As regulatory and funding dynamics from 2025 carry into 2026, carbon capture and storage (CCS) project development in the United States remains active. In 2025, the shifting regulatory landscape included the cancellation of Department of Energy (DOE) funding and the proposed suspension of the Greenhouse Gas Reporting Program (GHGRP). The year also marked an increase in the number of states obtaining or pursuing Class VI primacy. Despite these regulatory changes, CCS permit applications reached an all-time high, and many projects achieved new permitting milestones supported by continued private investment. This article summarizes key sector activities in 2025 and what they mean for CCS projects in 2026.
Major U.S. CCS Policy and Regulatory Developments in 2025
DOE grant cancellations highlighted the importance of diversified funding strategies and reinforced the central role of the 45Q tax credit as the primary financial driver for project development.
Arizona, Texas, and West Virginia received Class VI primacy. Class VI developers benefit from prioritizing states that have obtained Class VI primacy.
The proposed suspension of Subpart RR reporting requirements under the GHGRP introduced uncertainty for projects seeking the 45Q tax credit.
Together, these developments and the milestones shown below reflect the policy outcomes of 2025 that continue to shape the CCS sector in 2026.
U.S. 2025 CCS Policy and Regulatory Timeline
February 18, 2025 – The United States Environmental Protection Agency (USEPA) approves West Virginia’s Class VI primacy application.
March 12, 2025 – Summit Carbon Solutions suspends its Class VI permit application in Mercer, Morton, and Oliver Counties in North Dakota after South Dakota and Iowa passed similar legislation preventing the use of eminent domain to access private land.
April 7, 2025 – USEPA issues final Class VI permits to Oxy Low Carbon for three wells in Ector County, Texas to store about 722,000 metric tons of carbon dioxide (CO2) per year.
May 28, 2025 – The Department of Energy terminates $3.7 billion in grants previously awarded for CCS projects
July 4, 2025 – “One Big Beautiful Bill Act” becomes law. The bill maintains the 45Q tax credit for point source capture at $85/ton and direct air capture at $180/ton.
September 5, 2025 – Louisiana Department of Conservation and Energy authorizes construction of its first CO2 injection well (Hackberry Carbon Sequestration) in Cameron Parish for up to two million metric tons of CO2 annually for 20 years.
September 10, 2025 - The USEPA grants Arizona primacy for all Underground Injection Control (UIC) well classes, including Class VI wells.
September 12, 2025 – The USEPA issues a proposed rule to permanently eliminate most reporting obligations under the GHGRP.
October 2, 2025 – DOE terminates $7.56 billion in financial awards to 223 clean energy projects.
October 16, 2025 – USEPA issues three Class VI permits to ExxonMobil (Rose Project) for CO2 storage in Jefferson County, Texas. The project is planned for 13-year injection period for a maximum 53 million metric tons of CO2.
November 6, 2025 – The Wyoming Department of Environmental Quality issues its third authorization to inject in 2025 to Tallgrass High Plains Carbon Storage as part of the Eastern Wyoming Sequestration Hub in Laramie County, Wyoming.
November 12, 2025 - USEPA approves Texas’ Class VI primacy application.
December 19, 2025 – The Department of Treasury and Internal Revenue Service (IRS) release Notice 2026-01. It provides “safe harbor” for determining eligibility and the quantity of credits for sequestered carbon oxide.
CCS Market Outlook for 2026 and Beyond
A major implication for the CCS sector in 2026 is the decarbonization of U.S. data centers. Technology companies are investing heavily in dedicated power generation to support energy-intensive data facilities. The Lawrence Berkeley National Laboratory forecasts that artificial intelligence electricity-related demand could reach between 6.7% to 12.0% of total U.S. consumption by 2028. While these companies require increased power generation, many have stringent net-zero emissions goals. Some organizations have already announced plans to pair natural gas generation with CO2 sequestration to support data center operations. CCS provides a viable pathway to expand energy supply while aligning with corporate commitments.
Overall, the number of Class VI projects continues to grow, and investors seem to view CCS as a market. Bipartisan support for the 45Q tax credit helps to position CCS as a core strategy. Joint ventures and large regional projects seem to demonstrate both technical feasibility and long-term revenue potential. 2026 should be another interesting year for the CCS sector.
