Proposed CCUS Tax Credit regulations include guidance on use of LCA for carbon oxide utilization

On Thursday, May 28, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) issued proposed regulations (REG-112339) for the §45Q, Credit for Carbon Oxide Sequestration, of the Internal Revenue Code (Title 26 of U.S. Code).  The proposed regulations provide critical guidance on the meaning of secure geological storage, transferability of the credit, recapturing the credit, and the lifecycle analysis required for the utilization of carbon oxides.   

The proposed regulations should provide certainty to project developers and investors that their capture projects will qualify for the §45Q tax credit as modified in the Bipartisan Budget Act of 2018 (BBA). The modifications in the BBA were designed to enhance the existing tax incentive for carbon capture, utilization, and storage (CCUS) and promote investment in CCUS technology and the implementation of carbon capture projects at electric generating plants and industrial facilities. 

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