While not a regulation, the US federal government is incentivizing investment in carbon capture, utilization and sequestration (CCUS) via tax credits, as described in an amendment to Section 45Q of the Internal Revenue Code. The tax credit is computed per metric ton of “qualified” CO2 captured and sequestered or used, where “qualified” applies to carbon that would otherwise have been released to the environment. Recently amended as a result of the 2022 Inflation Reduction Act, key features include:

  • Applies to carbon capture that meets a Commence Construction Date before January 1, 2033
  • Applies to power plants that capture at least 18,700 metric tons annually, other facilities that capture at least 12,000 metric tons annually, and to Direct Air Capture (DAC) of at least 1,000 metric tons annually
  • “Other qualified use” of CO2 is limited to certain approved purposes
  • Eligibility to claim credit goes to the owner of the capture equipment
  • The tax claim period extends for 12 years from the in-service date

For qualified facilities and carbon capture equipment placed in service after December 31, 2022, the tax credits are as follows:


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CO2 Capture & Sequestration