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Carbon Capture, Utilization and Storage Tax Credit Amendments Act Introduced in Senate

March 25, 2021

Today, Senators Tina Smith (D-MN) and Shelley Moore Capito (R-WV) introduced the Carbon Capture, Utilization, and Storage Tax Credit Amendments Act.  The bill's original cosponsors also include Senators Sheldon Whitehouse (D-RI), Kevin Cramer (R-ND), Brian Schatz (D-HI), John Hoeven (R-ND), Joe Manchin (D-WV), John Barrasso (R-WY), Chris Coons (D-DE), Chuck Grassley (R-IA), Ben Ray Lujan (D-NM) and Joni Ernst (R-IA).

This legislation makes important revisions to both the Section 45Q tax credit for carbon oxide sequestration and the Section 48A tax credit for advanced coal projects retrofitted with carbon capture, utilization, and storage (CCUS) technology.  Specifically, the bill would extend the commence construction window under the Section 45Q tax credit program by five years, allow for an undiscounted direct payment option on both the Section 45Q and Section 48A tax credits, implement technical fixes to the Section 48A tax credit program to allow access to existing federal incentives, and revise legislative language from the 2017 tax bill that may act as a barrier for project developers and investors attempting to access the Section 45Q and Section 48A credits.  

Each of these provisions would provide needed certainty to facilitate private investment in CCUS projects in the wake of the pandemic and allow project developers to access project financing at a time when the economy will limit tax liability. This legislation represents a necessary step to advance widescale deployment of CCUS projects in the United States in both the electric power and industrial sectors, which energy and climate authorities suggest is necessary to achieve both domestic and global climate objectives.

CURC commends Senators Smith, Capito, and their Senate colleagues for their leadership on this legislation.  CURC Executive Director Shannon Angielski issued the following statement in support of the bill:

"CURC congratulates Senators Tina Smith (D-MN), Shelley Moore Capito (R-WV), and their Senate colleagues on the introduction of the 45Q Carbon Capture Utilization and Storage Tax Credit Amendments Act.  To aid ongoing economic recovery efforts, the U.S. needs to invest in the energy system and infrastructure of the future. Carbon capture, utilization, and storage (CCUS) technologies have a critical role to play in that future, contributing to the decarbonization of the electric power and industrial sectors while maintaining affordable, dispatchable power generation and creating good-paying jobs. Enhancing the Section 45Q and 48A tax credits are critical to stimulate the deployment of CCUS technologies. CURC commends Senators Smith and Capito for their leadership to bolster these tax credits to allow project developers and private investors to access their benefits, an effort that has bipartisan and bicameral support.”

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