Coalition Submits Comments on Treasury/IRS’ Proposed Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit

On August 2, the Carbon Capture Coalition submitted comments on Treasury’s proposed rule for “Clean Electricity Production Credit under section 45Y and the Clean Electricity Investment Credit under section 48E.” 

The IRA’s new technology-neutral tax credits under section 45Y and section 48E present new opportunities to reinforce the importance of carbon management as an emissions reduction tool in the power sector. The statute establishes that to qualify for these new technology-neutral credits, electricity production facilities must have greenhouse gas (GHG) emissions rates “not greater than zero.” The statutory provisions expressly allow potentially qualifying projects to reduce their GHG emissions through carbon management technologies. Thus, the use of carbon capture as an emissions mitigation tool may allow some facilities to qualify for these credits when they otherwise would not qualify. 

In light of that, the Coalition urged Treasury to issue final regulations for determining the GHG emissions rate for projects that use carbon management technologies under section 45Y or section 48E that are consistent with the GHG emissions rate determination under section 45Q.  

Additionally, the Coalition proposed several recommendations to Treasury, including: 

• Define “qualified CO₂” within the meaning of 45Q to avoid confusion. 

• Apply the current substantiation and verification requirements under section 45Q for captured carbon oxide, including current reporting and requirements under Treas. Reg. § 1.45Q-3 for secure geological storage, and the current utilization requirements under Treas. Reg. § 1.45Q-4. 

• Ensure there are no barriers for utilization projects intending to claim the section 45Y or 45E credit, as referenced in the Coalition’s comments to Treasury on 45Q. 

• Incorporate the current section 45Q recapture requirements under Treas. Reg. § 1.45Q-5, to address captured and sequestered carbon oxide that subsequently escapes into the atmosphere for a taxpayer that claimed a credit under section 45Y or section 48E. 

• Account for carbon capture and sequestration throughout the fuel production chain for fuel used by a facility to produce electricity to qualify for the section 45Y or section 48E credit. 

Central to these recommendations is that Treasury should harmonize the regulatory requirements between the new 45Y and 48E credits and 45Q with respect to regulations surrounding the capture, utilization, and permanent storage of CO₂. In addition to ensuring that the final regulations for those taxpayers wishing to use carbon management technologies to be eligible for sections 45Y and 48E are consistent with the reporting requirements under 45Q, the Coalition urges Treasury and IRS to issue long-awaited guidance on 45Q implementation. Together, these pieces of guidance will ensure that project developers can move forward on carbon management projects and enable maximum uptake of these crucial emissions reduction technologies. The Coalition stands ready to work with Treasury and IRS on these critical issues.  

You can read the Coalition’s comments to Treasury on the 45Y and 48E guidance here.  

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 Convened by the Great Plains Institute, the Carbon Capture Coalition is a nonpartisan collaboration of more than 100 companies, unions, conservation and environmental policy organizations, building federal policy support to enable economywide, commercial scale deployment of carbon management technologies. This includes carbon capture, removal, transport, utilization, and storage from industrial facilities, power plants, and ambient air.