GAO Report Flags Oversight Gaps In 45Q Carbon Capture Credit

A government watchdog says regulators still can't confirm whether America's 45Q carbon capture tax credit is meeting its goals. The Government Accountability Office found real compliance delays for companies converting captured carbon into products. It issued seven recommendations to close data gaps and speed up reviews, not to shrink the credit.

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What Did The GAO Actually Find?

GAO examined how the Internal Revenue Service and Department of Energy administer the credit. As of March 2026, 33 carbon capture facilities were operating nationwide, with more planned. Investigators also visited two carbon capture sites in Houston, Texas, and interviewed officials at the IRS, DOE, and Environmental Protection Agency.

The number of 45Q credit claims more than tripled between 2019 and 2023, according to IRS data cited in the report. That growth reflects the credit's expansion under the 2022 Inflation Reduction Act and its later extension to more capture pathways.

Even with that growth, investigators found no single federal agency responsible for measuring whether the credit is working. GAO summed up the core problem in its own words.

That gap doesn't mean the credit failed. It means Congress never assigned anyone the job of checking the math, something GAO's report is now asking lawmakers to fix.

Where Are Companies Getting Stuck?

Year	Legislative Action	Key Change
2008	Energy Improvement and Extension Act	Created the Section 45Q credit for carbon oxide sequestration
2018	Bipartisan Budget Act	Removed the 75 million ton cap and added direct air capture and utilization as eligible pathways
2022	Inflation Reduction Act	Raised credit values and extended the construction deadline to 2033
2025	One Big Beautiful Bill Act	Set equal credit values for storage and utilization pathways
2026	GAO Report GAO-26-107711	Recommended stronger data collection and streamlined compliance review

Companies that store captured carbon underground report the smoothest path to claiming 45Q. Those converting carbon into products, like concrete or jet fuel, face a much rougher one.

The credit requires a pre-approved lifecycle analysis built on direct production data through the end of the tax year. That requirement applies no matter when in the year a facility actually starts operating. Many developers end up filing amended returns instead of claiming the credit on their original one.

These delays land hardest on utilization projects tied to enhanced oil recovery, a pathway common across the Gulf Coast CCS buildout. Developers behind hubs like the Bayou Bend carbon storage hub near Houston depend on predictable timelines to attract investors.

What Is The GAO Recommending?

GAO issued seven total actions covering Congress, the IRS, and the DOE. One matter asks Congress to track the credit's progress toward its goals. It also asks for a look at efficiency and how 45Q compares to other policy tools.

The other six recommendations target the utilization approval process directly. Four go to the IRS. They cover data timing, technology baselines, and a simplified emissions model already used for the 45V and 45Z credits.

Two go to the DOE. They cover that same emissions model guidance and a process for fixing lifecycle analysis errors without restarting the review.

The IRS partially agreed with one recommendation. It disagreed, along with the DOE, on the other five, though GAO maintains all seven are warranted.

Bisignano pointed to the agency's recent safe harbor guidance for carbon reporting as evidence the IRS already responds to industry feedback. That guidance addressed timing gaps tied to the EPA's greenhouse gas reporting program.

Why This Doesn't Change 45Q's Trajectory

None of GAO's findings target the credit's value or its purpose. The report focuses on measurement and paperwork, the kind of routine fix that eventually follows most large federal tax expenditures.

45Q already survived its biggest test when the One Big Beautiful Bill Act preserved and expanded it in 2025. That outcome followed the industry's open letter to Congress, signed by groups spanning the American Chemistry Council to the United Steelworkers. The credit now anchors much of the $77 billion U.S. carbon capture industry.

45Q isn't the only federal tool developers lean on. Some pair it with other federal clean energy tax credits or with DOE's direct air capture hub funding to close financing gaps. Oversight fixes like these tend to make that stacking easier once agencies clarify the rules.

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Texas's Class VI primacy and the broader reshaping of America's carbon storage map already point toward faster project timelines. A cleaner federal compliance process would only add to that momentum.

Routine oversight like this is how big federal programs stay accountable without losing their footing. The 45Q credit isn't going anywhere. It's just getting a closer look.

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