Carbon capture is having a policy moment, with the OBBB boosting 45Q credits and the EU eyeing negative emissions in its ETS. We’re breaking down the new implications and economics for CCUS below as part of a new series about policy impacts.
Recalculating the CCUS math
The passage of the One Big Beautiful Bill (OBBB) marked a tectonic shift in the energy transition landscape, reworking the calculus for everything from clean firm power to supply chains. At Currence, we’ve been digging into the implications for key technologies, and this week, we’re giving you a sneak peek at our client-only analysis of one of OBBB’s clear winners: carbon capture, utilization, and storage (CCUS).
The updated package supercharges 45Q tax credits, delivering full financial parity between storing CO2 underground and putting it to work in products or enhanced oil recovery (EOR). Across the Atlantic, the EU is moving in parallel: tighter climate targets and updates to its Emissions Trading System (EU ETS) could soon reward negative emissions technologies like direct air capture (DAC).
CCUS has long held promise to capture CO2 emissions from industrial sources like power plants and factories. With these policy tailwinds, amid surging data center power demand, CCUS emerges as an increasingly attractive option to deliver clean(er) firm power. But in practice, deployment has lagged, as small-scale projects haven’t offered sufficient returns.
Currence clients can access project data and commentary on gas + CCS here, and the impact of the OBBB on the platform here. If you're interested in becoming a client, request a demo here.
What happened
The OBBB gives a major boost to CCUS, updating the tax credit values for it (45Q) to create full parity between storage and utilization. Point-source capture for storage holds steady at $85/ton, while utilization and enhanced oil recovery (EOR) jump from $60 to $85/ton — a 42% increase. For DAC, credits for storage remain at $180/ton, but DAC used for utilization or EOR rises from $130 to $180/ton, up 38%.
The bill also preserves tax credit transferability, allowing developers to monetize credits through tax equity or third-party sales, and introduces Master Limited Partnership (MLP) eligibility so certain CCS projects can tap public markets for financing. From 2026, however, projects with significant ties to “Foreign Entities of Concern” (China, Iran, North Korea, Russia) will lose access to 45Q credits.
Meanwhile, across the Atlantic, the EU is updating its Emissions Trading System (EU ETS) under the “Fit for 55” package. New rules set for 2024 clarify how CO2-based products are treated, and by 2026, the Commission will decide whether to integrate negative emissions technologies like DAC and BECCS into the system, opening the door for permanent removals to generate tradable credits.
But in practice, deployment has still lagged. For DAC, we’ve found only fourteen lab or pilot-scale projects that are operational worldwide, collectively capturing less than 20ktCO2 annually.
Why it matters
The real bottlenecks for CCUS aren’t in the capture technologies themselves. The challenges lie downstream: economics, infrastructure, and permitting hurdles that keep the dozens of announced projects stuck on paper.
For projects operating intermittently or without CO2 transport networks, the economics haven’t stacked up — yet. Now, this wave of support from OBBB could still tip the scales for certain developers. The updated 45Q tax credits create financial parity between geologic storage and utilization, potentially accelerating pathways that are more profitable but less climate-aligned. Enhanced oil recovery (EOR), for instance, could dominate near-term deployment: vertically integrated oil and gas players like Occidental could find the economics more compelling. Its flagship Stratos project, initially framed around EOR, can now monetize an additional $25m annually under the revised credit structure, or $300m over the 12-year 45Q window. For developers with oil-linked infrastructure, the path of least resistance (and highest returns) could shift to capture-and-sell rather than capture-and-store.
But that comes with trade-offs. EOR often re-releases most of the CO2 it captures. At Exxon’s Shute Creek plant in Wyoming, about 120 MtCO2 has been captured since the 1980s, but ~95% was sold for EOR and ~70% likely re-emitted — meaning roughly 80 MtCO2 has potentially found its way back into the atmosphere. Globally, 75–80% of all captured CO2 to date has been used for EOR, not permanent storage.
Key takeaways
- The scales tip for CCUS, especially EOR. The bill unlocks MLP eligibility, creating a new financing pathway for revenue-generating projects. But deployment still hinges on permitting, pipelines, and community buy-in, not just tax credits. Projects may move faster in EOR-heavy basins (Permian, Gulf Coast), where the infrastructure is already in place, and the geology is well understood. Still, EOR risks re-releasing captured CO2 back into the atmosphere.
- DOE funding is still a risk. Despite 45Q remaining in place, DOE cancellations could still stall deployment and industrial decarbonization. The DOE has canceled over $3.7bn in previously awarded clean energy funding, including flagship carbon capture projects like Calpine, Heidelberg Materials, and Exxon’s hydrogen hub in Baytown. These were high-CAPEX, grant-reliant projects that now face major uncertainty. Carbon tax credits may not be enough to get these projects off the ground.
- Policy could still change — and CCUS faces broader competition. The EU is still working on implementation, and faces threats from anti-climate coalitions in the parliament threatening to stall or weaken a 90% emissions reduction target for 2040. Meanwhile, globally, competing clean firm power sources, including nuclear SMRs, enhanced geothermal, and long-duration storage, are rapidly maturing and may offer lower-risk, more scalable pathways. Unless CCUS becomes cheaper and faster to deploy, it will find it difficult to compete with more established low carbon solutions.
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