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๐๏ธ Researchers have estimated that we will need a 1,300 โ 4,900 fold increase in carbon dioxide removal (#CDR) to meet global targets. One of the difficulties is that CDR is primarily a public good with limited inherent market demand.
๐ Therefore, in order to scale CDR effectively - and economically - we need robust #policy support to help drive that cost down. #Taxcredits have historically been an effective way to do so and are already being deployed in a number of countries, most notably the United States with its #45Q credit.
๐ก Third Way published a great report, โScaling the Skies: Policy Design Options for a New CDR Tax Credit.โ It proposes a new US federal method-neutral CDR tax incentive that can help CDR methods deploy at the pace and volumes needed. It also describes in-depth options for how to design a new tech-neutral CDR tax credit.
Their proposed credit has four components:
โ๏ธ Authority - who will have the authority to determine eligibility for the tax credit.
๐ Permanence - options including upfront eligibility restrictions based on the certainty of achieving removals or considering certainty as a factor in calculating a credit value.
๐ฎ Certainty - Given the wide variability in permanence and certainty for the various CDR approaches, there are options for the credit to include thresholds, how to implement monitoring requirements, as well as storage considerations factoring in reversibility.
๐ Environmental impacts The need to consider that many CDR methods are new and the potential non-climate environmental impacts need further research. Therefore, the new tax credit considers relying on existing federal environmental laws or providing additional guidance on specific topics.
๐ Thanks to Third Way for this easy-to-read, breakdown of how to design a new and more inclusive CDR tax credit.
I look forward to feeding these insights into CDR policy processes in the U.S., the European Union, and beyond.
๐ฌ What do you think?
๐ Read the full report here: https://lnkd.in/dmp6cKTe
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