U.S. Senators Kevin Cramer and John Hoeven joined their colleagues in introducing the 45Q and 48A Carbon Capture Utilization and Storage (CCUS) Tax Credit Amendments Act of 2020, bipartisan legislation to make targeted changes designed to maximize the utility of the carbon capture tax credit.

“North Dakota is leading the way in the development of clean, reliable energy by investing and applying carbon capture and use technologies to our lignite, oil, and ethanol facilities. Our bill will allow our innovators to get the most out of the tax credits we created, incentivizing further investments and ultimately lowering emissions,” said Senator Cramer. “I appreciate Senator Capito and Senator Whitehouse’s continued leadership on this issue and urge my colleagues to support our bipartisan legislation.”

The improvements in this legislation ensure the credit is utilized to its full potential. Specifically, the bill:

Extends the tax credit’s “start construction date” by five years. Doing this will make up for the more than two years of credit eligibility lost due to the delays in the Internal Revenue Service (IRS) finalizing the regulator guidance and aligns the 45Q credit with the expiries of other energy credits.

Allows the 45Q credit to offset tax obligations due to the Base Erosion Avoidance Tax (BEAT). BEAT is a form of alternative minimum tax for companies. Making 45Q eligible to offset BEAT liabilities will reduce obstacles to utilization of the credit.

Allows for the direct payment of the credit. This is essential to ensure the maximum effect of the credit in the wake of the recent economic downturn resulting from COVID-19.

The bill is led by Senators Shelley Moore Capito (R-WW) and Sheldon Whitehouse (D-RI) with Senator Cramer and Senators John Barrasso (R-WY), Hoeven (R-ND), and Tina Smith (D-MN) joining as original cosponsors.

 

“This legislation would make the 45Q and 48A tax credits more accessible and benefit our coal producers, helping them to better take advantage of these critical revenue streams through the implementation of CCUS technology,” said Senator Hoeven. “These tax credits are a central part of our efforts to ensure our nation can reduce emissions while continuing to harness its abundant coal resources, which provide the affordable and reliable power that homes and businesses rely on every day.”

This is the latest development in Senator Cramer’s ongoing efforts – who has jurisdiction over this issue through his seat on the EPW Committee – to ensure the 45Q carbon capture tax credit is properly implemented and used to its full potential. His efforts include:

Introducing legislation to extend the 45Q carbon capture tax credit’s commence construction window; 

Leading a bipartisan effort to amend IRS guidance to allow carbon capture projects to have an additional year of safe harbor eligibility;

Bringing Energy Secretary Dan Brouillette to North Dakota to discuss this issue and others with North Dakota energy producers;

Using his seats on the Senate Banking Committee and Senate Budget Committee to work with the Treasury Department and Office of Management and Budget (OMB) officials to implement rulemaking guidelines for these credits; and Gathering support from North Dakota’s energy leaders for the Trump Administration’s efforts.