On March 23, the Internal Revenue Service (IRS) issued IRS Notice 2026-23, titled “Public Recommendations Invited on Items to be Included on the 2026-2027 Priority Guidance Plan.” The Carbon Capture Coalition responded to the request for information (RFI), identifying several areas within regulations relevant to carbon management that the Department of the Treasury (Treasury) and the IRS must urgently address.
The Coalition has previously engaged with Treasury on this matter through consensus-based recommendations in our 2023 response to Treasury Notice 2022-57, as well as a joint letter with the Carbon Utilization Research Council (CURC) that we sent in February in response to Treasury Notice 2026-1.
As discussed in that letter, the Coalition’s chief priority is to request that Treasury extend the applicability of Notice 2026-1 beyond 2025. More specifically, Notice 2026-1 contains safe harbor provisions for taxpayers seeking to claim the Section 45Q tax credit for geologic sequestration beyond fiscal year 2025, in the event of the Environmental Protection Agency (EPA) repealing the greenhouse gas reporting program (GHGRP).
Under 45Q regulations, taxpayers must verify the amount of carbon oxide (CO) captured and permanently stored or utilized in a given tax year against amounts they report under the GHGRP. With the EPA’s proposed rescission of the GHGRP, Treasury issued safe harbor guidance at the end of 2025 to allow taxpayers to continue electing the tax credit in the absence of the GHGRP. While helpful, it applies only to fiscal year 2025, leaving investors uncertain about years beyond. As such, the Coalition requested an extension of that safe harbor guidance and clarification that qualified EOR projects may continue to rely on Subpart RR for reporting purposes.
In the Coalition’s comments, we reiterated several other priorities it has previously expressed to Treasury. These include:
- Allow approval or revision of Subpart RR MRV plans in 2025 and beyond.
- Clarify that qualified Enhanced Oil Recovery (EOR) projects may continue to rely on Subpart RR for reporting purposes.
- Clarify application of recapture provisions.
As well as requesting Treasury issue guidance on:
- Information needed to claim 45Q for electric generating units.
- Claiming 45Q for direct air capture facilities.
- Clarifying disaggregation rules for facilities with multiple process trains.
- LCA pre-approvals.
- Landfills using flares as a fuel combustion source producing a stream of CO.
The Coalition stands ready to continue working with Treasury to ensure a predictable and permanent solution to the possible gap in claiming 45Q that would be created by EPA’s repeal of the GHGRP.
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The Carbon Capture Coalition (the Coalition) is a nonpartisan collaboration of companies, labor unions, and conservation and environmental policy organizations. Coalition members work together to lay the groundwork for the necessary portfolio of federal policies to enable nationwide, commercial-scale deployment of carbon management technologies.