Great Plains Institute Blog Post: 45Q Implementation on Carbon Capture New Year Wish List

January 7, 2020 | Blog

The Great Plains Institute(GPI) has published the following blog post on the need for the US Department of the Treasury to implement the 45Q tax credit by publishing revised guidance to taxpayers seeking to utilize the credit.  The original blog post is provided below and can also be viewed on the Great Plains Institute website.

Written by Patrice Lahlum, Program Consultant, Great Plains Institute

The calendar has turned to 2020 and the carbon capture industry is still waiting on the US Department of the Treasury to release additional guidance on the implementation of the reformed and expanded 45Q credit. February 2020 will mark two years since the passage of the reformed 45Q tax credit, significantly shrinking the time frame that project developers and investors can qualify for the credit.

Former US Energy Secretary Rick Perry penned a letter to Treasury Secretary Mnuchin late last year encouraging the agency to issue 45Q guidance by the end of 2019, noting that several federal agencies, including the Department of Energy, the Environmental Protection Agency and the Department of the Interior stand ready to provide technical expertise to help Treasury get the 45Q guidance across the finish line.

To qualify for the revamped 45Q carbon capture tax credit, a carbon capture project must begin construction by 2023—a very short time frame, especially for carbon capture projects that are capital intensive and have long lead times to develop, permit, and finance. Since the passage of the revamped 45Q tax credit nearly two years ago, the Carbon Capture Coalition (which is convened by GPI) and many other stakeholders have worked diligently to provide the Treasury Department and Internal Revenue Service with robust and constructive input on implementation. But project developers, investors, and others are in a continuing quandary without any guidance or certainty from the Treasury Department on the specifics for qualifying for the tax credit.

The Coalition presented consensus model 45Q guidance to Treasury in November 2018, and submitted additional comments in response to Treasury’s request for information in June 2019. The subsequent comments included additional model guidance addressing critical questions relating to defining beginning construction and continuous construction for projects to qualify for the 45Q tax credit. The Coalition also recommended an approach for implementing the statutory greenhouse gas lifecycle analysis requirement, so that developers of carbon utilization projects can claim the credit.
Some who have communicated with the Department of the Treasury speculate that the agency will publish 45Q-related guidance in three segments, including:

• A revenue procedure, which addresses issues relating to business partnerships;
• A guidance or notice detailing beginning of construction requirements; and
• A notice of proposed rulemaking that addresses the implementation-related issues not covered in the other two segments.

While the clock ran out for Treasury to issue guidance in 2019, the Carbon Capture Coalition and many other stakeholders are eagerly anticipating action from the agency in early 2020. Proper implementation of the 45Q tax credit is crucial to realizing the significant carbon emissions reduction, energy and industrial production, and job creation benefits that will come from economy-wide deployment of carbon capture technology.

Read GPI’s primer on 45Q and background on carbon capture. Learn more about the Carbon Capture Coalition at