Senate Panel Pushes for Equal Tax Credits for Carbon Capture and Oil Recovery

A U.S. Senate panel has proposed to standardize the tax credits allocated for carbon emissions capture used in oil recovery with those designated for permanent sequestration. The committee's draft, part of the 2022 Inflation Reduction Act, suggests raising the credit for enhanced oil recovery from $60 to $85 per metric ton. This move is seen as advantageous for oil and gas producers.

The proposal, reflecting Wyoming Senator John Barrasso's initiative, has garnered support from senators in oil-rich states like North Dakota and Louisiana. Under former President Joe Biden's climate law, incentives for permanent carbon removal have been higher than for enhanced oil recovery due to environmental concerns. Companies like Occidental have been pushing for such a change as part of their carbon capture projects.

Support and criticism arise as the Carbon Utilization Research Council backs the changes, while Carbon180 warns of potential investment shifts toward fossil fuels. Major players like Exxon and Chevron, also involved in carbon capture, have not advocated for this parity. The debate continues as stakeholders weigh the environmental and economic implications.

(With inputs from agencies.)