Financial Incentives for Carbon Capture, Use and Sequestration – The Updated Section 45Q Program


While the fossil fuel industry continues to enjoy a number of tax incentives, a new generation of tax incentives were enacted in the early 2000s to promote the use of renewable energy. These include the expansion of the investment tax credit to include construction of solar energy generating facilities, the enactment of the so-called production tax credit, which encourages the use of wind to generate energy and the enactment in 2008 of Section 45Q which provides a tax credit for carbon sequestration. Section 45Q went through a major transformation in 2018 and it is now the major financial incentive targeted at decarbonization.

This article provides an in-depth discussion of the program’s incentives for carbon capture, use and sequestration.