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New Report Shows Feds Spent Tens of Billions on Subsidies for Failed Climate Solution

Taxpayers for Common Sense Releases New Analysis of Lifecycle Carbon Capture Subsidies 

Washington—The federal government has spent billions on tax breaks and subsidies for carbon capture and sequestration (CCS) projects and is planning to spend tens of billions more over the next decade, according to a report released today from Taxpayers for Common Sense, a nonpartisan taxpayer watchdog group. The report, From Cradle to Grave: Taxpayer Subsidies Throughout a Carbon Capture and Storage Project’s Lifecycle, shows that a substantial portion of this funding is slated to go towards oil and gas companies, which overwhelmingly use the captured carbon to extract more oil and gas through “enhanced oil recovery” that in turn emits more carbon into the atmosphere. The report contains a “Pipe Dream” infographic illustrating the sectors and end uses that benefit from CCS subsidies.

“Carbon capture and storage isn’t a serious climate solution. Subsidies have and will continue to go overwhelmingly to the very industries who have contributed most to the climate crisis,” said Autumn Hanna, executive vice president of Taxpayers for Common Sense. “So continuing to dedicate taxpayer resources to a costly and ineffective technology without increased proper oversight and accountability ensures more of the same.”

The report finds that for decades the federal government has provided tens of billions of dollars in both direct and indirect subsidies, including research, development, and demonstration funding and lucrative tax credits, in support of CCS technology and projects. 

The Inflation Reduction Act (IRA) significantly expanded and extended the 45Q tax credit, pushing the eligibility date back, making credits transferable, and allowing for direct payment of the credit. The credit is expected to cost almost $30 billion over the next decade. Critically, the credit rewards operators for every ton of carbon captured, rather than absolute emissions reductions, creating a financial incentive for carbon production. If captured, that carbon is then frequently injected into wells to produce more oil and gas. 

Under the Infrastructure Investment and Jobs Act and the IRA, the federal government is also slated to spend more than $12 billion over the next four years on research, development and demonstration projects, in addition to more than $48 billion in loan guarantees and debt financing for CCS projects. And the Inflation Reduction Act created a new, time-limited loan authority of $250 billion for which many CCS projects would be eligible. 

Despite the billions of dollars thrown at CCS, the technology has struggled with deployment issues due to high costs. And “carbon utilization” remains little more than a pipe dream; the vast majority of captured carbon is used for enhanced oil recovery. 

You can find the report HERE. To speak with Autumn Hanna or other experts on federal spending on carbon capture and storage, contact press@acadia-strategies.com 

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