IRS Clarity Revives U.S. CO₂ Pipeline Ambitions

Updated IRS 45Q guidance from 2024 continues to shape CO2 pipeline investment outlook as developers weigh opportunities amid ongoing permitting hurdles

11 Dec 2025

The US carbon pipeline sector is still adjusting to IRS Notice 2024-60, which clarified elements of the 45Q tax credit and offered developers greater certainty on monetisation, emissions measurement and financial structuring. Although the rules are no longer new, their influence on investment decisions remains strong as companies reconsider project plans under a more predictable incentive regime.

The July 2024 notice detailed how credit transfers and measurement standards would operate. Market analysts say this has helped revive discussions on partnerships, financing models and long-term network design. Developers are reassessing pipeline extensions, storage hubs and cross-sector links that now appear more financially viable.

Companies have avoided issuing direct reactions to the notice, but executives across the sector continue to stress that clarity on tax credits is essential for advancing large CO₂ transport systems. This has supported renewed interest in mergers, joint developments and potential corridor planning as firms position for a steadier policy base.

However, long-standing obstacles remain. Legal disputes, community opposition and permitting delays continue to slow progress in states such as Iowa and South Dakota, where several prominent proposals have faced regulatory setbacks. Operators warn that financial certainty cannot resolve local resistance, safety reviews or the slow pace of administrative approvals.

Still, many view the updated 45Q framework as an important shift for projects linking industrial sites, ethanol plants and power generators to geologic storage. If interest holds, the sector could see more active dealmaking as companies seek a position in a growing carbon management market.

For now, momentum is cautious. Clearer federal guidance has strengthened the foundation for long-term CO₂ infrastructure planning, but permitting and legal challenges continue to determine the speed of development.