Section 45Q Tax Credit: This tax credit provides a monetary incentive for CCUS projects. The credit provides up to $85 per metric ton of CO2 captured and permanently stored, and up to $60 per metric ton of CO2 captured and used for enhanced oil recovery or other purposes. The credit amount significantly increases for direct air capture (DAC) projects to $180 per metric ton of CO2 permanently stored and $130 per metric ton for used CO2 In 2022, changes in the Section 45Q Tax Credit reduced the capacity requirements for eligible projects: 18,750 metric tons per year for power plants (provided at least 75 percent of the CO2 is captured), 12,500 metric tons per year for other facilities, and 1,000 metric tons per year for DAC facilities. Finally, the 2022 changes include a seven-year extension to qualify for the tax credit, meaning that projects have until January 2033 to begin construction. Companies who seek eligibility for the tax credit must also propose a facility which will capture at least 100,000 metric tons of CO2 per year. The tax credit is limited to twenty-five million metric tons of CO2 per year. To qualify for the Section 45Q tax credit, a project must also meet other criteria: • Eligible facilities: The tax credit applies to specific types of facilities that capture CO2, such as power plants, industrial facilities, or direct air capture facilities. • Minimum capture thresholds: Facilities must capture a minimum amount of CO2 per year to be eligible for the credit. This threshold varies depending on the type of facility and its purpose (e.g., electric power generation, industrial manufacturing, or direct air capture). • Secure storage or utilization: Captured CO2 must either be securely stored in geological formations, used as a tertiary injectant in enhanced oil recovery, or used in certain commercial applications, such as producing chemicals, plastics, or carbon-based building materials. Reporting and monitoring: Companies claiming the credit must also adhere to reporting and monitoring requirements set by the Environmental Protection Agency to ensure the proper storage or utilization of CO2. Modified Accelerated Cost Recovery System (MACRS) Depreciation: This depreciation allows businesses to quickly recover the costs of their capital investments in CCUS equipment and reduce their tax burden. Industrial Source Carbon Capture Project Credit: This credit provides up to 30 percent of the cost of qualifying carbon capture equipment, up to a maximum of $3,000 per metric ton of CO2 captured and stored.
New Markets Tax Credit: This credit provides financing for qualifying community development projects, including CCUS projects in designated low-income areas. The availability and terms of these tax incentives depend on the specific project and the current regulatory environment. Additionally, other forms of government support, like grants and loans, may also be available to support carbon capture projects. Several states have also implemented other types of carbon pricing policies, but require state- specific research to understand the available programs. By meeting these criteria and following the necessary guidelines, businesses can take advantage of the tax credits available for CO2 capture, thus offsetting the costs associated with implementing CCUS technologies. SCS Engineers offers technical consulting services to help businesses and governments assess the feasibility of implementing these technologies, evaluate potential sites for storage or utilization, and navigate the permitting process. The company offers holistic teams to oversee system designs, provide guidance throughout the licensing and permitting process, and remain involved as collaborators throughout the construction phase. Choosing an appropriate partner for such initiatives ensures access to the necessary expertise, resources, and professional networks to enhance successful implementation. As various stakeholders unite around shared goals to advance carbon capture, they lay the groundwork for a more sustainable future for all. Dave Palmerton, PG , is professional geologist and Project Director at SCS Engineers’ Environmental Services Practice. He has handled numerous strategic and technical environmental issues for Fortune 100 companies across the United States. Dave’s extensive knowledge of federal and state regulatory requirements has enabled him to successfully negotiate with agencies on his client's behalf. His recent publications include “Funding Accelerates Efforts to Plug Abandoned Wells” in The American Oil and Gas Reporter and “The Science, Funding, and Treatment of Acid Mine Drainage” in Coal Age. SCS Engineers solve environmental management, solid waste, hazardous waste, and Superfund problems. SCS has a long history of assisting industrial, commercial, and institutional organizations, military facilities, federal-to-local governments, and tribes, in identifying and implementing appropriate environ - mental management practices.
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September 2023 csengineermag.com
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