Bill to expand, extend 45Q tax credit introduced in House

By Erin Voegele | April 20, 2021

Reps. David Schweikert, R-Ariz.; Brad Wenstrup, R-Ohio; and Carol Miller, R-W.V., on April 19 joined House Minority Leader Kevin McCarthy, R-Calif., in announcing a bill to improve and extend the 45Q tax credit for carbon capture and sequestration (CCS).

The bill, H.R. 2633, was introduced April 16 and referred to the House Committee on Ways and Means.

The bill aims to make the 45Q tax credit permanent. It would also increase the value of the credit from $35 to $50 per ton for carbon sequestered as part of enhanced oil and gas recovery. For other sequestered carbon, the value would increase from $50 to $85 per ton.

In addition, the bill would increase the payout term of the credit from 12 to 20 years; reduce the minimum amount of carbon that must be sequestered for direct air capture projects to qualify from 100,000 tons of carbon to 10,000 tons of carbon; reduce the minimum amount of carbon that must be sequestered for non-power manufacturing plans to qualify from 100,000 tons of carbon to 25,000 tons of carbon; reduce the minimum amount of carbon that must be sequestered for electrical generating facilities to qualify from 500,000 tons of carbon to 100,000 tons of carbon; and reduce the minimum amount of carbon that must be sequestered for carbon utilization to qualify from 25,000 tons of carbon to 10,000 tons of carbon.

The Carbon Capture Coalition has welcomed the introduction of the bill. “A multiyear extension of the 45Q tax credit is one of the Coalition’s top legislative priorities,” said Brad Crabtree, director of the CCC. “Bipartisan year-end energy legislation passed by Congress in December 2020 provided an urgently needed two-year extension, so that project developers and investors now have until the end of 2025 to begin construction and qualify for the 45Q credit. While this extension is helpful, substantially more time is required for carbon capture, carbon utilization and direct air capture projects to reach economywide deployment and help achieve net-zero emissions by midcentury. This legislation would provide the long-term financial certainty needed to drive significantly greater levels of private investment in the deployment of such projects.”

“This legislation provides yet another example of growing momentum and support from across the political spectrum to enhance the 45Q tax credit, including major bipartisan bills recently introduced in the House and the Senate and key provisions of President Biden’s ‘American Jobs Plan,’” Crabtree continued. “The Coalition continues to work with members of Congress from both sides of the aisle, as well as the Biden administration, to enact critical improvements to 45Q this year. Enhancements to 45Q are necessary to enable economywide deployment of carbon capture, removal, transport, utilization and storage to meet midcentury climate goals, support domestic energy, industry and manufacturing, and protect and create high-wage jobs.”

A full copy of the bill can be downloaded from Schweikert’s website