CVR Partners and CCS firm CapturePoint have closed a tax equity transaction with outside investors, opening up millions in quarterly payments through 2030.
CVR Partners, LP, a manufacturer of ammonia and urea ammonium nitrate solution fertilizer products, and CapturePoint, a Texas company focused on capturing carbon oxides from industrial processes, have closed a tax equity transaction pertaining to carbon capture and sequestration at CVR subsidiary Coffeyville Resources Nitrogen Fertilizers (CRNF).
The parties have entered into a series of agreements with certain unaffiliated third-party investors and certain of their respective affiliates intended to qualify under the Internal Revenue Service safe harbor described in Revenue Procedure 2020-12 for certain joint ventures that are eligible to claim Section 45Q Credits, accordign to a news release.
In connection with the 45Q transaction, CRNF and CapturePoint each received an initial payment, net of expenses, of approximately $18m and are expected to also receive installment payments, payable quarterly, until March 31, 2030, totaling up to approximately $22m each for the seven-year period and potentially certain contingent payments over this same period if certain carbon oxide capture and sequestration milestones are met, totaling up to approximately $38m each, subject to certain customary and other specified terms.
“As a leader in the production of low carbon nitrogen fertilizer, CVR Partners is proud to participate in the generation of carbon capture and sequestration credits as a result of our voluntary nitrous oxide abatement and carbon sequestration projects in Coffeyville, Kansas,” said Mark Pytosh, chief executive officer of CVR Partners’ general partner. “This facility is uniquely qualified to produce hydrogen and ammonia that is certified ‘blue’ to a market that is increasingly demanding reduced carbon footprints. These efforts support our core Values of Environment and Continuous Improvement, and our goal of continuing to produce nitrogen fertilizers that feed the world’s growing population in an environmentally responsible way.”
“CapturePoint is pleased to partner with CRNF and third-party investors to realize the benefits of carbon capture and sequestration credits for services that CapturePoint has long provided as a leader in the carbon capture and sequestration field,” said Tracy Evans, chief executive officer of CapturePoint. “CapturePoint looks forward to even more exciting announcements in the near future as it continues to expand its carbon capture and sequestration services.”
In the event that certain carbon oxide capture or sequestration requirements are not met, CRNF and CapturePoint may be required to pay certain specified damages payments to the Investors, up to the amount of payments received by CRNF and CapturePoint in connection with the 45Q Transaction, less the amount ofSection 45Q Credits received by the Investors.
CapturePoint will serve as manager of the Tax Equity JV, according to a securities filing.