Clifford Chance
One Big Beautiful Bill Act: Updates to Section 45Q Tax Credits for CCS and Publicly Traded Partnerships for clean energy
24 July 2025
On July 4, 2025, President Trump signed into law An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14, better known as the One Big Beautiful Bill Act (OBBBA).
Among the many changes made by the OBBBA to federal tax credit regimes are key updates to the carbon oxide sequestration credit (Section 45Q Tax Credit) available under 26 U.S. Code § 45Q (Section 45Q). Specifically, the OBBBA adds credit value parity for certain types of carbon oxide utilization where facilities or equipment are placed into service after the date of the OBBBA, and introduces new limitations on the availability of Section 45Q Tax Credits for certain foreign or foreign-influenced entities.
Additionally, the OBBBA expands the definition of "qualifying income" under Section 7704 to include income derived from hydrogen storage, carbon capture, advanced nuclear, hydropower and geothermal energy. This change creates opportunities for new forms of investment in renewable energy projects, particularly those owned and developed by master limited partnerships that enjoy broad access to capital markets while retaining tax advantaged status.
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