HR-1003 : Still Just a Bill

The "Enhancing Energy Recovery Act" (H.R. 1003) proposes changes to Section 45Q of the Internal Revenue Code of 1986, which concerns the carbon oxide sequestration credit. The main goal is to ensure equal treatment for different methods of using or utilizing qualified carbon oxide. Key provisions include:

• Revised Credit Structure:
  • Eliminates the separate credit category for carbon oxide used for enhanced oil or natural gas recovery without secure geological storage.
  • Establishes a unified framework where carbon oxide, whether stored geologically, used in enhanced recovery with storage, or utilized in other ways, is treated similarly for credit purposes.
• Credit Amounts:
  • Sets the applicable dollar amount to $17 for taxable years after 2024 and before 2027.
  • For years after 2026, the amount is $17 adjusted for inflation, using 2025 as the base year.
  • The $36 credit remains for carbon capture equipment that meets certain emission requirements.
• Technical Amendments:
  • Updates references within Section 45Q to reflect the revised structure.
  • Corrects a cross-reference in Section 6417(d)(3)(C)(i)(II)(bb) related to direct pay elections for the credit.

In essence, the bill aims to simplify and equalize the carbon oxide sequestration credit, promoting all qualified uses of captured carbon oxide with a focus on secure storage and utilization. The changes apply to taxable years beginning after December 31, 2024.