A Rare Trump-Era Climate Policy Hits an Obstacle: The Tax Man

In North Dakota, Minnkota Power now plans to retrofit one of its coal units with a similar technology, aiming to capture 3 million tons of carbon dioxide per year and store it more than a mile underground. Minnkota’s chief executive, Robert McLennan, said the utility is thinking about a future in which stricter climate rules could otherwise force its coal plant to shut down.

But success is far from assured. The $1 billion project isn’t viable without the federal tax credit, Mr. McLennan said, and lining up partners will take time. “Starting construction by the end of 2023 is going to be a challenge,” he said. “The sooner the I.R.S. can provide clarity, the better.”

Similarly, in New Mexico, the utilities that own the San Juan Generating Station, an 847-megawatt coal plant, were planning to retire the facility by 2022 as the state imposes stricter emissions rules. But the city of Farmington, N.M., is now proposing to partner with a company called Enchant Energy to take over the plant and outfit it with carbon capture technology to keep it running until 2035.

Peter Mandelstam, the chief operating officer of Enchant, said carbon capture could reduce the plant’s emissions by 90 percent, allowing it to comply with the state’s new rules. “This is a less disruptive way to transition to a renewable future,” he said, noting that hundreds of jobs could be lost if the plant closed today.

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Another company with a keen interest in carbon capture is Occidental, the largest producer of oil in the Permian Basin of Texas and New Mexico. In addition to its plans to capture emissions from two ethanol facilities, the company has partnered with a Canadian firm, Carbon Engineering, to explore a device that would pull 1 million tons of carbon dioxide per year directly from the air for use in enhanced oil recovery.

Occidental says its ultimate goal is to become carbon neutral — by removing as much carbon dioxide from the air as its oil produces — though it has not set a firm date on that. “We view carbon capture as a way to differentiate ourselves,” said Richard Jackson, president of Occidental’s low carbon ventures division.

But some environmentalists fear that the end result will simply be more oil. John Noël, a senior climate campaigner at Greenpeace, said increased use of carbon dioxide to extract petroleum could potentially mean “untold amounts of oil flooding the market, maintaining demand.” The risk, he said, is, “we never reach this point of transition” to a lower-carbon future.