December 08, 2020

Manchin, Whitehouse, Barrasso, Cramer, Hoeven, Smith, Capito Introduce 45Q Legislation

Washington, DC – U.S. Senators Joe Manchin (D-WV), Sheldon Whitehouse (D-RI), John Barrasso (R-WY), Kevin Cramer (R-ND), John Hoeven (R-ND), Tina Smith (D-MN) and Shelley Moore Capito (R-WV) yesterday introduced the 45Q Carbon Capture Utilization and Storage (CCUS) Tax Credit Amendments Act of 2020—legislation that makes targeted statutory changes to maximize the utility of the credit enacted as part of the Bipartisan Budget Act of 2018. These narrow, discrete improvements will ensure that the credit is utilized to its full potential to create manufacturing, construction, and engineering jobs; preserve coal and natural gas jobs; and prevent carbon dioxide emissions while even facilitating the reduction of carbon dioxide that is already in the atmosphere.

“The 45Q tax credit is an integral part of commercializing the carbon capture, utilization, and sequestration technologies that will play a critical role in reducing emissions. Two years after the enactment of the FUTURE Act, the IRS has yet to issue final guidance necessary for these projects to secure financing and break ground. In light of the delays, this bill will ensure those projects have sufficient time to take advantage of the 45Q tax credit. Doing so will help us address the global climate challenge, create jobs, and maintain our nation’s role in leading the way in energy innovation,” Senator Manchin said.  

“Our bipartisan FUTURE Act was a win for our climate and the promising new carbon capture technologies looking to gain a foothold in the market,” said Senator Whitehouse. “This bill extends the credit for carbon capture, boosting technologies that remove carbon directly from the atmosphere and cutting carbon pollution at industrial facilities. I am pleased to continue this important bipartisan work with Senators Capito and Barrasso."

“Carbon capture technologies hold the key to reducing carbon emissions and creating new jobs in Wyoming,” said Senator Barrasso. “The 45Q tax credit will spur advancements in the coal industry, advance our environmental goals, and lead to the development of new commercial uses for carbon emissions. Extending this credit will provide much needed relief and certainty for carbon capture projects who have been impacted by the COVID-19 pandemic. It will also help make sure America remains the global leader on this important energy technology.”

“North Dakota is leading the way in the development of clean, reliable energy by investing and applying carbon capture and use technologies to our lignite, oil, and ethanol facilities. Our bill will allow our innovators to get the most out of the tax credits we created, incentivizing further investments and ultimately lowering emissions,” said Senator Cramer. “I appreciate Senator Capito and Senator Whitehouse’s continued leadership on this issue and urge my colleagues to support our bipartisan legislation.”

“This legislation would make the 45Q and 48A tax credits more accessible and benefit our coal producers, helping them to better take advantage of these critical revenue streams through the implementation of CCUS technology,” said Senator Hoeven. “These tax credits are a central part of our efforts to ensure our nation can reduce emissions while continuing to harness its abundant coal resources, which provide the affordable and reliable power that homes and businesses rely on every day.”

“We need to be doing everything we can to reduce greenhouse gases in the atmosphere,” said Senator Smith. “Our bipartisan legislation, when coupled with extensions of other clean energy tax credits, will provide a win-win: good for our environment and good for our economy.”

“In the time since our bipartisan group of Senators came together to create the FUTURE Act—one of the most significant climate policies in U.S. history and certainly that with the most job creation and preservation potential—the economic situation in our country has completely changed,” said Senator Capito. “Since that time, we have not rested on our laurels. Instead, we have continued to engage with our industry, environmental, and labor stakeholders to ensure that the regulatory guidance implemented congressional intent and to look at next steps on how to maximize the return on these taxpayer investments, especially as we recover economically from COVID-19. The 45Q CCUS Amendments Act reflects the targeted, consensus-based changes called for by our stakeholders. These small modifications, following the models of previous energy policies that are supported by members of both parties for now well-established industries, will make a big difference in putting American innovation to work growing our economy and combatting climate change in a responsible way, regardless of the current economic circumstances.”  

Specifically, the legislation:

1.     Extends the tax credit’s “start construction date” by five years. Doing this will make up for the more than two years of credit eligibility lost due to the delays in the Internal Revenue Service (IRS) finalizing the regulator guidance and aligns the 45Q credit with the expiries of other energy credits.

2.     Allows the 45Q credit to offset tax obligations due to the Base Erosion Avoidance Tax (BEAT). BEAT is a form of alternative minimum tax for companies. Making 45Q eligible to offset BEAT liabilities will reduce obstacles to utilization of the credit.

3.     Allows for the direct payment of the credit. This is essential to ensure the maximum effect of the credit in the wake of the recent economic downturn resulting from COVID-19.

To view a one-pager on the legislation, click here.

To view bill text, click here.