The Nickel Report

The International Organization for Standardization (ISO) has finalized and released a new version of ISO 27914 (ISO 27914:2026), the standard for underground storage of carbon dioxide in geological formations that do not produce hydrocarbons. 

This standard is of particular significance because it could provide an alternative mechanism enabling the carbon capture and sequestration (CCS) industry to claim Section 45Q carbon sequestration tax credits if the U.S. Environmental Protection Agency (EPA) finalizes its proposal from last fall to repeal the Greenhouse Gas Reporting Program (GHGRP). This would include Subpart RR of the GHGRP, reporting under which is currently required for certain carbon sequestration operations under Department of Treasury regulations for the Section 45Q carbon sequestration tax credit.

Currently, Subpart RR of the GHGRP must be used by Underground Injection Control (UIC) Program Class VI storage operators as part of demonstrating “secure geological storage” of carbon oxides to qualify for the 45Q tax credit. Subpart RR is the only reporting mechanism authorized under the Treasury regulations for reporting for Class VI storage operations. Thus, the concern has been that, if Subpart RR is eliminated, taxpayers would not be able to claim the Section 45Q tax credit for permanent sequestration unless an alternative standard is adopted.

The Internal Revenue Service (IRS) last December issued a “safe harbor” notice (IRS Notice 2026-1) stating that, if by June 10, 2026, EPA did not open the electronic Greenhouse Gas Reporting Tool (e-GGRT) – the system it provides for entities to report the quantities of carbon oxides securely geologically sequestered under Subpart RR – then taxpayers could continue to follow the requirements of Subpart RR to claim the Section 45Q credit for the 2025 calendar year, as long as they obtain verification from an independent third-party engineer or geologist that the capture and disposal is in compliance with Subpart RR as in effect on December 31, 2025, and the information is accurate and complete. The independent engineer or geologist must include an affidavit that he or she is independent from the taxpayer. This essentially is “Subpart RR by another name.” However, the safe harbor provided in IRS Notice 2026-1 is applicable only for the 2025 calendar year, so Treasury and the IRS will need to issue additional guidance for future years, assuming Subpart RR is repealed.   

Another key option for replacing Subpart RR could be ISO 27914. This standard has been in existence for a number of years, but the version of the standard in place until now – ISO 27914:2017 – lacked the detailed requirements for storage calculation, as well as monitoring, reporting, and verification, that would be needed for it to function as a substitute for Subpart RR. The new version – ISO 27914:2026 – addresses those gaps. 

Should the IRS or Treasury decide to adopt ISO 27914:2026 by guidance or regulation as a replacement for Subpart RR, it would need to specify the portions of the standard that would serve in place of Subpart RR. ISO 27914:2026 reads much like a combination of Class VI UIC storage regulations, plus Subpart RR. The standard addresses issues associated with Class VI, such as site screening, feasibility investigation, and characterization; well construction; storage operations; risk management; and closure. It also covers issues addressed under Subpart RR, including quantification, and monitoring, reporting, and verification requirements. 

There is significant commonality between Subpart RR and the “RR-like” sections of ISO 27914:2026. The following sampling of similar provisions, while not a comprehensive list, illustrates the similarities: 

In the United States, ISO 27914:2026 now will be reviewed for approval by the American National Standards Institute (ANSI). As a practical matter, should the IRS and Treasury consider approving ISO 27914:2026 as a Subpart RR substitute, they may decide to wait until after ANSI has approved the standard. That would be consistent with Treasury’s approval for use of a different ISO standard – ISO 27916:2019 – for enhanced oil recovery operations, which was finalized after ANSI had approved ISO 27916:2019. As with the current safe harbor for Section 45Q reporting for the 2025 calendar year, in the case of ISO 27916:2019, Treasury required certification of reported quantities by an independent engineer or geologist, which also likely would be the case if ISO 27914:2026 becomes an approved reporting alternative.