The Trump Administration’s Climate Conundrum: The Curious Case of the 45Q Tax Credit
Introduction: Trump’s Climate Policy and the 45Q Exception
The Trump administration has been vocal in its opposition to climate change policies, actively working to dismantle or eliminate any government activity or mention related to climate change. However, there is one notable exception: a tax credit known as 45Q, embedded in Joe Biden’s signature climate law, the Inflation Reduction Act (IRA). This provision, which enlarges a tax credit for companies willing to capture carbon dioxide, has survived as a rare instance of climate-coded policy that might endure under Trump’s leadership. The 45Q credit, originally established during George W. Bush’s presidency, has evolved into a multibillion-dollar federal incentive for carbon capture. Its survival under a administration deeply skeptical of climate initiatives raises questions about the motivations behind this unexpected vote of confidence.
The Origins and Evolution of the 45Q Tax Credit
The 45Q tax credit was designed to incentivize companies to capture carbon dioxide, either for long-term storage or for enhanced oil recovery (EOR). The credit was increased under the IRA, offering $85 per ton for carbon stored permanently and $60 per ton for carbon used in oil production. This distinction reflects the dual nature of carbon capture technology, which has historically been used to extract more oil from depleted wells. The oil industry began exploring carbon injection in the 1970s as a method to maximize oil extraction, and today, about 4% of U.S. oil production relies on this technique. The majority of captured carbon is still used for EOR, raising concerns that the tax credit primarily benefits the oil industry rather than serving as an effective climate solution.
The Debate Over Carbon Capture: Climate Solution or Oil Industry Handout?
Proponents of the 45Q tax credit argue that it is essential for advancing carbon capture technology, which is widely regarded as a necessary tool in the fight against climate change. Supporters include oil industry giants like Exxon and Shell, as well as some climate-minded Democrats in Congress, who see the credit as a way to reduce emissions. However, environmental groups and conservative opponents, including some Trump supporters, are skeptical. Critics argue that the credit disproportionately benefits the oil industry, subsidizing a practice that ultimately leads to more fossil fuel production. Additionally, carbon capture and storage (CCS) technology has yet to prove reliable at scale, with many projects encountering unforeseen challenges in storing carbon permanently underground.
Pipeline Safety and Property Rights: Local Resistance to Carbon Capture Infrastructure
The expansion of carbon capture projects has also sparked concerns over safety and property rights. To transport captured carbon dioxide, thousands of miles of new pipelines would need to be built, posing risks to communities along the routes. Carbon dioxide is a dangerous gas that can cause asphyxiation in high concentrations, and pipeline accidents, like the 2020 incident in Satartia, Mississippi, highlight the potential dangers. In South Dakota, Republican Representative Karla Lems has emerged as a vocal opponent of a proposed pipeline by Summit Carbon Solutions, which would run through her state and four others. Lems and other conservatives view the project as a violation of property rights, particularly since the company is using eminent domain to secure land for the pipeline. This opposition reflects a broader tension between federal climate policies and local concerns over safety and individual freedoms.
The Political Implications: Trump’s Dilemma and the Conservative Backlash
The fate of the 45Q tax credit presents a political challenge for the Trump administration. On one hand, the credit enjoys bipartisan support and is championed by the oil industry, a key ally of the administration. On the other hand, its association with Biden’s climate agenda and its perception as a government handout to corporations risk alienating conservative voters who expect Trump to cut federal spending and protect property rights. Some Republican senators have even proposed raising the tax credit for EOR to the same level as that for long-term storage, further aligning the policy with oil industry interests. This decision could disillusion Trump supporters who assumed the president would prioritize their concerns over corporate interests. The backlash in South Dakota, where anti-pipeline candidates have unseated pro-pipeline legislators, serves as a cautionary tale for the administration.
Conclusion: The Collision of Climate Policy and Political Reality
The 45Q tax credit represents a rare intersection of climate policy and political pragmatism, where the interests of the oil industry, environmentalists, and conservative landowners collide. While the credit has the potential to advance carbon capture technology, its implementation has been fraught with controversy, from concerns over its effectiveness as a climate solution to the safety and property rights issues associated with pipeline expansion. The Trump administration’s stance on 45Q will be closely watched, as it balances the influence of the oil industry with the expectations of its conservative base. Whether the credit survives under Trump’s leadership will reveal much about the administration’s priorities and its willingness to reconcile its anti-climate rhetoric with the realities of energy policy and political pragmatism.