Will the 45Q carbon sequestration tax credit be reduced or repealed by US legislation before January 2027?

45Q has notable bipartisan support because CCS benefits fossil fuel-producing states (Louisiana, Texas, Wyoming) that are politically important. The credit was originally enacted in 2008 (Bush administration) and expanded in the IRA. Repealing or reducing 45Q specifically would face opposition from Republican-leaning states where CCS projects are concentrated. While the IRA faces political headwinds broadly, 45Q is one of the most politically durable provisions. Legislative action requires both chambers and presidential signature — even with a motivated majority, the legislative timeline makes action before January 2027 tight. I estimate 12%.

The political risk to 45Q is real but probably manifests through administrative narrowing (Treasury guidance) rather than legislative repeal. However, the question specifically asks about legislation — Treasury guidance changes wouldn't resolve YES. For legislative action: budget reconciliation is the most likely vehicle, and 45Q could be caught in a broader IRA rollback package. The risk of a partial modification (e.g., reducing to $50/ton from $85/ton) is higher than full repeal. But even a partial modification through legislation before January 2027 requires fast legislative action that hasn't yet been introduced. I bump slightly above base because the political environment is genuinely hostile to clean energy subsidies in some quarters.

45Q is fundamentally different from other IRA provisions because it supports carbon capture — a technology championed by fossil fuel industries and their political allies. The Western Governors' Association, major oil companies, and industrial unions all support 45Q. Any legislation targeting 45Q would face opposition from the most powerful lobbying groups in Washington. Furthermore, projects worth billions have been committed based on 45Q — retroactive reduction would face legal challenges. The political economy strongly protects this specific credit. I'm at 10% — lower than peers.

45Q has been described as the 'most bipartisan' part of the IRA. Even politicians who oppose the IRA broadly tend to support CCS provisions. The credit benefits companies in red states and blue states alike. Legislative repeal would need to overcome industry opposition, bipartisan congressional support, and potential legal challenges from companies with reliance interest. The probability of legislative reduction before January 2027 is low — about 12%.

I am more cautious than peers. The current political environment includes active efforts to roll back IRA provisions through budget reconciliation. While 45Q has bipartisan support, it could be reduced as part of a broader package deal — 'sacrificed' to achieve other political goals. The risk is not a targeted 45Q repeal but a broader IRA modification that includes 45Q reduction as a concession. In the horse-trading of budget reconciliation, bipartisan support for 45Q may not be sufficient if it's bundled with other provisions. I put this at 18% — still unlikely but with more political uncertainty than peers acknowledge.

The legislative clock is the key constraint. Even if there were political will to modify 45Q, passing legislation through both chambers and getting a presidential signature before January 2027 requires starting NOW. No such legislation has been introduced targeting 45Q specifically. Budget reconciliation targeting IRA more broadly might include 45Q modifications, but the timeline from introduction through CBO scoring through committee through floor votes through conference is typically 6-12 months. Starting from current position, January 2027 is tight. 13% probability.

45Q is bipartisan, supported by fossil fuel industry. Legislative repeal before Jan 2027 requires fast action that hasn't started. Very unlikely. About 10%.

Political environment hostile to clean energy broadly. But 45Q is CCS, which is fossil fuel-compatible. Could be caught in broader IRA rollback but unlikely to be targeted. About 13%.

Bipartisan credit, industry support, tight legislative timeline. 45Q repeal is one of the least likely IRA provisions to be modified. About 11%.