California lawmaker Ro Khanna introduced a bill into the US House of Representatives on Monday that would prevent investors from securing carbon capture and sequestration tax credits if the carbon is used to boost oil production.
The bill has little chance of being adopted into law, but reflects deep political divisions in Congress over whether and how carbon capture can be used as a tool in the fight against climate change.
The tax credit, known as 45Q, allows companies to earn money for every ton of carbon that they capture off a polluting facility and store underground. That includes carbon injected into oil fields to push trapped oil out of the ground, something the industry calls enhanced oil recovery (EOR).
Khanna's bill would revise 45Q by eliminating any credit for captured carbon used for EOR, which environmentalists say defeats the purpose of carbon capture by promoting the carbon-intensive fossil fuels industry.
Currently, 95% of carbon capture and storage (CCS) capacity in the United States is for EOR, according to data from the Global CCS Institute.
"We shouldn't be subsidizing (EOR) if this is going to be increasing carbon," Khanna told Reuters. "If the technology advances, we can consider it."
The bill, titled the End Polluter Welfare for Enhanced Oil Recovery Act, is co-sponsored by Raul Grijalva of Arizona, chair of the House Natural Resources Committee, and Mike Quigley of Illinois, both Democrats like Khanna. It is supported by twenty green groups including Food & Water Watch, the Sierra Club, and Sunrise Movement.
Khanna hopes the bill will be adopted into the Senate's version of the Build Back Better Act (BBBA), the budget reconciliation bill. The House passed its version of the bill in November.
But the provision would be a significant departure from the House version, which includes a major expansion to the 45Q credit.
According to media reports, several senators, including West Virginia's Joe Manchin, whose vote is needed to pass BBBA, have been discussing eliminating a provision of 45Q that requires facilities to capture at least 75% of their carbon emissions to qualify.
"They're going the wrong way," Khanna said of his Senate colleagues.