Key Provisions of Congressional Legislation Passed to Extend and Reform the Federal 45Q Tax Credit
The Bipartisan Budget Act of 2018 included in its entirety the FUTURE Act introduced in the U.S. Senate in 2017 to extend and reform the 45Q tax credit. Key provisions include:
- Increases the credit value incrementally over ten years from $10 to $35 per metric ton of CO2 stored geologically through enhanced oil recovery and from $20 to $50 per ton for saline and other forms of geologic storage.
- Provides $35 per ton for CO2 captured and put to beneficial uses beyond EOR that reduce lifecycle emissions.
- Authorizes the program for carbon capture projects that commence construction within 7 years from enactment, and projects meeting that timeframe can claim the credit for 12 years after being placed in service.
- Reduces the minimum eligibility threshold for qualified facilities from 500,000 metric tons of CO2 captured annually to 100,000 tons for industrial facilities and 25,000 tons for CO2 captured and put to beneficial uses other than EOR. Retains the 500,000-ton eligibility threshold for electric generating units.
- Awards the credit to the owner of the carbon capture equipment and allows transfer of the credit to other entities responsible for managing the CO2 to provide greater flexibility for companies with different business models to utilize the tax credit effectively, including cooperatives and municipal utilities.
- Allows projects that involve carbon monoxide capture and direct air capture to qualify for the credit as well.