H.R. 8108: End Polluter Welfare for Enhanced Oil Recovery Act of 2026

This bill, titled the End Polluter Welfare for Enhanced Oil Recovery Act of 2026, aims to amend the Internal Revenue Code to modify certain tax credits related to the oil and gas industry, specifically concerning enhanced oil recovery (EOR) methods that use carbon oxide. Here’s a breakdown of its key provisions:

1. Elimination of Carbon Oxide as Tertiary Injectant

The bill proposes to stop allowing the use of carbon oxide for enhanced oil recovery as a tertiary injectant for new facilities that begin construction after the bill is enacted. This means that any new oil recovery projects that would typically use carbon dioxide (CO2) as part of their extraction process will no longer be eligible to benefit from tax provisions related to this practice.

2. Removal of Enhanced Oil Recovery Credit

The legislation seeks to eliminate the enhanced oil recovery credit entirely, which is codified in Section 43 of the Internal Revenue Code. This tax credit currently allows companies to receive tax benefits for engaging in enhanced oil recovery activities that utilize carbon dioxide.

• Specific provisions related to this credit have been removed, impacting how businesses account for this tax benefit in their financial statements.
• Conforming amendments to other sections of the tax code will ensure that references to Section 43 are updated or removed to reflect these changes.

3. Effective Date

The amendments introduced by the bill will apply to taxable years that begin after the enactment of the Act. This means that the changes will not take effect retroactively but will impact new projects going forward.

Summary of Financial Implications

By eliminating these credits, the bill aims to reduce governmental financial support for enhanced oil recovery methods that depend on carbon oxide injection, indicating a shift in policy regarding energy production and environmental impacts. Companies involved in enhanced oil recovery might find their financial landscape changing significantly as these tax advantages are removed.

Relevant Companies

• XOM (Exxon Mobil Corporation): As one of the largest oil and gas companies, ExxonMobil engages in enhanced oil recovery. The removal of related tax credits could impact its operational costs and investment decisions regarding new recovery projects.
• CVX (Chevron Corporation): Another major player in the oil industry, Chevron utilizes EOR techniques. Changes in tax incentives may alter the company's approach to future projects relying on carbon dioxide injection.
• SLB (Schlumberger Limited): This company provides technology and services to oil and gas exploration and production companies, including those utilizing EOR. The bill could affect demand for certain technologies tied to enhanced oil recovery.