At a press conference Wednesday, Louisiana Democratic Gov. John Bel Edwards welcomed the announcement of a major new decarbonization collaboration between ExxonMobil
XOM
, CF Industries and EnLink Midstream focused in his state. Billed by the Governor as an “unprecedented” project in method, scale and scope, it also provides a proof point showing that the incentive provisions contained in the recently-enacted Inflation Reduction Act (IRA) are already having an impact.

“Today’s announcement of this unprecedented, large-scale, low-carbon partnership is a key milepost on Louisiana’s path toward a brighter future for our climate, our economy and our people,” Gov. Edwards said. “The collaboration and innovation to bring carbon capture and storage technology forward at this scale reaffirms our state’s ability to grow our economy without sacrificing our long-term emission-reduction goals to net zero by 2050.”

CF Industries, a global manufacturer of hydrogen and nitrogen products, recently announced a $198.5 million carbon dioxide dehydration and compression unit at its Donaldsonville Plant in Ascension Parish, southeast of Baton Rouge. The project announced Wednesday will involve capturing the CO2 from this unit and transporting it roughly 100 miles West via Enlink Midstream’s pipeline system for permanent storage in an ExxonMobil-owned underground facility in Vermillion Parish.

In a release, Tony Will, president and CEO of CF Industries Holdings
CF
, Inc. said, “As we leverage proven carbon capture and sequestration technology, CF Industries will be first-to-market with a significant volume of blue ammonia. This will enable us to supply this low-carbon energy source to hard-to-abate industries that increasingly view it as critical to their own decarbonization goals.”

CF Industries expects to market up to 1.7 million metric tons of “blue” ammonia on an annual basis. Chemical processes such as the manufacturing of ammonia (a key ingredient in fertilizers) are considered “blue” when carbon emissions are captured before their release into the air. The companies note in a joint release that “Demand for blue ammonia is expected to grow significantly as a decarbonized energy source for hard-to-abate industries, both for its hydrogen content and as a fuel itself, because ammonia’s components – nitrogen and hydrogen – do not emit carbon when combusted.”

Jesse Arenivas, Chief Executive Officer of EnLink emphasized the importance of the project to the state’s economy. “Utilizing this extensive network enables us to provide the most timely and cost-effective solution to CO₂ transportation, with a significantly lower environmental impact,” he said. “Because of this, EnLink is uniquely positioned to be the CO₂ transportation provider of choice in Louisiana’s Mississippi River corridor, which is a hub of industrial activity that is important to our economy.

Interestingly, Dan Ammann, president of ExxonMobil Low Carbon Solutions, went out of his way to credit the expanded incentive provisions contained in the IRA as having been a factor in enhancing the project’s viability. “This landmark project represents large-scale, real-world progress on the journey to decarbonize the global economy,” said Ammann. “We’re encouraged by the momentum we see building for projects of this kind, thanks to supportive policies such as the Inflation Reduction Act.”

According to the Clean Air Task Force, the IRA expands and enhances a wide array of federal tax credits and incentives, including:

• Updates to the 45Q tax credit, which incentivizes the use of carbon capture and storage – a climate solution that the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA) have found is likely to play a vital role in efforts to address climate change;
• Higher credit values across the board, with full value realized only if prevailing wage and apprenticeship requirements are met;
• An extended commence-construction window for qualifying projects. 45Q’s commence construction window is extended seven years to January 1, 2033. This means that projects must begin physical work by then to qualify for the credit;
• Expanded transferability provisions for 45Q; and
• A broadener definition of what constitutes a “qualified facility.”

Thus, just two months after its passage, we see the IRA already having an impact in spurring the initiation of decarbonization projects like this one. Love it or hate it, it is what the new law is designed to do, and rest assured that a parade of announcements for similar decarbonization projects will take place in the months and years to come.