Strange Bedfellows Unite to Kill Carbon Capture Credit

by Carlos Anchondo and Kelsey Brugger (Politico's E&E Daily) Tax incentives for carbon capture and storage are among the most popular and bipartisan on Capitol Hill. -- One of Congress' leading skeptics of mainstream climate change science and a critic of the fossil fuels industry want to put a popular tax incentive in the crosshairs.

Reps. Scott Perry (R-Pa.) and Ro Khanna (D-Calif.) announced legislation Monday to repeal the 45Q tax credit, which is calculated based on the amount of carbon dioxide that energy and other polluting companies capture and store.

The legislation comes as Republicans mull the fate of numerous climate-friendly energy incentives from the Democrats' 2022 Inflation Reduction Act. The 45Q allowances are considered among the least imperiled.

But Perry, who represents south-central Pennsylvania, called 45Q a "wasteful" credit and said it "subsidizes technologies that serve no purpose beyond distorting energy markets."

"The 45Q Repeal Act is a first step in restoring sanity to our energy sector and allowing markets to work by demand, not disrupted by subsidies from the federal government," Perry said in a statement to POLITICO's E&E News. READ MORE

Excerpt from Office of Congressman Scott Perry (R-PA 10): Congressman Scott Perry (PA-10) introduced the 45Q Repeal Act to repeal the 45Q tax credit for carbon capture and sequestration.

The bill will reduce overregulation and fraud, and has the added benefit of terminating a wasteful tax credit that we can now negotiate for real tax breaks in the pending reconciliation package.

“We've got to get the federal government out of every facet of our lives,” said Congressman Perry. “The American People demand that we cut waste, fraud, and abuse, and don’t want their tax dollars being used to prop up inefficient and market-distorting technology.”

The 45Q tax credit subsidizes technologies that serve no purpose beyond distorting energy markets.

There are serious concerns about the integrity of the tax credit; for example, the Treasury Inspector General for Tax Administration found nearly $1 billion in claims for unverified activities.

The 45Q Repeal Act is a first step in restoring sanity to our energy sector and allowing markets to work by demand, not disrupted by subsidies from the federal government.

This bill protects the Taxpayer and restores market discipline by removing insidious and wasteful tax incentives for market-distorting and inefficient technology. READ MORE

Excerpt from Pipeline Fighters Hub: Reps. Scott Perry (R-Penn.) and Ro Khanna (D-Calif.) have introduced legislation to end the 45Q tax credit for carbon capture, which wastes billions in taxpayer money, endangers public safety, and props up a fundamentally flawed and unreliable technology.

“Subsidizing carbon capture and utilization undermine our ability to hold Big Oil accountable for the climate crisis,” said Rep. Ro Khanna. “Congress has a responsibility to expose climate disinformation as harmful to both the environment and Americans’ wallets. We need to end fossil field subsidies and begin investing in clean energy technology that will steer us towards a thriving clean energy economy.”

A recent report from the Institute for Energy Economics and Financial Analysis (IEEFA) estimates that the 45Q credits could cost taxpayers as much as $800 billion over the next 18 years – more than $6 billion per subsidized carbon capture project – despite projects running wildly over budget and failing to meet their goals for removing carbon from the atmosphere.

“At first supporters claimed the 45Q tax credit would fight climate change, but it’s done far more to increase oil production. While the story changes from one administration to another, one thing is clear: South Dakotans aren’t interested in subsidizing the profits of billionaires and huge corporations. The bipartisan sponsors of this bill know that Americans all across the political spectrum aren’t buying it either,” said Chase Jensen of Dakota Rural Action, South Dakota.

Eliminating the 45Q tax credits is a point of bipartisan agreement. As Republicans work to repeal, freeze, or claw back more popular clean energy tax credits under the Inflation Reduction Act, advocates from across the ideological spectrum, from climate groups to the Heartland Institute, have agreed on the need to end these wasteful and ineffective handouts. Last month, hundreds of community advocates and environmental organizations called on Congress to repeal the carbon capture tax credit as part of its reconciliation tax bill.

“For lawmakers wanting to cut waste and fraud, they should start with 45Q. It is lining the pockets of the fossil fuel and biofuel industries with taxpayer dollars to the tune of billions. These extraction industries just have their hands out for money. If you want to stop waste and misuse of taxpayer dollars – get your scalpel and begin with 45Q,” said Peg Furshong, a rural Minnesota landowner who lives in the proposed Summit pipeline route.

“This bipartisan bill is a critical step toward ending wasteful corporate handouts for carbon capture, and reflects growing public opposition to this dangerous industry. We applaud Representative Perry and Representative Khanna for their leadership in introducing this bill that stands up to special interests and protects taxpayers,” said Jim Walsh, Policy Director at Food & Water Watch.

“If Trump really wants to target financial fraud and abuse, ending the 45Q tax credit would be a great place to start,” said Maggie Coulter, an attorney at the Center for Biological Diversity’s Climate Law Institute. “It’s past time to quit this wasteful subsidy for continued fossil fuel extraction disguised as climate progress.”

Carbon projects also threaten community safety, private property rights, and drinking water resources. On thursday, South Dakota Gov. Larry Rhoden, a Republican, signed into law a ban on the use of eminent domain for CO2 pipelines, a victory for property rights advocates and a blow to developers of the Summit Pipeline proposed across several midwestern states. Last month, the Pipeline and Hazardous Materials Safety Administration (PHMSA) recently issued a more than $2 million civil penalty to CO2 pipeline operators whose pipeline near Satartia, Mississippi leaked, sending 45 people to the hospital in 2020. And legislators in Illinois are considering a bill to ban carbon sequestration under a critical aquifer that supplies drinking water to more than a million people in the state, following high profile leaks from a sequestration project in the state.

The bill, HR 1946, can be viewed here. It was introduced on March 6, and referred to the House Committee on Ways and Means. READ MORE