Senators Call for Release of Further Guidance on New Carbon Capture Tax Credit Program

May 24, 2019

A bipartisan group of Senators from the Senate Committee on Environment and Public Works, including Committee Chairman John Barrasso (R-WY), recently sent a letter to Treasury Secretary Steve Mnuchin requesting guidance on implementing the carbon capture utilization and storage (CCUS) tax credit program. The letter is a follow up to the communication sent to IRS Assistant Secretary David Kautter and Acting Chief Counsel William M. Paul on February 6.

The CCUS tax credit program, also known as 45Q increases the pot of funds available to companies who are willing to capture and store carbon emissions that would have otherwise been emitted into the air by an industrial facility or power plant. The credit previously provided $10/metric ton for enhanced oil recovery. In 2017, the FUTURE Act amended this so that the credit will now increase to offer up to $35/metric ton by 2024. This is increased even more to $50/metric ton to those companies that do CCUS in geologic formations. 

The tax credit offered $10 per metric ton for enhanced oil recovery previously. That will ramp up to $35 a ton by 2024. A $50 a ton tax credit will be available for companies doing carbon capture and storage (CCS) in geologic formations.

“Carbon capture projects need financial certainty up front due to long lead times for development and construction,” the letter to Secretary Mnuchin notes. “It is imperative that developers have IRS guidance in the near term so project sponsors can demonstrate qualification for the credit as they seek private investment in a timely fashion before the January 1, 2024 tax credit commence construction deadline.” 

Following committee’s original letter in February to IRS officials, the IRS put out a request for information soliciting public feedback on a number of questions. This most recent letter to Secretary Mnuchin requests that along with further guidance on implementing the new tax credits, Treasury devote additional staff to finalizing review of all the comments and developing the final rule.

To read the letters in full, click here: https://www.whitehouse.senate.gov/imo/media/doc/2018-05-20%20Ltr%20to%20Mnuchin-45Q-Guidance.pdf