First Guidance on Carbon Capture Credits (45Q) Released
The Treasury Department issued its first guidance on a key tax credit for carbon capture projects last month, and projects producing algae biomass could be positioned to benefit. ABO worked with a large coalition to see the updated credit, known as 45Q, passed by Congress back in 2018.
Algae cultivation is an ideal way to capture industrial carbon dioxide emissions, essentially recycling the gas into new products that can have significant market value. A recent report in Chemical & Engineering News details how the 45Q credit is attracting interest among CO2 producers and those that can use the gas for manufacturing processes.
The new guidance gives project developers some certainty about how they might take advantage of the credit. Projects must begin before 2023, and must be completed within six years. For many projects these deadlines may already be too tight, and a number of groups, including ABO, will be asking Congress to legislate more time for these innovative efforts to get up and running.
This latest guidance is only a first step. The IRS is still working on another set of guidance documents that will be required before the credit can be claimed by a CCS project.
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