Carbon Capture Efforts Slow as Trump Targets Clean Energy Projects
- Carbon capture project activity in the U.S. has sharply declined in 2025.
- The Department of Energy recently canceled 24 carbon capture and decarbonization project awards worth $3.7 billion.
- Even with the $85/ton tax credit still in place, analysts say it's not enough to sustain widespread CCS adoption, leaving only oil majors like Occidental and ExxonMobil positioned to move forward
Since U.S. President Donald Trump took office, the number of applications for carbon capture projects has nosedived, signaling a slowdown in the efforts to commercialize the relatively new technology to remove carbon from the air.
Since the Trump Administration signaled it would be axing clean energy subsidies and tax credits, the nascent carbon capture sector, led by some of the biggest U.S. oil firms, has faced increasing uncertainty about the viability of many projects.
Carbon Capture Applications Plunge
As a result, the application process for Class VI wells, which are used to inject carbon dioxide (CO2) into deep rock formations, has stalled this year.
The number of submitted Class VI applications plummeted by 55% to just four in the first quarter of 2025, compared to an average of nine applications per quarter over the last two years, according to data from Enverus Intelligence Research.
The January-March quarter saw the fewest applications submitted in three years—since the first quarter of 2022, Enverus said in a report last week.
Moreover, no Class VI permits were approved in the first quarter of 2025, compared to three approvals in the fourth quarter of 2024 under the Biden Administration.
At the end of 2024, Enverus expected about 40 approvals to go through this year. Now it sees only 14 Class VI wells approvals.
The revised expectation is “mostly attributed to updated approval times from Class VI regulators while they wait on applicants for responses to notices of deficiency and requests for additional information during the review process,” said Brad Johnston, an analyst at Enverus Intelligence Research.
The U.S. Environmental Protection Agency (EPA) aims to review complete Class VI applications and issue permits when appropriate within approximately 24 months. However, the waiting time was about 30 months as of 2023, also due to a rush of applications at the time.
Several U.S. states have requested – and received – the so-called Class VI well primacy, or primary enforcement authority delegated by the EPA, to issue permits. These include North Dakota, Wyoming, West Virginia, and Louisiana, with Texas moved into the Proposed Rulemaking Phase in the EPA’s approval process for state primacy.
A 2 million metric ton per annum (mtpa) carbon capture and storage (CCS) project in Louisiana has recently received a draft permit from the state’s Department of Energy and Natural Resources. This was the first such permit issued since the state obtained Class VI primacy over a year ago, Enverus said.
But overall, lengthy permitting times and the many unknowns regarding clean energy incentives and tax credits under the Trump Administration have cooled enthusiasm about carbon capture technology among U.S. companies.
One notable exception was Occidental, which is pursuing direct air capture (DAC) technology that is different from carbon capture and storage.
In a first-of-its-kind approval in April, Occidental and its subsidiary 1PointFive received Class VI permits from the EPA to sequester carbon dioxide from their STRATOS DAC facility, currently under construction in Ector County, Texas.
Carbon Capture Funding Axed
However, many carbon capture and storage (CCS) projects reached the end of the road after U.S. Secretary of Energy Chris Wright terminated last week 24 awards to projects, primarily CCS and decarbonization initiatives. The Department of Energy found that “these projects failed to advance the energy needs of the American people, were not economically viable and would not generate a positive return on investment of taxpayer dollars.”
The awards to projects would have used $3.7 billion in taxpayer-funded financial assistance by DOE.
“While the previous administration failed to conduct a thorough financial review before signing away billions of taxpayer dollars, the Trump administration is doing our due diligence to ensure we are utilizing taxpayer dollars to strengthen our national security, bolster affordable, reliable energy sources and advance projects that generate the highest possible return on investment,” said Secretary Wright.
nder Secretary Wright’s memo on responsible financial assistance, DOE evaluated each of these 24 awards and “determined that they did not meet the economic, national security or energy security standards necessary to sustain DOE’s investment.”
In response, the Carbon Capture Coalition, which includes companies and conservation policy organizations, said that the cancellation of the projects “is a major step backward in the nationwide deployment of carbon management technologies.”
“Moves like this risk ceding America’s energy and technological leadership to other nations,” the coalition added.
The tax credit for carbon capture remains, for now, but some analysts say it’s not enough to help the industry take off.
The $85 per metric ton tax credit “is and continues to be insufficient to justify widespread deployment of post-combustion carbon capture”, Rohan Dighe, an analyst at Wood Mackenzie, told the Financial Times
The limitations to transferability of the credits after 2027 will also kill many small projects, Brenna Casey, a carbon capture associate at BloombergNEF, told FT.
The carbon capture market could soon reach a point in which only the oil majors could afford to be active in it.
But even majors such as ExxonMobil have conditioned their investments in low-carbon energy solutions on favorable policy and regulation.
At the end of 2024, Exxon said it is pursuing up to $30 billion of low-emission opportunities between 2025 and 2030, but “execution of these opportunities is contingent on the right policy and regulation as well as continued technology and market development.”
By Tsvetana Paraskova for Oilprice.com
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