What happens to the 45Q tax credits and is an extension past 2032 off the table?
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If Trump is elected, the U.S. vision for carbon capture, utilization, and storage (CCUS) could likely be tied to a broader fossil fuel focused energy strategy aligned with the overarching themes of “American energy independence” and “energy dominance.” During Trump’s first presidential term, aggressive shifts toward renewable energy policies were cast as a burden on the U.S. economy.

However, if there were to be a second presidential term, it is unclear how Trump would align his energy platform and posture towards CCUS with those of his campaign’s larger financial backers who are more closely aligned with technologies that clearly support not only point source carbon capture but also carbon dioxide removal (CDR) technologies such as direct air capture.

For example, Elon Musk, who has spent at least $132 million to support Trump’s campaign, and could be seen jumping on stage at various Trump rallies this year, has also set up a $100 million XPRIZE for carbon removal through his foundation. If Trump is elected, Musk is likely to have an influential role in the administration, which may preserve a continuation of the federal support that the CCUS and CDR industries have enjoyed since the passing of the Inflation Reduction Act (IRA).
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The need to extend these provisions past 2032 is clear, given the implementation hurdles and long permitting timelines that carbon capture projects currently face. Whether that extension occurs under a second Trump term is not necessarily completely off of the table but Trump could narrow any extension past 2032 to only certain eligible project types that support his broader energy agenda. For example, extending eligibility only for carbon capture that supports carbon utilization such as enhanced oil recovery.

Putting any extensions aside, actions to rescind are more likely. Trump’s stated plans to dismantle the IRA and increase fossil fuel investments, signal broader U.S. climate policy, ultimately impacting the CCUS industry, going in a different direction. Trump has consistently opposed the IRA, which he views as an excessive cost burden but his targets, at least as verbalized on the campaign, have been cutting spending on clean energy programs, including rolling back electric vehicle and renewable energy initiatives. The IRA's electric vehicle tax credit is arguably more at risk than any CCUS tax credits.

Trump has publicly stated that he would “rescind all unspent funds under the misnamed Inflation Reduction Act.” Practically speaking, the likelihood of this occurring depends heavily on how many Senate and House seats Republicans take and whether they can get a simple majority. If they take both chambers of Congress, Trump’s ability to dismantle parts of the IRA would improve. Trump could also cut U.S. Department of Energy and U.S. Environmental Protection Agency program budgets that support the development of the CCUS and CDR industries. Without strong support from federal agencies, the growth and scale of carbon removal solutions could stall, limiting U.S. progress toward climate goals and hindering broader CCUS innovation.