The Credit That Refused to Die: 45Q's New Chapter

When the Carbon Capture Coalition and industry stakeholders watched Congress debate the One Big Beautiful Bill Act in 2025, many braced for the worst. DOE grants were being slashed. Clean energy funding was on the chopping block. But when President Trump signed the bill on July 4, 2025, something surprising happened: the 45Q tax credit didn't just survive, it got upgrades.

For an industry facing federal uncertainty, this outcome signals that carbon capture remains commercially viable in the U.S. Here's what changed and why developers are still moving forward.

>> In Other News: Washington State Pumps More Tax Dollars Toward Green Jet Fuel

The Numbers That Matter

The Global CCS Institute confirmed that the OBBBA maintains the core 45Q credit structure. For projects in calendar years 2024 through 2026, the credit values remain at $85 per ton for point-source capture and $180 per ton for direct air capture with dedicated geologic storage. Inflation adjustments kick in for projects beginning after 2027.

But here's where it gets interesting. The bill created something developers have wanted for years: parity between permanent storage and utilization. CO2 used in enhanced oil recovery or converted into products now qualifies for the same credit value as CO2 stored permanently underground.

The key updates to the 45Q tax credit under the OBBBA. It highlights that the credit values for point-source and direct air capture are maintained through 2026, enhanced oil recovery now has parity, and transferability is preserved for smaller developers. It also notes the new restriction excluding Foreign Entities of Concern from eligibility.

This EOR parity is a big deal for Gulf Coast operators. Projects like the Louisiana carbon capture buildout and Texas-based hubs can now leverage existing oil and gas infrastructure while capturing the full credit value.

"Deployment of CCS can strengthen America's energy future, create jobs, and help solidify its position as a leader in the global low-carbon economy. U.S. policymakers continue their longstanding bipartisan support for CCS by sustaining and raising the 45Q tax credit in the One Big Beautiful Bill Act."

Jarad Daniels, CEO, Global CCS Institute

Why Transferability Is the Real Win

Earlier drafts of the OBBBA had proposed phasing out transferability, which would have been devastating for smaller developers. The final bill kept it intact. This means companies that earn 45Q credits but don't have large enough tax liabilities can sell those credits directly to third parties for cash.

That cash can fund capital investments, pay off infrastructure costs, or keep projects moving forward. It's what makes the $77 billion U.S. carbon capture industry accessible to more than just major integrated players like ExxonMobil and Air Products.

Gulf Coast industrial corridor aerial photo pipelines refineries energy facility daylight

From Grant-Dependent to Market-Driven

The shift away from DOE grants isn't a setback. It's a sign the market is maturing. Projects no longer need to wait on federal funding cycles or navigate political uncertainty around appropriations. Tax credit monetization and private capital are now the primary paths to project bankability.

This works especially well in states with regulatory advantages. Texas gained Class VI primacy in November 2025, joining Louisiana, Wyoming, North Dakota, West Virginia, and Arizona. These states can now fast-track permitting while developers leverage 45Q for project economics.

"To be clear, the 45Q tax credit continues to be the single most important driver of carbon management technologies, which are, in turn, a vital contributor to American energy, environmental, and economic leadership."

Jessie Stolark, Executive Director, Carbon Capture Coalition

What to Watch in 2026

With 45Q intact and primacy expanding, several milestones are on deck this year:

1. DAC Goes Commercial

Occidental's STRATOS facility in Texas is entering its first full operational year. At $180 per ton, DAC projects have strong economics when paired with the right geology and offtake agreements.

2. Gulf Coast Scale-Up Continues

Texas and Louisiana dominate the project pipeline. Primacy, shared infrastructure, and declining capture costs are creating a cluster effect that's hard to replicate elsewhere.

3. Wage and Apprenticeship Multipliers

Projects meeting labor standards will capture the highest credit values. Smart developers are already structuring their workforce plans to qualify.

The Bigger Picture

The U.S. now has more than 90 CCUS projects in the pipeline, with installed capacity to capture over 28 million tonnes per year. The 45Q credit's survival under OBBBA signals bipartisan recognition that carbon management is here to stay.

For developers, the message is clear: the grant-driven era is over, but the tax credit era is just getting started. Those who understand the new math are already moving forward.