This past week, the House and Senate discussed and voted on key legislative initiatives that impact support and incentives for carbon capture sequestration and storage including the 45Q tax credit. The Carbon Capture Coalition offered the following update on what was included:
For profit entities: Under the Inflation Reduction Act, project developers will, for the first time, have the option to access direct pay for the full value of the tax credit, for the first five years after the carbon capture equipment has been placed in service. The remaining seven years of the credit must be financed through alternative means.
Tax-exempt entities: These enhancements are even more expansive for tax-exempt organizations, i.e. nonprofit projects, cooperatives, and municipal utilities, which have the option to access direct pay for the entire lifetime of the credit (12 years).
Multiyear Extension of the Commence Construction Window: The commence construction deadline for carbon capture, direct air capture or carbon utilization projects will extend seven years to December 31, 2033;
Increased Credit Values for Industry and Power Projects: The value of 45Q will increase to $85/ton for storage in secure geologic formations from industrial and power generation carbon capture and $60/ton for either carbon utilization or secure storage in oil and gas fields;
Increased Credit Values for Direct Air Capture Projects: The credit value will increase to $180/ton for storage in secure geologic formations from direct air capture and $130/ ton for carbon utilization or secure storage in oil and gas fields;
Dramatically Reduced Annual Capture Thresholds: The carbon threshold for credit-eligible carbon capture facilities will decrease dramatically, leading to a significant increase in 45Q-eligible projects.
The bill heads to the desk of the President for signature.