GAO Warns IRS Delays and Bureaucracy Threaten Carbon Capture Tax Credit Growth
A new GAO report highlights significant compliance bottlenecks and evaluation gaps in the Section 45Q Carbon Capture Tax Credit administration. Unclear IRS and DOE processes threaten private investment in critical infrastructure, operational technology, and synthetic energy production vital to defense supply chain resilience.
A new Government Accountability Office (GAO) audit reveals that federal administration of the Section 45Q Carbon Oxide Sequestration Credit is plagued by compliance bottlenecks, procedural delays, and a lack of unified oversight. Following expansions under the 2022 Inflation Reduction Act and subsequent legislation, 45Q tax credit claims more than tripled between 2019 and 2023. As of early 2026, 33 commercial carbon capture facilities operate across the United States, with dozens more in development. However, federal interagency friction threatens to stall private capital deployment across the emerging carbon economy.
The operational friction is most acute for taxpayers attempting carbon utilization—converting captured carbon oxides into physical products such as synthetic fuels, chemicals, and structural materials. Joint administration by the Internal Revenue Service (IRS) and the Department of Energy (DOE) has introduced significant uncertainty. Project developers face opaque life-cycle assessment methodologies, rigid carbon displacement dataset requirements, and prolonged approval timelines. GAO emphasizes that streamlining approval workflows between the IRS and DOE is essential to minimize compliance burdens and provide the predictability required for high-capEx energy projects.
Signal Pro feature
This signal is in the subscriber archive.
Signals older than seven days are reserved for members. Subscribe to read the full analysis and unlock the complete Defense Signals archive.
Executive takeaway
Subscribe to receive signals like this — plus the executive analysis behind them.
Get the Signals