Carbon Capture Provisions in the Inflation Reduction Act of 2022

The Inflation Reduction Act of 2022 enhances the 45Q tax credit to make carbon capture and storage more accessible for hard-to-abate industries and direct air capture. Key changes include increased credit values, an extended construction window until 2033, the introduction of direct payment options, and lower capture thresholds for qualifying facilities.

• The Inflation Reduction Act (IRA) increases the 45Q tax credit values for carbon capture, provided that prevailing wage and apprenticeship requirements are met. For industrial and power generation facilities, the credit for storage in saline geologic formations rises from $50 to $85/tonne, and for utilization, it rises from $35 to $60/tonne. For direct air capture (DAC), the credit for saline geologic storage increases from $50 to $180/tonne, and for utilization, it increases from $50 to $130/tonne.
• The IRA extends the timeframe for projects to qualify for the 45Q credit, moving the commence-construction window seven years to January 1, 2033. The credit is available for 12 years after equipment is placed in service, with inflation adjustments starting in 2027 based on a 2025 base year.
• New financial mechanisms have been introduced to make the credit more accessible. Project developers can receive 45Q as a fully refundable direct payment; tax-exempt entities (including Tribes, municipalities, cooperatives, and states) can use this for the full 12 years, while for-profit entities are limited to five years. Additionally, credit recipients can transfer any portion of the credit to third-party tax-paying entities for non-taxable cash payments.
• The IRA lowers the minimum CO2 capture thresholds required for facilities to be eligible for the credit. For power generation facilities, the threshold drops from 500,000 to 18,750 tonnes per year, and for industrial facilities, it drops from 100,000 to 12,500 tonnes per year. DAC facilities see a reduction from 100,000 to 1,000 tonnes captured per year. Power generation facilities must also meet a capture design capacity of at least 75% of the CO2 from the unit installing the equipment.

APA

Clean Air Task Force (n.d.). Carbon Capture Provisions in the Inflation Reduction Act of 2022. https://cdn.catf.us/wp-content/uploads/2022/08/19102026/carbon-capture-provisions-ira.pdf

Chicago

Clean Air Task Force. Carbon Capture Provisions in the Inflation Reduction Act of 2022. n.d. https://cdn.catf.us/wp-content/uploads/2022/08/19102026/carbon-capture-provisions-ira.pdf.

Wikipedia

{{cite report |author=Clean Air Task Force |title=Carbon Capture Provisions in the Inflation Reduction Act of 2022 |url=https://cdn.catf.us/wp-content/uploads/2022/08/19102026/carbon-capture-provisions-ira.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cleanairtaskforcendcarbon, author = {{Clean Air Task Force}}, title = {{Carbon Capture Provisions in the Inflation Reduction Act of 2022}}, institution = {Clean Air Task Force}, url = {https://cdn.catf.us/wp-content/uploads/2022/08/19102026/carbon-capture-provisions-ira.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }