Editor's Note:
Pub. L. 117-169,
Sec. 13104, amended Sec. 45Q with a delayed effective date as indicated
below.
I.R.C. § 45Q(a) General Rule —
For purposes of section 38, the carbon oxide sequestration
credit for any taxable year is an amount equal to the sum of—
I.R.C. § 45Q(a)(1) —
$20 per metric ton of qualified carbon
oxide which is—
I.R.C. § 45Q(a)(1)(A) —
captured by the taxpayer using carbon
capture equipment which is originally placed in service at a qualified
facility before the date of the enactment of the Bipartisan Budget
Act of 2018, and
I.R.C. § 45Q(a)(1)(B) —
disposed of by the taxpayer in secure
geological storage and not used by the taxpayer as described in paragraph
(2)(B),
I.R.C. § 45Q(a)(2) —
$10 per metric ton of qualified carbon
oxide which is—
I.R.C. § 45Q(a)(2)(A) —
captured by the taxpayer using carbon
capture equipment which is originally placed in service at a qualified
facility before the date of the enactment of the Bipartisan Budget
Act of 2018, and
I.R.C. § 45Q(a)(2)(B)
I.R.C. § 45Q(a)(2)(B)(i) —
used by the taxpayer as a tertiary injectant
in a qualified enhanced oil or natural gas recovery project and disposed
of by the taxpayer in secure geological storage, or
I.R.C. § 45Q(a)(2)(B)(ii) —
utilized by the taxpayer in a manner
described in subsection (f)(5),
I.R.C. § 45Q(a)(3) —
the applicable dollar amount (as determined
under subsection (b)(1)) per metric ton of qualified carbon oxide
which is—
I.R.C. § 45Q(a)(3)(A) —
captured by the taxpayer using carbon
capture equipment which is originally placed in service at a qualified
facility on or after the date of the enactment of the Bipartisan Budget
Act of 2018, during the 12-year period beginning on the date the equipment
was originally placed in service, and
I.R.C. § 45Q(a)(3)(B) —
disposed of by the taxpayer in secure
geological storage and not used by the taxpayer as described in paragraph
(4)(B), and
I.R.C. § 45Q(a)(4) —
the applicable dollar amount (as determined
under subsection (b)(1)) per metric ton of qualified carbon oxide
which is—
I.R.C. § 45Q(a)(4)(A) —
captured by the taxpayer using carbon
capture equipment which is originally placed in service at a qualified
facility on or after the date of the enactment of the Bipartisan Budget
Act of 2018, during the 12-year period beginning on the date the equipment
was originally placed in service, and
I.R.C. § 45Q(a)(4)(B)
I.R.C. § 45Q(a)(4)(B)(i) —
used by the taxpayer as a tertiary injectant
in a qualified enhanced oil or natural gas recovery project and disposed
of by the taxpayer in secure geological storage, or
I.R.C. § 45Q(a)(4)(B)(ii) —
utilized by the taxpayer in a manner
described in subsection (f)(5).
Editor's Note: Sec. 45Q(b), below, before amendment by Pub. L. 117-169, Sec. 13104(b), (c), is
effective for facilities or equipment placed in service before January
1, 2023.
I.R.C. § 45Q(b) Applicable Dollar Amount; Additional Equipment; Election
I.R.C. § 45Q(b)(1) Applicable Dollar Amount
I.R.C. § 45Q(b)(1)(A) In General —
The applicable dollar amount shall be an amount equal
to—
I.R.C. § 45Q(b)(1)(A)(i) —
for any taxable year beginning in a calendar
year after 2016 and before 2027—
I.R.C. § 45Q(b)(1)(A)(i)(I) —
for purposes of paragraph (3) of subsection
(a), the dollar amount established by linear interpolation between
$22.66 and $50 for each calendar year during such period, and
I.R.C. § 45Q(b)(1)(A)(i)(II) —
for purposes of paragraph (4) of such
subsection, the dollar amount established by linear interpolation
between $12.83 and $35 for each calendar year during such period,
and
I.R.C. § 45Q(b)(1)(A)(ii) —
for any taxable year beginning in a
calendar year after 2026—
I.R.C. § 45Q(b)(1)(A)(ii)(I) —
for purposes of paragraph (3) of subsection
(a), an amount equal to the product of $50 and the inflation adjustment
factor for such calendar year determined under section 43(b)(3)(B)
for such calendar year, determined by substituting “2025”
for “1990”, and
I.R.C. § 45Q(b)(1)(A)(ii)(II) —
for purposes of paragraph (4) of such
subsection, an amount equal to the product of $35 and the inflation
adjustment factor for such calendar year determined under section
43(b)(3)(B) for such calendar year, determined by substituting “2025”
for “1990”.
I.R.C. § 45Q(b)(1)(B) Rounding —
The applicable dollar amount determined under subparagraph
(A) shall be rounded to the nearest cent.
I.R.C. § 45Q(b)(2) Installation Of Additional Carbon Capture Equipment On Existing
Qualified Facility —
In the case of a qualified facility placed in service
before the date of the enactment of the Bipartisan Budget Act of 2018,
for which additional carbon capture equipment is placed in service
on or after the date of the enactment of such Act, the amount of qualified
carbon oxide which is captured by the taxpayer shall be equal to—
I.R.C. § 45Q(b)(2)(A) —
for purposes of paragraphs (1)(A) and
(2)(A) of subsection (a), the lesser of—
I.R.C. § 45Q(b)(2)(A)(i) —
the total amount of qualified carbon
oxide captured at such facility for the taxable year, or
I.R.C. § 45Q(b)(2)(A)(ii) —
the total amount of the carbon dioxide
capture capacity of the carbon capture equipment in service at such
facility on the day before the date of the enactment of the Bipartisan
Budget Act of 2018, and
I.R.C. § 45Q(b)(2)(B) —
for purposes of paragraphs (3)(A) and
(4)(A) of such subsection, an amount (not less than zero) equal to
the excess of—
I.R.C. § 45Q(b)(2)(B)(i) —
the amount described in clause (i) of
subparagraph (A), over
I.R.C. § 45Q(b)(2)(B)(ii) —
the amount described in clause (ii)
of such subparagraph.
I.R.C. § 45Q(b)(3) Election —
For purposes of determining the carbon oxide sequestration
credit under this section, a taxpayer may elect to have the dollar
amounts applicable under paragraph (1) or (2) of subsection (a) apply
in lieu of the dollar amounts applicable under paragraph (3) or (4)
of such subsection for each metric ton of qualified carbon oxide which
is captured by the taxpayer using carbon capture equipment which is
originally placed in service at a qualified facility on or after the
date of the enactment of the Bipartisan Budget Act of 2018.
Editor's Note: Sec. 45Q(b), below, after amendment by Pub. L. 117-169, Sec. 13104(b), (c), is
effective for facilities or equipment placed in service after December
31, 2022.
I.R.C. § 45Q(b) Applicable Dollar Amount; Additional Equipment; Election
I.R.C. § 45Q(b)(1) Applicable Dollar Amount
I.R.C. § 45Q(b)(1)(A) In General —
Except as provided in subparagraph (B) or (C), the applicable
dollar amount shall be an amount equal to—
I.R.C. § 45Q(b)(1)(A)(i) —
for any taxable year beginning in a calendar
year after 2016 and before 2027—
I.R.C. § 45Q(b)(1)(A)(i)(I) —
for purposes of paragraph (3) of subsection
(a), $17, and
I.R.C. § 45Q(b)(1)(A)(i)(II) —
for purposes of paragraph (4) of such
subsection, $12, and
I.R.C. § 45Q(b)(1)(A)(ii) —
for any taxable year beginning in a
calendar year after 2026—
I.R.C. § 45Q(b)(1)(A)(ii)(I) —
for purposes of paragraph (3) of subsection
(a), an amount equal to the product of $17 and the inflation adjustment
factor for such calendar year determined under section 43(b)(3)(B)
for such calendar year, determined by substituting “2025”
for “1990”, and
I.R.C. § 45Q(b)(1)(A)(ii)(II) —
for purposes of paragraph (4) of such
subsection, an amount equal to the product of $12 and the inflation
adjustment factor for such calendar year determined under section
43(b)(3)(B) for such calendar year, determined by substituting “2025”
for “1990”.
I.R.C. § 45Q(b)(1)(B) Special Rule For Direct Air Capture Facilities —
In the case of any qualified facility described in subsection (d)(2)(A) which is placed in
service after December 31, 2022, the applicable dollar amount shall
be an amount equal to the applicable dollar amount otherwise determined
with respect to such qualified facility under subparagraph (A), except
that such subparagraph shall be applied—
I.R.C. § 45Q(b)(1)(B)(i) —
by substituting “$36” for “$17”
each place it appears, and
I.R.C. § 45Q(b)(1)(B)(ii) —
by substituting “$26” for “$12”
each place it appears.
I.R.C. § 45Q(b)(1)(C) Applicable Dollar Amount For Additional Carbon Capture Equipment —
In the case of any qualified facility which is placed
in service before January 1, 2023, if any additional carbon capture
equipment is installed at such facility and such equipment is placed
in service after December 31, 2022, the applicable dollar amount shall
be an amount equal to the applicable dollar amount otherwise determined
under this paragraph, except that subparagraph (B) shall be applied—
I.R.C. § 45Q(b)(1)(C)(i) —
by substituting “before January
1, 2023” for “after December 31, 2022”, and
I.R.C. § 45Q(b)(1)(C)(ii) —
by substituting “the additional
carbon capture equipment installed at such qualified facility”
for “such qualified facility”.
I.R.C. § 45Q(b)(1)(D) Rounding —
The applicable dollar amount determined under subparagraph
(A), (B), or (C) shall be rounded to the nearest cent.
I.R.C. § 45Q(b)(2) Installation Of Additional Carbon Capture Equipment On Existing
Qualified Facility —
In the case of a qualified facility placed in service
before the date of the enactment of the Bipartisan Budget Act of 2018,
for which additional carbon capture equipment is placed in service
on or after the date of the enactment of such Act, the amount of qualified
carbon oxide which is captured by the taxpayer shall be equal to—
I.R.C. § 45Q(b)(2)(A) —
for purposes of paragraphs (1)(A) and
(2)(A) of subsection (a), the lesser of—
I.R.C. § 45Q(b)(2)(A)(i) —
the total amount of qualified carbon
oxide captured at such facility for the taxable year, or
I.R.C. § 45Q(b)(2)(A)(ii) —
the total amount of the carbon dioxide
capture capacity of the carbon capture equipment in service at such
facility on the day before the date of the enactment of the Bipartisan
Budget Act of 2018, and
I.R.C. § 45Q(b)(2)(B) —
for purposes of paragraphs (3)(A) and
(4)(A) of such subsection, an amount (not less than zero) equal to
the excess of—
I.R.C. § 45Q(b)(2)(B)(i) —
the amount described in clause (i) of
subparagraph (A), over
I.R.C. § 45Q(b)(2)(B)(ii) —
the amount described in clause (ii)
of such subparagraph.
I.R.C. § 45Q(b)(3) Election —
For purposes of determining the carbon oxide sequestration
credit under this section, a taxpayer may elect to have the dollar
amounts applicable under paragraph (1) or (2) of subsection (a) apply
in lieu of the dollar amounts applicable under paragraph (3) or (4)
of such subsection for each metric ton of qualified carbon oxide which
is captured by the taxpayer using carbon capture equipment which is
originally placed in service at a qualified facility on or after the
date of the enactment of the Bipartisan Budget Act of 2018.
I.R.C. § 45Q(c) Qualified Carbon Oxide —
For purposes of this section—
I.R.C. § 45Q(c)(1) In General —
The term “qualified carbon oxide” means—
I.R.C. § 45Q(c)(1)(A) —
any carbon dioxide which—
I.R.C. § 45Q(c)(1)(A)(i) —
is captured from an industrial source
by carbon capture equipment which is originally placed in service
before the date of the enactment of the Bipartisan Budget Act of 2018,
I.R.C. § 45Q(c)(1)(A)(ii) —
would otherwise be released into the
atmosphere as industrial emission of greenhouse gas or lead to such
release, and
I.R.C. § 45Q(c)(1)(A)(iii) —
is measured at the source of capture
and verified at the point of disposal, injection, or utilization,
I.R.C. § 45Q(c)(1)(B) —
any carbon dioxide or other carbon oxide
which—
I.R.C. § 45Q(c)(1)(B)(i) —
is captured from an industrial source
by carbon capture equipment which is originally placed in service
on or after the date of the enactment of the Bipartisan Budget Act
of 2018,
I.R.C. § 45Q(c)(1)(B)(ii) —
would otherwise be released into the
atmosphere as industrial emission of greenhouse gas or lead to such
release, and
I.R.C. § 45Q(c)(1)(B)(iii) —
is measured at the source of capture
and verified at the point of disposal, injection, or utilization,
or
I.R.C. § 45Q(c)(1)(C) —
in the case of a direct air capture facility,
any carbon dioxide which—
I.R.C. § 45Q(c)(1)(C)(i) —
is captured directly from the ambient
air, and
I.R.C. § 45Q(c)(1)(C)(ii) —
is measured at the source of capture
and verified at the point of disposal, injection, or utilization.
I.R.C. § 45Q(c)(2) Recycled Carbon Oxide —
The term “qualified carbon oxide” includes
the initial deposit of captured carbon oxide used as a tertiary injectant.
Such term does not include carbon oxide that is recaptured, recycled,
and re-injected as part of the enhanced oil and natural gas recovery
process.
I.R.C. § 45Q(d) Qualified Facility —
For purposes of this section, the term “qualified
facility” means any industrial facility or direct air capture
facility—
I.R.C. § 45Q(d)(1) —
the construction of which begins before
January 1, 2033, either—
I.R.C. § 45Q(d)(1)(A) —
construction of carbon capture equipment
begins before such date, or
I.R.C. § 45Q(d)(1)(B) —
the original planning and design for
such facility includes installation of carbon capture equipment, and
I.R.C. § 45Q(d)(2) —
which —
I.R.C. § 45Q(d)(2)(A) —
in the case of a direct air capture facility,
captures not less than 1,000 metric tons of qualified carbon oxide
during the taxable year,
I.R.C. § 45Q(d)(2)(B) —
in the case of an electricity generating
facility—
I.R.C. § 45Q(d)(2)(B)(i) —
captures not less than 18,750 metric
tons of qualified carbon oxide during the taxable year, and
I.R.C. § 45Q(d)(2)(B)(ii) —
with respect to any carbon capture equipment
for the applicable electric generating unit at such facility, has
a capture design capacity of not less than 75 percent of the baseline
carbon oxide production of such unit, or
I.R.C. § 45Q(d)(2)(C) —
in the case of any other facility, captures
not less than 12,500 metric tons of qualified carbon oxide during
the taxable year.
I.R.C. § 45Q(e) Definitions —
For purposes of this section—
I.R.C. § 45Q(e)(1) Applicable Electric Generating Unit —
The term “applicable electric generating unit”
means the principal electric generating unit for which the carbon
capture equipment is originally planned and designed.
I.R.C. § 45Q(e)(2) Baseline Carbon Oxide Production
I.R.C. § 45Q(e)(2)(A) In General —
The term “baseline carbon oxide production”
means either of the following:
I.R.C. § 45Q(e)(2)(A)(i) —
In the case of an applicable electric
generating unit which was originally placed in service more than 1
year prior to the date on which construction of the carbon capture
equipment begins, the average annual carbon oxide production, by mass,
from such unit during—
I.R.C. § 45Q(e)(2)(A)(i)(I) —
in the case of an applicable electric
generating unit which was originally placed in service more than 1
year prior to the date on which construction of the carbon capture
equipment begins and on or after the date which is 3 years prior to
the date on which construction of such equipment begins, the period
beginning on the date such unit was placed in service and ending on
the date on which construction of such equipment began, and
I.R.C. § 45Q(e)(2)(A)(i)(II) —
in the case of an applicable electric
generating unit which was originally placed in service more than 3
years prior to the date on which construction of the carbon capture
equipment begins, the 3 years with the highest annual carbon oxide
production during the 12-year period preceding the date on which construction
of such equipment began.
I.R.C. § 45Q(e)(2)(A)(ii) —
In the case of an applicable electric
generating unit which—
I.R.C. § 45Q(e)(2)(A)(ii)(I) —
as of the date on which construction
of the carbon capture equipment begins, is not yet placed in service,
or
I.R.C. § 45Q(e)(2)(A)(ii)(II) —
was placed in service during the 1-year
period prior to the date on which construction of the carbon capture
equipment begins,
the designed annual carbon oxide
production, by mass, as determined based on an assumed capacity factor
of 60 percent.
I.R.C. § 45Q(e)(2)(B) Capacity Factor —
The term “capacity factor” means the ratio
(expressed as a percentage) of the actual electric output from the
applicable electric generating unit to the potential electric output
from such unit.
I.R.C. § 45Q(e)(3) Direct Air Capture Facility
I.R.C. § 45Q(e)(3)(A) In General —
Subject to subparagraph (B), the term “direct air
capture facility” means any facility which uses carbon capture
equipment to capture carbon dioxide directly from the ambient air.
I.R.C. § 45Q(e)(3)(B) Exception —
The term “direct air capture facility” shall
not include any facility which captures carbon dioxide—
I.R.C. § 45Q(e)(3)(B)(i) —
which is deliberately released from naturally
occurring subsurface springs, or
I.R.C. § 45Q(e)(3)(B)(ii) —
using natural photosynthesis.
I.R.C. § 45Q(e)(4) Qualified Enhanced Oil Or Natural Gas Recovery Project —
The term “qualified enhanced oil or natural gas
recovery project” has the meaning given the term “qualified
enhanced oil recovery project” by section 43(c)(2), by substituting “crude
oil or natural gas” for “crude oil” in subparagraph
(A)(i) thereof.
I.R.C. § 45Q(e)(5) Tertiary Injectant —
The term “tertiary injectant” has the same
meaning as when used within section 193(b)(1).
I.R.C. § 45Q(f) Special Rules —
I.R.C. § 45Q(f)(1) Only Qualified Carbon Oxide Captured And Disposed Of Or Used
Within The United States Taken Into Account —
The credit under this section shall apply only with respect
to qualified carbon oxide the capture and disposal, use, or utilization
of which is within—
I.R.C. § 45Q(f)(1)(A) —
the United States (within the meaning
of section 638(1)), or
I.R.C. § 45Q(f)(1)(B) —
a possession of the United States (within
the meaning of section 638(2)).
I.R.C. § 45Q(f)(2) Secure Geological Storage —
The Secretary, in consultation with the Administrator
of the Environmental Protection Agency, the Secretary of Energy, and
the Secretary of the Interior, shall establish regulations for determining
adequate security measures for the geological storage of qualified
carbon oxide under subsection (a) such that the qualified carbon oxide
does not escape into the atmosphere. Such term shall include storage
at deep saline formations, oil and gas reservoirs, and unminable coal
seams under such conditions as the Secretary may determine under such
regulations.
I.R.C. § 45Q(f)(3) Credit Attributable To Taxpayer
I.R.C. § 45Q(f)(3)(A) In General —
Except as provided in subparagraph (B) or in any regulations
prescribed by the Secretary, any credit under this section shall be
attributable to—
I.R.C. § 45Q(f)(3)(A)(i) —
in the case of qualified carbon oxide
captured using carbon capture equipment which is originally placed
in service at a qualified facility before the date of the enactment
of the Bipartisan Budget Act of 2018, the person that captures and
physically or contractually ensures the disposal, utilization, or
use as a tertiary injectant of such qualified carbon oxide, and
I.R.C. § 45Q(f)(3)(A)(ii) —
in the case of qualified carbon oxide
captured using carbon capture equipment which is originally placed
in service at a qualified facility on or after the date of the enactment
of the Bipartisan Budget Act of 2018, the person that owns the carbon
capture equipment and physically or contractually ensures the capture
and disposal, utilization, or use as a tertiary injectant of such
qualified carbon oxide.
I.R.C. § 45Q(f)(3)(B) Election —
If the person described in subparagraph (A) makes an
election under this subparagraph in such time and manner as the Secretary
may prescribe by regulations, the credit under this section—
I.R.C. § 45Q(f)(3)(B)(i) —
shall be allowable to the person that
disposes of the qualified carbon oxide, utilizes the qualified carbon
oxide, or uses the qualified carbon oxide as a tertiary injectant,
and
I.R.C. § 45Q(f)(3)(B)(ii) —
shall not be allowable to the person
described in subparagraph (A).
I.R.C. § 45Q(f)(4) Recapture —
The Secretary shall, by regulations, provide for recapturing
the benefit of any credit allowable under subsection (a) with respect
to any qualified carbon oxide which ceases to be captured, disposed
of, or used as a tertiary injectant in a manner consistent with the
requirements of this section.
I.R.C. § 45Q(f)(5) Utilization Of Qualified Carbon Oxide
I.R.C. § 45Q(f)(5)(A) In General —
For purposes of this section, utilization of qualified
carbon oxide means—
I.R.C. § 45Q(f)(5)(A)(i) —
the fixation of such qualified carbon
oxide through photosynthesis or chemosynthesis, such as through the
growing of algae or bacteria,
I.R.C. § 45Q(f)(5)(A)(ii) —
the chemical conversion of such qualified
carbon oxide to a material or chemical compound in which such qualified
carbon oxide is securely stored, or
I.R.C. § 45Q(f)(5)(A)(iii) —
the use of such qualified carbon oxide
for any other purpose for which a commercial market exists (with the
exception of use as a tertiary injectant in a qualified enhanced oil
or natural gas recovery project), as determined by the Secretary.
I.R.C. § 45Q(f)(5)(B) Measurement
I.R.C. § 45Q(f)(5)(B)(i) In General —
For purposes of determining the amount of qualified carbon
oxide utilized by the taxpayer under paragraph (2)(B)(ii) or (4)(B)(ii)
of subsection (a), such amount shall be equal to the metric tons of
qualified carbon oxide which the taxpayer demonstrates, based upon
an analysis of lifecycle greenhouse gas emissions and subject to such
requirements as the Secretary, in consultation with the Secretary
of Energy and the Administrator of the Environmental Protection Agency,
determines appropriate, were—
I.R.C. § 45Q(f)(5)(B)(i)(I) —
captured and permanently isolated from
the atmosphere, or
I.R.C. § 45Q(f)(5)(B)(i)(II) —
displaced from being emitted into the
atmosphere,
through use of a process described
in subparagraph (A).
I.R.C. § 45Q(f)(5)(B)(ii) Lifecycle Greenhouse Gas Emissions —
For purposes of clause (i), the term “lifecycle
greenhouse gas emissions” has the same meaning given such term
under subparagraph (H) of section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), as in effect
on the date of the enactment of the Bipartisan Budget Act of 2018,
except that “product” shall be substituted for “fuel”
each place it appears in such subparagraph.
I.R.C. § 45Q(f)(6) Election For Applicable Facilities
I.R.C. § 45Q(f)(6)(A) In General —
For purposes of this section, in the case of an applicable
facility, for any taxable year in which such facility captures not
less than 500,000 metric tons of qualified carbon oxide during the
taxable year, the person described in paragraph (3)(A)(ii) may elect
to have such facility, and any carbon capture equipment placed in
service at such facility, deemed as having been placed in service
on the date of the enactment of the Bipartisan Budget Act of 2018.
I.R.C. § 45Q(f)(6)(B) Applicable Facility —
For purposes of this paragraph, the term “applicable
facility” means a qualified facility—
I.R.C. § 45Q(f)(6)(B)(i) —
which was placed in service before the
date of the enactment of the Bipartisan Budget Act of 2018, and
I.R.C. § 45Q(f)(6)(B)(ii) —
for which no taxpayer claimed a credit
under this section in regards to such facility for any taxable year
ending before the date of the enactment of such Act.
I.R.C. § 45Q(f)(7) Inflation Adjustment —
In the case of any taxable year beginning in a calendar
year after 2009, there shall be substituted for each dollar amount
contained in paragraphs (1) and (2) of subsection (a) an amount equal
to the product of—
I.R.C. § 45Q(f)(7)(A) —
such dollar amount, multiplied by
I.R.C. § 45Q(f)(7)(B) —
the inflation adjustment factor for such
calendar year determined under section 43(b)(3)(B) for such calendar
year, determined by substituting “2008” for “1990”.
Editor's Note: Sec. 45Q(f)(3)[8], below, before amendment by Pub. L. 117-169, Sec. 13104(e), is effective
for facilities or equipment placed in service before January 1, 2023.
I.R.C. § 45Q(f)(3) Credit Reduced for Certain Tax-Exempt Bonds —
The amount of the credit determined
under subsection (a) with respect to any project for any taxable year
shall be reduced by the amount which is the product of the amount
so determined for such year and the lesser of ½ or a fraction—
I.R.C. § 45Q(f)(3)(A) —
the numerator of which is the sum, for
the taxable year and all prior taxable years, of the proceeds from
an issue described in section 142(a)(17) used to provide financing
for the project the interest on which is exempt from tax under section
103, and
I.R.C. § 45Q(f)(3)(B) —
the denominator of which is the aggregate
amount of additions to the capital account for the project for the
taxable year and all prior taxable years.
The amounts under the preceding sentence
for any taxable year shall be determined as of the close of the taxable
year.
Editor's Note: Sec. 45Q(f)(8), below, after amendment by Pub. L. 117-169, Sec. 13104(e), is effective
for facilities or equipment placed in service after December 31, 2022.
I.R.C. § 45Q(f)(8) Credit Reduced for Tax-Exempt Bonds —
Rules similar to the rule under section 45(b)(3) shall apply for purposes
of this section.
I.R.C. § 45Q(f)(9) Election —
For purposes of paragraphs (3) and (4) of subsection
(a), a person described in paragraph (3)(A)(ii) may elect, at such
time and in such manner as the Secretary may prescribe, to have the
12–year period begin on the first day of the first taxable year
in which a credit under this section is claimed with respect to carbon
capture equipment which is originally placed in service at a qualified
facility on or after the date of the enactment of the Bipartisan Budget
Act of 2018 (after application of paragraph (6), where applicable)
if—
I.R.C. § 45Q(f)(9)(A) —
no taxpayer claimed a credit under this
section with respect to such carbon capture equipment for any prior
taxable year,
I.R.C. § 45Q(f)(9)(B) —
the qualified facility at which such
carbon capture equipment is placed in service is located in an area
affected by a federally-declared disaster (as defined by section 165(i)(5)(A))
after the carbon capture equipment is originally placed in service,
and
I.R.C. § 45Q(f)(9)(C) —
such federally-declared disaster results
in a cessation of the operation of the qualified facility or the carbon
capture equipment after such equipment is originally placed in service.
I.R.C. § 45Q(g) Application Of Section For Certain Carbon Capture Equipment —
In the case of any carbon capture equipment placed in
service before the date of the enactment of the Bipartisan Budget
Act of 2018, the credit under this section shall apply with respect
to qualified carbon oxide captured using such equipment the earlier
of January 1, 2023, and before the end of the calendar year in which
the Secretary, in consultation with the Administrator of the Environmental
Protection Agency, certifies that, during the period beginning after
October 3, 2008, a total of 75,000,000 metric tons of qualified carbon
oxide have been taken into account in accordance with—
I.R.C. § 45Q(g)(1) —
subsection (a) of this section, as in
effect on the day before the date of the enactment of the Bipartisan
Budget Act of 2018, and
I.R.C. § 45Q(g)(2) —
paragraphs (1) and (2) of subsection
(a) of this section.
Editor's Note: Sec. 45Q(h), below, before being redesignated
by Pub. L. 117-169, Sec. 13104(d),
and amended by Sec. 13104(h), is effective for facilities or equipment
placed in service before January 1, 2023.
I.R.C. § 45Q(h) Regulations —
The Secretary may prescribe such regulations and other
guidance as may be necessary or appropriate to carry out this section,
including regulations or other guidance to—
I.R.C. § 45Q(h)(1) —
ensure proper allocation under subsection
(a) for qualified carbon oxide captured by a taxpayer during the taxable
year ending after the date of the enactment of the Bipartisan Budget
Act of 2018, and
I.R.C. § 45Q(h)(2) —
determine whether a facility satisfies
the requirements under subsection (d)(1) during such taxable year.
Editor's Note: Sec. 45Q(h), below, after being added by Pub. L. 117-169, Sec. 13104(d), is effective
for facilities or equipment placed in service after December 31, 2022.
I.R.C. § 45Q(h) Increased Credit Amount For Qualified Facilities And Carbon
Capture Equipment
I.R.C. § 45Q(h)(1) In General —
In the case of any qualified facility or any carbon capture
equipment which satisfy the requirements of paragraph (2), the amount
of the credit determined under subsection (a) shall be equal to such
amount (determined without regard to this sentence) multiplied by
5.
I.R.C. § 45Q(h)(2) Requirements —
The requirements described in this paragraph are that—
I.R.C. § 45Q(h)(2)(A) —
with respect to any qualified facility
the construction of which begins on or after the date that is 60 days
after the Secretary publishes guidance with respect to the requirements
of paragraphs (3)(A) and (4), as well as any carbon capture equipment
placed in service at such facility—
I.R.C. § 45Q(h)(2)(A)(i) —
subject to subparagraph (B) of paragraph
(3), the taxpayer satisfies the requirements under subparagraph (A)
of such paragraph with respect to such facility and equipment, and
I.R.C. § 45Q(h)(2)(A)(ii) —
the taxpayer satisfies the requirements
under paragraph (4) with respect to the construction of such facility
and equipment,
I.R.C. § 45Q(h)(2)(B) —
with respect to any carbon capture equipment
the construction of which begins on or after the date that is 60 days
after the Secretary publishes guidance with respect to the requirements
of paragraphs (3)(A) and (4), and which is installed at a qualified
facility the construction of which began prior to such date—
I.R.C. § 45Q(h)(2)(B)(i) —
subject to subparagraph (B) of paragraph
(3), the taxpayer satisfies the requirements under subparagraph (A)
of such paragraph with respect to such equipment, and
I.R.C. § 45Q(h)(2)(B)(ii) —
the taxpayer satisfies the requirements
under paragraph (4) with respect to the construction of such equipment,
or
I.R.C. § 45Q(h)(2)(C) —
the construction of carbon capture equipment
begins prior to the date that is 60 days after the Secretary publishes
guidance with respect to the requirements of paragraphs (3)(A) and
(4), and such equipment is installed at a qualified facility the construction
of which begins prior to such date.
I.R.C. § 45Q(h)(3) Prevailing Wage Requirements
I.R.C. § 45Q(h)(3)(A) In General —
The requirements described in this subparagraph with
respect to any qualified facility and any carbon capture equipment
placed in service at such facility are that the taxpayer shall ensure
that any laborers and mechanics employed by the taxpayer or any contractor
or subcontractor in—
I.R.C. § 45Q(h)(3)(A)(i) —
the construction of such facility or
equipment, and
I.R.C. § 45Q(h)(3)(A)(ii) —
with respect to any taxable year, for
any portion of such taxable year which is within the period described
in paragraph (3)(A) or (4)(A) of subsection (a), the alteration or
repair of such facility or such equipment,
shall be paid wages at rates not
less than the prevailing rates for construction, alteration, or repair
of a similar character in the locality in which such facility and
equipment are located as most recently determined by the Secretary
of Labor, in accordance with subchapter IV of chapter 31 of title
40, United States Code. For purposes of determining an increased credit
amount under paragraph (1) for a taxable year, the requirement under
clause (ii) of this subparagraph is applied to such taxable year in
which the alteration or repair of qualified facility occurs.
I.R.C. § 45Q(h)(3)(B) Correction And Penalty Related To Failure To Satisfy Wage Requirements —
Rules similar to the rules of section 45(b)(7)(B) shall apply.
I.R.C. § 45Q(h)(4) Apprenticeship Requirements —
Rules similar to the rules of section 45(b)(8) shall apply.
I.R.C. § 45Q(h)(5) Regulations and Guidance —
The Secretary shall issue such regulations or other guidance
as the Secretary determines necessary to carry out the purposes of
this subsection, including regulations or other guidance which provides
for requirements for recordkeeping or information reporting for purposes
of administering the requirements of this subsection.
Editor's Note: Sec. 45Q(i), below, after being redesignated
by Pub. L. 117-169, Sec. 13104(d),
and amended by Sec. 13104(h), is effective for facilities or equipment
placed in service after December 31, 2022.
I.R.C. § 45Q(i) Regulations —
The Secretary may prescribe such regulations and other
guidance as may be necessary or appropriate to carry out this section,
including regulations or other guidance to—
I.R.C. § 45Q(i)(1) —
ensure proper allocation under subsection
(a) for qualified carbon oxide captured by a taxpayer during the taxable
year ending after the date of the enactment of the Bipartisan Budget
Act of 2018,
I.R.C. § 45Q(i)(2) —
determine whether a facility satisfies
the requirements under subsection (d)(1) during such taxable year,
and
I.R.C. § 45Q(i)(3) —
for purposes of subsection (d)(2)(B)(ii),
adjust the baseline carbon oxide production with respect to any applicable
electric generating unit at any electricity generating facility if,
after the date on which the carbon capture equipment is placed in
service, modifications which are chargeable to capital account are
made to such unit which result in a significant increase or decrease
in carbon oxide production.
(Added by Pub. L. 110-343, div. B, title I,
Sec. 115(a), Oct. 3, 2008, 122 Stat.
3765; and amended by Pub.
L. 111–5, div. B, title I, Sec. 1131, Feb.
17, 2009, 123 Stat. 115; Pub. L. 113-295, Div. A, title II,
Sec. 209(j)(1), Dec. 19, 2014, 128 Stat.
4010; Pub. L. 115-123,
Div. D, title II, Sec. 41119(a), Feb. 9, 2018, 132 Stat. 64; Pub.
L. 116-260, Div. EE, title I, Sec. 121, Dec. 27, 2020, 134 Stat. 1182; Pub.
L. 117-58, Div. H, title IV, Sec. 80402(e), Nov. 21, 2021, 135 Stat. 429; Pub.
L. 117-169, title I, Sec. 13104, Aug. 16, 2022, 136 Stat. 1818.)
BACKGROUND NOTES
AMENDMENTS
2022 — Subsec. (b)(1)(A). Pub. L. 117-169, Sec. 13104(b)(1), (2),
amended subpar. (A):
(1) clause (i) in subclause (I), by striking “the
dollar amount” and all that follows through “such period”
and inserting “$17”, and in subclause (II) by striking “the
dollar amount” and all that follows through “such period”
and inserting “$12”;
(2) clause (ii) in subclause (I) by striking “$50”
and inserting “$17”, and in subclause (II) by striking “$35”
and inserting “$12”.
Pub. L. 117-169,
Sec. 13104(c)(2), amended subpar. (A) by striking “The applicable
dollar amount” and inserting “Except as provided in subparagraph
(B) or (C), the applicable dollar amount”.
Subsec. (b)(1)(A). Pub.
L. 117-169, Sec. 13104(c)(2)(A), amended par. (1) by striking “The
applicable dollar amount” and inserting “Except as provided
in subparagraph (B) or (C), the applicable dollar amount”.
Subsec. (b)(1)(B)–(D). Pub. L. 117-169, Sec. 13104(c)(1)(A), (B),
amended par. (1) by redesignating subpar. (B) as subpar. (D), and
inserting new subpars. (B) and (C).
Subsec. (b)(1)(D). Pub.
L. 117-169, Sec. 13104(c)(2)(B), amended subpar. (D), as
redesignated by Sec. 13104(c)(1)(A), is amended by striking “subparagraph
(A)” and inserting “subparagraph (A), (B), or (C)”.
Subsec. (d). Pub. L.
117-169, Sec. 13104(a)(1), amended subsec. (d). Before amendment,
subsec. (d) read as follows:
“(d) Qualified Facility.—For purposes
of this section, the term ‘qualified facility' means any industrial
facility or direct air capture facility—
“(1) the construction of which begins before
January 1, 2026, and—
“(A) construction of carbon capture equipment
begins before such date, or
“(B) the original planning and design for
such facility includes installation of carbon capture equipment, and
“(2) which captures—
“(A) in the case of a facility which emits
not more than 500,000 metric tons of carbon oxide into the atmosphere
during the taxable year, not less than 25,000 metric tons of qualified
carbon oxide during the taxable year which is utilized in a manner
described in subsection (f)(5),
“(B) in the case of an electricity generating
facility which is not described in subparagraph (A), not less than
500,000 metric tons of qualified carbon oxide during the taxable year,
or
“(C) in the case of a direct air capture
facility or any facility not described in subparagraph (A) or (B),
not less than 100,000 metric tons of qualified carbon oxide during
the taxable year.”
Subsec. (e). Pub. L.
117-169, Sec. 13104(a)(2), amended subsec. (d) by redesignating
pars. (1)–(3) as pars. (3)–(5), and adding new pars.
(1)–(3).
Subsec. (f). Pub. L.
117-169, Sec. 13104(e)(1), (2), amended subsec. (f) by striking
the second paragraph (3), as added at the end of such section by section
80402(e) of the Infrastructure Investment and Jobs Act (Pub. L. 117-58), and by adding par. (8)
at the end. Before being struck, the second par. (3) read:
“(3) Credit Attributable To Taxpayer.—
“(A) In General.—Except as provided
in subparagraph (B) or in any regulations prescribed by the Secretary,
any credit under this section shall be attributable to—
“(i) in the case of qualified carbon oxide
captured using carbon capture equipment which is originally placed
in service at a qualified facility before the date of the enactment
of the Bipartisan Budget Act of 2018, the person that captures and
physically or contractually ensures the disposal, utilization, or
use as a tertiary injectant of such qualified carbon oxide, and
“(ii) in the case of qualified carbon oxide
captured using carbon capture equipment which is originally placed
in service at a qualified facility on or after the date of the enactment
of the Bipartisan Budget Act of 2018, the person that owns the carbon
capture equipment and physically or contractually ensures the capture
and disposal, utilization, or use as a tertiary injectant of such
qualified carbon oxide.
“(B) Election.—If the person described
in subparagraph (A) makes an election under this subparagraph in such
time and manner as the Secretary may prescribe by regulations, the
credit under this section—
“(i) shall be allowable to the person that
disposes of the qualified carbon oxide, utilizes the qualified carbon
oxide, or uses the qualified carbon oxide as a tertiary injectant,
and
“(ii) shall not be allowable to the person
described in subparagraph (A).”
Subsec. (f). Pub. L.
117-169, Sec. 13104(g), added par. (9).
Subsec. (g). Pub. L.
117-169, Sec. 13104(f), amended subsec. (g) by inserting “the
earlier of January 1, 2023, and” before “the end of the
calendar year”.
Subsecs. (h), (i). Pub.
L. 117-169, Sec. 13104(d), redesignated subsec. (h) as subsec.
(i) and inserted new subsec. (h).
Subsec. (i). Pub. L.
117-169, Sec. 13104(h)(1)–(3), amended subsec. (i):
(1) in paragraph (1) by striking “and”, (2) in paragraph
(2) by striking the period at the end and inserting “, and”,
and (3) by adding new par. (3) at the end.
2021 — Subsec. (f)(3). Pub. L. 117-58, Sec. 80402(e),
amended subsec. (f) by adding new par. (3).
2020 — Subsec. (d)(1). Pub. L. 116-260, Sec. 121, amended par.
(1) by substituting “January 1, 2026” for “January
1, 2024”.
2018 — Sec. 45Q. Pub. L. 115-123, Sec. 41119(a),
amended Sec. 45Q. Before amendment, it read as follows:
“Sec. 45Q. Credit For Carbon Dioxide Sequestration.—
“(a) General Rule.—For purposes of
section 38, the carbon dioxide sequestration credit for any taxable
year is an amount equal to the sum of—
“(1) $20 per metric ton of qualified carbon
dioxide which is—
“(A) captured by the taxpayer at a qualified
facility, and
“(B) disposed of by the taxpayer in secure
geological storage and not used by the taxpayer as described in paragraph
(2)(B), and
“(2) $10 per metric ton of qualified carbon
dioxide which is—
“(A) captured by the taxpayer at a qualified
facility,
“(B) used by the taxpayer as a tertiary injectant
in a qualified enhanced oil or natural gas recovery project, and
“(C) disposed of by the taxpayer in secure
geological storage.
“(b) Qualified Carbon Dioxide.—For
purposes of this section—
“(1) In General.—The term ‘qualified
carbon dioxide’ means carbon dioxide captured from an industrial
source which—
“(A) would otherwise be released into the
atmosphere as industrial emission of greenhouse gas, and
“(B) is measured at the source of capture
and verified at the point of disposal or injection.
“(2) Recycled Carbon Dioxide.—The term ‘qualified
carbon dioxide’ includes the initial deposit of captured carbon
dioxide used as a tertiary injectant. Such term does not include carbon
dioxide that is re-captured, recycled, and re-injected as part of
the enhanced oil and natural gas recovery process.
“(c) Qualified Facility.—For purposes
of this section, the term ‘qualified facility’ means any
industrial facility—
“(1) which is owned by the taxpayer,
“(2) at which carbon capture equipment is
placed in service, and
“(3) which captures not less than 500,000
metric tons of carbon dioxide during the taxable year.
“(d) Special Rules And Other Definitions.—For
purposes of this section—
“(1) Only Carbon Dioxide Captured and Disposed
of or Used Within the United States Taken Into Account.—The
credit under this section shall apply only with respect to qualified
carbon dioxide the capture and disposal or use of which is within—
“(A) the United States (within the meaning
of section 638(1)), or
“(B) a possession of the United States (within
the meaning of section 638(2)).
“(2) Secure Geological Storage.—The
Secretary, in consultation with the Administrator of the Environmental
Protection Agency, the Secretary of Energy, and the Secretary of the
Interior, shall establish regulations for determining adequate security
measures for the geological storage of carbon dioxide under paragraph
(1)(B) or (2)(C) of subsection (a) such that the carbon dioxide does
not escape into the atmosphere. Such term shall include storage at
deep saline formations, oil and gas reservoirs, and unminable coal
seems under such conditions as the Secretary may determine under such
regulations.
“(3) Tertiary Injectant.—The term ‘tertiary
injectant’ has the same meaning as when used within section
193(b)(1).
“(4) Qualified Enhanced Oil Or Natural Gas
Recovery Project.—The term ‘qualified enhanced oil or
natural gas recovery project’ has the meaning given the term ‘qualified
enhanced oil recovery project’ by section 43(c)(2), by substituting ‘crude
oil or natural gas’ for ‘crude oil’ in subparagraph
(A)(i) thereof.
“(5) Credit Attributable To Taxpayer.—Any
credit under this section shall be attributable to the person that
captures and physically or contractually ensures the disposal of or
the use as a tertiary injectant of the qualified carbon dioxide, except
to the extent provided in regulations prescribed by the Secretary.
“(6) Recapture.—The Secretary shall,
by regulations, provide for recapturing the benefit of any credit
allowable under subsection (a) with respect to any qualified carbon
dioxide which ceases to be captured, disposed of, or used as a tertiary
injectant in a manner consistent with the requirements of this section.
“(7) Inflation Adjustment.—In the case
of any taxable year beginning in a calendar year after 2009, there
shall be substituted for each dollar amount contained in subsection
(a) an amount equal to the product of—
“(A) such dollar amount, multiplied by
“(B) the inflation adjustment factor for
such calendar year determined under section 43(b)(3)(B) for such calendar
year, determined by substituting ‘2008’ for ‘1990’.
“(e) Application Of Section.—The credit
under this section shall apply with respect to qualified carbon dioxide
before the end of the calendar year in which the Secretary, in consultation
with the Administrator of the Environmental Protection Agency, certifies
that 75,000,000 metric tons of qualified carbon dioxide have been
taken into account in accordance with subsection (a).”
2014 — Subsec. (d)(2). Pub. L. 113-295, Div. A, Sec. 209(j)(1),
amended par. (2) by substituting “Administrator of the Environmental
Protection Agency, the Secretary of Energy, and the Secretary of the
Interior, shall establish” for “Administrator of the Environmental
Protection Agency, the Secretary of Energy, and the Secretary of the
Interior, shall establish”.
2009 — Subsec. (a)(1)(B). Pub. L. 111-5, div. B, Sec. 1131(b)(2),
amended subpar. (B) by inserting “and not used by the taxpayer
as described in paragraph (2)(B)” after “storage”.
Subsec. (a)(2)(A)–(C). Pub. L. 111-5, div. B, Sec. 1131(a),
amended par. (2) by striking “and” at the end of subpar.
(A), by substituting “, and” for the period at the end
of subpar. (B), and by adding subpar. (C).
Subsec. (d)(2). Pub.
L. 111-5, div. B, Sec. 1131(b)(1), amended par. (2)
by substituting “paragraph (1)(B) or (2)(C) of subsection (a)”
for “subsection (a)(1)(B)”; by substituting “, oil
and gas reservoirs, and unminable coal seams” for “and
unminable coal seems”; and by inserting “the Secretary
of Energy and the Secretary of the Interior,” after “Environmental
Protection Agency”.
Subsec. (e). Pub.
L. 111-5, div. B, Sec. 1131(b)(3), amended subsec.
(e) by substituting “taken into account in accordance with subsection
(a)” for “captured and disposed of or used as a tertiary
injectant”.
EFFECTIVE DATE OF 2022 AMENDMENTS
Generally, the amendments made by Pub. L. 117-169, Sec. 13104, are effective
for facilities or equipment placed in service after December 31, 2022. Pub. L. 117-169, Sec. 13104(i), provides:
“(i) Effective Dates.—
“(1) In General.—Except as provided
in paragraphs (2), (3), and (4), the amendments made by this section
shall apply to facilities or equipment placed in service after December
31, 2022.
“(2) Modification Of Carbon Oxide Capture
Requirements.— The amendments made by subsection (a) shall apply
to facilities or equipment the construction of which begins after
the date of enactment of this Act.
“(3) Application Of Section For Certain Carbon
Capture Equipment.—The amendments made by subsection (f) shall
take effect on the date of enactment of this Act.
“(4) Election.—The amendments made
by subsection (g) shall apply to carbon oxide captured and disposed
of after December 31, 2021.”
EFFECTIVE DATE OF 2021 AMENDMENT
Amendment by Pub.
L. 117-58, Sec. 80402(e), effective for obligations issued
after December 31, 2021.
EFFECTIVE DATE OF 2020 AMENDMENT
Amendment by Pub. L.
116-260, Sec. 121, effective on the date of the enactment
of this Act [Enacted: Dec.27, 2020].
EFFECTIVE DATE OF 2018 AMENDMENT
Amendment by Pub.
L. 115-123, Sec. 41119(a), effective for taxable years beginning
after December 31, 2017.
EFFECTIVE DATE OF 2014 AMENDMENT
Amendment by Pub.
L. 113-295, Div. A, Sec. 209(j)(1), effective as
if included in the provisions of the American Recovery and Reinvestment
Tax Act of 2009 ]Pub. L. 111-5,
Sec. 1131] to which they relates [Effective for carbon dioxide captured
after Feb. 17, 2009].
EFFECTIVE DATE OF 2009 AMENDMENTS
Amendments by Sec. 1131 of Pub. L. 111-5, div. B, effective for
carbon dioxide captured after the date of the enactment of this Act
[Enacted: Feb. 17, 2009].
EFFECTIVE DATE
Effective for carbon dioxide captured after the
date of the enactment of this Act [Enacted: Oct. 3, 2008].