Enhancing Energy Recovery Act

The bill proposes significant amendments to Section 45Q of the Internal Revenue Code, which governs the carbon oxide sequestration credit. Its stated purpose is to ensure parity for different uses and utilizations of qualified carbon oxide by streamlining the existing credit structure. It achieves this by consolidating the categories for secure geological storage, enhanced oil or natural gas recovery, and other forms of utilization into a unified framework under subsection (a)(3). Under the revised Section 45Q, the applicable dollar amount for most qualified carbon oxide disposed of or utilized will be set at $17 per metric ton for taxable years beginning after 2024, subject to inflation adjustments in later years. For carbon oxide captured by direct air capture facilities , the credit amount will be $36 per metric ton. These changes simplify the credit system, applying a more uniform, albeit generally reduced, incentive across various carbon management strategies, and are effective for taxable years beginning after December 31, 2024.