO2 would replace.
Baseline & Comparative LCAs
We worked with the client and their carbon capture project team to generate two Life Cycle Assessments:
1. A baseline LCA, which calculated:
The annual carbon emissions of existing operations without the carbon capture system and purification system.
The footprints of the typical CO2 sources our client’s captured CO2 would replace downstream. Since our client planned to sell the captured CO2, we identified the current CO2 supply sources within the target industries, which included CO2 sourced from an ethanol plant, hydrogen plant in a refinery, ammonia plant, cogen plant, and a natural dome. We then conducted mini-LCAs to calculate the footprints of each of these CO2 sources.
2. A comparative LCA, which calculated:
The net carbon emissions from installing and operating the proposed carbon capture and purification system at standard capacity on site. The analysis included the emissions impact of the construction phase, the operation phase, and the total CO2 both emitted and captured from the project within the first year.
The results above illustrated the net carbon emissions per unit of CO2 captured. We then compared these emissions to those associated with the equivalent unit of CO2 from downstream sources that our supply would replace. (Fun fact: our client's captured CO2 required significantly fewer emissions!)
Collaborations on Behalf of the Client
We worked closely with the supplier of the proposed carbon capture system to get the information needed to calculate the theoretical carbon capture. We also engaged on the client’s behalf with their professional tax counsel to bridge the gap between the carbon capture environmental data and the IRS 45Q requirements.
Compliance with ISO Standards & IRS 45Q
JBE prepared the comparative LCA in accordance ISO 14040/14044a requirements and with the NETL CO2U LCA Guidance Document as modified by the 45Q addendum.
OUR IMPACT
Environmental Benefit and Tax Credits
Our comparative LCA calculated the total amount of carbon that would be displaced from the atmosphere if the client were to install their selected carbon capture and purification system. The results brought to light both the environmental benefit of installing the system and the amount of CO2 that would qualify for the IRS 45Q tax credits. Now our client is deciding if they would like to install the desired carbon capture system and receive the tax benefits.