There’s a rule in politics that goes something like this: You incentivize what you want more of and tax what you want less of.
It doesn’t work in every scenario, but there seems to be wisdom behind the phrase.
That political philosophy is well suited to a proposal by Wyoming Sen. Mike Enzi, who recently proposed a carbon tax credit for companies that sequester carbon dioxide and use it for energy extraction.
The bill is aimed at encouraging the capture and use of the greenhouse gas, commonly generated by coal-fired power plants and other industrial facilities. Some producers in Wyoming and elsewhere pump the gas into depleted oil wells to push out additional oil, a practice known as enhanced oil recovery.
On the surface, it’s a great piece of legislation for Wyoming because it helps the energy industry and would help the market for coal presumably.
The bill, if passed, would create an environment that would help stabilize the carbon dioxide market, leading to the kind of certainty businesses would need to be able to rely on the technology.
This bill would gurantee carbon dioxide producers would get revenue or credits from the captured gas. Because the government has recognized the need and because there is financial incentive, it gives carbon dioxide producers a better chance at finding investors and banks ready to help support the industry.
Because this bill could stabilize the market, it gives certainty to those interested in investing in the technology. And, as more companies invest, the technology becomes cheaper, therby increasing the likelihood of its widespread use.
The side benefit, of course, is that carbon dioxide capture would help make coal consumption more palatable. Indeed, carbon dioxide, the greenhouse gas released when coal is burned is one of the chief reasons for opposition to coal. But imagine if that concern would be lessened or nearly minimized? What effect could that have on the coal industry?
Could carbon dioxide sequestration help revitalize oil fields once thought played out?
We’ve said it before: Carbon based energy isn’t going away soon. The United States and its increasing appetite for energy doesn’t appear to be lessening. In order to achieve energy independence, our energy sources must be diverse, and that includes developing new fuel sources.
Meanwhile, we will need to meet growing demands.
Carbon dioxide means that we will have a chance to be better at extracting fuels that already exist, too. Or, it could mean we can develop new ways to make the old fuels even better.
Enzi’s legislation appears to be just this kind of step. This law, if passed, will allow us to continue to revitalize oil fields, making them productive again. And, it will allow us to use coal, but ensure it will have even less impact on the environment.
Enzi should be given credit. Opponents and critics of coal and fossil fuel energy like to take shots at the state and industries for not trying something new and not improving business practices. Anyone who works in Wyoming knows different — just look at the life hydraulic fracturing has given to fields across the state. Yet, a tax credit for carbon dioxide is another example of being proactive and responsive.
We hope among all the gridlock that exists in Congress, this might be one of the few pieces of legislation that has a chance of winning the bipartisan support needed to become law.