President Donald Trump’s executive orders and energy “emergency” declaration signal the US is going to expand the carbon capture and sequestration policies he focused on during his first administration.
Carbon capture refers to the process of removing carbon dioxide from fuel production, fuel combustion processes, and ambient air streams. The captured carbon can either be compressed into liquid and then injected for permanent geologic sequestration in deep sub-surface formations, or used for enhanced oil recovery and product manufacturing.
The Bipartisan Budget Act of 2018, which Trump signed, expanded Section 45Q tax credits so a credit could be computed per metric ton of qualified carbon oxide captured and sequestered, rather than exclusively for CO2. The Department of Energy in 2020 also supported so-called “clean fossil” power generation technologies such as natural gas and blue ammonia in combination with carbon capture processes.
Trump’s latest executive orders promote energy supply solutions that integrate with and are supported by carbon capture, creating optimism those technologies will receive renewed support. By declaring a national energy emergency, Trump directed the heads of executive departments and agencies to exercise any lawful emergency or other lawful authorities “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.”
The executive order defines energy as “crude oil, natural gas, lease condensates, natural gas liquids, refined petroleum products, uranium, coal, biofuels, geothermal heat, the kinetic movement of flowing water, and critical minerals.” Many of these energy sources are well-suited for a carbon capture component.
Meanwhile, Rep. Troy Balderson (R-Ohio) reintroduced legislation to promote fossil fuel and nuclear energy development, signaling a push for energy supply that integrates with carbon capture technologies.
There has been continued bipartisan support for carbon capture and related sequestration since the Obama administration’s Environmental Protection Agency adopted the Class VI CO2 injection well permitting program critical to carbon capture projects in 2010. The 2024 Carbon Dioxide Removal Investment Act established a new production tax credit for carbon removal technology, and there is a general expectation the tax credits for carbon capture under the Inflation Reduction Act will remain intact despite the change in administration.
Another factor contributing to optimism for broader deployment is that permitting, an often costly and time-consuming process, may be streamlined. Trump directed federal agencies to eliminate delays and expedite processing of federal permits for projects essential to the nation’s economy or national security
As a result, the Environmental Protection Agency is expected to prioritize issuing permits that support fossil fuel energy sources, as well as permits for technologies that integrate with such sources, such as Class VI CO2 injection well permits. The EPA likely will delegate its authority, known as primacy, to a greater number of states beyond the current four (West Virginia, North Dakota, Wyoming, and Louisiana) to issue Class VI permits at the state level, further expediting the permitting process.
However, challenges remain for widespread carbon capture deployment. While technologies such as amine CO2 stripping and CO2 injection for enhanced oil recovery are well-established with mature permitting processes, deep CO2 injection for permanent sequestration is a more recent development and faces technical, supply chain, and regulatory hurdles.
Beyond such project development considerations, some stakeholders view carbon capture processes as controversial because they encourage continued use of fossil energy resources and raise concerns about the safety of deep CO2 injection, notwithstanding the safety requirements imposed by the Class VI permitting regulations.
Despite these challenges and uncertainties, progress in carbon capture technology has been notable, driven by policy support and growing industry interest. In 2022, GE Gas Power received $5.7 million in federal funding for a study on retrofitting Alabama Power’s James M. Barry Electric Generating Plant to capture up to 95% of its CO2 emissions.
New carbon capture opportunities are also rising from the growing energy demand of data centers supporting artificial intelligence. Engine No. 1 and Chevron U.S.A. Inc. recently announced a partnership to develop natural gas power plants for data centers on a site that is compatible with lower-carbon solutions such as carbon capture.
The trend of promoting carbon capture projects domestically and globally will likely continue. McKinsey & Co. anticipates that annual investment in carbon capture, utilization, and storage could reach $175 billion by 2035. A recent report from ResearchAndMarkets.com forecasts a 16% compound annual growth rate in the carbon capture market from 2024 to 2031, with North America and Europe leading the growth.
Although the new administration’s energy policy is evolving, its focus on affordable and reliable energy supply, especially through fossil fuels, suggests that integrating carbon capture technology into both new and existing projects will become more viable both commercially and technically.
Author Information
Anastasia Slivker is partner at Norton Rose Fulbright focused on renewable energy and infrastructure transactions and other corporate matters.
Scott Burton is co-head of Norton Rose Fulbright’s environmental and mass tort practice in the US.
Siyi Zhu is an associate at Norton Rose Fulbright.
