The US has made meaningful strides in advancing climate policy over the past few years. Together, landmark legislation such as the Bipartisan Infrastructure Law (BIL) and the Inflation Reduction Act (IRA) have delivered unprecedented investment in carbon removal across tech, marine and land-based pathways. These policy wins positioned the US as a global leader in carbon removal, and provided both policy certainty and critical investments in research, development, and deployment (RD&D).
That momentum is now under threat. The newly passed “One Big Beautiful Bill” (OBBB) reverses key provisions of these laws and jeopardizes the hard-fought progress that carbon removal advocates and climate activists have worked for. Here’s a breakdown of how the OBBB could impact US carbon removal policy.
Updates to 45Q incentives
One of the IRA’s most important provisions for CDR was the expansion of the 45Q tax credit. By authorizing up to $180 per ton of geologically stored CO2, the law enabled direct air capture (DAC) developers a viable path for commercialization. It also eased access to credit by allowing it to be transferred between entities, a significant benefit for startups that don’t have major tax liabilities.
While the OBBB preserves the 45Q tax credit, it is not without strings. Under the latest updates, 45Q eligibility has been expanded to include projects that use captured carbon to make products or increase oil production, diluting the climate benefits of CDR. While the transferability of tax credits has been retained, new restrictions bar companies with ties to “foreign areas of concern” from accessing the credit. The real-world impact of this provision will hinge on guidance from the Department of the Treasury, leaving developers and investors with uncertainty.
The state of federal funding
Forest and agriculture programs
The IRA injected nearly $20 billion into popular United States Department of Agriculture (USDA) conservation programs, helping farmers and ranchers implement climate-smart practices that sequester carbon. It also provided targeted support for the US Forest Service, including $100 million to conduct environmental reviews and $50 million to protect old-growth forests.
OBBB has now rescinded all unobligated funds from both Forest Service programs, while mandating an automatic increase in commercial logging on federal lands. Each year, the Forest Service sets timber targets, measured in board feet, for the volume of timber it aims to sell from national forests. Under OBBB, those targets will increase by 250 million board feet annually from 2026 through 2034, totaling 1.75 billion additional board feet over nine years. This massive scale-up comes with no added staff or resources to manage the increased volume responsibly.
Policymakers have also folded over $60 billion in Farm Bill provisions into the package, rescinding all unspent IRA funding meant to scale climate-smart practices, and redirecting it to general conservation programs. This raises the overall conservation baseline long term, but abandons targeted support for climate-smart practices that sequester carbon.
Like terrestrial agriculture, aquaculture — including kelp and seaweed farming for ocean-based CDR — are dependent on the Farm Bill and other conservation programs that support climate-smart practices. Cuts to these programs threaten the viability of seaweed aquaculture and could stall progress for biological marine carbon dioxide removal (mCDR) approaches.
Investment at the Department of Energy
The Bipartisan Infrastructure Law, alongside the IRA, helped accelerate growth in the carbon removal sector, authorizing $3.5 billion for direct air capture hubs and funding prize competitions to support non-DAC approaches, such as enhanced mineralization, biomass storage, and ocean-based removal.
Unlike many other climate and clean energy initiatives, carbon removal programs at the Department of Energy (DOE) were spared from cuts in the OBBB. Recent actions by the Administration, however, threaten to stall or even prevent the implementation of these programs. DOE recently canceled key carbon management awards and proposed eliminating carbon removal funding entirely in its FY25 and FY26 budgets. Lawmakers must leverage their power of the purse to ensure DOE continues to fund carbon removal RD&D and lawfully administers congressionally directed spending.
Cuts at the National Oceanic and Atmospheric Administration (NOAA)
The Inflation Reduction Act and the Bipartisan Infrastructure Law together represent a significant investment in marine carbon dioxide removal (mCDR), directing billions to NOAA for restoring blue carbon ecosystems, bolstering coastal resilience, expanding ocean observing capabilities, and piloting new mCDR approaches.
For now, mCDR programs at DOE are not affected. However, both staff and budget cuts to NOAA’s climate and oceanographic research programs will stall the research needed to assess the efficacy, durability, co-benefits, and risks of mCDR. These cuts at NOAA will also eliminate programs that protect and restore critical, carbon-storing ecosystems like salt marshes, mangroves, seagrasses, and kelp forests.
What does this mean for carbon removal?
Federal incentives for carbon removal remain an essential part of DOE’s portfolio, but they are at risk without decisive Congressional action. As Carbon180, alongside 40 other stakeholders, wrote to Senate appropriators last month, it is critical that Congress seize this opportunity to continue investing in CDR — ultimately unlocking economic growth, creating jobs across the country, and ensuring the US remains at the forefront of global innovation.
Aside from the OBB, recent administrative actions also threaten to undermine the momentum behind land-based carbon removal pathways. The administration recently reduced Forest Service staffing by 25%, only for the OBBB’s arrival to mandate that the agency somehow increase its project output. On top of that, the Forest Service has also recently updated its National Environmental Policy Act (NEPA) regulations to strip away opportunities for public input and transparency. The agency has eliminated requirements for public notice and comment on most projects. This shift prioritizes harvesting the largest, most commercially valuable trees rather than harvesting trees to improve forest health and reduce wildfire risk. Despite these changes, the Forest Service is still unlikely to meet its timber targets.
US agriculture also faces long-term uncertainties as a result of the OBBB. By pushing significant Farm Bill provisions through the reconciliation package, policymakers have bypassed decades of bipartisan process and fractured the coalition that has historically sustained the Farm Bill. Key programs left out of the package, including several conservation and research initiatives, now remain in limbo. And even where funding has increased, USDA staffing cuts threaten program delivery. Producers, who have long relied on the stability of a five-year Farm Bill, are now left navigating an uncertain landscape.
Moving forward
Carbon180 is monitoring the implementation of existing programs and the use of appropriated funding to ensure it’s administered in accordance with Congressional intent. We’re working with a diverse coalition to sustain RD&D funding at DOE and push for stronger and more ambitious carbon removal programs that raise the bar for quality and scale.
We’re also watching to see how these changes play out on the ground, particularly as federal agencies like USDA’s Forest Service and Natural Resources Conservation Service and NOAA now face major staffing reductions that threaten implementation of key research and conservation programs. At the same time, we’ll continue to advocate for critical programs that were left out of the reconciliation package and face an uncertain future, including the Conservation Reserve Program, the Sustainable Agriculture Research and Education program, and the Agriculture and Food Research Initiative.
The One Big Beautiful Bill represents a pivotal moment for the carbon removal field. Much of the sector’s momentum, from ocean to land and tech-based pathways, was made possible through the investments and policy of the IRA and BIL. Now is the time for Congress to reassert its authority, not just to protect existing carbon removal programs, but to ensure they are effectively implemented.
Edited by Ana Little-Saña. Cover image by Kendall Hoopes.
