Monetizing Your Carbon Emissions with 45Q Tax Credits
What ethanol producers need to know about these credits and the steps to take to determine if carbon capture, utilization and storage (CCUS) is a viable option
45Q is a section of the tax code that provides incentives, in the form of tax credits, to encourage companies to invest in carbon capture and storage solutions that reduce carbon emissions to the atmosphere.
This white paper provides details about how carbon capture works and how the tax credits could improve the profitability of your plant operations.
Captured carbon dioxide must be either stored underground in secure geologic formations, used for carbon dioxide-enhanced oil recovery or utilized in other projects that permanently sequester carbon dioxide.
A multi-phase approach is needed to inform the economic analysis, identify an appropriate storage location and ultimately construct and operate the well.
Plant owners interested in taking advantage of 45Q tax credits must determine whether it makes economic sense. Under the new tax code, the answer for many producers will be yes.
These steps take time, so plant owners interested in pursuing the 45Q tax credits should get started as soon as possible. Construction on new CCUS projects must begin before Jan. 1, 2026.
In carbon capture, utilization and storage, carbon dioxide is captured, compressed and dehydrated at the source. It is then transported to the injection facility and injected into a secure geologic reservoir for storage or into an oil reservoir for carbon dioxide enhanced oil recovery.
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