The Treasury Department and the IRS provided practical administrative rules for the carbon capture and sequestration tax credit.

Key Points:

..These rules are the third in a series of regulatory guidance issued by the IRS and are intended to propel the growth of the carbon capture and sequestration industry in the US.

..The guidance, issued in proposed form, covers topics of great importance to the industry, including how to comply with the secure geological storage requirement, how to transfer the tax credits from the capturing party to the sequestering party, and the scope of potential tax credit recapture in the event of a leak of carbon oxide.

..Industry participants have until August 3, 2020, to comment on certain key aspects of the proposed regulations, including the definition of “commercial markets.”

..For geological storage of carbon oxide through enhanced oil recovery, the IRS created the option to establish “secure geological storage” by following one of two permissible methods.