A broad coalition of civil society organizations is urging US Congress to dismantle the 45Q tax credit, arguing that the policy has drifted far from its stated climate intent and now functions primarily as a subsidy for oil extraction.
More than 125 national and local groups signed a joint letter coordinated by Food & Water Watch, alongside signatories including Sierra Club, Climate Justice Alliance, Bold Alliance and Earthjustice.
Campaigners argue that the bulk of carbon captured under 45Q is ultimately routed into enhanced oil recovery, effectively using public funds to support additional fossil fuel production.
They cite data from the Environmental Protection Agency (EPA) indicating that most captured CO2 in the US is channeled toward oil extraction rather than permanent storage. With no cap on the credit, critics warn that taxpayer exposure could continue to balloon as more projects qualify for support.
Subsidies, scrutiny, and the credibility gap
The intervention lands alongside a new critique from Jeff Merkley, who has warned that recent budget legislation expands fossil-linked subsidies while eroding federal revenues over the next decade.
His office points to long-standing weaknesses in monitoring and verification for 45Q claims, arguing that past credits were issued with limited oversight, undermining confidence that the program delivers measurable climate benefits.
Community advocates frame the issue less as an accounting failure and more as an environmental justice concern.
Relevant: IRS Creates Temporary Safe Harbor To Shield 45Q Carbon Capture Credits
Residents in heavily industrialized regions say CCS tied to enhanced oil recovery extends pollution burdens while locking in new pipelines and industrial infrastructure. In their view, 45Q entrenches a model where communities shoulder environmental risks while large producers capture the upside.
Defenders of the credit argue that carbon capture remains a necessary tool for hard-to-abate sectors, and that stronger safeguards are the appropriate fix. But opponents counter that continued support for oil-linked capture distorts climate policy at a moment when public funds are scarce and political capital is limited.
As Washington debates the future of US climate incentives, 45Q has become a litmus test: whether carbon capture policy will prioritize permanent emissions reductions, or continue underwriting the economics of extraction.
Read more: Groups Call On IRS To Strengthen Oversight Of 45Q Tax Credit
