The 45Q Tax Credit: A Game-Changer for Carbon Capture and Storage Projects
This post explores the recent trend of billionaires, corporations, and lawmakers buying up vast amounts of land and how it relates to the 45Q Tax Credit and a stock that is bound to profit.
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Carbon Brief
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Atlas Renewable Energy signs largest private solar PPA in Latin America. Atlas repeats partnership with Albras, the largest aluminum producer in Brazil. The deal is an unprecedented 21-year US dollar power purchase agreement and will help the carbon intensive aluminum producer become net-zero.
The 45Q Tax Credit
The recent trend of billionaires, corporations, and even lawmakers buying up vast amounts of land has caught the attention of many people. What could be behind this land-buying frenzy? Well, it all goes back to the 45Q Tax Credit that was added to the Inflation Reduction Act last August and went into effect this year.
The 45Q Tax Credit is an incentive for companies that capture and store carbon. Under the old law, companies could only write off $50 per ton of carbon captured. However, with the new law, companies can now write off up to $130 per ton of carbon captured. This change in the law has made it much more lucrative for companies to invest in carbon capture and storage projects.
Take the example of J.P. Morgan's recent purchase of timberland. The trees on the land absorb 500,000 tons of carbon each year. Under the old law, J.P. Morgan would have received $25 million in write-offs. However, with the new law, they can now receive $67.5 million a year in write-offs. This is a significant increase in their potential return on investment.
Origin Materials ($ORGN)
While regular investors may be limited in their ability to participate in this tax credit, there is still a way for retail traders to get in on the action. This is where Origin Materials Inc. comes in. Origin Materials has figured out how to manufacture materials like textiles, rubber, plastic, and asphalt not just carbon-free, but carbon negative.
What's interesting about this company is that they were one of the larger lobbyists for the 45Q tax credit. They have also secured a $9.8 billion backlog from companies that have pledged to be carbon neutral in the coming years. These companies include AT&T, Microsoft, Patagonia, Walmart, Amazon, General Motors, and many more.
Origin Materials' manufacturing facilities are set to open next month, and just one of their plants will be able to offset more than double the amount of carbon captured than JP Morgan's land can. This presents a huge opportunity for retail traders who are interested in investing in sustainable finance and supporting the fight against climate change.
This is not investment advice.