Legislation introduced in US House would make 45Q permanent

By Lisa Gibson | February 13, 2020

U.S. Reps. Brad Wenstrup, R-Ohio, and David Schweikert, R-Ariz., introduced legislation Feb. 12 to expand the 45Q carbon sequestration tax credit and make it permanent in the federal tax code.

Section 45Q provides a tax credit for projects that permanently sequester carbon. The credit is tiered: enhanced oil and gas recovery is worth $35 per ton, and other sequestered carbon is worth $50 per ton. Current law requires that projects be started before 2024 to qualify. Ethanol plants are eligible to take advantage of 45Q.

Beyond making the credit permanent, Wenstrup and Schweikert’s legislation would enhance the value of the 45Q credit by 25 percent for both tiers. It would also reduce the minimum amount of carbon that must be sequestered for a direct air capture project to qualify from 100,000 tons of carbon to 50,000 tons of carbon.

“On behalf of the over 75 companies, unions and environmental and clean energy organizations in the Carbon Capture Coalition, we welcome legislation introduced in the U.S. House…to make the 45Q tax credit permanent and to strengthen its provisions for incentivizing direct air capture technology,” said Brad Crabtree, Carbon Capture Coalition director. “Carbon capture from industrial facilities and power plants and removing CO2 directly from the atmosphere through direct air capture are essential tools for meeting midcentury climate goals. But companies and private investors need more time than the remaining four years of the 45Q tax credit to plan, engineer, permit and finance carbon capture, utilization and storage projects. By making 45Q permanent, this legislation will unleash private investment in climate solutions while supporting domestic energy and industrial production, manufacturing and high-wage jobs.

“We look forward to working with Members of Congress from both parties and both chambers to continue to build support for these and other complementary legislative measures to achieve economywide deployment of carbon capture technologies”

Schweikert said, “By investing in carbon capture technology, the U.S. will reduce our carbon emissions while driving economic growth and creating jobs. The carbon sequestration tax credit has already helped businesses break into this market, but [this] legislation to make 45Q permanent would give these same businesses the certainty they need in order to keep advancing this technology. Our legislation would also help companies capturing carbon directly from the air have even more access to the tax credit, which presents a much-needed step forward in expanding technologies that will help clean our environment.”

Wenstrup said, “Our legislation will help take more pollution out of the air as well as boost the economy without jeopardizing jobs or driving up energy costs for hardworking American families and businesses. It will help more companies enter the carbon capture market by creating certainty and predictability as well as by expanding access to the tax credit. By incentivizing the private sector to invest in new technology, we can continue meeting our climate goals and solidify America’s role as the leading exporter of climate solutions.”