Carbon Capture and the Inflation Reduction Act

The Inflation Reduction Act (IRA) of 2022 significantly increases the 45Q tax credit to $85/tonne for industrial and power generation facilities and $180/tonne for direct air capture (DAC) when stored in saline geologic formations. These enhancements, alongside a lowered capture threshold for industrial emitters (from 100,000 to 12,500 tonnes per year) and DAC facilities (from 100,000 to 1,000 tonnes per year), aim to make carbon capture more accessible for hard-to-abate sectors like steel, cement, and refineries. The IRA also extends the construction window to January 1, 2033, and ties full credit realization to worker requirements, such as minimum wage. Based on these developments, the document urges Europe to establish its own Carbon Capture and Storage Strategy, develop CO2 transport and storage infrastructure, and implement supportive policy frameworks like carbon contracts for difference.

• The Inflation Reduction Act (IRA) increases the 45Q tax credit for CO2 captured and stored in saline geologic formations to $85/tonne for industrial and power generation facilities and $180/tonne for direct air capture (DAC).
• The IRA lowers the annual CO2 capture thresholds required to qualify for credits, reducing the requirement for industrial emitters from 100,000 tonnes to 12,500 tonnes and for DAC facilities from 100,000 tonnes to 1,000 tonnes.
• The IRA extends the deadline for projects to begin physical work to qualify for the credit to January 1, 2033, and provides credits for 12 years after equipment is placed in service, with inflation adjustments starting in 2027.
• Full realization of the increased credit values under the IRA is contingent upon meeting worker requirements, including a mandatory minimum wage.
• To maintain global competitiveness and decarbonize industry, Europe is advised to develop a dedicated Carbon Capture and Storage Strategy, accelerate CO2 transport and storage infrastructure, and expand policy schemes such as carbon contracts for difference.

APA

Clean Air Task Force (n.d.). Carbon Capture and the Inflation Reduction Act. https://cdn.catf.us/wp-content/uploads/2023/02/16093309/ira-carbon-capture-fact-sheet.pdf

Chicago

Clean Air Task Force. Carbon Capture and the Inflation Reduction Act. n.d. https://cdn.catf.us/wp-content/uploads/2023/02/16093309/ira-carbon-capture-fact-sheet.pdf.

Wikipedia

{{cite report |author=Clean Air Task Force |title=Carbon Capture and the Inflation Reduction Act |url=https://cdn.catf.us/wp-content/uploads/2023/02/16093309/ira-carbon-capture-fact-sheet.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cleanairtaskforcendcarbon, author = {{Clean Air Task Force}}, title = {{Carbon Capture and the Inflation Reduction Act}}, institution = {Clean Air Task Force}, url = {https://cdn.catf.us/wp-content/uploads/2023/02/16093309/ira-carbon-capture-fact-sheet.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }