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• Extension and expansion of the 45Q tax credit for carbon capture, utilization, and
sequestration (CCUS). The law extends the existing 45Q tax credit, adds an enhanced
credit for direct air capture (DAC), and lowers the carbon capture threshold requirements
for certain facilities to benefit from the credit. Facilities meeting prevailing wage and
registered apprenticeship requirements can qualify for bonus credits. This tax credit
complements funding in the Bipartisan Infrastructure law for CCUS and DAC, including
$2.537 billion for the Carbon Capture Demonstration Projects Program, $937 million for
Carbon Capture Large-Scale Pilot Programs, and $3.5 billion for Regional Clean Direct
Air Capture Hubs.

• $1.55 billion to cut methane pollution from oil and gas industry operations. EPA
received $1.55 billion to provide financial and technical assistance to accelerate the
reduction of methane and other greenhouse gas emissions from petroleum and natural gas
systems by improving and deploying new equipment, supporting technological
innovation, permanently shutting in and plugging wells, and other activities. In addition
to these financial incentives, the Inflation Reduction Act imposes a waste emissions
charge on facilities with methane emissions that exceed a certain threshold. This EPA
program complements nearly $4.7 billion in the Bipartisan Infrastructure Law to plug and
remediate orphaned oil and gas wells on Tribal, federal, state, and private lands.

• $38.5 million to implement the American Innovation and Manufacturing (AIM) Act,
a bipartisan law to phase down the production and consumption of hydrofluorocarbons
(HFCs), maximize reclamation and minimize releases from equipment, and facilitate the
transition to next-generation technologies through sector-based restrictions.

Programs Covered in This Chapter

IRA Tax
Agency Section Code Program Name Amount
Section
Department of the Treasury 13104 45Q Credit for Carbon Oxide Sequestration
Advanced Industrial Facilities
Department of Energy 50161 - $5,812,000,000
Deployment Program
Environmental Protection Agency 60113 - Methane Emissions Reduction Program $1,550,000,000
Environmental Protection Agency 60109 - Implementation of the AIM Act $38,500,000

The Credit for Carbon Oxide Sequestration (45Q) is eligible for direct pay. Section 13801
of the Inflation Reduction Act, adding Section 6417 of the Internal Revenue Code, extends many
of the law’s tax incentives, including the 45Q credit, to entities that generally do not benefit from
income tax credits, such as state, local, and Tribal governments and other tax-exempt entities.
Specifically, these entities can elect to receive these tax credits in the form of direct payments.
Certain businesses also can elect to receive the 45Q tax credits in the form of direct payments.
The 45Q tax credit also is transferable. Section 13801 adds Section 6418 of the Internal
Revenue Code and makes certain tax credits transferable. Taxpayers that are generally ineligible
for direct payment of credits may transfer all or a portion of certain credits to an unrelated party
in exchange for cash.

68 B U IL D IN G A C L E A N E N E R G Y E C O N O MY
G U ID E B O O K | J AN UARY 20 2 3 | VE RS I O N 2