Section 45Q Credit for Carbon Oxide Sequestration

Last updated: 29 June 2020

Section 45Q of the Unites States Internal Revenue Code provides a tax credit for CO₂ storage. The policy is intended to incentivize deployment of carbon capture, utilisation and storage (CCUS), and a variety of project types that generate CO₂ emissions reductions are eligible.

In 2018, the US introduced a significant stimulus for CCUS investment with the passage of legislation to expand and enhance the 45Q tax credit (The Financing Our Energy Future Act, S. 1841 and H.R. 3249).

The 2018 changes to 45Q will provide up to USD 50 per tonne of CO2 permanently stored and USD 35 per tonne of CO2 used for enhanced oil recovery (EOR) or other industrial uses of CO2, provided emissions reductions can be clearly demonstrated. For CCUS in electricity generation, the minimum project size is 0.5 metric tons of CO₂ captured annually (Mtpa), for industrial facilities it is 0.1 Mtpa, and for CO2 captured and used in applications other than EOR it is 0.025 Mtpa. The tax credits are available for 12 years and projects must enter construction before 1 January 2024.

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