Carbon Capture Coalition Statement on the Extension of the Safe Harbor for 45Q Public Comment DEADLINE October 30, 2026

(Carbon Capture Coalition) On August 14, the US Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) announced they have modified and extended the available safe harbor for taxpayers who capture and store carbon in dedicated saline geologic formations until such time as Treasury provides further guidance or proposed regulations. The notice issued today provides a path forward for the continued election of the Section 45Q tax credit in calendar years 2025 and beyond, allows taxpayers to continue relying on Subpart RR to substantiate volumes of CO2 stored for the purposes of enhanced oil recovery (EOR), and addresses necessary recapture provisions.

This statement may be attributed to Jessie Stolark, Executive Director of the Carbon Capture Coalition, a collaboration of over 70 companies, labor unions, and nonprofits working to build support for carbon management policies.   

“We are grateful to Treasury and IRS for providing greater certainty to taxpayers electing the 45Q tax credit with today’s notice and extension of the safe harbor. Long-term certainty regarding Section 45Q eligibility is essential to reaching final investment decisions; even short-term gaps in guidance can create material uncertainty and deter investment. Today’s notice provides important clarity in several areas of the regulations governing the 45Q tax credit.

“Since the EPA announced the potential repeal of the US Greenhouse Gas Reporting Program (GHGRP)  last year, the Carbon Capture Coalition has been communicating to the administration and policymakers on both sides of the aisle that the GHGRP serves as the regulatory backbone of the federal Section 45Q tax credit, underpinning the integrity, transparency, and accountability of the program.  

“Therefore, EPA’s proposed repeal of the GHGRP created an urgent need for new guidance from the Treasury and IRS on requirements to quantify and verify secure geologic storage to qualify for the Section 45Q tax credit. With this in mind, the Coalition, in collaboration with others in the stakeholder community, proposed pragmatic solutions to the administration that would allow for the continued election of the tax credit in the absence of the GHGRP. 

“Today’s issuance of Notice 2026-50 aligns with many of our earlier recommendations and provides critical continuity and long-term certainty to taxpayers conducting all types of permanent geologic storage. While the EPA has long been a key component in verifying amounts of CO2 captured and stored, the safe harbor guidance importantly maintains the integrity of the tax credit through certification by an independent engineer or geologist.

“Specifically, the notice extends the applicability date of the earlier safe harbor, allows EOR operators to continue using the Subpart RR methodology, and addresses important recapture provisions.

“Notably, today’s notice does not address the development, submission, certification, or revision of a Subpart RR monitoring, reporting, and verification (MRV) plan. Subpart RR MRV plans are an important component of the regulatory framework of geologic storage and require monitoring for any potential surface leakage.

“We are pleased to see the Treasury and IRS act with urgency to ensure that the robust reporting elements contained in GHGRP’s Subpart RR are maintained through this safe harbor.  We look forward to engaging with the agency to preserve the long-term integrity of these vital reporting mechanisms, which support the further development and deployment of these essential technologies.”  

The Carbon Capture Coalition is a nonpartisan collaboration of companies, unions, conservation and environmental policy organizations, building federal policy support to enable economywide, commercial-scale deployment of carbon capture and storage technologies. This includes carbon capture, removal, transport, reuse, and storage from industrial facilities, power plants, and the ambient air. READ MORE

Excerpt from Engineering News Record: New guidance preserves an alternative compliance pathway for carbon capture projects and expands it to enhanced oil and gas recovery -- The action comes as the U.S. Environmental Protection Agency considers eliminating greenhouse gas reporting requirements used to document how much captured carbon dioxide is securely stored and qualifies for the credit.

Treasury and the IRS issued Notice 2026-50 to provide an alternative compliance pathway if EPA's electronic reporting system is unavailable. The guidance extends an earlier safe harbor beyond carbon dioxide stored in 2025 and expands it to qualified carbon dioxide used in enhanced oil or natural gas recovery projects.

The guidance also allows the safe harbor to be used in determining whether previously claimed credits must be recaptured—or effectively repaid—because stored carbon has leaked into the atmosphere.

Stakeholders also told Treasury and IRS that enhanced oil and gas recovery projects could face significant costs, schedule constraints and compliance issues if they had to shift from EPA's Subpart RR reporting standard to other available standards.

The potential gap stems from EPA's September 2025 proposal to eliminate most requirements of its Greenhouse Gas Reporting Program, including Subpart RR requirements for geologic sequestration of carbon dioxide. Under Subpart RR, covered facilities develop EPA-approved site-specific monitoring, reporting and verification plans and report how much carbon dioxide is geologically stored. Existing 45Q regulations rely on those requirements in determining whether captured carbon has been securely stored.

The new safe harbor applies when EPA does not make its electronic greenhouse gas reporting system available by March 31 following the applicable reporting year. Projects using it must continue complying with Subpart RR requirements as they existed Dec. 31, 2025, and have an applicable EPA-approved monitoring, reporting and verification plan. Instead of submitting the required annual report through EPA's system, a taxpayer submits it to an independent engineer or geologist registered or certified in a state for certification.

NR reported in 2023 that Fluor Corp. was seeing an upturn in funding inquiries and project studies after the Inflation Reduction Act increased the 45Q credit for qualifying point-source projects from $50 to as much as $85 per metric ton. Fluor Vice President Curt Graham said then that 45Q had "fundamentally changed the revenue situation and return on investment" for carbon capture projects.

The safe harbor applies to qualifying storage beginning Jan. 1, 2025, through the end of the calendar year in which Treasury and IRS issue further interim guidance or proposed regulations addressing measurement, reporting and verification requirements.

Treasury and IRS also asked Aug. 14 whether the recently issued ISO 27914:2026 standard for geological carbon storage, or another methodology, could replace Subpart RR if EPA eliminates the reporting requirements. Comments are due Oct. 30. READ MORE