SECTION 2. BACKGROUND

Section 45Q was enacted by § 115 of the Energy Improvement and Extension Act of 2008, Division B of Pub. L. No. 110-343, 122 Stat. 3765 (October 3, 2008), to provide a credit for the sequestration of carbon dioxide. Section 45Q was amended significantly by § 41119 of the Bipartisan Budget Act of 2018, Pub. L. No. 115-123 (February 9, 2018), to apply to carbon oxides, and most recently by § 13104 of the IRA.

Generally, the IRA modifies § 45Q by adjusting credit amounts; ¹ extending the deadline for beginning construction of a qualified facility from January 1, 2026 to January 1, 2033; broadening the definition of a “qualified facility” by reducing the required carbon capture thresholds; modifying the rules applicable to direct air capture (DAC) facilities and electric generating units; and providing a new election to restart the § 45Q credit period for qualified facilities at which carbon capture equipment is placed in service in an

1 Other amendments made by the IRA to § 45Q increase the credit amount if certain prevailing wage and apprenticeship requirements are satisfied. The IRA also provides an election for certain taxpayers to receive an elective payment or to transfer the credit under § 45Q. See Notice 2022-51 requesting comments on prevailing wage and apprenticeship requirements and Notice 2022-50 requesting comments on the elective payment and credit transfer elections. General comments pertaining to the prevailing wage and apprenticeship requirements should be submitted in response to Notice 2022-51. General comments pertaining to elective payment and credit transferability provisions should be submitted in response to Notice 2022-50.

November 21, 2022 482 Bulletin No. 2022–47

(2) What records or documentation do taxpayers currently maintain or could they create to substantiate the required capture amounts under § 45Q(d)(2)(B)? Could facility-level data reported to the EPA Greenhouse Gas Reporting Program (Suppliers of Carbon Dioxide source category; 40 CFR Part 98, subpart PP) be used by taxpayers to substantiate the required capture amounts?

(3) Which source or sources of information should the Treasury Department and the IRS consider in establishing the capacity factor and baseline carbon oxide production requirements under § 45Q(e)(2)?

(4) Using technology currently available to industry, how could project developers that incorporate carbon capture equipment into electric generating units demonstrate that the carbon capture equipment meets the 75 percent baseline carbon oxide requirement under § 45Q(d) (2)(B)(ii)?

(5) What records or documentation do taxpayers currently maintain or could they create to substantiate captured carbon oxide within a qualified electricity generating facility that contains multiple electric generating units?

(6) What clarifications are needed regarding the treatment of modifications to a qualified electricity generating facility that result in a significant increase or decrease in carbon oxide production and are chargeable to capital account?

.04 Credit Reduction for Tax-Ex- empt Bonds . Section 45Q(f)(8) includes a reduction for the § 45Q credit when tax-exempt bonds are used in the financing of the facility using rules similar to the rule under § 45(b)(3). What, if any, additional guidance would be helpful in determining how to calculate this reduction?

.05 Specific Technologies . What clarifications, if any, are needed regarding the classification of industry-specific or emerging technologies that qualify for the § 45Q credit?

.06 Please provide comments on any other topics related to § 45Q credit that may require guidance.