Following its introduction, the 45Q Repal Act was referred to the House Committee on Ways and Means. No other action has been taken on the legislation to date.
The 45Q tax credit was first established in 2008. It was later expanded and extended by several pieces of legislation, most notably the Bipartisan Budget Act of 2018 and the Inflation Reduction Act of 2022.
The value of the 45Q tax credit varies depending on project type and currently ranges from $60 per metric ton to $180 per metric ton. The highest value credit is available for the secure geologic storage in saline or other geologic formations of CO2 captured via direct air capture technology. The lowest value of the credit is available for CO2 captured from industrial or power operations and used in the production of useful products, such as fuels or chemicals, or used in enhanced oil and gas recovery.
Some U.S. ethanol producers are currently benefitting from the 45Q credit by capturing and permanently sequestering CO2 generated during the fermentation process. Several other plants have CCUS projects in various stages of planning and construction. In addition to allowing such producers to claim the 45Q credit, CCUS projects at these plants also helps lower the carbon intensity (CI) of a facility’s ethanol production, allowing producers to access higher value markets.
In announcing the introduction of the 45Q Repeal Act on March 10, Perry claimed the legislation “will reduce overregulation and fraud, and has the added benefit of terminating a wasteful tax credit that will can now negotiate for real tax breaks in the pending reconciliation package.” Perry went on to claim that the “45Q ta credit subsidies technologies that serve no purpose beyond distorting energy markets.”
