Winston & Strawn attorney Scott Delaney offered his insights on the Inflation Reduction Act (IRA) sections 45Q and 45Z in a recent bylined article featured in Hart Energy. 

The Risks and Benefits of the IRA’s 45Q, 45Z carefully breaks down the section changes while discussing recent interest in energy transition and renewable energy projects investments, and the credits and tax implications that may apply. 

“Section 45Q of the IRA provides a tax credit for qualified carbon oxide (COx) captured and either securely stored in underground geological formations or reused for specified purposes,” Mr. Delaney writes. “Section 45Z of the IRA provides a tax credit for production of low-emissions transportation fuels, including low-carbon ethanol, biodiesel and sustainable aviation fuels.” 

Mr. Delaney details three important legal considerations: creating a framework for elections, sharing in the incentives’ upsides and allocating risk of recapture. 

“The tax incentives in the IRA provide an exciting opportunity for project developers in the clean energy industry in the U.S., but also create new types of uncertainty and risk.”