Big Oil’s carbon capture tax credit betrayal

Big Oil’s carbon capture tax credit betrayal
© Getty Images

Instead of finding ways to responsibly reduce production, the fossil fuel industry has decided carbon capture is the preferred way to tackle their climate pollution.

Tax credits recently finalized in Congress under Section 45Q will purportedly lead to an uptick in carbon capture projects that will help us bury more CO2 underground. But according to the International Energy Agency, upwards of 90 percent of these projects will simply sell the captured carbon back to oil companies to be injected underground to coax more oil to the surface.

ADVERTISEMENT
Over time this process, buoyed by a consistent supply of subsidized CO2, could unlock 81 billion barrels of oil. No wonder the fossil fuel industry is so enthusiastic and its allies in Congress are finally willing to acknowledge carbon emissions are a thing we have to deal with.

 

If we are going to go full tilt into Carbon Capture and Sequestration (CCS) deployment, as bipartisan support on Capitol Hill would indicate, we need to make sure it is done right. Unfortunately, but not unsurprisingly, certain oil companies are engaging in bad faith when it comes to the details. While many in the growing Carbon Capture Coalition are focused on important carbon utilization technologies and research, there is a parallel effort by Big Oil to undermine basic environmental protections and data collection. These requirements are necessary to assess our ability to safely store captured carbon permanently underground without it escaping back into the atmosphere over time. Yet, despite backdoor efforts to circumvent and discredit important environmental safeguards by many in the industry, some companies are already complying.

Members of Congress who want to build enduring support for carbon capture and utilization technology should push back against these attempts to undermine carbon storage both through legislation and through the tax credit implementation process at the Treasury Department.

Sen. John HoevenJohn Henry HoevenOvernight Energy: Trump Cabinet officials head west | Zinke says California fires are not 'a debate about climate change' | Perry tours North Dakota coal mine | EPA chief meets industry leaders in Iowa to discuss ethanol mandate 74 protesters charged at Capitol in protest of Kavanaugh Big Oil’s carbon capture tax credit betrayal MORE (R-N.D.) and Rep. Kevin CramerKevin John CramerOvernight Health Care: Supreme Court nomination reignites abortion fight in states | Trump urges Sessions to sue opioid makers | FDA approves first generic version of EpiPen Vulnerable Dem Sen. Heitkamp hits opponent on ObamaCare repeal votes Overnight Energy: Trump Cabinet officials head west | Zinke says California fires are not 'a debate about climate change' | Perry tours North Dakota coal mine | EPA chief meets industry leaders in Iowa to discuss ethanol mandate MORE (R-N.D.) are driving the persistent efforts to deregulate the tax code at the request of allies in the oil industry via the Energy Advance Center. This undercuts the hard work to date on carbon utilization and breeds suspicion that, given the oil industry’s history of dishonest engagement around carbon emissions, is entirely reasonable.

Complicating matters further is the new revelation that the carbon capture tax credit is compromised. Since 2009, companies accrued well over $500 million in tax credits while EPA has no record that any of the captured carbon is actually contained in “secure geologic storage,” a condition necessary to qualify for the tax credit in the first place. Companies claimed the credits but avoided the monitoring and reporting requirements needed to show actual sequestration.

We still do not know which companies claimed the tax credits, but the small number of eligible carbon capture projects indicate it could only be a handful of operators. Exxon Mobil, for example, owns the largest carbon capture facility in the world and would have been eligible to receive tax credit if they followed the rules.

Exxon’s contracts with the buyers of its captured carbon would, in theory, reveal the full story. IRS indicated this is not public information, but given the vast discrepancy in the credits claimed versus amount reported to EPA, it is certainly in the public’s interest to find out what really happened with our tax dollars.

Congress should conduct an investigation into the integrity of the Section 45Q tax credit, including which companies claimed what, when and why the regulations were ignored. This is basic corporate accountability and oversight necessary to ensure the credit doesn’t continue to favor enhanced oil recovery companies and that the public maintains trust in the process of storing captured carbon safely underground at scale.

John Noel is the National Oil & Gas Program director for advocacy organization Clean Water Action.