Iowa Legislator's Efforts Bolster Wind and Solar Industries Through Key Tax Credit Provisions
Key Insights
Louisiana's Senate Bill No. 244 introduces stricter regulations for carbon capture and storage projects, including tighter eminent domain standards and increased unitization thresholds.
The federal One Big Beautiful Bill Act (OBBBA) reaffirms and strengthens the Section 45Q tax credit, maintaining key incentives for point-source capture and direct air capture.
Louisiana's Department of Energy & Natural Resources will be restructured, aiming to streamline administrative processes for CCS development.
The OBBBA also establishes parity for CO2 utilization, allowing projects that convert or reuse CO2 to qualify for the same tax credit values as dedicated geologic storage.
BATON ROUGE, LA & WASHINGTON D.C. – Recent legislative actions at both state and federal levels are poised to significantly reshape the landscape for carbon capture and storage (CCS) development, particularly impacting projects in Louisiana. On June 24, 2025, Louisiana Governor Jeff Landry signed Senate Bill No. 244 into law, introducing substantial updates to the state’s regulatory framework for CCS. This move, following the national reaffirmation of bipartisan support for CCS through the federal One Big Beautiful Bill Act (OBBBA) signed by President Donald J. Trump on July 4, 2025, creates a new operational environment for industry participants.
Senate Bill No. 244, a comprehensive 227-page amendment to the Louisiana Geologic Sequestration of Carbon Dioxide Act, introduces several key changes. Effective October 1, 2025, the Louisiana Department of Energy & Natural Resources (LDENR) will transition to the Louisiana Department of Conservation & Energy (LDCE), consolidating administrative powers under Secretary Tyler Gray. This restructuring aims to streamline permitting and oversight processes, fostering greater transparency for businesses engaging with the department.
However, the state legislation also imposes stricter requirements for project developers. The use of eminent domain for pipeline operators has been tightened, now requiring a “reasonable probability” that a project will serve the public as a common carrier, defined as transporting carbon dioxide for one or more third parties. Furthermore, the landowner approval threshold for unitization in CCS projects has been increased from 75 percent to 85 percent of owners in interest within a proposed unit. Expanded notice requirements mandate that applicants for Class V and Class VI wells conduct a “reasonable search and a good faith effort” to notify surface and subsurface stakeholders, including those within 500 feet of a proposed well, via certified mail upon application submission.
Concurrently, the federal OBBBA has provided crucial stability for CCS financing. Contrary to some prior concerns, the Act preserves and, in some instances, strengthens the Section 45Q tax credit. The credit for point-source capture remains at $85 per metric ton and for direct air capture (DAC) at $180 per metric ton for dedicated geologic storage. Significantly, the OBBBA introduces parity for carbon dioxide utilization, allowing CO2 used or converted into valuable products, or injected for enhanced oil or natural gas recovery, to qualify for the same credit values as permanently sequestered CO2. The Act maintains transferability and the 2027 inflation adjustment date with a 2025 base index year, while also introducing restrictions for Foreign Entities of Concern.
These legislative developments present a mixed but generally optimistic outlook for CCS in Louisiana. While the state’s new compliance and stakeholder engagement requirements may necessitate adjustments for developers, the robust federal tax incentives are expected to continue driving investment. The industry will closely monitor how these dual legislative forces shape the pace and scale of future CCS project deployment in the Gulf Coast region and across the United States.