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Deciphering the new tax credits on carbon capture investments

Source: greenbiz.com - May 10, 2018

Technology aimed at halting climate change, such as by capturing carbon dioxide emissions, long has been frowned upon by investors as not being financially viable, but times are changing. Ten major oil and gas companies have formed the Oil and Gas Climate Initiative investing in climate technologies through a $1 billion investment vehicle. Similarly, a group of the world’s richest billionaires has formed a private equity fund, Breakthrough Ventures, to invest billions of dollars in this field. In addition, the U.S. Bipartisan Budget Act of 2018 expands and enhances the tax credit under section 45Q of the U.S. Internal Revenue Code for carbon oxide recapture. This could have an important impact on the continued development of these "negative emissions" technologies and their commercial return.

The Bipartisan Budget Act of 2018 enacted Feb. 9 includes a new expanded version of Internal Revenue Code Section 45Q. The new 45Q continues the old credit for carbon capture equipment placed in service before Feb. 9 ("old equipment"). It provides a credit of $20 per metric ton (reduced to $10 for various commercial uses and adjusted for inflation) of qualified carbon oxide captured by a taxpayer using old equipment and disposed of by the taxpayer in secure geological storage.

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Category: General Business