Trump legislation preserves tax credits for carbon capture

Weeks after the US Department of Energy (DoE) announced its was withdrawing US$3.7bn in funding for numerous green energy projects, the Trump administration has seemingly reaffirmed its support for carbon capture and storage by preserving federal 45Q tax credit as part of the “One Big Beautiful Bill Act”, signed into law by President Trump on 4 July.

The bill maintains the 45Q tax credit for point-source capture at US$85/t and direct air capture (DAC) at US$180/t in dedicated geologic storage, preserves transferability, and keeps the inflation adjustment date of 2027 with a base index year of 2025.

Notably, the tax credit under the new Bill now includes parity for the utilisation of CO₂. This means that CO₂ used or converted into valuable products, or injected and geologically stored in a qualified enhanced oil recovery or natural gas recovery project site, will qualify for the same dollar value credit as CO₂ that is permanently sequestered in a dedicated geologic storage site. 

According to the Global CCS Institute, the US is the global leader in CCS deployment, with 33 operational projects, 19 under construction and 300 in various stages of development.

There are currently at least five major US-based cement CCS projects in development. The two largest of these – National Cement’s Lebec plant (California) and Heidelberg Materials’ Mitchell plant (Indiana) – each lost US$500m in funding from the DoE cuts. Other include pilot projects in Charlevoix (Michigan), Ash Grove (Arkansas) and Cemex’s Knoxville (Tennessee) facility.