Section 13104 extends and expands the tax credit for carbon capture and sequestration in Section 45Q of the IRC. Previously, in order to qualify for the credit, carbon capture facilities had to commence construction prior to January 1, 2023. Section 13104 of the IRA extended the “commence construction” window to January 1, 2033. Section 13104 of the IRA also reduced the amount of carbon dioxide that facilities must capture in order to be eligible for the credit and increased the amount of the credit.
Projects that capture carbon dioxide at electric generating plants or industrial facilities and sequester it in geologic formations are now eligible for a base credit of $17 per metric ton for carbon oxide captured and geologically sequestered, and $85 per metric ton for facilities that meet apprenticeship requirements and pay prevailing wages during construction as well as the first 12 years of operation, a five-fold increase of the base rate.
For projects that capture carbon dioxide via direct air capture facilities and sequester it in geologic formations, the base credit is $36 per metric ton of carbon oxide captured and geologically sequestered and $180 per metric ton for facilities meeting prevailing wage and apprenticeship requirements, a five-fold increase of the base rate.
The Treasury Department must issue regulations and guidance on the facility, wage, apprenticeship and equipment requirements to qualify for the increased tax credit.
Eligible Entities:
Agency Actions:
- Treasury Issues Proposed Rule on Clean Energy Apprenticeship and Prevailing Wage Requirements
- IRS Issues 2023 Carbon Capture and Sequestration Inflation Adjustment Factors
- Treasury Requests Comments on Carbon Oxide Sequestration Credit
- Treasury Issues Initial Guidance on Prevailing Wage and Apprenticeship Requirements
- Treasury Requests Comments on Prevailing Wage, Apprenticeship, Domestic Content, and Energy Community Requirements