Projects to Stash Carbon Dioxide Underground Get a Boost

WASHINGTON — Carbon capture, a rarely tested strategy to fight climate change, is attracting growing interest in the United States after the Trump administration began clearing a longstanding roadblock to subsidizing the technology.

In 2018, Congress approved a lucrative tax break for companies that trap carbon dioxide produced by industrial sites before the gas escapes into the atmosphere and heats the planet. But for years, potential carbon capture projects stalled because the Internal Revenue Service had yet to clarify how, exactly, the tax credit worked.

That’s starting to change. In May, the I.R.S. finally issued proposed regulations, outlining the rules companies would have to follow when burying their emissions underground, as well as the penalties they would face if the gas leaked back out.

“That was one of the keys we’ve been waiting for,” said Robert McLennan, chief executive of Minnkota Power Cooperative, an electric utility planning to retrofit a coal plant in North Dakota. The project aims to capture 3 million tons of carbon dioxide per year, equivalent to the pollution from 640,000 cars, and bury the gas more than a mile underground. At an estimated cost of $1 billion, he said, the venture wouldn’t be financially viable without the credit.

But the complex effort still faces hurdles.

Minnkota needs to find financial partners who can take advantage of the tax break, and Mr. McLennan said the I.R.S. rules may need further changes to make investors feel confident before they are finalized. The coronavirus pandemic has also disrupted some engineering work. “But, on balance, the rules are helpful,” he said. “We’re optimistic we can move forward.”

Across the country, companies have proposed at least 30 carbon capture projects to date. In Indiana, Wabash Valley Resources aims to produce greener fertilizer by stashing its emissions underground. In Texas, Occidental Petroleum plans to capture carbon dioxide from two ethanol plants and inject the gas into its oil wells to dislodge more crude, a process known as enhanced oil recovery. The company says emissions from that oil would be partly offset by the injected carbon dioxide that would stay below ground.