End Polluter Welfare for Enhanced Oil Recovery Act of 2026
- Bill Number
- H.R. 8108
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-03-26: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-04-27T22:25:46Z
AI-Generated Summary
Purpose
This bill, titled the End Polluter Welfare for Enhanced Oil Recovery Act of 2026, aims to eliminate federal tax credits that support enhanced oil recovery (EOR) projects. EOR involves injecting substances like captured carbon dioxide (CO2, referred to as "carbon oxide") into oil fields to extract more oil. The legislation targets subsidies seen as welfare for polluters by ending these incentives.
Key Provisions
- Amendment to Section 45Q (Carbon Oxide Sequestration Credit):
- For any "qualified facility" (e.g., carbon capture projects) where construction begins after enactment, bans the use of carbon oxide as a "tertiary injectant" (CO2 injected to boost oil recovery) for claiming the credit.
- Repeal of Section 43 (Enhanced Oil Recovery Credit):
- Completely removes this tax credit, which provided dollar-per-barrel incentives for EOR.
- Conforming Amendments:
- Updates or removes references to Section 43 in other tax code sections (e.g., Sections 38, 45I, 45K, 45Q, 196, 6501) to reflect its elimination.
- Effective Date:
- Applies to taxable years beginning after enactment.
Significant Changes to Existing Law
- Ends 45Q Credit Eligibility for EOR in New Projects: Previously, Section 45Q allowed credits for CO2 used in EOR; this blocks it for facilities built post-enactment.
- Full Repeal of Section 43: Eliminates a long-standing credit (dating back decades) that subsidized oil production, with no grandfathering for ongoing projects.
- These changes reduce tax benefits tied to fossil fuel extraction while preserving 45Q credits for pure CO2 storage (not EOR).
Potential Impacts
- Oil Industry: Higher costs for EOR, potentially slowing domestic oil production and affecting profitability of mature fields.
- Carbon Capture Projects: Shifts focus from EOR-linked capture (common in oil regions) to geological storage, possibly slowing near-term deployment but aligning with climate goals.
- Federal Budget: Saves taxpayer money by cutting tax expenditures (estimated billions over time, though not specified in bill).
- Environment/Citizens: Reduces indirect subsidies for oil, potentially lowering emissions from extraction but risking short-term energy price increases.
- No Direct International Effects: Primarily domestic tax policy.
Main Stakeholders
- Oil and Gas Companies: Primary losers, as they rely on these credits for EOR viability.
- Taxpayers and Environmental Advocates: Beneficiaries through reduced subsidies and potential emission reductions.
- Government Agencies: IRS and Treasury (administer tax credits); Department of Energy (oversees related carbon programs).
- Carbon Capture Firms: Mixed impact—lose EOR revenue stream but gain clarity for storage-focused projects.
Notable Legal, Constitutional, or Political Implications
- Legal: Straightforward tax code amendments via reconciliation-eligible process; no retroactive changes, minimizing challenges.
- Constitutional: None apparent; Congress has broad taxing/spending authority under Article I.
- Political: Sponsored by progressive Democrats (e.g., Khanna, Tlaib); signals push to end fossil fuel subsidies amid climate debates, likely partisan divide in Ways and Means Committee.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (11)
Rep. Tlaib, Rashida [D-MI-12], Rep. Barragán, Nanette Diaz [D-CA-44], Del. Norton, Eleanor Holmes [D-DC-At Large], Rep. Jayapal, Pramila [D-WA-7], Rep. Frost, Maxwell [D-FL-10], Rep. Ramirez, Delia C. [D-IL-3], Rep. Schakowsky, Janice D. [D-IL-9], Rep. Mullin, Kevin [D-CA-15], Rep. Goldman, Daniel S. [D-NY-10], Rep. Huffman, Jared [D-CA-2], Rep. Cohen, Steve [D-TN-9]
Recent Actions
- 2026-03-26: Referred to the House Committee on Ways and Means.
- 2026-03-26: Introduced in House
- 2026-03-26: Introduced in House
Bill Versions
- End Polluter Welfare for Enhanced Oil Recovery Act of 2026 — issued 2026-03-26 — PDF (4 pages)