Those government checks for "carbon capture" are actually encouraging power plants to burn more fuel and stay open longer.
SSRN · March 13, 2026 · 6305498
Why it matters
While these tax credits are meant to reduce carbon, they are paid per ton of CO2 captured. This research shows the policy creates a perverse incentive to favor inefficient, high-pollution plants because they 'produce' more CO2 to harvest, keeping dirty plants running that would otherwise have been shut down.
From the abstract
Since 2008, the US has provided a subsidy for carbon capture and storage (CCS) via a tax credit for captured and used or stored CO2. The value of the tax credit is specified per-tonne of CO2 stored or used. Using an analytical model accompanied by detailed electricity sector simulations, we compare the existing per-tonne storage subsidy with an alternative, generation-based ($/MWh) subsidy that achieves an equivalent level of generation from CCS technologies. In doing so, we evaluate how the str