President Donald Trump’s promises to bolster the fossil fuel industry while dismantling federal climate programs are on a collision course when it comes to carbon removal subsidies.
Exxon Mobil, Shell and other oil companies are working on technologies or projects that seek to suck carbon dioxide from the skies. Occidental Petroleum bought a carbon removal startup and is developing two megaprojects in Texas. Revoking billions of dollars in matching grants and tax credits would threaten those investments, putting thousands of potential red state jobs at risk.
Carbon removal companies use energy, CO2-absorbing materials, proprietary technologies and oil field workers to pull heat-trapping carbon from the air or seas and store it underground or in long-lasting products like concrete. Some oil CEOs have pitched carbon removal as a way to extend the fossil fuel era — an argument that has been rejected by climate scientists but could appeal to Trump.
Repealing federal funding could send shock waves through venture capital markets, domestic supply chains and local communities that have already begun betting on the climate technologies, according to analysts and some Republican lawmakers.
“We’re the pro-business party. So anytime an entity has made a significant investment, you don’t pull the rug out from underneath their feet,” Sen. Bill Cassidy (R-La.) told POLITICO’s E&E News, in response to questions about carbon removal incentives. Cassidy serves on the Finance Committee, which is looking to reduce or eliminate climate-related subsidies to help pay for an extension of tax cuts enacted in Trump’s first term.
The uncertainty surrounding carbon removal programs comes as the president and Elon Musk, the world’s richest person, are racing to shutter some government agencies and their climate programs, drawing rebukes from courts and Congress.
Musk has previously supported carbon removal development, putting up $100 million of his own money for a contest intended to advance the field. But Musk, who as CEO of Tesla promoted the climate benefits of electric vehicles, has stood by the president as the administration implements policy rollbacks that could slow EV adoption.
Cassidy and other other top Republicans don’t want to see the same thing happen to federal funding for carbon removal.
“The technology being invested in has the ability to bring a lot of jobs to my state, a good Republican state,” he said, referring to a $1 billion carbon removal megaproject in western Louisiana named Project Cypress. It would use direct air capture technology to siphon CO2 from the atmosphere.
The $3.5 billion program that is helping to bankroll Project Cypress and a major Occidental development in South Texas was created by the bipartisan infrastructure law. The legislation required the Energy Department to select four direct air capture hubs — a process that is now in limbo as the Trump administration reviews Biden-era spending programs.
“I am concerned if the Trump administration is clawing back money that has been specifically appropriated for a particular purpose,” Sen. Susan Collins (R-Maine), the chair of the Appropriations Committee, told reporters last week. She was responding to a question about carbon removal subsidies, including a plan she championed to have the government procure tons of carbon removals from climate technology companies.
“There’s no doubt that the president appears to have empowered Elon Musk to go far beyond what I think is appropriate,” she added.
The White House and the Energy Department didn’t respond to requests for comment. Neither did Exxon, Shell or Occidental.
Justin Prendergast, a spokesperson for the American Petroleum Institute said the oil and gas trade association “will continue to work with policymakers to preserve 45Q,” a bipartisan provision of the tax code that subsidizes investments in capturing carbon from industrial facilities and the atmosphere.
The speed and scope of the spending attacks by Trump and Musk has created divisions in the carbon removal advocacy community over which climate policies to defend.
For Erin Burns, the executive director of the environmental group Carbon180, the answer is all of them. That’s because they tend to be interconnected. If renewable energy installations are hampered, for example, that could push carbon removal facilities to use fossil fuels for their power, increasing emissions even as they work to draw them down.
“We’ve already seen a lack of available renewable energy … impact things like [direct air capture] hubs,” she said, pointing to the cancellation last year of a huge carbon removal development known as Project Bison in Wyoming. “You need to build a bigger, more durable political coalition that involves working with other people who are defending their spending.”
Other advocates and carbon removal executives are less concerned about the Trump administration’s efforts to slow wind and solar energy projects.
Carbon removal developers “need to figure out different ways to get clean energy,” said Noah Deich, who served as a carbon management adviser in the Biden administration. The former Energy Department official touted the potential for natural gas plants that capture their carbon emissions, stranded nuclear assets and new geothermal projects to power carbon removal facilities.
Deich, who co-founded Carbon180 before going into government, remains optimistic that the U.S. can retain its leadership role on carbon removal. The Trump administration should move “faster on the permitting side, especially for CO2 storage wells,” he said in a Q&A with E&E News.
Some carbon removal companies are delivering a similar message on Capitol Hill. The founders of Houston-based Vaulted Deep, for instance, visited Washington last week to make the case for permitting reform with members of the House Ways and Means and Appropriations committees.
Other carbon removal companies are hedging their bets on the U.S. and eyeing opportunities abroad.
“If, for whatever reason, the United States government decides over the next four years that climate is not a priority, we will focus more internationally,” said Steve Oldham, the CEO of California-based Captura.
The direct ocean capture startup has received investments from corporate giants in Europe, the Middle East and Asia and is on the verge of building its first commercial plant, which Oldham said could integrate with industrial facilities that use seawater, such as some coastal power plants. “A lot of the energy companies still regard having a climate and a carbon management program as important for them, internationally and in the long term,” he added.
Oldham previously led Carbon Engineering, a DAC firm purchased by Occidental for more than $1 billion in 2023. He expects the second Trump era will trigger a winnowing of carbon removal companies.
“The stronger companies will survive and flourish,” he said, noting that Captura has built three pilot plants without any U.S. subsidies. “The ones that are maybe earlier in the development cycle and are more dependent on government funding may struggle.”
Reporter Carlos Anchondo contributed.
This story also appears in Energywire.
