Carbon Capture, Utilization and Sequestration Tax Benefits under the Proposed Inflation Reduction Act (USA)
by Heather Cooper, Carl J. Fleming, Parker A. Lee, Denmon Sigler on mwe.com
On July 27, 2022, Senate Majority Leader Chuck Schumer (D-NY) and Senator and Energy and Natural Resources Chair Joe Manchin (D-WV) announced an agreement on a proposed reconciliation package called the Inflation Reduction Act of 2022, HR 5376, 117th Cong. (Act). The included tax credits and benefits related to CCUS projects represent some of the most notable and impactful aspects of the proposed Act. They include (1) an increase in tax credit value to $85 per ton; (2) an added tax credit value for direct air capture (DAC); (3) a decrease in the size (emissions eligibility thresholds) of qualifying projects and (4) a 45Q tax credit through direct pay.