To amend the Internal Revenue Code of 1986 to modify the carbon oxide sequestration credit to ensure parity for different uses and utilizations of qualified carbon oxide.
Analysis under review: This bill has generated analysis that may be too generic or incomplete. Clause-level evidence remains available below.
Summary
What This Bill Does
This bill changes the federal tax credit for carbon capture and storage (Section 45Q of the tax code) to treat all uses of captured carbon dioxide equally. Currently, companies get different tax credit amounts depending on whether they permanently store CO2 underground, use it to extract more oil and gas, or turn it into other products like fuels or building materials. This bill eliminates those differences and sets one consistent credit structure: $17 per ton for most facilities and $36 per ton for certain qualifying facilities, with the $17 rate adjusting for inflation starting in 2027.
Who Benefits and How
Oil and gas companies that use carbon dioxide to boost production from aging oil and gas fields (a technique called "enhanced oil recovery" or EOR) are the primary beneficiaries. Under current law, they receive a lower tax credit than companies doing permanent geological storage; this bill raises their credit to match, potentially worth tens of millions of dollars annually for large EOR operations. Carbon utilization companies that convert captured CO2 into synthetic fuels, chemicals, or building materials also benefit from the same credit increase. All carbon capture facility operators benefit from a simpler, more predictable credit structure that makes project financing easier.
Who Bears the Burden and How
American taxpayers bear the cost through lost federal tax revenue. Because this bill raises the tax credit for enhanced oil recovery and carbon utilization to match the higher rate previously reserved mainly for permanent geological storage, the Treasury will collect less tax revenue—potentially several hundred million dollars per year once existing and new projects claim the expanded credits. There are no new fees, reporting requirements, or regulatory costs imposed on any parties.
Key Provisions
- Eliminates the two-tier credit structure in current law that gave lower credits to enhanced oil recovery and utilization
- Establishes a unified credit of $17 per ton (base rate) or $36 per ton (enhanced rate) for all qualifying carbon capture activities
- Makes carbon dioxide used in oil and gas extraction eligible for the same high credit as permanent underground storage
- Applies to tax years beginning after December 31, 2024
- Indexes the base $17 credit to inflation starting in 2027
Evidence Chain:
This summary is generated from the full bill text using AI analysis. Expand "Detailed Analysis" below for identified beneficiaries/burden bearers.
At a Glance
What This Bill Does
Amends the carbon oxide sequestration tax credit (IRC Section 45Q) to establish parity among different uses of captured carbon oxide by consolidating credit rates and eliminating distinctions between geological storage, enhanced oil/gas recovery, and utilization pathways.
Who Benefits
- Carbon capture and storage facility operators
- Enhanced oil recovery (EOR) operators using carbon dioxide injection
- Carbon utilization companies (e.g., synthetic fuels, chemicals, building materials)
Who Bears Costs
- Federal Treasury (foregone tax revenue from expanded credit eligibility)
- Taxpayers (indirect cost of tax credits)
Key Policy Areas
Tax Policy, Energy, Climate & Environment
Primary Purpose
Amends the carbon oxide sequestration tax credit (IRC Section 45Q) to establish parity among different uses of captured carbon oxide by consolidating credit rates and eliminating distinctions between geological storage, enhanced oil/gas recovery, and utilization pathways.
Policy Domains
Legislative Strategy
"Simplify the 45Q credit structure to encourage all forms of carbon capture by removing preferential treatment previously given to direct geological storage over enhanced oil recovery or utilization pathways"
Identified Gains
- Carbon capture and storage facility operators
- Enhanced oil recovery (EOR) operators using carbon dioxide injection
- Carbon utilization companies (e.g., synthetic fuels, chemicals, building materials)
- Oil and gas extraction companies using EOR techniques
Identified Costs
- Federal Treasury (foregone tax revenue from expanded credit eligibility)
- Taxpayers (indirect cost of tax credits)
Sponsors
Legislative Progress
IntroducedMr. Hern of Oklahoma introduced the following bill; which was …
Stakeholder Effects
cui bono?How this legislation distributes effects. Mention counts reflect frequency, not effect magnitude.
Enhanced oil recovery (EOR) operators using carbon dioxide injection, Oil & gas producers on federal and private lands using CO2-EOR
Carbon utilization companies (synthetic fuels, chemicals, building materials from captured CO2)
Carbon capture and sequestration (CCS) facility operators - all types
Industrial CO2 emitters with carbon capture systems (power plants, cement, steel)
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "the_taxpayer"
- → Entity claiming the 45Q tax credit for carbon oxide sequestration
- "the_secretary"
- → Secretary of the Treasury (implicit in IRC amendments)
Note: No significant scope conflicts - this bill amends a single IRC section with clear definitions carried over from existing law
Key Definitions
Terms defined in this bill
The carbon oxide sequestration credit provision in the Internal Revenue Code of 1986
Using carbon oxide in products or processes as described in IRC 45Q(f)(5), including conversion to fuels, chemicals, building materials, or other products
Carbon oxide that qualifies for the 45Q credit (defined in existing IRC 45Q(c))
The per-ton tax credit value: base rate of $17 (inflation-adjusted after 2026) or enhanced rate of $36 for certain facilities
Permanent storage of carbon oxide underground in a manner that prevents atmospheric release (defined in existing IRC 45Q(d))
Use of carbon oxide as a tertiary injectant to increase oil or natural gas extraction (defined in existing IRC 45Q)
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology