Inflation Reduction Act’s benefits for the carbon capture industry

With the ink barely dry on the “Inflation Reduction Act,” there will be a lot written about this new legislation in the US. Here’s a memo from Gibson Dunn entitled “The Inflation Reduction Act Includes Significant Benefits for the Carbon Capture Industry.”

Here’s the intro:

Carbon capture, utilization, and sequestration (“CCUS”) projects around the United States received a significant boost from the Inflation Reduction Act of 2022 (the “IRA”). The IRA, which President Biden recently signed into law, includes approximately $369 billion in incentives for clean energy and climate-related program spending, including CCUS projects.

Notably, the IRA (1) substantially increases the availability of the federal income tax credits available for domestic CCUS projects (often referred to as “45Q credits”), (2) makes it easier for CCUS projects to qualify for 45Q credits, and (3) provides significant new avenues for monetizing 45Q credits. The IRA also extends the deadline to begin construction on 45Q credit-eligible projects from 2026 to 2033.

Taken together, these changes are anticipated to significantly increase the number of CCUS projects that will enter service over the coming years.