New Tax Break for Mines: Methane Capture Credit Kicks In After 2024, Requires Pipeline Use

The “Methane Reduction and Economic Growth Act” is looking to change the game for how mining operations handle their greenhouse gas emissions, specifically methane. Starting in 2025, this bill rewrites a key tax credit—Section 45Q of the Internal Revenue Code—to push mines to capture methane that would otherwise vent straight into the atmosphere. Essentially, it swaps out the existing rules for carbon capture and applies them directly to methane from mines, offering a credit if they can prove they’re catching the gas.

The New Rules for Mining Emissions

This isn’t a free pass; the bill sets some specific ground rules for who qualifies. To claim the credit, a mining facility—which could be an active, abandoned, or closed mine—must start construction on both the source (like a vent shaft) and the capture equipment before January 1, 2036. Furthermore, the facility has to capture at least 2,500 metric tons of methane (measured in CO2 equivalent) every tax year. This threshold means the credit is realistically aimed at larger operations or those with significant emission problems, potentially leaving smaller mines out in the cold.

What Do You Do With the Captured Gas?

This is where the bill gets specific about the real-world impact. The tax break hinges entirely on what happens to the methane after it’s captured. You can only get the credit if the gas is either injected into a pipeline system that meets federal safety standards (49 CFR section 192) or if it's used immediately to produce heat or energy. The catch on the energy use is that you can only release a “tiny, minimal amount of methane” in the process. This provision effectively replaces the old rule that allowed the credit for methane used in enhanced oil recovery and then stored underground. Now, the incentive is focused on getting that gas into the energy supply chain or directly burned for power.

The Trade-Offs for Taxpayers and Industry

For the environment, this is a clear win: methane is a potent greenhouse gas, and capturing it from mines, especially abandoned ones, is a significant positive step. However, the bill creates a very specific infrastructure pathway. By requiring captured methane to go into regulated pipelines or be used directly for energy, the bill heavily favors companies with the capital and existing infrastructure to make those connections. For a small or remote mine, meeting the 2,500-ton threshold and then building the necessary pipeline connection or power generation facility might be too high a hurdle, despite the tax credit. This structure could concentrate the benefits among larger entities already positioned near existing gas transport routes. These changes apply to all qualified methane captured after December 31, 2024.