45Q Tax Credits & LCFS Policy

Understanding the financial incentives driving carbon capture innovation

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45Q Calculator

Capture Type

Storage Type

Annual Capture (tons CO₂)

Project Duration (years)

$85/ton

Credit Rate

$8,500,000/year

Annual Value

$85,000,000

Total Project Value

* Calculations based on current IRA rates. Actual values may vary based on prevailing wage and apprenticeship requirements.

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The Section 45Q tax credit, significantly enhanced by the Inflation Reduction Act (IRA) of 2022, provides substantial financial incentives for carbon capture projects in the United States.

Current 45Q Rates (Post-IRA)

Industrial Facilities & Power Plants:

$85/ton - Geological storage
$60/ton - EOR or qualified uses

Direct Air Capture (DAC):

$180/ton - Geological storage
$130/ton - EOR or qualified uses

Increased Credit Values

Substantial increase from pre-IRA levels

Extended Deadline

Construction must begin by January 1, 2033

Lower Thresholds

12,500 tons/year (industrial), 1,000 tons/year (DAC)

Direct Pay & Transferability

Easier monetization of credits

The LCFS is a market-based program in California designed to reduce the carbon intensity (CI) of the state's transportation fuels.

How LCFS Works

Annual CI benchmarks set by California Air Resources Board (CARB)
Credits generated for fuels below benchmark, deficits for those above
Credit trading market creates financial incentives
CCUS projects can generate credits by capturing CO₂ from fuel production

Stacking Opportunity: LCFS credits can be combined with 45Q tax credits for additional revenue streams.

45Q Credit Values: Pre-IRA vs Post-IRA

Industrial/Power

Pre-IRA

$35-50/ton

Post-IRA

$60-85/ton

Direct Air Capture