Statement

Billion Dollar Boon for Taxpayers with New 45Q Repeal Act of 2025

Energy & Natural Resources, | Statements and Press Releases

Mar 11, 2025 | 5 min read | Print Article

Representatives Perry (R-PA) and Khanna (D-CA) have introduced the 45Q Repeal Act of 2025, legislation to eliminate Section 45Q of the Internal Revenue Code—the Carbon Oxide Sequestration Credit. This tax credit functions as a production subsidy for carbon capture and storage (CCS), awarding funds for every ton of carbon produced and captured. Repealing it would save American taxpayers an estimated $36.2 billion from FY2024-FY2033 and end the siphoning of taxpayer dollars into a technology that has repeatedly failed to deliver lasting results despite decades of generous federal funding.

Statement by Autumn Hanna, vice president of Taxpayers for Common Sense

“The 45Q tax credit has a long history of fraud and abuse and carries a hefty price tag for American taxpayers. Carbon capture and storage projects have consistently failed, despite billions in federal subsidies. CCS requires transporting and injecting billions of tons of CO₂ underground, infringing on landowner rights, creating health and safety risks, and saddling taxpayers and communities with costly long-term liabilities. Repealing 45Q would prevent $30 billion in wasteful spending over the next decade—protecting taxpayer dollars, private property rights, and local communities.”

Background

Carbon Capture and Sequestration (CCS) encompasses technologies designed to capture carbon oxides emitted during power generation and other industrial processes, instead of releasing them into the atmosphere. These captured carbons are then sequestered underground or in specially designed facilities. For decades, the federal government has provided billions of dollars in both direct and indirect subsidies to support CCS technology and projects. These subsidies have included research, development, and demonstration (RD&D) funding, loan guarantees, and the 45Q tax credit.

The 45Q tax credit is available to owners of CCS technology and is available per metric ton of carbon oxide captured and stored. To be eligible for the 45Q tax credit, a project must be a “qualified facility” that meets certain minimum capture thresholds.

The 45Q tax credit, which has grown significantly in both size and scope since its creation in 2008, has been mired in fraud and waste. A substantial portion of the 45Q tax credits claimed between 2010 and 2019 were based on inadequate reporting. Just 10 taxpayers accounted for over $1 billion in 45Q credits, constituting approximately 99% of the total credits claimed during that period. Alarmingly, $894 million—nearly 90% of the credits claimed—failed to comply with Environmental Protection Agency reporting requirements.

45Q lacks robust taxpayer safeguards. It does not require on-site verification of carbon sequestration, nor does it mandate the use of specific technologies or timelines to monitor and report leaks, leaving the public no way to verify the amount of carbon stored or whether it remains underground. This lack of taxpayer safeguards puts taxpayer funds at significant risk, as the credit could cost taxpayers over $36.2 billion in the next decade.

CCS also infringes upon private property rights. CCS projects have been claiming “common carrier” status to seize privately owned land for pipeline construction and CO₂ storage sites through eminent domain. As a result, landowners are often forced to surrender their property against their will, receiving minimal compensation and having little recourse. The storage and transportation of captured carbon also pose public health risks to communities. Ruptured CO₂ pipes can sicken nearby communities, and underground storage site leaks can contaminate underground drinking water sources.

Eliminating subsidies for CCS is fiscally responsible and will protect taxpayers, landowners, and communities.