Section 45Q –Tax Credits incentivize the construction and deployment of Carbon Capture, Sequestration, and Utilization (CCS&U)) projects. Recent enhancements to IRS 45Q provide certainty to financing long sought by investors. The definition of a Qualified 45Q Tax-Filer now incorporates Direct Air Capture Facilities, Industrial Facilities, Power Plants, Carbon Capture Technology Companies, Enhanced Oil Recovery Companies, Project Developers, Partners, Builders, or Investors.
Investors have set aside more than $1B for CCS & U project development. The oil and gas industry and positive-climate-change investors favor CCS&U project development, and IRS and California’s Low Carbon Fuels Standard Program incentivize development with Credits. Negative Emissions Technologies, CCS&U projects, show promise to deliver reductions in Greenhouse Gas relatively soon. 45Q recapture insurance for the Carbon Capture Equipment Owner and the 45Q Tax-Filers seeks to address concerns that might otherwise hold back investments.
Carbon Capture, Sequestration, and Utilization Projects generate for the Carbon Capture Equipment Owner one IRS 45Q Tax Credit for each MT of captured CO2 from an industrial facility exhaust or Direct Air Capture. The Carbon Capture Equipment (CCE) Owner can sell the captured CO2 to Off-Takers for Sequestration, Utilization, or use as a tertiary agent in Enhanced Oil Recovery (EOR) projects. Off-Takers of captured CO2 assume IRS 45Q compliance obligations. Off-Takers, professional service organizations, and other project entities contribute to the Project’s compliance with IRS Guidelines, and all can contribute to a Project’s Non-Compliance. The CCE Owner can sell the 45Q tax credits to the Industrial Facility, Direct Air Capture Facility, Power Plant, Carbon Capture Technology Company, Enhanced Oil Recovery Company, and Project Developer, Project Contractor, and Investor. Qualified Tax-Filers are accountable to the IRS for up to five years if the 45Q tax credits are recaptured because the Off-Takers of the captured CO2, professional service organizations, or project entities do not comply with IRS Guidelines.