CMI Annual Report 2022

that might also contribute significantly to rapid
decarbonization goals.
Fischer-Tropsch liquid fuels
The IRA liquid fuels incentive, 45Z, will be discontinued in
2027, so it will not be available in the 2030s timeframe of our
analysis without an extension. Liquid fuel pathways might still
derive some benefit from 45V and 45Q incentives, however, as
reflected in pathways P7-P9 (Figure 3.2a). These pathways
represent facilities synthesizing liquid fuels from inputs of H 2
and CO 2
. They incorporate 45V credits for H 2
production (at
separate facilities, P2 – P4) and 45Q credits for CO 2
from
separate direct air capture facilities. Pathways P10 and P11
synthesize fuels using H2 from P5 and P6, respectively, and
carbon-neutral biogenic CO 2
recovered from the P5 and P6
facilities. The liquids costs for P10 and P11 incorporate 45V
credits associated with P5 and P6 facilities, which are assumed
to be adjacent to, but separate from, the liquids production
facility. CO 2
removal is intrinsic to making H 2
from biomass,
and so it is assumed that the liquids producer incurs no extra
cost for the CO 2
, beyond what is reflected in the cost of the
delivered H 2
. As Figure 3.2a quantifies, the production cost for
only one of the low-carbon liquid fuels pathways, P9, falls
within the range of U.S. wholesale jet fuel prices observed over
the past decade.
Figure 3.2a also shows results for P12 and P13 pathways,
neither of which qualify for any credit under the IRA, because
the current 45Z credit will end in 2027. These represent
facilities that integrate biomass gasification with Fischer-
Tropsch synthesis to produce liquid fuels without and with
CCS, respectively. Pilot and demonstration scale projects using
technology configurations that resemble these are under
development today (Mesfun, 2022). Note that pathways P10
and P11 also produce bio-derived fuels but are somewhat
artificial configurations designed specifically to maximize the
capture of IRA credits. The integrated P12 and P13 facilities
have lower capital costs and higher energy conversion
efficiencies than their counterpart two-facility configurations,
P10 and P11, but they are unable to exploit IRA credits. On
balance, P10 has slightly lower production costs than P12
because the embedded 45V credit for P10 offsets the lower
capital and fuel costs for P12. The large 45V credit embedded
in P11 more than compensates for the lower capital and
biomass costs for P13.
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Carbon Mitigation Initiative Twenty-second Year Report 2022