In the world of carbon offsets, here is an interesting thought. Biden’s Infrastructure Plan announced March 31 includes a proposal to
reform and expand the bipartisan Section 45Q tax credit, making it direct pay and easier to use for hard-to-decarbonize industrial applications, direct air capture, and retrofits of existing power plants.
For a short refresher, Section 45Q values a metric ton of qualified avoided CO2 emissions at $50 (for geologic capture/sequestration) or $35 (for other methods of capture/sequestration). As a tax credit, it only applies to the owner of the carbon capture/sequestration equipment or user of the captured CO2.
But changing to a “direct pay” model could open the doors to innovative revenue sharing arrangements between electricity producers, capture/sequestration technology providers and even other parties.
