On September 23, 2024, Sen. Elizabeth Warren (D-MA) and Rep. Ro Khanna (D-CA) led a letter to the Department of Treasury and the Environmental Protection Agency (EPA) concerning upcoming guidance on the 45Q tax credit for carbon oxide sequestration. The letter calls for additional safeguards in the tax credit’s implementation, including independent verification of captured carbon, improved coordination between the EPA and IRS, and enhanced transparency and recordkeeping to better protect communities and taxpayers. The letter was signed by Sen. Angus King (I-ME), Rep. Alma Adams (D-NC), Rep. Pramila Jayapal (D-WA), and Rep. Jan Schakowsky (D-IL).

The letter highlights key taxpayer safeguards TCS has long called for, including :

1. Independent, third-party verification of carbon sequestration, including for any leaks discovered.
2. Improved coordination between the IRS and EPA.
3. Stricter recordkeeping requirements and a 12-year recapture period for the 45Q credit.

The 45Q tax credit is estimated to cost taxpayers more than $30 billion by 2033. Without robust compliance and anti-fraud measures, the IRS will be unable to protect taxpayers and communities from financial mismanagement and the negative health and environmental impacts of carbon capture and sequestration (CCS). These protections are essential to help ensure the 45Q tax credit is used appropriately and doesn’t saddle taxpayers with costly long-term liabilities.

For more information on the 45Q tax credit and other federal support for CCS, check out the additional resources below:

• Section 45Q: Carbon Oxide Sequestration Credit
• Five Fast Facts about Oversight of the 45Q Tax Credit
• The 45Q Carbon Capture and Storage Tax Credit: Calling on the IRS for Increased Transparency and Accountability
• From Cradle to Grave: Taxpayer Subsidies Throughout a Carbon Capture and Storage Project’s Lifecycle