Earth Track Document

This memo provides updated subsidy estimates and background information on three subsidies benefiting the oil and gas industry. These include 45Q tax credits for carbon capture, utilization and storage (CCUS); tax exemptions for Master Limited Partnerships (MLPs), used heavily by the oil and gas sector; and the federal Strategic Petroleum Reserve. The memo also highlights an emerging risk area: the use of tax-exempt corporate structures for carbon sequestration activities.

Chapter 45Q provides large tax credits for carbon capture, utilization and storage (CCUS). Unlike budgetary spending, these credits are uncapped and the costs to taxpayers in terms of lost federal tax revenues appears to have been greatly underestimated. Not only is the government’s financial exposure uncapped, but compliance with statutory rules is self-reported, and because tax returns are confidential under federal law (26 USC §6103), only the IRS is legally entitled to know the identities of claimants and the amounts of their claims.

The 45Q tax credit expansion for Carbon Capture, Utilization, and Storage, passed as part of the Inflation Reduction Act of 2022, dramatically increases the expected cost to taxpayers without adequate oversight or transparency to ensure fiscal integrity or program efficacy. 

The World Nuclear Industry Status Report 2024 (WNISR2024) assesses the status and trends of the international nuclear industry. Earth Track was pleased to have contributed to the report again this year, with the focus chapter Power Firming and Competitive Pressure on Nuclear Energy assessing how solar/wind + storage put increasing competitive pressures on the nuclear sector.

This event was the Washington, DC launch of the World Nuclear Industry Status Report 2023 (WNISR 2023). It was co-sponsored by Princeton's Center for Policy Research on Energy and the Environment and the Program on Science and Global Security. 

The Permian is by far the largest oil producing basin in the United States and the second largest for natural gas. Firms in the region have been highly profitable, yet have continued to benefit from a wide array of government subsidies. Some of the subsidies have been in place for decades, though new ones continue to be introduced as well. All of the subsidies work against the need to decarbonize our economy and erode the competitive positioning of lower-carbon substitutes.