SECTION 2. BACKGROUND

Section 45Q(a)(1) allows a credit of $20 per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of BBA, (ii) disposed of by the taxpayer in secure geological storage, and (iii) neither used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project nor utilized in a manner described in § 45Q(f)(5).

Section 45Q(a)(2) allows a credit of $10 per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility before the date of the enactment of BBA and (ii) either (I) used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project and disposed of by the taxpayer in secure geological storage, or (II) utilized by the taxpayer in a manner described in § 45Q(f)(5).

Section 45Q(a)(3) allows a credit of the applicable dollar amount (as determined under § 45Q(b)(1)) per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment which is originally placed in service at a qualified facility on or after the date of the enactment of BBA during the 12-year period beginning on the date the equipment was originally placed in service, (ii) disposed of by the taxpayer in secure geological storage, and (iii) neither used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project nor utilized in a manner described in § 45Q(f)(5).

Section 45Q(a)(4) allows a credit of the applicable dollar amount (as determined under § 45Q(b)(1)) per metric ton of qualified carbon oxide (i) captured by the taxpayer using carbon capture equipment

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at the point of disposal, injection, or utilization.

(2) Section 45Q(c)(2) provides that the term “qualified carbon oxide” includes the initial deposit of captured carbon oxide used as a tertiary injectant but does not include carbon oxide that is recaptured, recycled, and re-injected as part of the enhanced oil and natural gas recovery process.

.02 Qualified Facility . Section 45Q(d) provides that the term “qualified facility” means any industrial facility or direct air capture facility—

(1) the construction of which begins before January 1, 2024, and

(a) construction of carbon capture equipment begins before such date, or

(b) the original planning and design for such facility includes installation of carbon capture equipment, and

(2) which captures— (a) in the case of a facility which emits not more than 500,000 metric tons of carbon oxide into the atmosphere during the taxable year (Section 45Q(d)(2)(A) Facility), not less than 25,000 metric tons of qualified carbon oxide during the taxable year which is utilized in a manner described in § 45Q(f)(5),

(b) in the case of an electricity generating facility which is not a Section 45Q(d)(2)(a) Facility (Section 45Q(d)(2)(B) Facility), not less than 500,000 metric tons of qualified carbon oxide during the taxable year, or

(c) in the case of a direct air capture facility or any facility which is not a Section 45Q(d)(2)(A) Facility or a Section 45Q(d)(2)(B) Facility, not less than 100,000 metric tons of qualified carbon oxide during the taxable year.

.03 Industrial Facility . An industrial facility is a facility that produces a carbon oxide stream from a fuel combustion source, a manufacturing process, or a fugitive carbon oxide-emission source that, absent capture and disposal or utilization, would otherwise be released into the atmosphere as industrial emission of greenhouse gas or lead to such release. An industrial facility does not include a facility that produces carbon dioxide through carbon dioxide production wells from natural carbon dioxide-bearing formations.

.04 Direct Air Capture Facility . Section 45Q(e)(1) provides that the term “direct air capture facility” means any facility that uses carbon capture equipment to capture carbon dioxide directly from the ambient air. A direct air capture facility does not include any facility that captures carbon dioxide that is deliberately released from naturally occurring subsurface springs or using natural photosynthesis.

.05 Carbon Capture Equipment . Carbon capture equipment includes all components of property that are used to capture or process (for example, separation, purification, drying, and/or compression) carbon oxide until it is transported away from the qualified facility for disposal, utilization, or use as a tertiary injectant. For these purposes, carbon capture equipment includes a system of gathering lines that collect carbon oxide captured from a qualified facility or multiple qualified facilities that constitute a single project (as described in section 8.01 of this notice) for the purpose of transporting that carbon oxide away from the qualified facility or single project to a pipeline used to transport carbon oxide from multiple taxpayers and projects.