Key Contacts: Ryan Covington – Partner | Michael Byrd – Partner | Lev Gantly – Partner | Anna Hickey – Partner | Niall Donnelly – Partner | Jordan Baber – Counsel | Dearbhla Cantwell – Counsel | Max Loughrey – Senior Associate | Jordan Bingham – Associate |
Section 45Q of the Internal Revenue Code is a US federal income tax credit designed to incentivize the capture, removal and permanent storage of carbon dioxide. It has become one of the most consequential policy tools shaping the economics of carbon capture projects in the United States. The credit can materially influence how carbon capture projects are structured, including their siting, financing models and underlying commercial arrangements across the project value chain.
Our Climate Projects Group recently discussed how Section 45Q is influencing the structuring, financing and bankability of carbon capture and removal projects, particularly as developers scale DAC and BECCS solutions in the US market.
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