Alerts6.5.20
IRS Releases Section 45Q Proposed Regulations For Carbon Capture Projects
The proposed carbon capture regulations provide detailed rules and clarity on the following issues:
- Standards for contracting with third parties to dispose of, inject or utilize the captured carbon oxide
- Standards and reporting obligations for complying with Secure Geological Storage requirement
- Utilization of carbon oxide established by lifecycle analysis
- Flexible rules for transferring all or a portion of the Section 45Q credit to the party or parties disposing of the captured carbon oxide
- Adoption of 80/20 rule allowing use of some used equipment
- Five-year tax credit recapture period
On May 28, 2020, the U.S. Department of the Treasury issued long-awaited proposed regulations under Section 45Q of the Internal Revenue Code of 1986, as amended, providing guidance on how taxpayers may qualify for tax credits with respect to carbon capture projects. In general, the proposed regulations provide much needed clarity regarding carbon oxide capture, use and sequestration and will encourage new investment in carbon capture projects.
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