45Q: Toward a Stronger Federal Carbon Capture Tax Credit

Abstract

This article explores how 45Q in the U.S. tax code incentivized carbon capture, utilization, and storage (CCS, or CCUS) before President Biden signed the 2022 Inflation Reduction Act (IRA) into law. That legislation increased dollar values, added direct pay, and otherwise enhanced 45Q. The article first explains CCS mechanics and then explores 45Q’s history. Next, it lays out which industries (oil, gas, ethanol, etc.) have claimed the credit, and in what contexts (enhanced oil recovery, saline storage, etc.). Finally, it details updates the IRA adopted and weighs proposals to improve regulatory transparency in environmental monitoring, reporting, and verification.

Topics & Concepts