The Hill – BY RACHEL FRAZIN – 05/29/20 11:04 AM EDT
The IRS late Thursday provided guidance for expanding a tax credit that encourages the use of still-developing technology to remove carbon from the atmosphere.
The long-awaited update to the regulations for carbon capture tax credits follows a 2018 budget bill directing the IRS to offer the credits.
Treasury Secretary Steven Mnuchin said in a statement that the credit “incentivizes American businesses to invest in carbon capture technology and promotes safe and environmentally conscious storage for carbon oxides that would otherwise be emitted to the atmosphere.”
“These proposed regulations provide detailed guidance to implement this important incentive,” he added.
In 2018, Congress passed legislation to expand the tax credit, though companies looking to build carbon capture utilization and storage projects have been waiting on an IRS guidance for its implementation.
Brad Crabtree, the director of the Carbon Capture Coalition, which advocates for use of the technology, told The Hill in an interview Friday that the two years it took for the agency to issue the guidance could make it harder for companies to start construction on their projects by the deadline at the end of 2023 to take advantage of the credit.
“With less than four years to go, some projects will be challenged to meet that beginning construction deadline,” he said, adding that the delay and current economic downturn are “putting projects at risk for cancellation.”
He said, however, that he was pleased with many provisions in the proposal, which include certain monitoring and reporting requirements for the geologic storage of carbon; guidance for how to recapture credits if companies do not actually store the carbon; and the ability for companies to transfer tax credits to another investor.
“We think that there’s a lot of helpful clarity on all these things,” Crabtree said.