Bicameral legislation introduced by U.S. Sens. Steve Daines (R-MT) and John Hoeven (R-ND) and U.S. Rep. Ryan Zinke (R-MT) on Wednesday would encourage the use of a carbon sequestration tax credit.
Under current law, developers can claim a tax credit for carbon sequestration. IRS guidance, however, subjects enhanced oil and gas recovery applications to regulations geared for geological storage because the guidance does not differentiate between different sequestration methods.
The CO2 Regulatory Certainty Act would take steps to make the Section 45Q tax credit more accessible to developers by aligning existing federal regulations and tax regulations.
“This bill will help ensure carbon captured from places like Colstrip using a Section 45Q tax credit can be used in a responsible, innovative and economical way to unlock made-in-Montana energy,” Daines said. “I am proud to join Rep. Zinke in stopping yet another misguided, and backward policy guidance from the Obama administration that obstructs commonsense innovative solutions to save Montana’s coal jobs and produce more American energy.”
Despite the administration’s “perpetual war on fossil fuels,” Zinke said, more coal is needed now than ever before to keep energy reliable and affordable.
“We as a Congress must find more ways to utilize Montana’s coal reserves with innovative, clean technologies,” Zinke said. “This is why the CO2 Regulatory Certainty Act of 2016 is crucial. The current 45Q tax credit, which incentivizes carbon capture technologies, is unusable to companies who want to sequester carbon through geological storage. I am supportive of 45Q, but I want for companies in Montana to actually be able to utilize it. We introduced this legislation to create new economic opportunities, protect our environment, and keep our coal, oil and gas communities viable for generations to come.”
The bill is a “straightforward fix” that would encourage more companies to use enhanced oil and gas recovery methods, Hoeven said.
“Clarifying the 45Q tax credit is a simple way to encourage more CO2 sequestration,” Hoeven added. “This legislation is good for taxpayers and good for the environment.”