Sens. Shelley Moore Capito, R-W.V.; Sheldon Whitehouse, D-R.I.; John Barrasso, R-Wyo.; Kevin Cramer, R-N.D.; John Hoeven, R-N.D.; Tina Smith, D-Minn.; and Joe Manchin, D-W.V.; on Dec.&nbsp; introduced the 45Q Carbon Capture Utilization and Storage (CCUS) Tax Credit Amendments Act of 2020. The bill makes targeted statutory changes to maximize the utility of the credit enacted as part of the Bipartisan Budget Act of 2018.
Specifically, the bill would extend the tax credit&rsquo;s start of construction date by five years, which the senators indicate will help make up for the more than two years of credit eligibility lost due to the delays in the Internal Revenue Service finalizing the regulator guidance. The extension would align the 45Q credit with the expiries of other energy credits. The bill would also allow the 45Q credit to offset tax obligations due to the Base Erosion Avoidance Tax, a form of alternative minimum tax for companies. In addition, it would allow for the direct payment of the credit, which would help ensure the maximum effect of the credit in the wake of the recent economic downturn resulting from COVID-19.
The legislation is separate from the Accelerating Carbon Capture and Extending Secure Storage through 45Q (ACCESS 45Q) Act, which was <a href="http://www.ethanolproducer.com/articles/17788/mckinley-veasey-introduce-accesss-45q-act" target="_blank">introduced </a>in the U.S. House of Representatives on Dec. 3. That bill aims to extend the deadline for start of construction by 10 years and would also provide a diret pay elective for the full value of the tax credit.
The Carbon Capture Coalition on Dec. 8 issued a statement in support of the Senate bill.
&ldquo;The Carbon Capture Coalition welcomes the introduction of the&nbsp;45Q Carbon Capture Utilization and Storage (CCUS) Tax Credit Amendments Act of 2020&nbsp;and thanks Senators Capito (R-WV), Whitehouse (D-RI), Barrasso (R-WY), Cramer (R-ND), Hoeven (R-ND), Smith (D-MN) and Manchin (D-WV) for their leadership and ongoing bipartisan efforts to advance carbon capture legislation,&rdquo; said Brad Crabtree, director of the CCC. &ldquo;This legislation combines the Coalition&rsquo;s top two legislative priorities, providing for both a direct pay option and a five-year extension of the federal Section 45Q tax credit for geologic storage and beneficial use of carbon captured from industrial facilities, power plants and through direct air capture. This bill also grants the same treatment to investors in carbon capture, removal and utilization projects as now enjoyed by investors in wind and solar projects by preventing the disallowance of 45Q credits under the Base Erosion and Anti-Abuse Tax, or BEAT Tax.
&ldquo;Introduction of this legislation comes immediately on the heels of last Thursday&rsquo;s House&nbsp;<a href="https://carboncapturecoalition.org/carbon-capture-coalition-statement-on-the-introduction-of-the-accelerating-carbon-capture-and-extending-secure-storage-act-through-45q-access-45q-act/">introduction</a>&nbsp;of the ACCESS 45Q Act (Accelerating Carbon Capture and Extending Secure Storage), by Representatives McKinley (R-WV), &nbsp;Veasey (D-TX) and others, which would extend 45Q for ten years and also implement a direct pay option. Efforts to advance these two bipartisan bills in both the House and Senate underscore growing support and urgency for securing crucial enhancements to the 45Q tax credit yet this Congress,&rdquo; he continued. &ldquo;The Coalition&rsquo;s 80-plus companies, unions and NGOs now urge congressional leaders to act immediately to include these critical 45Q provisions in year-end legislation now being negotiated and finalized.
According to the CCC, enactment of these 45Q tax credit provisions will help ensure that over 30 publicly-announced carbon capture, removal, use and storage projects now under development continue moving forward, preventing their cancelation due to COVID 19-related economic uncertainty in tax equity markets and the rapidly closing window to commence construction under 45Q and qualify for the credit. These measures will also significantly expand the number of projects in the development pipeline, boosting private investment and high-wage job retention and creation at a time when they are sorely needed by American workers and communities across the country struggling to recover from the pandemic.
&ldquo;A multiyear extension of 45Q is essential to ensuring that project developers and investors have the financial certainty and a sufficient time horizon to complete current projects and to initiate new ones,&rdquo; Crabtree added. &ldquo;Large-scale, capital-intensive carbon capture, removal, utilization and storage projects require years to plan, engineer, permit and finance, yet nearly three years of the original six-year authorization of the 45Q tax credit have been lost to delays in Treasury and IRS guidance and rulemaking. Project developers must now begin construction by the end of 2023 or fail to qualify for the credit&mdash;a risk exacerbated by the COVID-19 pandemic.
&ldquo;A direct pay option for 45Q would allow carbon capture project developers to receive an estimated payment on their tax return in lieu of monetizing the tax credit, making the incentive much more efficient, cost-effective and impactful over the longer term for both project developers and the federal government alike,&rdquo; he said. &ldquo;Direct pay would allow companies to finance projects, while bypassing the inefficiencies and additional costs burdens of tax equity transactions that unnecessarily constrain the very innovation and deployment that the 45Q tax credit aims to incentivize. In the near term, direct pay would also significantly reduce barriers faced by project developers in obtaining private investment due to the COVID-19 pandemic.&rdquo;
&nbsp;
&nbsp;
&nbsp;

2020/12/Capito_16074739752072_largethumb.jpg

2020/12/Capito_16074739752072_thumb.jpg

2020/12/Capito_16074739752072.jpg

The 45Q Carbon Capture Utilization and Storage Tax Credit Amendments Act of 2020 was introduced in the U.S. Senate on Dec. 7. The bill makes targeted statutory changes to maximize the utility of the credit.	

45Q CCUS Tax Credit Amendments Act of 2020 introduced in Senate

Related Stories

US ethanol and SAF industry leaders seek to intervene in legal challenge to EU SAF regulation

USGC highlights emerging new-use opportunities for ethanol at industry events in Singapore, Australia

USDA: Ethanol exports top 159 million gallons in March

EIA: Ethanol production up 3%, stocks down 1%, exports down 42%

Stabenow, Thompson release outlines for 2024 Farm Bill

Upcoming Events

Biodiesel Summit: Sustainable Aviation Fuel & Renewable Diesel

Carbon Capture & Storage Summit

45Q CCUS Tax Credit Amendments Act of 2020 introduced in Senate.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}