More than 40 Iowa Lawmakers Urge for Repeal of 45Q Tax Credits in Budget Reconciliation Bill
Six GOP lawmakers from North Dakota also signed on the letter. A similar letter that circulated earlier this month was headed by lawmakers in South Dakota.
A group of Republican lawmakers, who have opposed carbon sequestration pipelines in Iowa, penned a letter to U.S. Sen. Joni Ernst this week asking her to remove a tax credit incentivizing carbon sequestration from the budget reconciliation bill.
“Repeal 45Q now!” the letter read, naming the section of tax code.
The budget reconciliation bill, known as the “one big beautiful bill,” has removed or substantially altered a number of clean energy credits for things like wind power or solar projects, but it has retained the 45Q tax credit, which was initiated in 2008 and expanded under the Biden-era Inflation Reduction Act.
The Senate has not finalized its version of the bill yet, but is aiming for a Fourth of July deadline.
Iowa lawmakers from both the House and the Senate have been opposed to 45Q credits and to the Summit Carbon Solutions pipeline project, which plans to lay nearly 1,000 miles of pipeline in Iowa alone to transport carbon dioxide captured at ethanol facilities to underground storage in North Dakota.
Six GOP lawmakers from North Dakota also signed on the letter. A similar letter that circulated earlier this month was headed by lawmakers in South Dakota.
The opponents in the Iowa-led letter said the federal tax credit “bankrolls private corporations” to “bulldoze our land, intimidate our communities, endanger lives, and bury opportunity.”
Carbon sequestration pipelines have brought about arguments surrounding private property rights. Summit was granted the right of eminent domain by the Iowa Utilities Commission last year. The Iowa House passed a bill to ban carbon sequestration pipelines operators from using eminent domain, and the state Legislature passed a bill significantly limiting a CO2 pipeline’s ability to operate.
The bill was vetoed by Gov. Kim Reynolds June 11, and House lawmakers have submitted a petition to return for a special session to override the veto, but the effort will likely not be picked up by the Senate.
“For four years, we have fought a grueling legislative battle to defend the constitutional property rights, safety, and economic vitality of our constituents—80–90% of whom reject the 45Q,” the letter read, referencing a survey from the fall conducted by a group opposed to the pipeline.
In addition to opposing the use of eminent domain, opponents of the CO2 pipeline worry about potential safety issues associated with the project and damage to cropland.
“Why would we bulldoze our way through some of the best farmland in the world to bury CO2 into formations with unknown consequences and deprive the Corn Belt of adding value and purpose to one third of each bushel of corn in the form of methanol and other fuels?” the letter read.
Summit has said it will restore cropland impacted by the pipeline to its original condition and holds that it is “going above and beyond” federal standards to ensure safety.
According to its website, the Summit Carbon Solutions pipeline would have the capacity to put more than 18 million metric tons of carbon dioxide annually into storage. 45Q credits carbon sequestration projects of this kind at $85 per metric ton of CO2, meaning Summit could receive around $1.5 billion in the tax credits annually.
The letter said federal lawmakers have “dismissed” the pipeline and 45Q issue as a state matter.
“This is no state issue —it’s a federal travesty, with 45Q’s unlimited borrowed billions fueling corporate aggression,” the letter read.
A 2023 report on the tax credit from the Congressional Budget Office estimated by the 2030s the expanded use of carbon sequestration and companies claiming the credits could result in federal revenue loss between $30 billion and “well over” $100 billion.
The letter from lawmakers said the cost was “staggering.”
Carbon capture and sequestration would allow the Iowa biofuels industry to enter the ultra-low carbon fuel market, which it says would be hugely beneficial to struggling farmers and the state.
The CBO report also projected that if all of the projected carbon capture and sequestration projects across the country were brought online, it could remove close to 3% of the nation’s annual CO2 emissions.
The letter argues if the industry attempts to reach “net zero” emissions, the cost of these tax credits to the federal government, and taxpayers, would be even higher.
“Repealing 45Q in (the budget reconciliation bill) would halt this federally funded nightmare, save trillions of additional debt, and empower our farmers and ethanol plants to lead a new renewable fuels revolution,” the letter said. “Our constituents demand it, our farmland deserves it, and our future depends on it.”
Ernst’s office did not respond to a request for comment on the letter.
A draft of the bill from a Senate committee shows some changes to the 45Q tax credit, like standardizing the credit across project types and prohibiting foreign entities from claiming the credit.
Cami Koons is an Iowa Capital Dispatch reporter covering agriculture and the environment. She previously worked at publications in Kansas and Missouri, covering rural affairs.
Iowa Capital Dispatch is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.
The Crude Life republishes their articles, features and stories online and/or in print under Creative Commons license CC BY-NC-ND 4.0.
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