The Trump Administration’s Unlikely Stance on a Key Climate Policy
The Trump administration has been actively working to dismantle most government initiatives and mentions related to climate change, with few exceptions. One notable exception is a tax credit included in President Joe Biden’s signature climate law, the Inflation Reduction Act (IRA). This tax credit, known as 45Q, has emerged as a rare point of potential agreement between the Trump administration and some Democrats, despite its association with climate change mitigation. The 45Q provision, which provides billions of dollars in federal incentives for companies that capture and store carbon dioxide, has been in place since the George W. Bush administration. Its survival under Trump would mark a surprising endorsement of a government program aimed at addressing climate change.
The 45Q tax credit has garnered support from both the oil industry and some climate-conscious Democrats in Congress. However, it also faces criticism from environmental groups and conservative Trump supporters, particularly in states where carbon capture infrastructure would be built. While carbon capture technology has gained attention in recent years as a potential climate solution, it has historically been used primarily to enhance oil production. Critics argue that the tax credit could end up being a handout to the oil industry rather than an effective tool for combating climate change.
The History and Purpose of Carbon Capture
Carbon capture technology involves capturing carbon dioxide emissions from industrial processes, such as oil refineries, and storing them underground to prevent them from entering the atmosphere. Theoretically, this process reduces greenhouse gas emissions and helps combat climate change. However, the technology is expensive and unprofitable without government incentives. The 45Q tax credit aims to address this issue by offering companies $85 for every ton of carbon dioxide they capture and store permanently, or $60 for every ton used to enhance oil recovery.
The origins of carbon capture date back to the 1970s, when the oil industry began using carbon dioxide injection to extract more oil from depleted wells. Today, this technique accounts for about 4% of U.S. oil production, and most captured carbon is still used for enhanced oil recovery. While the IRA’s 45Q tax credit was designed to promote the climate-friendly version of carbon capture, critics argue that the smaller credit for enhanced oil recovery remains a generous subsidy to the oil industry. The Department of Energy estimates that widespread use of carbon capture for oil recovery could unlock enough additional oil to supply the U.S. for 38 years.
The Political Battle Over the 45Q Tax Credit
The 45Q tax credit has a diverse group of supporters, including oil giants like Exxon and Shell, as well as some Democratic lawmakers who see it as a necessary tool for reducing emissions. Republican senators have even introduced a bill to raise the tax credit for enhanced oil recovery to the same level as that for permanent storage, further benefiting the oil industry. However, environmental groups and conservative Trump supporters in states like South Dakota are vocal opponents of the credit, viewing it as a government handout to corporations.
In South Dakota, Republican Representative Karla Lems has emerged as a vocal opponent of a proposed carbon dioxide pipeline that would transport captured emissions to a storage site in North Dakota. The project, led by Summit Carbon Solutions, has sparked concerns about property rights and safety, particularly after a 2020 pipeline leak in Mississippi hospitalized 45 people. Lems and her allies argue that the 45Q tax credit is a prime example of government overreach and corporate greed, violating core conservative values. The fight over the pipeline has already reshaped local politics, with 11 pro-pipeline Republican representatives losing primary elections.
Implications of Keeping or Repealing the 45Q Tax Credit
The survival of the 45Q tax credit under the Trump administration would have significant implications for both the oil industry and the broader climate debate. If the credit remains intact, it could bolster the nascent carbon capture industry, which supporters argue is essential for meeting global climate goals. However, critics warn that the credit disproportionately benefits the oil industry while failing to deliver meaningful emissions reductions.
On the other hand, repealing the credit would deal a major blow to the carbon capture industry, potentially halting its growth. Some argue that the loss of the credit could also alienate conservative Trump supporters who expected the administration to side with property rights over corporate interests. The outcome of this debate could set the stage for a new wave of activism, uniting climate activists with landowners opposed to pipeline expansion.
A Deeper Divide Over Climate Policy
The Trump administration’s approach to climate policy has been consistent in its first few weeks, rolling back key initiatives and stripping federal programs tied to environmental justice. However, the 45Q tax credit presents a unique challenge: whether to preserve a policy widely seen as a Biden-era climate solution or to repeal a program that enjoys bipartisan support and is championed by the oil industry.
Some moderation in the administration’s stance is possible, as seen in its decision to protect a Biden-era sustainable jet fuel project in Montana after pressure from a Republican senator. While the administration remains skeptical of climate science and big government, ideological flexibility for political or economic gain cannot be ruled out. The fight over the 45Q tax credit highlights the increasingly tangled politics of climate policy, where alliances are tested and unlikely coalitions emerge.
In the end, the fate of the 45Q tax credit will reveal much about the Trump administration’s priorities and its willingness to balance conservative values with the demands of its corporate allies. Whether the credit survives or not, the debate it has sparked underscores the enduring complexity of addressing climate change in a politically divided nation.
