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How Expanded 45Q Tax Credit is Energizing the Carbon Capture Market

Published by Todd Bush on September 30, 2025

The expanded Section 45Q tax credit is proving to be a pivotal force in accelerating carbon capture and storage (CCS) projects across the United States. This incentive, combined with supportive policies, is breathing new life into an industry critical for achieving decarbonization goals. As companies invest in CCS technologies, the market is responding with growing optimism, seeing a future where carbon emissions can be sustainably managed at scale.

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The Growing Momentum Behind CCS

Carbon capture and storage has come a long way, emerging as a key pillar in managing industrial carbon emissions. Thanks to the recent expansion of the 45Q tax credit, project developers now find it economically viable to implement large-scale CCS systems.

  • Increased project pipeline: Over 150 proposed CCS projects in heavy industries like cement, power generation, and oil & gas.
  • Economic benefits: CCS projects supported by 45Q are associated with thousands of jobs and billions in economic activity annually.
  • Emissions impact: The technology helps companies meet regulatory demands and corporate net-zero commitments by capturing millions of metric tons of CO2.

1. Incentive Expansion Drives Large-Scale Investment

The 45Q tax credit now offers companies up to $85 per metric ton of CO2 permanently stored and $60 per metric ton for CO2 used in enhanced oil recovery. This increased value has made CCS a financially attractive proposition.

Compared to previous years, the expanded credit is credited with turning marginal projects into bankable ones, fueling a surge in private sector partnerships and government-backed demonstrations.

2. Industry Leaders Endorse the Impact

Julio Friedmann

"The expanded Section 45Q is truly changing the economics of carbon capture. With these incentives, technologies that once seemed out of reach are now feasible at scale."

Julio Friedmann, Senior Research Scholar, Columbia University Center on Global Energy Policy

Balancing Enthusiasm with Fiscal Responsibility

While the industry's excitement about the tax credit is palpable, questions around fiscal impact and sustainability also come into focus. The expanded credit represents a significant government expenditure, but supporters argue it is essential to avoid the escalating costs of climate impacts.

  1. The Congressional Budget Office estimates the cost could reach upwards of $45 billion annually over the next two decades.
  2. Various watchdog groups call for transparent oversight to ensure funds are effectively driving emission reductions.
  3. Legislators continue discussions on the longevity and scale of incentives to maintain market confidence.
Daniel R. Simmons

"This is a generational opportunity to catalyze the clean energy transition. It requires careful stewardship but holds enormous promise for decarbonizing heavy industry."

Daniel R. Simmons, Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy

Key Facts About 45Q and CCS Market Growth

  • The global carbon capture and storage market is expected to grow at a CAGR of over 11% from 2025 to 2030, reaching upwards of $15 billion.
  • Post-combustion carbon capture leads the technology segment with 48% market share.
  • In the US, the 45Q tax credit underpins more than 150 CCS projects, with strong interest from cement, power, and oil & gas sectors.
  • Each ton of CO2 captured through 45Q-eligible projects can generate up to $85 in federal tax credits.

Why Investors and Industry See a Bright Future

Carbon capture represents a crucial step in industrial decarbonization, especially for sectors where emissions are hardest to abate. With governments and companies committing billions, the sector expects:

  • Rapid advancements in capture and storage technology
  • Scaling of commercial projects designed for climate impact
  • New public-private partnerships leveraging 45Q incentives

This momentum aligns with global goals to meet net-zero targets by mid-century, marking CCS not as an afterthought but a central strategy. The expanded Section 45Q tax credit enhances this outlook by providing the economic framework for sustained growth.

Looking Ahead: A Catalyst for Change

As the landscape evolves, the expansion of the 45Q credit is more than just a financial incentive. It embodies the hope of an energy future where industrial emissions no longer contribute to climate change unchecked.

By fostering innovation and encouraging commercial deployments, the tax credit ushers in a new chapter for carbon capture—a future shaped by cleaner industry and resilient environmental policies.

Ultimately, the ongoing success of CCS supported by 45Q will depend on collaboration among lawmakers, industry leaders, and communities dedicated to safeguarding the planet for generations to come.

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