Carbon Capture and Storage (CCS)

Carbon Capture and Storage has a history of waste, fraud, and abuse
and has not achieved results for the climate or taxpayers.

Carbon capture and storage (CCS) is the process of capturing carbon dioxide emitted during fossil fuels combustion or other industrial processes, pumping it deep inside the earth, and storing it in underground geologic formations such as exhausted oil and gas fields. The technology is predominantly designed to be used with coal, coal-to-liquid, or natural gas plants to decrease their overall carbon emissions. But despite billion in taxpayer subsidies towards research and development as well as a a tax credit known as 45Q – CCS is nowhere close to being a realistic part of the climate solution.

For years, TCS has raised the alarm on this expensive and unproven technology. Building, proving, and implementing CCS technology is prohibitively expensive. Sequestering billions of tons of CO2 underground annually could have unintended negative consequences, such as potentially contaminating ground water, and leave taxpayers with costly long-term environmental liabilities. There is mounting evidence that CCS is not economically viable nor an answer to our environmental challenges:

• As early as 2008, the Government Accountability Office (GAO) reported that general commercial CCS deployment was and would continue to be barred by technological barriers.
• A September 2022 GAO report found that “lengthy time to deployment and high costs hinder widespread deployment of both types of carbon capture [capture technologies at point sources and direct air capture] in the near term.”
• A report from the Intergovernmental Panel on Climate Change in 2022 ranks CCS as one of the highest cost, lowest potential options for reducing greenhouse gas emissions.
• The Congressional Research Service noted that 11 out of 12 existing CCS projects in the U.S. are used for enhanced oil recovery (EOR). And in the near term, most CCS projects will continue to be used for EOR.

History of Fraudulent Claims

Beyond its failure as a climate solution, the 45Q tax credit program already has a record of improper claims. The whole credit is premised on the idea that companies would be preventing tons of CO2 from reaching the atmosphere. To this end, the IRS directed claimants to comply with EPA guidance for what constituted “secure geological storage.” That guidance required companies to submit a Monitor, Report and Verify plan for EPA approval. But the IRS and EPA don’t compare notes – something some folks in industry exploited. According to the Treasury Inspector General for Tax Administration, companies claiming a total of $894 million in credits chose to simply ignore the EPA guidance. So far, the IRS has disallowed $531 million of these credits. And this amount could be even larger as the IRS has only reported on their investigation of 68% of the noncompliant claims.

Despite these repeated failures, Congress continues to allocate additional funding for CCS. The 2021 Infrastructure Investment and Jobs Act authorized and appropriated billions of dollars in new investments in CCS demonstration projects. The Inflation Reduction Act of 2022 greatly expanded and extended the 45Q credit. The Joint Committee on Taxation estimated that the new 45Q credit extension in the Inflation Reduction Act will cost taxpayers $3.2 billion over the next decade.

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 federal carbon capture and sequestration (CCS) tax credit

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.