EPA gutted the CO2 sequestration reporting framework that 45Q credits depend on

In September 2025, the EPA proposed permanently removing Subpart RR of the Greenhouse Gas Reporting Program -- the very framework that CCS project operators use to measure, report, and verify (MRV) how much CO2 they have geologically sequestered. The 45Q tax credit ($85/tonne for geological storage) requires proof of sequestration, and the existing Treasury regulations specifically reference Subpart RR compliance as the verification mechanism. With Subpart RR gone, there is no official federal standard for proving sequestration volumes to the IRS. Treasury issued a stopgap safe harbor in late 2025 allowing independent engineer certification as a substitute, but this is interim guidance with no permanent regulatory backing. Project developers and their tax equity investors now face deep uncertainty: if the IRS later decides the safe harbor was insufficient, billions of dollars in claimed 45Q credits could be clawed back. This chills investment in new CCS projects at exactly the moment when the IRA's enhanced credits were supposed to accelerate deployment. The problem persists because EPA and Treasury operate on separate rulemaking timelines with no formal coordination mechanism, and the EPA action was driven by a deregulatory agenda that did not account for downstream impacts on tax credit verification.