Treasury and the IRS issued Notice 2026-50 to provide an alternative compliance pathway if EPA's electronic reporting system is unavailable. The guidance extends an earlier safe harbor beyond carbon dioxide stored in 2025 and expands it to qualified carbon dioxide used in enhanced oil or natural gas recovery projects.

The guidance also allows the safe harbor to be used in determining whether previously claimed credits must be recaptured—or effectively repaid—because stored carbon has leaked into the atmosphere.

Stakeholders also told Treasury and IRS that enhanced oil and gas recovery projects could face significant costs, schedule constraints and compliance issues if they had to shift from EPA's Subpart RR reporting standard to other available standards.

The potential gap stems from EPA's September 2025 proposal to eliminate most requirements of its Greenhouse Gas Reporting Program, including Subpart RR requirements for geologic sequestration of carbon dioxide. Under Subpart RR, covered facilities develop EPA-approved site-specific monitoring, reporting and verification plans and report how much carbon dioxide is geologically stored. Existing 45Q regulations rely on those requirements in determining whether captured carbon has been securely stored.

The new safe harbor applies when EPA does not make its electronic greenhouse gas reporting system available by March 31 following the applicable reporting year. Projects using it must continue complying with Subpart RR requirements as they existed Dec. 31, 2025, and have an applicable EPA-approved monitoring, reporting and verification plan. Instead of submitting the required annual report through EPA's system, a taxpayer submits it to an independent engineer or geologist registered or certified in a state for certification.

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"We are grateful to Treasury and IRS for providing greater certainty to taxpayers electing the 45Q tax credit with today's notice and extension of the safe harbor," Jessie Stolark, executive director of the Carbon Capture Coalition, said in a statement.

ENR reported in 2023 that Fluor Corp. was seeing an upturn in funding inquiries and project studies after the Inflation Reduction Act increased the 45Q credit for qualifying point-source projects from $50 to as much as $85 per metric ton. Fluor Vice President Curt Graham said then that 45Q had "fundamentally changed the revenue situation and return on investment" for carbon capture projects.

The safe harbor applies to qualifying storage beginning Jan. 1, 2025, through the end of the calendar year in which Treasury and IRS issue further interim guidance or proposed regulations addressing measurement, reporting and verification requirements.

Treasury and IRS also asked Aug. 14 whether the recently issued ISO 27914:2026 standard for geological carbon storage, or another methodology, could replace Subpart RR if EPA eliminates the reporting requirements. Comments are due Oct. 30.