Carbon capture and storage (CCS) is receiving increasing attention for its potential to help address climate change. More and more widely, people are realizing that addressing climate change will require not only an acceleration of efforts to reduce emissions, but also the deployment at scale of technologies to remove carbon from the atmosphere and securely store it.  

In 2018, the United States expanded and enhanced its federal carbon capture "45Q" tax credits. The new 45Q legislation includes provisions sought by carbon capture supporters, including added eligibility for direct air capture and non-EOR (enhanced oil recovery) CO2 utilization and conversion, increased incentive levels and a credit extension.1

This update has spurred hopes of accelerated deployment of carbon capture in the U.S.  The International Energy Agency (IEA) and the MIT Technology Review have suggested that these tax credits could trigger a surge in carbon capture investment.  

However, the Internal Revenue Service (IRS) is still developing guidance for the updated credits, creating uncertainty and potentially delaying projects. This summer, the IRS solicited public comments on key questions for implementation of the 45Q credits. A much-debated issue in the Request for comments is whether the new definition of "secure geological storage" should apply to all CCS projects (including CO2-EOR) under the new 45Q or only CO2 geological storage projects as in the past. Some of the key questions include:  

  • What kinds of carbon storage should qualify?  
  • What happens if carbon escapes from previously secure storage?  

WRI reviewed responses on some key questions related to the definition of secure geological storage for all CCS under the new 45Q,2 whether other relevant programs and standards should be considered to demonstrate secure storage and what standards are needed for the possible recapture of credits for carbon that is no longer securely stored.  

ISO Standard for Carbon Capture 

The IRS is considering what monitoring, verification and reporting (MRV) should be required to demonstrate the "secure geologic storage" needed to claim the credit. Existing IRS rules require an MRV plan approved by the Environmental Protection Agency (EPA) under subpart RR of its greenhouse gas reporting rules, which applies to geologic sequestration. The IRS asked whether other technical criteria should apply in place of or in addition to the EPA's and whether other guidance, standards or regulations could be applied in this context. The IRS pointed to the International Organization for Standardization (ISO) as a possible source for such standards.  

The ISO is an independent, non-governmental international organization that develops specifications to ensure quality, safety, and efficiency of products, services, and systems. The ISO works through 164 national standards bodies, bringing together experts to share knowledge and develop voluntary, consensus-based International Standards for topics such as environmental management to food safety. The American National Standards Institute (ANSI) adapts ISO standards to the United States. ISO standards have been referenced in U.S. federal regulations when appropriate. For example, the U.S. Nuclear Regulatory Commission referenced ISO 1496 in its regulations on physical protection systems for the transport of special nuclear material.  

The ISO Carbon Dioxide Capture, Transportation and Geological Storage Committee (ISO/TC265)  has six working groups: capture; transport; storage; quantification & verification; cross-cutting; and enhanced oil recovery (Figure 1). Thirty countries and seven organizations participate in the work of the Committee.3 In January 2019, the committee published a standard for carbon dioxide storage using enhanced oil recovery (CO2-EOR), which covers all major parts of a CO2-EOR project including injection, operations, and project termination. (EOR is defined by the US Department of Energy as a series of techniques using special fluids to increase the oil-recovery factor beyond the improved oil recovery process.) This standard is not prescriptive; developed for use in a variety of regulatory and voluntary contexts, it rather provides a framework for addressing key issues. To use this standard for 45Q credits, the IRS would need to develop specific provisions in its regulations and guidance for its use, and therefore specifically requested comment on whether this ISO standard could be used to demonstrate secure geological storage.  

Responses to the IRS Request for Comment 

Stakeholders posted 98 comments as of August 8, 2019, representing a variety of organizations (Table 1). Of these, about 30 comments addressed questions relating to secure geological storage. Three areas of general agreement arose, though significant differences remain within those areas.

Industry NGO State and Local Governments Associations & Coalitions
  • BP
  • Shell
  • Occidental Petroleum
  • NRG Energy & JX Nippon Oil Exploration (joint comments)
  • Denbury Resources
  • BHP
  • Environmental Defense Fund
  • Natural Resources Defense Council & Greenpeace (joint comments)
  • Great Plains Institute
  • Resources for the Future


  • Governor of Wyoming.
  • Wyoming State Senator Eli Bebout
  • Town of Wright, WY
  • Carbon Capture Coalition
  • Carbon Utilization Research Council
  • Energy Advance Center
  • Biomass Power Association

1. The need for a clear framework for demonstrating "secure geologic storage" for all CCS.

To be effective as a climate solution, carbon capture projects will need to keep sequestered CO2 in place for centuries. Therefore, the need for an effective and workable framework to demonstrate "secure geological storage" is broadly recognized by the commenters, though they differ on what should be in such a framework. For environmental NGOs, EPA's subpart RR should be the minimum reporting requirements to demonstrate "secure storage" for primary geological storage and EOR storage. In other words, any alternative proposed by the IRS must be at least as stringent as Subpart RR. However, other than Occidental, no energy companies agreed that subpart RR should be required for EOR operations claiming 45Q credits. (Occidental is the largest CO2-enhanced oil producer in the U.S., operating more than half of the CO2 floods in the Permian Basin.) Occidental is also the only major oil company that has received the approval from EPA for its MRV plan for its CO2 EOR Operations.4

Some commenters, including NRDC/Greenpeace, Shell and BP, question whether the IRS can develop and manage its own "secure geologic storage" program, as its role is to ensure the project complies with tax law. These organizations encourage the IRS to work with EPA, the Department of Energy, and Department of Interior to develop the regulations and guidance. BP suggests that in the long term, governmental review should be no longer required after a standard is developed for a formulaic credit calculation.  

2. The potential for using the ISO standard as an option to demonstrate secure geological storage.

A central issue is what monitoring, verification and reporting requirements are needed to demonstrate secure storage. Different options have been put forward, and the IRS requested comment on the possible use of the ISO standard. Other options include continued use of EPA's Subpart RR requirements and the protocol under California's low carbon fuel standard (LCFS). These three options differ in terms of the amount and types of information required, with the ISO the least prescriptive (viewed in isolation from any additional national requirements).  

Subpart RR ISO 27916 LCFS CCS Protocol

All facilities subject to subpart RR are required to submit annual reports to EPA by September 30, 2012 reporting basic information on CO2 received in 2011. In subsequent years, annual reports are due to EPA by March 31.

These facilities will add data to their annual reports on the amount of CO2 that is geologically sequestered and annual monitoring activities once their EPA-approved MRV plans are implemented.

Documentation should be prepared at least annually and shall include: incremental and cumulative CO2 stored; underlying data, formulas, methodologies, including treatment of uncertainties; description of validation and verification procedures; and the source of each CO2 stream quantified as associate storage.

For crediting purposes, CCS operators are required to submit quarterly or annual reports throughout the lifetime of the project, depending on how often the project elects to undergo verification.

LCFS requires that operators must monitor the site for at least 100 years’ post-injection, where the minimum post injection site care period for Class VI wells is 50 years.5

Many commenters supported using the ISO standard as an option to demonstrate SGS, often with recommendations for how to improve its transparency, reporting and oversight. For example, the Carbon Capture Coalition (CCC) — which includes energy, industrial and technology companies; labor unions; and energy and environmental policy organizations — included model guidance that combines additional public transparency, reporting and oversight provisions that could complement the ISO standard. Similarly, the Carbon Utilization Research Council (CURC) — which includes coal producers, electric utilities and power generators, equipment manufacturers, national labor unions, and others — suggests that the ISO standard could be coupled with public transparency and third-party certification provisions.  

Other commenters are more clearly pro or con on the use of the ISO standards and the need for additional MRV. The Energy Advance Center, an association of energy and energy-related organizations, recommended that the IRS recognize the ISO standards for demonstration of SGS and strongly opposed requiring an EPA-approved MRV plan for EOR projects.6 On the other hand, EDF recommends the IRS continue to use the EPA Subpart RR requirements, since they believe it will not be possible to develop a sufficiently robust alternative any time soon. In their joint comments, NDRC and Greenpeace recommend that the IRS not allow other technical criteria, including ISO, in lieu of EPA's GHGRP subpart RR. They fear that the other system might create inconsistencies on the assessment of secure geological storage among different projects.   

Several environmental NGOs recognized California's Low Carbon Fuel Standard (LCFS) CCS Protocol as a sufficient alternative for reporting and crediting. In addition, CURC pointed to this protocol as one the IRS should examine for possible use. The protocol provides detailed requirements for site characterization and selection, project operation, monitoring, reporting, verification, post-injection and site closure. The LCFS protocol requires demonstrating long-term containment that go well beyond the requirements of EPA's Subpart RR program or the ISO standard, requiring a demonstration that 99 percent of the injected carbon dioxide will be geologically stored for over 100 years and requiring verification by a certified third-party professional geologist.  

3. Standards for recapture of credits

The 45Q legislation calls for recapture of credits if the carbon is no longer sequestered consistent with the 45Q requirements, and the IRS requested comment on what should trigger this requirement. Commenters agree on the need for clarity on this issue, and that recapture should be linked to the secure geologic storage MRV program. However, most industry groups recommend that that recapture should only apply for the three-year period following the year of filing of the relevant tax return, consistent with the audit and recapture requirements for many tax credits. Some also suggest that a "safe harbor" provision be included that would keep recapture applying if the injection operator is operating in compliance with IRS standards for secure geologic storage.6 NRDC and Greenpeace suggest in their joint comments that recapture should happen if the sequestered CO2 associated with those credits: 1) migrates outside the maximum monitoring area, 2) is released to the atmosphere, or 3) is removed from geological storage. The LCFS requires all CCS projects to contribute a percentage of LCFS credits to a Buffer Account at the time of the credits issued, which was suggested in the NRDC/Greenpeace joint comment.7  


The amendment to the 45Q tax credit represents a significant opportunity for CCS development, potentially positioning the US as a global leader in this field. However, the new legislation can be effective only if implemented properly. Given the urgency of climate challenges and the tight window of the current 45Q statute require construction before 2024, it is critical for IRS to issue timely regulations and guidance that are technically feasible and environmentally sound.

1The new 45Q provisions increased credits from $10/tonne for enhanced oil recovery (EOR) projects and $20/tonne for geological storage to $35/tonne and $50/tonne, respectively (plus inflation). The new law also eliminates the 75-million-ton cap and allows the developers to claim the tax credits for 12 years after the new equipment went into service. 

2 Secure geological storage includes safe and long-term CO2 storage at deep saline formations, oil and gas reservoirs, and unmineable coal seams.

*3For more information on the Technical Committee, see here. WRI serves as a liaison in the working group on cross cutting issues and played a vital role in publishing the ISO standard on “Lifecycle risk management for integrated CCS projects,” available here.

4See here.

*5Class VI wells are used to inject carbon dioxide (CO2) into deep rock formations for long-term underground storage. See EPA here.

6A safe harbor provision specifies that certain conduct be considered not a violation of a law or regulation.

*7Under the LCFS, CCS projects must contribute a percentage of the credits they generate to a Buffer Account which provides a reserve that can be drawn on to maintain environmental integrity in the event of CO2 leakage.