Manchin Introduces Carbon Capture Legislation

Legislation would offer tax credit changes to cut amount of carbon sent into atmosphere

March 25, 2021

Washington, DC – Today,  U.S. Senator Joe Manchin (D-WV), Chairman of the Senate Energy and Natural Resources Committee, introduced legislation to reduce greenhouse gas emissions. His bill would make tax credits that encourage carbon capture projects more available and easier to use.

“Carbon capture, utilization, and sequestration (CCUS) is one of the most critical technologies to combat climate change globally. As we transition to a cleaner energy future, increased investment in CCUS and carbon removal technologies will reduce emissions, keep our energy affordable and reliable, and ensure our continued climate leadership. Enhancing the 45Q and 48A tax credits will encourage increased commercialization of CCUS and Direct Air Capture technologies across the nation while supporting clean energy, infrastructure, and manufacturing jobs across the country, including in traditional energy producing communities like those in West Virginia. I look forward to working with my colleagues on both sides of the aisle to ensure this legislation becomes law,” said Chairman Manchin.

Additional supporters of the Carbon Capture Utilization and Storage Tax Credit Amendments Act include U.S. Senator John Barrasso (R-WY), Ranking Member of the Senate Energy and Natural Resources Committee, and U.S. Senators Shelley Moore Capito (R-WV), Tina Smith (D-MN) Sheldon Whitehouse (D-RI), Kevin Cramer (R-ND), Brian Schatz (D-HI), John Hoeven (R-ND), Chris Coons (D-DE), Chuck Grassley (R-IA), Ben Ray Luján (D-NM), and Joni Ernst (R-IA). This legislation would make improvements to ensure that carbon capture utilization and storage (CCUS) credits are utilized to their full potential to create manufacturing, construction, and engineering jobs and reduce carbon dioxide emissions.

The CCUS Tax Credit Amendments Act would:

  • Extend “commence construction” by five years. The credits would be available to projects that begin by the end of 2030.
  • Allow for direct payment of the carbon capture credits. This is urgently needed for the majority of project developers who otherwise lack sufficient taxable income to fully utilize the credits.
  • Increase support for direct air capture (DAC) of CO2 from the atmosphere. This is key to the decarbonization of the heavy industry and manufacturing sectors and also allows us to pull carbon dioxide out of the atmosphere after it has been released.
  • Allow the 45Q credit to offset tax obligations due to the Base Erosion Avoidance Tax (BEAT). This bill will grant the same tax treatment to carbon capture, direct air capture and carbon utilization projects as is currently offered to wind and solar projects.
  • Revise 48A credit to make it work for CCUS retrofits. This bill includes modifications to the 48A tax credit aligned with the recent Carbon Capture Modernization Act.

You can access a summary of the bill here and full text of the bill here.