Uncertainty surrounds carbon capture and storage — a climate solution that Houston’s oil and gas companies spent billions growing into what they believe can be a trillion-dollar industry.

Elizabeth Conley/Staff Photographer

A week after the federal government gave Texas the power to approve permits for a new kind of well that stashes climate-warming carbon dioxide underground, one of the state’s top oil and gas regulators decried it as a waste of taxpayer dollars.

Wayne Christian, one of the three elected leaders of the Texas Railroad Commission, questioned why the commission would spend state funds regulating the practice when the Trump administration believes it is “a scam” and that carbon dioxide “is no longer a threat.”

"I also find myself very disappointed that we make a decision,” he said, referring to the commission’s approval of Occidental Petroleum’s carbon storage project, “at this time that the administration, the world, seems to be realizing that a lot of this extremist environmental agenda has been over the top."

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Christian’s statements highlight the uncertainty surrounding carbon capture and storage — a climate solution that Houston’s oil and gas companies spent billions growing into what they believe can be a trillion-dollar industry.

The Trump administration has gutted regulations of climate-warming gases and cut funding to hundreds of clean energy projects. Climate-focused companies and projects are folding and cutting back. Even Bill Gates, a devoted climate champion for many years, walked back funding for climate initiatives and repositioned some of his philanthropic investments.

These changes highlight the dilemma facing big oil companies and other entrants into the nascent business: Can they launch the carbon removal industry at a time when the importance of addressing climate change is in question?

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Peter Findlay, director of CCUS analytics for Wood Mackenzie, said moving forward with carbon capture and storage projects right now feels a bit like Indiana Jones trying to walk across an invisible bridge over a bottomless chasm in an attempt to find the Holy Grail.

“That’s kind of what building some of these projects is, if you don’t have obvious incentives to do so,” Findlay said. “You’re believing there’ll be a value to decarbonization, and all the physics and economics shows that there should be … but that’s very, very difficult for someone to do in a corporate setting.”

Last year, the business case for decarbonization was clear. Lured by global agreements to curb climate-warming emissions and the previous administration’s policies pushing companies to capture and store emissions underground, Houston’s largest oil companies rushed to build up their place in the new industry — an industry in which Texas and the Gulf Coast area offered prime geologic real estate.

Some of the U.S. oil industry’s biggest players threw billions into the prospect. They acquired carbon-focused firms, hired new teams, leased land and engineered facility plans. Exxon Mobil paid $4.9 billion to buy Plano-based Denbury in 2023, largely because of the smaller company’s network of carbon dioxide pipelines and storage facilities along the Gulf Coast.

Occidental Petroleum paid $1.1 billion to acquire Carbon Engineering, a Canadian company with a technology capable of sucking carbon dioxide from the air like a vacuum. Chevron also invested $45 million in Boulder-based ION Clean Energy, a tech company focused on carbon capture, while Houston-based oilfield services company Schlumberger invested $400 million in a joint venture with Norway’s Aker Carbon Capture.

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Both Exxon and Chevron leased massive acreage along the Gulf Coast and offshore in the Gulf of Mexico to advance their plans to store carbon dioxide emissions from the region’s chemical plants and refineries underground. In October, Exxon received approval for three permits for carbon storage wells in Jefferson County.

Exxon said it believed the emerging industry’s worth could grow to trillions of dollars a year as demand for climate solutions grows. The International Energy Agency describes carbon mitigation as “an important technology for achieving global net-zero emissions.”

While the Trump administration has largely left alone attractive tax credits for carbon capture and storage projects, it has undermined the business case for carbon removal. It slashed billions in federal funding for clean energy projects and eliminated federal regulations requiring companies to meet certain carbon emissions standards.

A Chevron worker walks up a standard drilling rig that will be drilling its first onshore test well for the Bayou Bend CCUS project is photographed on Thursday, Feb. 22, 2024 in Winnie area. It is expected to have the capacity to store more than 1 billion metric tons of carbon dioxide in underground geologic structures.

Yi-Chin Lee/Staff photographer

As a result, experts say the front-end costs may no longer make related tax breaks financially worthwhile.

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Exxon announced last month it had paused plans to build what would be one of the world’s largest hydrogen production and carbon capture facilities. The Baytown facility would use natural gas to make cleaner-burning hydrogen and would capture the carbon dioxide emissions associated with the industrial conversion process. As part of the project, Exxon planned to store as much as 10 million metric tons of carbon dioxide a year.

Before the plans were paused, the Department of Energy cut more than $330 million previously awarded to the project under the Biden administration, lumping it among clean energy projects that it said "failed to advance the energy needs of the American people.”

Exxon’s CEO Darren Woods told Reuters in November the company was back-burnering the project because it was struggling “to establish committed customers” for the natural gas alternative.

One of the saving graces for the industry, however, may still be that many individual consumers – the general public – still seem to care about cutting carbon emissions, said Brad Johnston, a research analyst at Enverus. Additionally, because these bigger companies have already built up teams of workers and invested heavily in their carbon projects, he believes Texas’ oil and gas industry will ultimately continue to develop the industry.

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“Each project is going to have very specific kinds of economic drivers, but overall a benefit on the Texas side, specifically the Gulf Coast … the benefit is that there’s already pretty significant industrial activity in that area that can be decarbonized,” Johnston said.

The Railroad Commission said it has 18 pending applications for carbon storage wells and is aware of others in the works across the state. Applications for “Class VI” carbon storage wells in Texas accounted for roughly a quarter of pending permits nationally, according to an EPA tracker.

Carl von Merz, the head of oil and gas for Hunton Andrews Kurth, said that for now, his firm hasn’t seen a slowdown in carbon capture and storage projects.

“We’re still seeing our projects go full steam ahead right now,” von Merz said.