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45Q Issue Brief - Nearly 90 Percent of Carbon Sequestration Tax Credits Based on Insufficient Reporting and Fraudulent Claims

Tuesday, February 14, 2023 11:45 AM | PR Newswire via QuoteMedia

45Q Issue Brief - Nearly 90 Percent of Carbon Sequestration Tax Credits Based on Insufficient Reporting and Fraudulent Claims
45Q Issue Brief - Nearly 90 Percent of Carbon Sequestration Tax Credits Based on Insufficient Reporting and Fraudulent Claims

PR Newswire

Taxpayers for Common Sense analysis shows $894 million of $1 billion in 45Q credits between 2010-2019 did not comply with EPA requirements for reporting on sequestered carbon.

WASHINGTON , Feb. 14, 2023 /PRNewswire/ -- Congress envisioned the Carbon Capture and Sequestration (CCS) 45Q tax credit as an incentive that would spur innovations in technology and reduce greenhouse gas (GHG) emissions. But troubling trends have emerged, and public records reveal that close to a billion dollars was fleeced from taxpayers between 2010 and 2019. The nonpartisan Taxpayers for Common Sense today released a new issue brief highlighting more than a decade of fraud and abuse of Section 45Q of the U.S. Internal Revenue Code tax credit for CO 2 storage, including a pattern of non-compliance with EPA regulations by the oil and gas industry. Despite this well-documented history of fraudulent claims, Congress expanded the scope of 45Q in 2022.

To download the new 45Q issue brief from Taxpayer for Common Sense, visit:

The new Taxpayers for Common Sense issue brief highlights that 10 taxpayers claimed more than $1 billion in 45Q tax credits from 2010 to 2019, roughly 99 percent of the total credits claimed. Of the total $1 billion claimed, credits worth $894 million did not comply with Environmental Protection Agency (EPA) requirements for reporting on sequestered carbon.

Taxpayers for Common Sense Vice President Autumn Hanna said: "No one can deny the oil and gas industry's non-compliance and fraudulent 45Q claims. Tax credits for CO2 storage have a failed history. The expansion of 45Q is particularly worrisome since it could open the flood gates to more fraud and abuse. Based on the most recent information available, there is little assurance that 45Q will do more than pad the pockets of special interests, primarily oil and gas companies and the ethanol industry."

Additionally, the issue brief focuses on the practice of Enhanced Oil Recovery (EOR) and the long-term cost to taxpayers. Most companies taking the 45Q tax credits sell their carbon oxides to oil and gas producers, who in turn use them to enhance oil extraction and increase output – a process is commonly known as enhanced oil recovery (EOR).

Taxpayer for Common Sense underscores that EOR projects do not have net negative emissions throughout the entire life of the project, according to recent academic papers. Despite the availability of the 45Q credit, just one of the 12 commercial carbon capture projects in the US sequesters captured carbon underground. The other 11 are capturing and injecting CO2 for EOR.

Cost estimates for 45Q have risen over the life of the tax credit. The issue brief documents that the Joint Committee on Taxation (JCT) adjusted its 10-year cost projection from roughly $1.8 billion in 2018 to $3.2 billion in 2022. A different cost estimate from the U.S. Treasure Department in 2021 put the price tag for 45Q at $20.1 billion from FY2021-FY2031, but that changed last year when the Treasury Department's 45Q 10-year cost estimate jumped from $20.1 billion to $30.6 billion .

Autumn Hanna said: "What we have found is that American taxpayers are being forced to foot the bill for a flawed climate solution in the form of a tax credit that is subsidizing the very industries responsible for climate change."


Taxpayers for Common Sense ( ) is a nonpartisan budget watchdog that has served as an independent voice for the American taxpayer since 1995. We work to ensure that taxpayer dollars are spent responsibly, and that government operates within its means. TCS does not accept donations from corporations, unions, the government, or anyone with a financial stake in our work. TCS has long raised the alarm on carbon capture and sequestration (CCS) and has been a critic of federal subsidies for this expensive and unproven technology.

Check out additional TCS resources on CCS here:

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SOURCE Taxpayers for Common Sense

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