{"id":1585,"date":"2023-05-31T08:02:45","date_gmt":"2023-05-31T12:02:45","guid":{"rendered":"https:\/\/saperemarketing.com\/clearpath\/?p=1585"},"modified":"2024-08-15T15:11:24","modified_gmt":"2024-08-15T15:11:24","slug":"why-45q-matters-and-why-its-not-enough","status":"publish","type":"post","link":"https:\/\/saperemarketing.com\/clearpath\/our-take\/why-45q-matters-and-why-its-not-enough\/","title":{"rendered":"Why 45Q Matters – and Why It\u2019s Not Enough"},"content":{"rendered":"\n

This blog has been updated. Previously posted on March 22, 2018 by Rich Powell and Justin Ong<\/em><\/p>\n\n\n\n

One of the most critical clean energy incentives available today is the 45Q tax credit. Recent modifications raised the incentive for heavy industry and power carbon capture operators from $50 per ton to $85 per ton of CO2<\/sub> and up to $180 per ton for direct air capture (DAC) \u2013 think machines that selectively vacuum CO2<\/sub> out of the air \u2013 sequestration projects. Additionally, the legislation lowered capture thresholds and extended the construction windows for projects looking to take advantage of the tax credit.<\/p>\n\n\n\n

The 45Q tax credit now represents the most aggressive policy driver for the deployment of carbon capture, utilization, and storage (CCUS) across the globe. This incentive will further U.S. leadership by accelerating a network of new CCUS projects from existing and new coal and natural gas plants, as well as industrial facilities that produce a range of U.S. products.<\/p>\n\n\n\n

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CCUS Projects Are in Development Across the Country<\/span><\/p>\n\"\"\n

Map: CCUS projects are in development across the country for biofuels, cement, direct air capture, heat and power, hydrogen, heavy industry, storage, and other applications.<\/p>\n<\/div>\n\n\n\n

For background, Congress first established the 45Q incentive as part of the Energy Improvement and Extension Act of 2008. Over the next decade, it became clear that the incentive was not driving the level of investment and innovation that policymakers envisioned, leading to a bipartisan effort to make the credit more attractive for private investment. In 2018, recognizing that something needed to be done, Congress updated 45Q, increasing the credit value, lowering capture eligibility thresholds, and allowing DAC to be eligible for the incentive. The industry experienced additional gains when the Energy Act of 2020 established the research and demonstration programs for carbon capture that would ultimately be funded by the Infrastructure Investment and Jobs Acts (IIJA). IIJA infused nearly $12 billion to develop the full carbon capture supply chain, from capture to transportation and storage. This was a huge win for American technology leadership. Among other changes, the recent update allowed project developers to elect to have direct pay for the first five years of a project’s life, eliminating the need to seek funds from the tax equity market \u2013 which can be very costly.<\/p>\n\n\n\n