Carbon Capture and Storage (CCS)

Carbon Capture and Storage has a history of taxpayer waste, fraud, and abuse and has yet to demonstrate it can be a cost-effective solution for climate change.

Carbon capture and storage (CCS) involves capturing carbon dioxide emissions from fossil fuel combustion or other industrial processes and storing them underground in geological formations, such as depleted oil and gas fields. This technology is mainly intended for use with coal, coal-to-liquid, or natural gas plants to reduce their carbon emissions. Yet, despite billions in taxpayer subsidies research and development, plus a tax credit known as 45Q, CCS is far from a realistic part of the climate solution.

Taxpayers for Common Sense (TCS) has long warned about this costly and unproven technology. Constructing and operating CCS is prohibitively expensive. The annual sequestration of billions of tons of CO2 could inadvertently contaminate groundwater and burden taxpayers with long-term environmental liabilities. A mountain of evidence suggests CCS is neither economically viable nor a solution to our environmental problems:

• A September 2022 GAO report highlighted the long deployment time and high costs as obstacles to widespread adoption of carbon capture technologies.
• The Intergovernmental Panel on Climate Change’s 2022 report ranked CCS among the costliest and least effective options for reducing greenhouse gas emissions.
• The Congressional Budget Office observed that 13 of the 15 existing CCS projects in the U.S. are used to assist in extracting more oil, a trend that is likely to continue.
• A recent extension of the CCS tax credit is estimated to cost taxpayers close to $5 billion dollars in the next five years despite the tax credit’s problematic history.

History of Fraudulent Claims

The Inflation Reduction Act of 2022 significantly increased and extended the 45Q tax credit. The Joint Committee on Taxation estimates that the updated 45Q credit will cost taxpayers $4.8 billion over the next five years.

Moreover, this expansion failed to address the fact that the 45Q tax credit program has also been marred by fraudulent claims in the past. The IRS originally required companies to submit approved carbon capture plans consistent with EPA guidelines to qualify for the credit. But because the IRS and EPA did not coordinate effectively, companies were able to claim credits without the required documentation. The Treasury Inspector General for Tax Administration later found that, from 2010 to 2019, companies claiming $894 million in credits had ignored the guidelines, and the IRS ultimately rescinded $531 million of these credits. This figure could increase, as the IRS has not finished reviewing the noncompliant claims.

Without implementing oversight mechanisms, Congress is exposing taxpayers to more risks by continuing to fund CCS projects and giving out the 45Q credit.

For more information on Carbon Capture and Sequestration, check out these additional TCS resources below:

• Five Fast Facts about Carbon Capture and Storage (CCS)
  Read our Five Fast Facts on CCS.

• Pricey and Problematic: Carbon Capture and Storage Remains Elusive Despite Decades of Taxpayer Subsidies
  Read our report on federal subsidies for the CCS industry.

• Carbon sequestration tax credit is flawed climate solution, subsidizes corporate fraud
  Read our op-ed on the federal carbon capture and sequestration tax credit (45Q).

• Watchdog Catches Tax Abuse – Taxpayers for Common Sense
  Read our Weekly Wastebasket on 45Q fraud.

• Hot Air and High Costs: The Carbon Capture and Sequestration 45Q Credit
  Read our Issue Brief on the federal carbon capture and sequestration (CCS) tax credit

• Carbon Storage Isn’t a Silver Bullet Climate Solution – Taxpayers for Common Sense
  Read Our Take on a legislative hearing on carbon capture and storage.

• Costly Expansion of 45Q in the Inflation Reduction Act of 2022 – Taxpayers for Common Sense
  The Inflation Reduction Act of 2022 included an expansion of the 45Q tax credit. Find out more.

• TCS Comments on IRA Expansion of the 45Q Carbon Capture Credit – Taxpayers for Common Sense
  Read our comments to the Department of Treasury.

• TCS Comments on Elective Payment and Transfer of Certain Energy Credits – Taxpayers for Common Sense
  Read our comments to the Department of Treasury.

• Rebranding Doesn’t Make CCUS a Better Bet in FY23 Budget – Taxpayers for Common Sense
  The President’s Budget request for Fiscal Year 2023 included an 8 percent boost for the Fossil Energy and Carbon Management program.