One Climate Subsidy That Trump Could Get Behind

Yahoo

19-02-2025

The Trump administration is fully engaged in a drive to eliminate virtually any government activity or mention related to climate change—with a few notable exceptions. Take, for example, a single tax credit in Joe Biden's signature climate law that may have the best chance of survival out of any climate-coded policy.
A provision in the Inflation Reduction Act, known as 45Q, enlarged a tax credit for any company willing to capture carbon dioxide. A version of this credit has been in place since George W. Bush's presidency, and in its current iteration, it represents billions of dollars in federal incentives. If the Trump administration moves to keep 45Q intact, that choice would be an unusual vote of confidence from the president for a large government expenditure billed as a way to fight climate change. (The White House did not respond to a request for comment.)
The politics of this tax credit are unusual in the climate world too. Both the oil industry and some climate-minded Democrats in Congress want to keep it. Among its opponents are environmental groups, as well as avid Donald Trump supporters in South Dakota and other states where carbon-capture infrastructure would be built.
Only in recent years has carbon-capture technology made a name for itself as a climate solution. But it was—and remains—primarily a way to produce more oil. The version meant to help mitigate climate change, by storing carbon in the ground virtually forever, might have made sense when instituted alongside many other climate policies. But as a stand-alone measure, carbon capture starts looking more like a handout to the oil industry.
The climate argument for carbon capture goes like this: If one ton of carbon is captured from an industrial process, such as a refinery, and then injected into underground formations, that's theoretically one ton less carbon added to the atmosphere, where it would have warmed the planet. This process, however, is both expensive and unprofitable. The IRA tried to solve that problem with 45Q, which raised the maximum tax credit for every ton of carbon dioxide a company captured from $50 to $85, if the intent was to store it forever, or $60, if the intent was to produce more oil—which was carbon capture's original purpose.
In the 1970s, after the OPEC crisis, the oil industry began to look for new methods to milk existing wells for all they were worth. One method was to inject carbon dioxide underground, where it would act as a solvent, liberating the more stubborn oil residues in otherwise-depleted wells. Today, some 4 percent of American oil is produced with this technique, and the majority of all carbon captured from any industry is used to produce more oil and gas.
The price difference in the tax credit was meant to boost the climate-solution version of carbon capture. But critics say the smaller credit, for enhanced oil recovery, is a generous subsidy to the oil industry, which also ends up with a valuable product to sell. And the product potential is enormous: The Department of Energy has said that, if carbon capture was used to its fullest extent to enhance oil recovery, the American petroleum industry could extract the equivalent of 38 years' worth of the country's current crude-oil supply.
45Q has many admirers: Oil-and-gas-industry giants such as Exxon and Shell are all in on carbon capture, and Doug Burgum, Trump's interior secretary, is a big fan of the technology. Losing the credit—which represents billions, perhaps tens of billions, of dollars that the government is giving up in tax revenues—would be such a blow to the nascent industry that it 'would effectively cut it off at the knees,' Jessie Stolark, the executive director of the Carbon Capture Coalition, told me. And if the credit does survive, it may benefit the oil industry even more: Republican senators just introduced a bill to raise the tax credit for enhanced oil recovery to the same level as the one for long-term carbon storage.
The tax credit also still has fans among Democrats who see it as a way for the country to cut down on its emissions. Ron Wyden, a Democratic senator from Oregon, was an author of the IRA energy-tax package, and 'is strongly supportive of this credit and is already working to defend it from Republican attacks,' Ryan Carey, a communications director with the U.S. Senate Committee on Finance, told me. But many environmental groups think carbon capture and storage is a false solution. Although carbon capture and storage is widely said to be necessary to combat climate change in a world where burning fossil fuels continues, as of now, the technology to store carbon long enough to keep it out of the atmosphere permanently hasn't been proved reliable at scale. Even projects held up as success stories encounter unexpected problems with keeping highly volatile carbon dioxide in place underground.
Communities in the path of carbon capture projects also worry about the safety of the pipeline expansion. To transport highly pressurized carbon dioxide from the places it would be captured—such as ethanol plants and refineries—to wells for storage, the country would need to build a lot of new pipelines. Carbon dioxide is an odorless, colorless gas, and at high enough concentrations, it's an asphyxiant. If a pipe were to burst, no one might know for a while. The gas is also heavier than air, so it would hug the ground and roll downhill, choking off the oxygen of whoever is in its path. (This happened in 2020, in Satartia, Mississippi; 45 people were hospitalized.)
Karla Lems, a Republican representative from South Dakota, voted for Trump and considers herself a conservative. She is among the most vocal opponents of a pipeline that the company Summit Carbon Solutions plans to build across her state and four others, to bring carbon dioxide from ethanol plants to a storage site in North Dakota. The company is attempting to use eminent domain to clear its way, which incensed Lems. 'George Washington said freedom and property rights are inseparable,' she told me. She sponsored a bill now making its way through the state legislature to bar eminent domain for carbon projects. (For a while, Summit planned to put it directly through her family's farmland, but the company eventually decided to site it on her neighbor's land instead, she told me. Summit declined to comment for this story.)
To Lems, the 45Q tax credit is exactly the type of handout and government bloat that Trump promised to eliminate. 'In my mind, this is a company that stands to make a lot of money from this project, which I believe is just a grift on the taxpayers," she told me. 'It's all a big boondoggle and a scam. We'll see if the Trump administration can see it for what it is.' Chase Jensen, an organizer at Dakota Rural Action, which is also working to block the Summit pipeline, says many of his group's dues-paying members voted for Trump and would see it as a betrayal if he decided to keep the tax credit. Many assumed Trump would be against it, given its presentation as a Biden-branded climate solution, he told me. But more than that, he said, 'these folks hold property rights as one of the most core rights.' That those rights would be traded so that, as they see it, a corporation could make money would violate their deepest conservative values.
Already, the Summit-pipeline fight has 'completely restructured' leadership in South Dakota, Jensen said; 11 Republican representatives who had voted for pro-pipeline legislation lost primary elections for state House and Senate seats. Jensen expects that the Trump administration's stance on 45Q will be disillusioning for supporters who might have expected the president to side with people over corporations. 'People are going to have to reconcile what's happening,' he said. (Summit has said that the project would need 'reassessment' if the tax credit were repealed.)
So far, the U.S. has relatively few carbon-dioxide pipelines—just 5,300 miles' worth, compared with roughly 3 million miles of natural-gas pipelines. But the Department of Energy predicts that could grow substantially. Without the tax credit, much of that growth would likely be out of the question. With it, the administration could be setting itself up for a new fight that unites climate activists with aggrieved landowners.
In some ways, the politics of this fight look familiar: After the Obama administration failed to pass climate legislation in 2010, the climate movement started making common cause with conservative landowners in Nebraska and other states that the oil pipeline Keystone XL was set to cross. (Some of the same players are fighting the Summit pipeline now.) That fight continued through the entire first Trump administration, and ended only when Biden blocked the project. Now the Trump administration is reportedly looking at resuscitating that pipeline project too. In its first weeks, the second Trump administration has rerun the attacks on climate policy from its first go-round—leaving the Paris Agreement, stripping climate information from public view—but has also taken them further, culling any federal employees and programs that have a whiff of promoting environmental justice.
45Q presents a challenge: Conspicuously preserve a program billed as a Biden-era climate solution, or axe something with bipartisan support that the oil industry—which contains some of Trump's most important business allies—wants to keep? Already, the administration has appeared to selectively protect at least one big Biden-era climate project in Montana—the expansion of a plant making sustainable jet fuel—after a Republican senator pressed the White House to release the funds. This administration might be skeptical of both big government and climate science, but that ideology can be bent for the right backers.
Article originally published at The Atlantic