Treasury and IRS, in 2021, issued final rules (TD 9944) for implementing the Carbon Oxide Sequestration Tax Credit under Sec. 45Q of the Internal Revenue Code. The regulations answer many open questions regarding the tax incentive for investing in carbon capture and sequestration projects and the use of qualified carbon oxide used for tertiary injectant in qualified enhanced oil and gas recovery. When taken together with earlier guidance released by the Treasury and IRS, a workable framework emerges for further developing and financing carbon capture projects. Subsequent guidance, along with legislative changes, has further clarified the credit requirements.

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