Alaska lawmakers consider Dunleavy’s carbon capture proposal
(The Center Square) – Lawmakers will take a closer look at a carbon management and monetization plan proposed by Gov. Mike Dunleavy.
The governor has introduced four bills that would establish a carbon offset program Dunleavy said could bring in millions to the state.
The proposal has raised questions from lawmakers and their constituents.
“I have received carbon policy feedback from concerned Alaskans and would also like to make clear that while not a feature of Governor Dunleavy’s current proposals, I oppose any legislation that taxes businesses for carbon generation that would pass on costs to consumers. I also oppose any effort to assess a tax on an individual or family’s carbon footprint,” said Rep. Ben Carpenter, R-Nikiski, who chairs the House Legislative Budget and Audit Committee in a statement.
Aaron O’Quinn of the Alaska Division of Oil and Gas said new taxes are not part of the proposal.
“We’re here to say, ‘hey, if you have carbon, you can put it here in our rocks,'” O’Quinn told the House Resources Committee on Friday. “We’ll charge you for it, and then you can comply with your permits, and we’ll take your money.”
Native American corporations are already making money off the carbon capture market, Dunleavy said in a memorandum.
“As of 2019, the carbon offsets registered in Alaska were worth $370 million and were the biggest forestry participants in the California system,” according to the memorandum.
But the program will not come without upfront costs. The bills’ fiscal notes indicate at just over $1 million would be needed for fiscal year 2024 if the plan passes the Legislature. The money would go toward salaries for at least two full-time positions, legal fees and other contracted services.
The state would be able to use a tax credit known as “45Q” for carbon storage created “primarily” through the Inflation Reduction Act, according to a fiscal note from the Alaska Department of Revenue. How much carbon capture would bring back into the state is not certain, according to the department.
“While the 45Q credit will reduce the state’s corporate income tax collection because the state tax code adopts by reference the federal code, there are numerous fees, penalties, and other charges that will generate the revenue necessary to administer this new program,” the revenue department said in its fiscal note. “Additionally, there is the potential for the state to monetize carbon injection from other jurisdictions for a fee once the program is underway. For these reasons, and because obtaining class VI primacy from the Environmental Protection Agency will take time, the Department of Revenue cannot say within an acceptable margin of error what the ultimate revenue potential will be at this stage.”
Rep. Tom McKay, chairman of the House Resources Committee, said hearings on the actual bill and a public hearing are the next steps. No dates have been set.
