The Enhancing Energy Recovery Act modifies the federal tax credit for carbon dioxide sequestration under Section 45Q of the Internal Revenue Code. Currently, the law offers different tax credit amounts depending on how captured carbon is used—whether it's stored permanently underground or used in oil and gas recovery operations. This bill creates "parity" by establishing a single credit amount of $17 per metric ton for carbon dioxide that is either stored in secure geological formations or used in enhanced oil and gas recovery projects, with the credit indexed to inflation after 2026. The legislation also raises the credit to $36 per metric ton for carbon dioxide used in other specified utilization methods. These changes apply to tax years beginning after December 31, 2024, and primarily affect companies and industries involved in carbon capture, utilization, and storage technologies. The bill aims to provide more consistent financial incentives across different carbon management practices.
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