Carbon management refers to the value chain of technologies that capture, manage, and abate carbon dioxide (CO2) or carbon monoxide (CO) from critical domestic sectors such as steel, cement and chemicals production, and directly remove CO2 from the atmosphere. This carbon is then transported to appropriate sites for reuse or secure underground storage in appropriate geologic formations.

The One Big Beautiful Bill Act of 2025 (H.R.1), which Congress passed and sent to U.S. President Trump’s desk for signature on July 3, contained congressional Republican priorities and included several significant changes to clean energy tax credits. The Section 45Q tax credit, which provides a per-ton tax credit for captured and stored or reused carbon, is the market signal for the nationwide deployment of carbon management technologies across emitting sectors.

Thanks to long-standing bipartisan support for carbon management technologies, combined with the Carbon Capture Coalition and allied efforts, 45Q emerged from OBBBA not only intact but slightly enhanced. This positions the 45Q tax credit to continue to be the market signal for the nationwide deployment of carbon capture, direct air capture, transport, reuse and storage technologies.

Enhancements to the 45Q Tax Credit Under OBBBA Create End-Use Parity
Since its creation in 2008 and through subsequent updates, the 45Q tax credit has provided differentiated credit levels for carbon management projects depending on the end-use of captured CO2 or CO. With the passage of the OBBBA, the core credit structure is preserved, thus providing a vital market signal for a broad range of carbon capture, removal, reuse, transport and storage applications across industries. Additionally, the bill creates credit level parity for end uses of captured carbon. Alongside boosting credit values for CO2 used for enhanced oil recovery (EOR), this change to the credit structure builds upon critical enhancements made to the credit in 2022 by providing enhanced credit values for carbon reuse projects, ensuring innovative reuse technologies can fulfill their role as an essential complement to large-scale dedicated geologic storage. The modified credit values are available for projects placed in service following the law’s enactment.

New Foreign Entity of Concern Requirements for Clean Energy Tax Credits
The OBBBA does impose new restrictions on clean energy tax credits created in the 2022 Inflation Reduction Act by creating Foreign Entities of Concern requirements for taxable years beginning January 1, 2026. Different tax credits are subject to other requirements, but specifically for 45Q, any entity deemed controlled or influenced by a specified foreign entity is barred from claiming the tax credit. In addition, the law prohibits any taxpayer determined to be a “foreign-influenced entity,” which includes specific thresholds for partial ownership by specified foreign entities, including ownership of debt, from claiming the 45Q tax credit. Among those credits now with FEOC restrictions, those placed on 45Q are among the least restrictive and do not apply to the materials or supply chains for building carbon management projects.

On July 7, President Trump issued Executive Order “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources,” which, among other things, directed the U.S. Treasury to promulgate guidance for taxpayers on complying with these new FEOC restrictions. Guidance is necessary so that project developers may understand their full impact on clean energy markets and subsequent technology deployment.

What’s Next for Carbon Management
Increasingly, when we discuss what’s needed to deploy carbon management technologies across emitting sectors nationwide, the answer is “more projects.” The more projects we see across sectors, the more costs begin to reduce from learn by doing, and the greater the confidence in the technology from investors. And, with meaningful engagement at the local level, the expectation and hope are that the public will become more comfortable with the technologies operating safely in their communities.

After the passage of OBBBA, the Carbon Capture Coalition is now focusing on ensuring progress on the available policy framework for the commercial deployment of carbon management technologies to cement carbon management technologies’ role in providing affordable, reliable, abundant and clean energy sources.

Knowing that more project deployment is the end goal, the Coalition’s to-do list for the remainder of this Congress includes high-impact legislative and regulatory activities to ensure we make continued progress on the available policy framework for deploying these technologies. This includes robust appropriations for the research, development and deployment of carbon management technologies, reforms to the available permitting regime for project deployment, making progress on necessary regulations for technology deployment, and building markets for carbon management technologies.

Conclusion
Following the passage of the OBBBA, carbon management advocates and our allies have a tremendous opportunity to continue working with bipartisan members of Congress and the administration to make progress on the necessary suite of policies and regulations for the nationwide deployment of these technologies.

Authors:
Leo Duke
Communications & Member Relations Specialist, Carbon Capture Coalition
Christian Flinn
Coalition Public Policy Manager, Carbon Capture Coalition

Printed in Issue 2, 2025 of Carbon Capture Magazine

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Leo Duke and Christian Flinn