Kevin McCabe: Should Alaska embrace the carbon tax credits before they go away?

By KEVIN MCCABE

Alaska energy reliability is not an abstract policy debate. It’s survival. When winter temperatures hit -40° and communities sit hundreds of miles from backup infrastructure, dependable, affordable power is not optional. It is the difference between stability and crisis. That is why I have been clear and consistent, despite the purveyors of persistent “no,” Alaska cannot afford to ignore the federal 45Q tax credits available to us.

The 45Q credit advances carbon capture, utilization, and storage, providing up to $85 per metric ton of CO₂ permanently sequestered. That matters in Alaska, where infrastructure costs are high, distances are vast, and margins are thin. These credits could help finance projects like the proposed Terra Energy Center in West Susitna, a 400-megawatt coal-fired plant paired with carbon capture and fueled by local coal resources that could last centuries. Turning our backs on 45Q out of ideological purity does not make Alaska cleaner or freer. It makes us weaker, poorer, and more dependent on outside energy.

The economic reality is straightforward. Alaska has fewer than 750,000 residents, with only about 500,000 ratepayers on the Railbelt grid. We do not enjoy the economies of scale found in the Lower 48. Building energy infrastructure here is expensive, whether it is wind, solar, hydro, gas, or coal. Permafrost, logistics, weather, terrain, and remoteness drive costs up across the board. Without tools like 45Q, many large-scale projects simply do not pencil out without imposing heavy costs on ratepayers.

It is important to be clear about what 45Q is and what it is not. It is not a tax. It is a tax credit. While the aggregate credit is costly on the federal books, when divided across the national taxpayer base the individual burden is relatively modest. More importantly, if Alaska does not use these credits, they don’t come back to individual Americans, they flow to projects in other states. The real question is return on investment. For the American taxpayer, that return is a stronger, more resilient Alaska, serving as a reliable gateway to the Arctic with secure energy, infrastructure, and strategic capacity.

As of late 2025, 45Q remains intact and strengthened, with clearer IRS safe harbors and long-term certainty for investors. Alaska now has an opportunity to pair that federal tool with state control through House Bill 50. Under HB50, the Alaska Oil and Gas Conservation Commission has authority under state law to regulate carbon sequestration facilities and is actively pursuing Class VI primacy from the U.S. Environmental Protection Agency. If that primacy application is approved, Alaska, not federal regulators, will oversee deep CO₂ injection wells. That keeps permitting, enforcement, and accountability in state hands, reduces red tape, and allows Alaska to collect fees and storage royalties from depleted and unused oil and gas reservoirs instead of watching them flow Outside.

This is not just about state economics. A strong Alaska matters to national security. Reliable power supports our military bases, our resource industries, and our growing role as America’s gateway to the Arctic. Projects like West Susitna could deliver dispatchable, low-carbon baseload power that works in Arctic conditions, unlike intermittent systems that struggle during long, dark winters and extreme cold. That reliability attracts industry, data centers, manufacturing, and mining. It keeps families here. It creates opportunity.

Without new generation, Alaskans pay the price. Utility rates already run roughly double the national average. Rural communities see heating oil at eight dollars a gallon. Cook Inlet gas supplies are declining, and importing LNG could cost already strapped Alaskans billions more. Ignoring practical solutions does not make us virtuous. It does not protect households. It punishes them.

Too many voices in this debate belong to the Citizens Against Virtually Everything, or CAVE. On one side are conspiracy theorists who see every federal incentive as a globalist plot against the American taxpayer. On the other are activists who treat any use of fossil fuels as moral failure, designed to kill salmon, regardless of technology or outcomes. Neither group offers a workable alternative. No plan, no strategy, no ideas, just no. Their obstruction does not reduce global emissions. It shifts production overseas to countries like China, where standards are weaker and pollution is higher.

Rejecting CCUS in Alaska does not eliminate coal use. One way or another, it exports it. The result is higher global emissions and higher local energy costs. Meanwhile, Alaska loses jobs, families leave, infrastructure decays, and the Permanent Fund Dividend strains under a stagnant economy.

The shrieking from the extremes has drowned out serious discussion for too long. Carbon capture works. It has worked for decades. Norway’s CCS projects, including Sleipner, Snøhvit, and the Northern Lights initiative, provide real-world examples of carbon capture and storage operating at scale. Norway is not the only country pursuing CCS globally, but its projects are among the most advanced and longest-running, demonstrating that the technology is viable when paired with rigorous oversight and long-term monitoring. Legitimate concerns about groundwater, monitoring, and site integrity have been addressed through permitting, engineering standards, and legislative safeguards, including amendments to HB50 and ongoing regulatory review.

Alaskans are pragmatic. They want affordable, reliable power. They want jobs. They want stewardship that makes sense, not symbolism that leaves them freezing in the dark. That means evaluating projects honestly, demanding accountability, and using every available tool to strengthen Alaska.

Alaska should use 45Q to our advantage, pairing it with state primacy, local oversight, and Alaska-first priorities. The return is clear, lower rates, new jobs, industrial growth, and a resilient energy system that serves both our state and the nation.

Saying “no” may feel righteous to those who believe they are protecting either the salmon or the taxpayer, but it solves nothing. Action does. Alaska’s future depends on it.

Quid est consilium tuum?

Rep. Kevin McCabe is an Alaska legislator representing District 30, Big Lake. He has lived in Alaska for 43 years, served in the US Coast Guard, as a Boeing 747 captain, and was a volunteer firefighter.

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