Article

The city of Spokane is poised to embark on an ambitious initiative that could see an investment of up to $210 million, accompanied by an annual operating budget of $21 million, to align with state climate regulations following the legislature's denial of an exemption request. Central to this project is the installation of advanced carbon capture equipment at the municipal waste-to-energy facility, a move designed to significantly mitigate carbon dioxide emissions by transforming this greenhouse gas into a carbonated solution for subsequent underground storage.

CarbonQuest, a local company specializing in such technologies, recently presented the Spokane City Council with findings from a $650,000 feasibility study—funded by the Climate Commitment Act—which underscores the potential for the city to save approximately $3.25 million annually compared to purchasing carbon allowances, contingent, however, on the availability of federal tax credits. These credits, known as the 45Q credit, provide financial incentives for carbon capture projects, allowing entities to either receive payments per ton of carbon dioxide captured or sell credits to other organizations, provided construction commences before the end of 2032.

Nevertheless, the financial viability of the project harbors uncertainties. The internal revenue service does not issue 45Q credits until it verifies eligibility, meaning that any delays in project execution could result in the city incurring debt service and operational costs without immediate financial relief. Moreover, the international carbon credit market is susceptible to shifts in buyer demand and fluctuating benchmarks, adding another layer of risk to the endeavor.

An economic analysis suggests that if the $210 million project is realized, it could generate an annual revenue stream of approximately $41.4 million, offset by operational costs of around $21.4 million. However, a scaled-back version of the facility would yield lower revenues, further complicating the financial landscape. The goal is to recoup the investment over a decade, yet the dependency on seamless execution raises concerns about potential rate increases for local taxpayers should revenue fall short or market conditions shift unfavorably.

The proposed carbon capture initiative is anticipated to consume nearly all the electricity generated by the waste-to-energy plant, leaving little for the approximately 11,000 homes currently served. Michael Laucius, CarbonQuest's vice president of business development, emphasizes the company's readiness to collaborate with the city on the next steps, which will necessitate careful coordination with state authorities and rigorous validation of market assumptions before any bidding process can commence.