Coalition Submits Letter to Treasury Urging Preservation of 45Q Beginning of Construction Guidance 

On August 12, the Carbon Capture Coalition sent a letter to the Department of the Treasury (Treasury) requesting it maintain the “beginning of construction” guidance and existing safe harbors relating to the Section 45Q carbon sequestration credit. Taxpayers have long relied on this existing guidance to plan and make investments in carbon capture and direct air capture (DAC) technologies and associated infrastructure, and Treasury should not introduce uncertainty in guidance where none exists.  

The letter was in response to the Trump administration’s July 7 Executive Order (EO),  “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources.” The EO directed Treasury to issue “new and revised guidance” for determining the beginning of construction (BOC) window for wind and solar facilities under the section 45Y and section 48E clean electricity production and investment tax credits, and ensure that Treasury guidance for BOC is “not circumvented … by preventing the artificial acceleration or manipulation of eligibility.” 

BOC constitutes a well-defined legal standard developed through long-standing Treasury and Internal Revenue Service (IRS) guidance. Furthermore, while the EO specifically calls out sections 45Y and 48E, deviation from the existing framework introduces uncertainty to the section 45Q tax credit that currently relies on the same BOC framework. Such a move would chill the investment and deployment in this suite of essential energy and emissions reduction technologies.  

The section 45Q credit plays a critical role in driving investment into CCUS projects that support domestic energy production and manufacturing, particularly in sectors such as natural gas processing, ethanol production, hydrogen, cement, steel, and power generation. These emissions-heavy industries are critical to our economic growth, and the section 45Q credit supports carbon management technologies that help these projects reduce overall emissions. Furthermore, producing, operating, and maintaining these technologies supports innovation. Innovation in turn, thanks to the section 45Q tax credit, creates skilled energy-sector jobs in areas such as construction, pipeline development, and geologic storage. 

Additionally, Congress recently reaffirmed its commitment to the continued build-out of carbon management infrastructure, job creation, and robust private sector investment. Maintaining clear and reliable BOC guidance is essential to ensuring that carbon management projects can move forward and taxpayers can access the credit in line with the President’s domestic energy and manufacturing priorities. 

The letter specifically makes the following requests:  

• Treasury Should Maintain the Clearly Defined Safe Harbors Applicable to Section 45Q 

In 2013, the Treasury and IRS issued guidance establishing the requirements for a project to be considered as having begun construction under sections 45 and 48. Through a series of notices over the last decade, Treasury and the IRS have subsequently modified, amended, and reaffirmed this begin construction guidance to establish tax credit eligibility for multiple types of energy tax credits, including section 45Q.  

• If Issued, New or Revised Begin Construction Guidance Should Not Affect Projects That Have Reasonably Relied on Existing Begin Construction Guidance 

Carbon management projects involve installing innovative technologies and significant financial expenditures. The current BOC guidance under IRS Notice 2020-12 recognizes the additional scale, innovation, and significant expenditures involved in carbon capture projects by providing a six-year continuity safe harbor rather than the four-year period applicable to wind and solar projects. 

The Coalition urges Treasury to ensure that if they do move to change existing BOC guidance for carbon management projects, any changes should apply prospectively and include clear transition rules, allowing projects currently under development to rely on the existing guidance.  

The Coalition looks forward to continuing to engage with Treasury to ensure that taxpayers can continue to rely on clearly established BOC windows for carbon management projects and that domestic energy and industrial sectors can deploy these technologies, which help safeguard US economic interests while providing cleaner energy and materials.    

### 

The Carbon Capture Coalition (the Coalition) is a nonpartisan collaboration of more than 100 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.