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The Trump administration is planning to end a program run by the Environmental Protection Agency (EPA) that collects and publishes data on greenhouse gas emissions. This may prevent any company from accessing federal subsidies for capturing carbon or producing hydrogen fuel. The Greenhouse Gas Reporting Program, which costs more than $2 billion, has served as a primary database for carbon pollution and emissions policy across the U.S. economy, with other federal programs relying on its data.
Trump Administration Proposes End to EPA Program; Could Impede Access to Federal Subsidies
The Trump administration has proposed to halt a program by the Environmental Protection Agency (EPA), a decision that could prevent companies from accessing federal subsidies for carbon capture and hydrogen fuel production. This plan was unveiled on Friday, with the EPA stating it would cease the collection and publishing of greenhouse gas emissions data from numerous refineries, power plants, and factories nationwide.
According to the Trump administration, this move is aimed at ending the Greenhouse Gas Reporting Program, which they claim costs over $2 billion and is not mandated by the Clean Air Act. EPA administrator Lee Zeldin described the program as “bureaucratic red tape that does nothing to improve air quality”.
However, many argue that the program is far more crucial than the Administration acknowledges. The policy has required more than 8,000 facilities to report their emissions, enabling the EPA and external analysts to estimate the country’s annual greenhouse gas emissions.
The Crucial Role of the Greenhouse Gas Reporting Program
In the last decade, the program has established itself as the primary database of carbon emissions and policy across the US economy. Jack Andreasen Cavanaugh, a fellow at the Center on Global Energy Policy at Columbia University, explained to us how crucial the program is to federal emissions reduction initiatives.
Moreover, several other federal programs, some even endorsed by Republicans in Congress, rely on the EPA database. Among them is the federal tax credit for carbon dioxide capture and utilization.
Republicans recently amplified the subsidy, referred to as 45Q after a tax code section, for companies that use captured carbon to enhance oil well productivity or create another product. This amendment was passed as part of President Trump’s major tax and spending law this summer.
Zeldin’s proposal to discontinue the Greenhouse Gas Reporting Program could potentially make this subsidy inaccessible for an indefinite period. Under federal law, companies can only claim the 45Q tax credit if they report technical information to the EPA’s emissions reporting program.
An additional federal tax credit, for companies that utilize carbon capture to generate hydrogen fuel, also depends on the Greenhouse Gas Reporting Program. However, unlike the 45Q subsidy, this one hasn’t received the same support from Republicans and is now set to phase out by 2028.
The Role of the EPA Program in Carbon Capture and Hydrogen Projects
Jane Flegal, a former Biden administration appointee and now the executive director of the Blue Horizons Foundation, emphasized the importance of the EPA program. She said, “The primary mechanism by which companies investing in and deploying carbon capture and hydrogen projects quantify the CO2 that they’re sequestering, such that they qualify for tax incentives.”
The program also serves to verify to the IRS that companies are storing or using the amount of carbon they claim to be. Cavanaugh further explained that the Greenhouse Gas Reporting Program is “how the IRS communicates with the EPA” when companies claim the 45Q credit, allowing the EPA to provide information to the IRS without disclosing confidential tax information.
The announcement that the EPA would phase out the program has generated concern among companies planning on using the tax credit. In a statement, the Carbon Capture Coalition—an alliance of oil companies, manufacturers, startups, and NGOs—referred to the reporting program as the “regulatory backbone” of the carbon capture tax credit. They further asserted that the program’s robust reporting mechanisms are vital to the long-term success of the carbon management industry.
Potential Impact on American Companies and GOP Proposals
The termination of the EPA program could also have other ramifications for American companies. Currently, companies doing business with European firms rely on EPA data to comply with the EU’s carbon border adjustment tax. Without the EPA data, it remains uncertain how these companies would fare.
Furthermore, GOP proposals could also be affected. Senator Bill Cassidy, a Republican from Louisiana, has proposed that imports to the US should pay a foreign pollution fee—a means of accounting for the implicit subsidy of China’s dirty energy system. However, data for complying with that law would likely come from the EPA’s greenhouse gas database.
While the termination of the EPA database won’t necessarily spell the end for the carbon capture tax credit, it would make it significantly more challenging to utilize in the coming years. To reinstate the tax credit for applications, several departments (Treasury, Energy, Interior, and the EPA) would need to draft new rules for companies claiming the 45Q credit—a process that could take years and potentially stall ongoing projects.
“There are now billions of dollars being invested by the private sector and the government in these technologies, where the U.S. is positioned to lead globally,” noted Flegal. Changing the rules would “undermine any way for the companies to succeed.”
However, carbon capture-based hydrogen projects could be doomed if the EPA database is discarded. Under the provisions of Trump’s tax law, companies aiming to claim the hydrogen credit must commence construction on their projects by 2028.
The Trump administration seems to believe that dismantling the EPA database may necessitate new rules for the carbon capture tax credit. When asked for comment, an EPA spokesperson referred to a line in the agency’s proposal: “We anticipate that the Treasury Department and the IRS may need to revise the regulation,” the legal proposal states. “The EPA expects that such amendments could allow for different options for stakeholders to potentially qualify for tax credits.”
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