The Trump administration, which has called the climate crisis “a hoax” and canceled funding for many other types of climate projects, continued this tax credit, which often benefits energy companies that are already using underground technology such as fracking. It offers companies $85 in transferable tax credits for each ton of point-source carbon stored – a bounty that has set off what some call “a carbon-capture gold rush”.
Since even the smallest projects expect to store hundreds of thousands of tons of carbon each year, the tax credits could be hugely profitable, said Brad Johnston, an analyst with Enverus, an energy industry market research company and data company that tracks permits for this type of project. Many are proposed for ethanol plants, which emit a nearly pure stream of CO2, making their emissions simpler to capture and put underground.
While only a handful of projects are operating, a “huge wave” is about to be approved, Johnston said.
Experts say the money brought in to these companies by tax credits from these carbon projects can rival the revenues from selling the actual ethanol itself, thereby potentially doubling a plant’s earnings.
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Environmental experts say the risks of carbon storage include earthquakes, water table contamination and potentially deadly carbon leaks, and point to several cases where carbon has leaked.
In 2024, the nation’s first commercial carbon capture project, under a lake that provides drinking water for large parts of central Illinois, developed two leaks. The state subsequently banned new CCS projects under one of the state’s biggest aquifers.
