Yesterday the Internal Revenue Service (IRS) shared instructions for taxpayers who want to claim credit for sequestration of carbon dioxide through its capture, removal or utilization.
Notice 2024-60 has detailed information about what the details that have to be included in the lifecycle analysis (LCA) report that accompanies the claims, as well as all the supporting documentation that has to be reviewed by the IRS and Energy Department for the credits to be approved. The relevant form to use is 8933.
The use of these credits was expanded under the Inflation Reduction Act which was enacted in 2022 and provides the main framework of support for companies looking to develop carbon capture, utilization and storage (CCUS) projects in the U.S.
The 45Q tax credit is the specific mechanism that companies have been using to develop these carbon management projects, with amounts of $85 per ton of CO2 captured and $180 per ton of CO2 removed available.
Relevant: What is The 45Q Tax Credit?
The credit is expected to be used by companies subject to new EPA rules that mandate all existing coal-fired power plants and all new natural-gas power plants that are active over 40% of the time to slash 90% of their CO2 emissions. To make this expense more palatable the credit was extended to have a 10-year duration
These EPA rules were recently challenged in a DC circuit court by a group of 25 Republican states along with a number of utilities and mining companies, and coal industry trade associations. The court said the rule should proceed and its opponents now plan to file an appeal with the Supreme Court.
Read more: U.S. Court Of Appeals Says EPA Emissions Rule For Natural Gas And Coal To Proceed
