Section 45Q Calculator
Welcome to this resource page which provides information on Section 45Q and instructions on how to use an Earthshift Global created calculator to estimate potential tax credits.
What is Section 45Q?
Section 45Q of the US tax code provides a performance-based tax credit for carbon management projects which capture carbon oxides (carbon dioxide and its precursor, carbon monoxide) from eligible industry and power facilities, as well as directly from the atmosphere.
To apply for the credit requires IRS form 8933.
According to the IRS, "To claim the credit for disposal of carbon oxide in secure geological storage or for use of carbon oxide as a tertiary injectant in an EOR or natural gas recovery project, prior to disposal in secure geological sequestration, the amount of carbon oxide must be measured at the source of capture and verified either at the point of disposal in secure geological storage or at the point of injection as a tertiary injectant in an EOR or natural gas recovery project. The amount of qualified carbon oxide is presumed to be the lesser of the amount measured at capture and the amount verified at disposal or injection unless it can be established to the satisfaction of the IRS that the greater amount is the correct amount.
To claim the credit for utilization of carbon oxide, the amount of qualified carbon oxide utilized by you is equal to the metric tons of qualified carbon oxide that you demonstrate, based upon an analysis of lifecycle greenhouse gas emissions (LCA), were (1) captured and permanently isolated from the atmosphere, or (2) displaced from being emitted into the atmosphere. The amount of qualified carbon oxide utilized by you for purposes of the carbon oxide sequestration credit can't exceed the amount of qualified carbon oxide measured at the source of capture.
Lifecycle greenhouse gas emissions and lifecycle analysis
The term “lifecycle greenhouse gas emissions” means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes) related to the full product lifecycle, including all stages of product and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished product to the ultimate consumer, where the mass values for all greenhouse gases are adjusted to account for their relative global warming potential according to Table A-1 of 40 CFR Part 98 subpart A. The amount of lifecycle greenhouse gas emissions measured by a lifecycle greenhouse gas analysis (LCA) is expressed in carbon dioxide equivalents (CO2-e).
Measurement
The measurement and written LCA report must be performed by or verified by an independent third party. The LCA report must be prepared in conformance with, and contain documentation that conforms to, the International Organization for Standardization (ISO) 14040:2006, Environmental Management—Life Cycle Assessment—Principles and Framework and ISO 14044:2006, Environmental Management—Life Cycle Assessment—Requirements and Guidelines, as well as a statement documenting the qualifications of the independent third party, including proof of appropriate U.S. or foreign professional license, and an affidavit from the third party stating that it's independent from you."
Free Calculator with Instructions
Earthshift Global works with clients to support their Section 45Q measurements and information required to complete the necessary forms. We have created a free calculator that is designed to generate a rough estimate of §45Q credit which may be obtained from CO2 capture and reuse. Note that while the data and structure are in line with the NETL CO2U LCA Guidance Document as modified by the §45Q addendum, the tool was not designed to create the high quality models required for §45Q submission.
Click here to download the calculator.
Click here to download the calculator use instructions.
Contact us if you have questions or would like additional support.