The past several years have seen a flurry of carbon capture projects, with at least 270 proposed across the U.S. -- many buoyed by billions in subsidies from the Biden Administration meant to fight climate change.

But so far, only a tiny fraction of these carbon capture projects are actually operating, and only four are “permanently” burying carbon without directly subsidizing the oil and gas industry. The majority of these allegedly climate friendly carbon capture projects are not actually helpful in controlling climate-warming gases because they are for “enhanced oil recovery,” which involves pumping carbon dioxide captured from industry into the ground to force out more oil and gas to be burned, releasing yet more greenhouse gases.

Rather than improving incentives for the permanent storage of carbon captured from industry, the Trump Administration instead increased payouts to companies using carbon to pump more oil and gas.

The Trump Administration has slashed federal funding for many clean energy projects that proposed to use carbon capture technology to bury the climate-warming gas.   Trump also increased by 25 percent the federal taxpayer subsidies for the “enhanced oil recovery” use of carbon capture – through an IRS program called “45Q” -- in the “One Big Beautiful Bill Act” he signed on July 4.

Anika Juhn, energy data analyst at the Institute for Energy Economics and Financial Analysis, said that she doubts the carbon capture industry is going away, despite the change in administrations.

“Overall, leaving the 45Q tax credit in place was a really big signal about where the support from the administration is really directed,” Juhn said of the federal subsidies, including for “enhanced oil recovery.”

Carbon capture and sequestration is a controversial practice that involves injecting carbon dioxide underground to remove it from the atmosphere. It has been touted by supporters as the next big climate solution, even as critics consider it a largely unproven technology and, at best, a risky stopgap measure.  

Following President Biden’s signing of the Inflation Reduction Act in 2022, with its increased federal subsidies for carbon capture, companies made a flood of announcements about new carbon capture projects across the country. They proposed a complex network of carbon capture points and injection sites, with pipelines to transport the gas.

Although the politics surrounding federally-funded environmental programs has since radically shifted under the Trump Administration, many companies that proposed building carbon sequestration projects during the Biden Administration are already deeply invested in the permitting process and are unlikely to switch directions at this late stage, said Juhn, with the Institute for Energy Economics and Financial Analysis.

EPA has already received applications for 237 injection wells across 66 projects, which are in various stages of review. Louisiana, where the state government has authority over these permits, is reviewing 53 more applications, and is expected to issue one permit soon.

While some projects may be hurt by the lost clean energy funding that had been part of Biden’s Inflation Reduction Act, many others were left untouched.  For example, a massive federally-funded project in Louisiana to capture carbon dioxide directly from the atmosphere called “Project Cypress” is still moving forward-- although Trump has suggested he might kill the funding for it.  

The Trump Administration has already revoked federal funding promised to many projects under Biden. Earlier this year, several carbon-capture related “clean energy” grants were terminated, including one at ExxonMobil’s Baytown complex outside of Houston.  

News stories also suggested that the Trump Administration may cancel some promised funding for hydrogen hubs, a Biden initiative to develop regional “clean hydrogen” networks to produce and distribute clean fuel and decarbonize industry. At least one project associated with the hubs, a hydrogen plant at the BP Whiting Refinery in Northern Indiana, has already been put on indefinite hold.  

That would reduce a source of federal funding to BP. But in many other ways, the Trump Administration has been funneling more money and help to the oil and gas industry.

For example, the “One Big Beautiful Bill Act,” not only retained lucrative “45Q” tax credits for carbon injection but increased them. Since 2022, companies have been able to obtain $85 in tax credits for each metric ton of carbon dioxide injected underground for ‘permanent’ storage, but only $60 per metric ton of the gas injected for the purpose of extracting oil.  But Trump’s “beautiful bill” adjusts the carbon-assisted oil recovery tax credit so that it is the same as for permanent sequestration.

Recent news stories about the carbon capture industry have been rife with speculation about whether it would take a major hit under the Trump Administration.  

In May, for example, a Pennsylvania-based company called Air Products announced they planned to sell  the carbon sequestration component of a controversial hydrogen plant it was proposing to build in Louisiana, near Lake Maurepas.

ExxonMobil recently said it may delay or cancel its plans to add a hydrogen plant with carbon capture at the company’s manufacturing complex in Baytown, Texas, due to uncertainties about the market for low-carbon hydrogen.  The Trump Administration in May announced it planned to cut $330 million in federal funds for the Baytown hydrogen project.

But other projects appear to be moving ahead.  In July, CF Industries announced the start-up of carbon capture operations at its ammonia production facility in Donaldsonville, Louisiana.  

The carbon dioxide from CF Industries was initially announced to be sequestered “permanently” at one of ExxonMobil’s sequestration sites near Beaumont, Texas. However, Exxon has not yet received permits authorizing the construction and operation of the carbon injection wells.

While ExxonMobil waits for the permits to be issued in the coming months, the carbon dioxide currently being captured at the Donaldsonville Complex is being used by ExxonMobil to extract oil from the ground.  

Under the new legislation signed by Trump, this enhanced oil recovery would now be eligible for the same tax credits as permanently burying carbon at the site – with no additional permits or construction needed.

The fate of other proposed carbon sequestration projects is still uncertain, in part because the EPA permitting process is expected to take at least two years. Most of the rules around carbon sequestration permitting are designed for keeping carbon dioxide underground, with requirements to monitor its movement, better ensuring it does not escape the underground reservoir or leach into underground sources of drinking water. The permits for carbon sequestration require companies to continue monitoring for up to 50 years after finishing the injection. In comparison, obtaining permits – and federal funding – for “enhanced oil recovery” carbon capture projects is much easier.  Much of the oil and gas recovery infrastructure for these projects is already built, with oil fields already full of hundreds of wells.  

These wells, which are permitted as oil and gas wells, not carbon injection wells, do not have the same monitoring, reporting, and verification requirements as carbon sequestration wells. The process of getting permits for new wells is also significantly shorter, and in most places, only requires state authorization. Even with the additional requirements, one of the approved carbon injection wells has already been found to have problems with leakage.

Some climate activists fear that this quicker and easier process – combined with the increased federal subsidies – will encourage companies to sidestep regulations designed to make carbon sequestration safer while reducing climate benefits and subsidizing an already booming oil and gas industry.

Lead photo: The W.A. Parish Generating Station in Texas, where carbon dioxide is captured for use in enhanced oil recovery. Photo by RM VM.