Yesterday, Senators Shelley Moore Capito (R-WV) and Sheldon Whitehouse (D-RI) introduced the 45Q Carbon Capture Utilization and Storage Tax Credit Amendments Act (S.4966). The bill's original cosponsors also include Senators John Barrasso (R-WY), John Hoeven (R-ND), Kevin Cramer (R-ND), Joe Manchin (D-WV), and Tina Smith (D-MN).
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, 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 Executive Director Shannon Angielski issued the following statement in support of the legislation:
“The Carbon Utilization Research Council (CURC) commends Senators Shelley Moore Capito and Sheldon Whitehouse on the introduction of the 45Q Carbon Capture Utilization and Storage Tax Credit Amendments Act. While the 2018 revisions to the Section 45Q tax credit program spurred immediate interest in carbon capture project development, the ongoing delay in issuing implementing regulations and, now, the impact of the pandemic have stymied momentum towards deployment. This legislation would extend the commence construction window under the Section 45Q tax credit program, allow for both Section 45Q and Section 48A taxpayers to elect to receive an undiscounted direct payment in lieu of a tax credit, and remedy legislative language from the 2017 tax bill that may act as a barrier for projects seeking to access each credit. Each of these changes would provide financial flexibility for project developers and investors, and will help to deliver the investment impacts intended by both the 45Q and 48A tax credit programs. CURC is pleased that there is bipartisan and bicameral support for bolstering these tax credits to allow project developers and private investors to access their benefits.”