Carbon Capture Coalition Submits Comments to U.S. Department of Treasury on 45Q Tax Credit Implementation
June 28, 2019 | News
Comments Filed Ahead of July 4, 2019 Deadline Reflect Consensus Recommendations of the Coalition’s 60+ Industry, Labor and NGO Participants Regarding Implementation of the Carbon Capture Tax Credit
(Washington, D.C.) – The Carbon Capture Coalition today formally filed comments in response to the U.S. Department of the Treasury Request for Information on implementation of the reformed and expanded Section 45Q tax credit for the geologic storage and beneficial use of carbon captured from industrial facilities, power plants and ambient air. The Treasury Department and Internal Revenue Service (IRS) requested comments as part of the process to develop and finalize guidelines for the implementation of the tax credit, which was enacted as part of the Bipartisan Budget Act of 2018.
The culmination of more than six years’ work by the Carbon Capture Coalition’s industry, labor, and environmental participants and their partners, the revamped 45Q tax credit aims to spur private capital to invest in the deployment of carbon capture technology across a range of key industries, including electric power generation, ethanol and fertilizer production, natural gas processing, chemicals production, refining, and the manufacture of steel and cement. Key to unlocking that potential is completion of IRS guidance or a final rule to clarify for project developers and investors the rules of the road for the new tax credit.
“A fully functioning Section 45Q tax credit is vital to economywide deployment of carbon capture technologies, which, in turn, is essential to achieving midcentury climate goals, supporting domestic energy and industrial production, and protecting and creating high-wage jobs,” explained Brad Crabtree, co-director of the Carbon Capture Coalition. “The Coalition’s submission represents 13 months of work to reach consensus among over 60 companies, unions and NGOs. It provides a comprehensive, broadly-supported roadmap for effective implementation of 45Q, and we urge Treasury and IRS officials to expedite efforts to finalize guidance or a final rule.”
Guidelines from the IRS are urgently needed for commercial projects to move forward that are critical to the future of carbon capture technology innovation and deployment in multiple industries, as well as to continued U.S. global leadership in this sector. Given delays to date, hundreds of millions and perhaps billions of dollars in private capital remain on the sidelines as project developers and investors await the necessary clarity and certainty from Treasury to proceed with projects during the short timeline to begin construction by the end of 2023 to qualify for the credit.
The Coalition presented consensus model 45Q guidance to Treasury last November, and today’s submission significantly expands on those original recommendations. It includes 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 recommends an approach for implementing the statutory greenhouse gas lifecycle analysis requirement, so that developers of carbon utilization projects can claim the credit.
Finally, the Coalition’s participants have broken important new ground in addressing key regulatory issues by agreeing on model guidance to establish an equivalent, International Organization for Standardization (ISO)-based program for demonstrating secure geologic storage associated with CO2-enhanced oil recovery to claim the 45Q tax credit. The Coalition is recommending an ISO-based program for monitoring, reporting and verification as an additional option, along with the existing Subpart RR of the federal Greenhouse Gas Reporting Program administered by the U.S. Environmental Protection Agency.
Summary detail on all of these issues can be found on the Coalition website here.
The Carbon Capture Coalition brings together over 60 energy, industrial and technology companies, labor unions and environmental, clean energy and agricultural organizations dedicated to fostering the economywide deployment of carbon capture. The Coalition is convened by the Center for Climate and Energy Solutions and the Great Plains Institute.