Industrial Carbon Capture and Sequestration Tax Credit


Energy - Fossil Fuels

Subsidy Type

Tax Expenditure

Committees of Jurisdiction

Senate Finance Committee

$110 FY 16 Budget Score (in mil.)
$410 FY 16-25 Budget Score (in mil.)

Carbon capture and sequestration is the process of separating carbon dioxide (CO2) from combusted fossil fuels, pumping it deep inside the earth, and leaving it stored in underground geologic formations such as exhausted oil and gas fields. The technology is predominantly designed to be used with coal, coal-to-liquid, or natural gas plants to decrease their overall carbon emissions. The Emergency Economic Stabilization Act of 2008 created a tax credit for companies that capture and store carbon. The carbon dioxide sequestration credit for any taxable year is equal to $20 per metric ton of carbon dioxide captured, instead of released into the atmosphere, and disposed of in secure geological storage, or $10 per metric ton of qualified carbon dioxide which is used as a tertiary injectant and disposed of in secure geological storage. Secure geological storage can include deep saline formations, oil and gas reservoirs, or unmineable coal seams. To qualify, a facility must capture at least 500,000 metric tons of carbon dioxide during the taxable year. The credit has been indexed to the rate of inflation since 2009 and is capped to expire in whatever year 75 million tons worth of credits have been claimed.

« Back to Database