New Section 45Q Tax Credit promotes energy friendly venture

According to Internal Revenue Bulletin 2009-44 highlights the new Section45Q.  Section 45Q was enacted by § 115 of the Energy Improvement and Extension Act of 2008, Pub. L. No. 110-343, 122 Stat. 3829 (October 3, 2008), as amended by § 1131 of the American Recovery and Reinvestment Tax Act of 2009, Division B of Pub. L. 111-5, 123 Stat 115 (Feb. 17, 2009). Section 45Q(a) provides that a credit for CO₂ sequestration (§ 45Q credit) is generally available to a taxpayer that captures qualified CO₂at a qualified facility and disposes of the CO₂ in secure geological storage within the United States, effective for CO₂ captured after October 3, 2008. As originally enacted, § 45Q(a)(1) provides for a credit of $20 per metric ton of qualified CO₂ that is captured and disposed of in secure geological storage, and § 45Q(a)(2) provides for a credit of $10 per metric ton of qualified CO₂ that is captured and used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project (EOR project). Section 45Q(a), as amended, provides additional requirements effective after February 17, 2009, that, for purposes of the $20 per metric ton credit under § 45Q(a)(1), the qualified CO₂ must not be used as a tertiary injectant; and, for purposes of the $10 per metric ton credit under § 45Q(a)(2), the qualified CO₂ used as a tertiary injectant must be disposed of in secure geological storage.

This new tax credit should promote the recovery of methane gas (up to 90%) and will provide a safe and conservation wise system to dispose of CO2 from power generation facilities and other carbon dioxide producers.

For information on this tax credit, contact Ray Dinning, JD, LLM at (757) 232-2619.