Inflation creates new urgency for passage of 45Q enhancements

The Clean Air Task Force advocates for increasing the 45Q tax credit to $85 per tonne for carbon capture and $180 per tonne for DAC, while indexing these values to inflation from 2020 to prevent economic erosion. The brief suggests that these enhancements, combined with the Infrastructure Investment and Jobs Act, could lead to a 13-fold increase in carbon capture projects by 2031, sequestering between 72 and 125 million tonnes of CO2 annually.

• Increasing the 45Q credit to $85 per tonne for carbon capture and storage and $180 per tonne for direct air capture (DAC) is necessary to make projects in hard-to-decarbonize industries economically viable, as the current $50 per tonne rate is insufficient.
• High inflation threatens to erode the real value of the 45Q credit by nearly 30% by 2026 if it is not indexed to inflation using 2020 as the base year from the date of enactment.
• The implementation of a 'direct pay' option would increase market efficiency and reduce the cost of capital by allowing taxpayers to claim credits as an overpayment of taxes rather than relying on tax equity partners.
• Proposed policy changes, including extending the construction deadline to 2032 and lowering emissions eligibility thresholds (to 18,250 tonnes for power plants, 12,500 for industrial facilities, and 1,000 for DAC), could result in a 13-fold increase in carbon capture projects.
• Raising the credit to $85 per tonne is estimated to create between 4,000 and 4,800 project jobs and between 2,500 and 3,600 operations jobs, with a total federal expenditure estimated by the Joint Committee on Taxation at $2 billion.

APA

Jaruzel, M., & Bright, M. (2022). Inflation creates new urgency for passage of 45Q enhancements. Clean Air Task Force. https://www.catf.us/2022/06/inflation-creates-new-urgency-for-passage-of-45q-enhancements/

Chicago

Jaruzel, Marc, and Matt Bright. Inflation creates new urgency for passage of 45Q enhancements. Clean Air Task Force, 2022. https://www.catf.us/2022/06/inflation-creates-new-urgency-for-passage-of-45q-enhancements/.

Wikipedia

{{cite report |last1=Jaruzel |first1=Marc |last2=Bright |first2=Matt |title=Inflation creates new urgency for passage of 45Q enhancements |publisher=Clean Air Task Force |date=3 June 2022 |url=https://www.catf.us/2022/06/inflation-creates-new-urgency-for-passage-of-45q-enhancements/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{jaruzel2022inflation, author = {Jaruzel, Marc and Bright, Matt}, title = {{Inflation creates new urgency for passage of 45Q enhancements}}, institution = {Clean Air Task Force}, year = {2022}, month = jun, url = {https://www.catf.us/2022/06/inflation-creates-new-urgency-for-passage-of-45q-enhancements/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }