The bill, known as the “One Big Beautiful Bill,” was passed by Congress on July 3. It would award emitters up to $85 per metric ton of CO2 captured and used in enhanced oil recovery. The change would represent a $25/metric ton increase, bringing the incentive on par with the incentive for carbon storage without any associated oil production. The American Petroleum Institute had lobbied for the boost to EOR, gaining the support of several Republican senators. However, the 45Q expansion received mixed reviews from other industry watchers. The Carbon Capture Coalition, a group that includes Occidental Petroleum Corp. and climate group Clean Air Task Force, does not have a consensus position on the higher credit level for EOR.

• The bill would also raise credit levels to $85/metric ton for emitters that capture their CO2 for other end uses, such as synthetic fuels production or carbonating beverages.
• EOR and other utilization projects that pull CO2 from ambient air instead of smokestacks would be eligible for an even higher credit of $180/metric ton, up from $130/metric ton.

The final bill came alongside steep cuts to other clean energy and climate provisions, particularly those supporting renewable power generation. The 45Q tax credit was reduced, and several provisions that were proposed in earlier drafts were eliminated. The Carbon Capture Coalition had opposed these changes, but Stolark acknowledged that the bill still includes some positive elements. “Anything that we can do to see more capture and direct air capture technology being realized is a good thing,” Stolark said. “But I would say that we still very much see long-term geologic storage as where the industry is moving.”

Despite the mixed reviews, some proponents of carbon capture technology argue that EOR can still be a net positive for the climate. If oil demand is held constant, EOR minimizes exploration and drilling by increasing the productivity of existing wells and infrastructure.

“I understand the desire to reduce fossil fuel dependence,” Stolark said. “But [EOR is] a way to make sure that we’re utilizing existing resources as opposed to new resources.”

EOR operators can source recycled CO2, which could reduce greenhouse gas emissions. The oil produced from EOR operations in places like West Texas has fewer associated emissions than the imported oil it would likely be replacing.

The Congressional enhancements to the 45Q tax credit have also sparked debate about the impact on the deployment of carbon capture for oil production relative to long-term storage. Stolark acknowledged that the higher tax break may not get more producers in the game, but she doubted it would have a significant impact. “Given that EOR is a specialized extraction method, I doubt that the higher tax break will get more producers in the game.”

However, some experts argue that the bill could improve carbon capture’s economics even beyond the extra $25/metric ton tax break and additional revenue stream. Sending CO2 to an existing oilfield is much easier than securing permits for new CO2 pipelines and storage, according to Jeff Brown, a distinguished associate at the think tank EFI Foundation and adjunct professor at Stanford University’s Doerr School of Sustainability.

In this way, Brown added, Congress’ action could improve carbon capture’s economics even beyond the extra $25/metric ton tax break and additional revenue stream.