There’s a $95-per-ton gap sitting in the middle of the 45q tax credit that most people in carbon capture don’t talk about enough. Point-source capture, pulling CO2 out of a smokestack or industrial exhaust stream, earns $85 per metric ton. Direct air capture, pulling it out of the sky, earns $180. Same credit. Same tax code section. More than double the value.
That gap isn’t random. Congress built it that way because the two technologies are solving fundamentally different problems, and the economics of getting there couldn’t be more different.
What Makes DAC Worth $180 a Ton
Point-source capture works with concentrated CO2. A cement plant or ethanol facility produces exhaust gas that’s anywhere from 4% to over 90% carbon dioxide depending on the process. The capture technology grabs that CO2 before it leaves the facility. It’s hard engineering, but the concentration makes the thermodynamics workable.
Direct air capture is doing something far harder. Ambient air contains about 420 parts per million of CO2. That’s 0.042%. You’re pulling a trace gas out of the atmosphere using chemical sorbents or liquid solvent systems, and the energy cost is enormous. Current DAC runs $400 to over $1,000 per ton captured. At $180 per ton, the 45q tax credit covers less than half the cost for most projects. Without it, none of them pencil.
The policy logic is straightforward even if the engineering isn’t. Point-source capture prevents new emissions from entering the atmosphere. DAC removes CO2 that’s already there. One avoids a problem. The other reverses it. Congress decided the reversal was worth paying more for.
Why the OBBBA Made the Gap Even More Interesting
Before the One Big Beautiful Bill Act, there was a split inside the 45q tax credit that made EOR and utilization pathways less attractive than dedicated geologic storage. Point-source projects using CO2 for enhanced oil recovery earned $60 per ton. DAC projects using CO2 for EOR earned $130. The incentive pushed everyone toward pure sequestration, which limited flexibility.
The OBBBA eliminated that split. Now the credit pays the same rate regardless of whether the captured CO2 goes into a saline formation, gets used for EOR, or feeds an industrial utilization process. Point-source gets $85 across the board. DAC gets $180 across the board.
For DAC developers specifically, this was a major unlock. A 250,000-ton DAC facility generating $45 million per year in 45q tax credit value can now pair that with EOR offtake revenue without sacrificing $50 per ton in credit. That math opens up project sites near oilfields that would have been marginal before.
The Low Capture Threshold Nobody Expected
Here’s one that flew under the radar when the IRA first passed. The minimum annual capture requirement for DAC facilities is 1,000 metric tons. Compare that to 12,500 tons for general industrial facilities or 18,750 tons for power plants (with a 75% capture rate requirement on top of that).
A thousand tons. That’s small enough to qualify pilot-scale projects that wouldn’t come close to meeting the thresholds for any other 45Q category. It was a deliberate choice to let early-stage DAC developers access the credit while the technology matures, and it’s one of the reasons you’re seeing more DAC startups reach financial close than the cost curves alone would predict.
How DAC Credits Get Monetized
The 45Q tax credit is transferable under Section 6418, and it’s also one of the three credits (with 45V and 45X) that for-profit companies can elect to receive as a direct cash payment under Section 6417 for up to five years. Most DAC projects don’t have the tax liability to use credits internally, so the real choice is between direct pay at full value and transfer at a discount. These are capital-intensive startups burning cash, not profitable industrials. Transferability isn’t a nice feature. It’s the revenue model.
Pricing for DAC credits hasn’t fully matured the way 45X or solar ITC credits have, partly because so few projects are generating credits at commercial scale. But the structural advantage is clear. A buyer purchasing a $180 DAC credit at even a 10% discount is getting $180 of federal tax reduction for $162. A 10% discount yields the same return on any credit regardless of its per-ton rate, and 45X credits already trade at a 4% to 6% discount, which is a better return than 10%.
For anyone looking at the structural advantages of 45Q credits and the diligence involved, DAC represents the highest-value tier in the market. The compliance and verification requirements are real, but the per-ton economics are unmatched.
Conclusion
The 45q tax credit pays DAC projects more than double what point-source projects earn because the technology is harder, the costs are higher, and the climate impact is categorically different. Removing CO2 from the atmosphere isn’t the same as catching it at the pipe, and the tax code prices that distinction at $95 per ton. The OBBBA leveled EOR and storage rates. The 1,000-ton minimum keeps the door open for projects still scaling. If you’re financing or buying carbon capture credits, DAC is where the highest per-unit value sits and where the biggest risks live. Both things are true at the same time.
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