The Internal Revenue Code’s tax credit for carbon oxide sequestration, better known as 45Q, is fortunate to enjoy something very rare in Washington, DC, these days — generally bipartisan support. A host of changes aimed at bolstering the tax credit were included in the House-approved version of the Democrats’ central piece of legislation, the Build Back Better (BBB) Act, but it appears to have no way forward in the Senate — it was declared “dead” Tuesday by West Virginia Senator Joe Manchin, a must-have vote — which means it will likely be split into separate pieces, further complicating its path to passage. Several proposed changes to the 45Q tax credit have already been included in separate legislation, so they could still become a reality. In today’s RBN blog, we’ll look at some potential changes to the tax credit as well as measures that might restrict its use.
Part 1 of this series began with a look at carbon sequestration, the permanent storage of carbon dioxide (CO2) deep underground with the aim of keeping that greenhouse gas (GHG) permanently out of the atmosphere. If CO2 is captured and stored, that’s carbon capture and sequestration (CCS). If the CO2 is used for some other process before it’s stored, that’s carbon capture, use, and sequestration (CCUS). We looked at the CO2 value chain in Part 2, tracing CO2 from its initial sources of supply through enhanced oil recovery (EOR) and onto a variety of end uses. In Part 3, we examined the 45Q tax credit — what it is and how the credits are intended to work, along with a couple of notable examples where they do not. In Part 4, we looked at how those tax credits can add up for individual projects and how widely variable costs can often make carbon capture uneconomic.
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The 45Q rules provide a federal tax credit for disposing of qualified carbon oxide (QCO) in secure geologic storage or using it in certain approved ways. For the purposes of the tax credit, QCO is a carbon oxide — usually CO2 — that would have been released into the atmosphere if it had not been otherwise captured. Each tax credit is earned by capturing and sequestering 1 metric ton (MT) of QCO. The credit was added to the federal tax code in the Energy Improvement and Extension Act of 2008 and was expanded and extended in the Bipartisan Budget Act of 2018.
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About the song
“Way Down in the Hole” was written by Tom Waits and appears as the second song on side two of Waits' 10th studio album, Franks Wild Years. The song was used as the theme song for the HBO crime drama series, The Wire. The series ran for five seasons from 2002-08. In addition to Waits’ version, a different recording of “Way Down in the Hole” was used for each season, including versions by The Blind Boys of Alabama, The Neville Brothers, DoMaJe, and Steve Earle. Personnel on the Waits record were: Tom Waits (vocals, pump organ), Marc Ribot (guitar), Greg Cohen (bass), Michael Blair (drums, percussion), Ralph Carney (sax), and Angela Brown, Leslie Holland, and Lynne Jordan (backing vocals).
Franks Wild Years was recorded during 1987 at Universal Recording in Chicago, and The Sound Factory and Sunset Sound in Hollywood. The album contains songs written for a play of the same name. Several songs from the album have appeared in television shows, movies, and stage productions. Produced by Waits, the album was released in August 1987 and went to #115 on the Billboard Top 200 Albums chart.
Tom Waits is an American songwriter, singer, musician, and actor. He began his professional career performing on the San Diego folk circuit as a teen in the late 1960s. He moved to Los Angeles in 1972, where he worked as a songwriter before securing his first record deal with Asylum Records. He has released 17 studio albums, three live albums, seven compilation albums, two soundtrack albums, and 24 singles. His songs have been covered by many artists from different genres. Waits has appeared in over two dozen motion pictures. He was inducted into the Rock and Roll Hall of Fame in 2011. His last tour was in 2008 and his last LP, Bad as Me, was released the same year. He has a featured role in the movie Licorice Pizza, which was released in the U.S. in November 2021 and received an Oscar nomination for Best Picture.
