Congress Preserves Carbon Management Funding in FY26 Bill Heading to Trump's Desk

In a decisive show of bipartisan support, Congress has passed a fiscal year 2026 appropriations package that preserves critical funding for carbon capture, hydrogen production, and carbon dioxide removal technologies. The bill passed the Senate 82-15 and the House 397-28, and now heads to President Trump's desk ahead of the January 31 funding deadline.

The legislation marks a significant departure from the Trump administration's proposed budget, which called for deep cuts to the Department of Energy's clean energy research programs. While the White House sought to slash energy R&D spending by 32.5%, Congress trimmed cuts to just 2.6%, signaling that lawmakers on both sides of the aisle view carbon management as essential infrastructure for America's energy future.

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What the Bill Delivers for Carbon Management

The DOE's Office of Fossil Energy will receive $720 million in total funding, with targeted allocations across the carbon management value chain. This represents a meaningful commitment to technologies that are already driving $77.5 billion in private investment across more than 270 announced projects nationwide.

For direct air capture developers and carbon storage operators, the bill also maintains $5 million for Class VI injection well permitting at the EPA, along with $1.2 million for regulator training. This funding is critical for expanding the permitting capacity needed to deploy permanent carbon storage at scale.

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Congress Reasserts Constitutional Authority

The overwhelming vote margins reflect something deeper than budget numbers. Lawmakers are asserting their constitutional role in directing federal spending, particularly on energy innovation that supports domestic manufacturing and clean hydrogen infrastructure.

The bill includes an important provision preventing DOE from terminating federal awards simply because they "no longer effectuate program goals or agency priorities." This language provides some protection for existing grant recipients, though it does not restore awards already canceled or cover Inflation Reduction Act funding.

Strategic Trade-offs in Energy Investment

The legislation does include some reallocations. Notably, $1.5 billion in unobligated CIFIA program funds will be redirected to support nuclear technologies through the Advanced Reactor Deployment Program.

The Carbon Capture Coalition noted this reallocation, though they emphasized that core R&D funding for carbon management technologies remains largely intact.

Funding Category	White House Request	Final Bill
Office of Nuclear Energy	$1.45B	$1.785B (+23.5%)
EERE Total	$880M	$3.1B
Office of Fossil Energy	Not specified	$720M
Office of Science	Not specified	$8.4B

What This Means for Industry

For developers working on 45Q-eligible projects, the appropriations bill provides welcome stability. Combined with the tax credits preserved in last summer's One Big Beautiful Bill Act, the policy framework supporting carbon capture remains broadly intact.

States like Louisiana, Texas, and North Dakota continue advancing major carbon storage hubs, supported by both federal R&D funding and the 45Q tax credit structure that makes commercial deployment economically viable.

Carbon Management's Political Durability

The bipartisan nature of this vote underscores something industry observers have noted for years: carbon management technologies enjoy support that cuts across traditional political divides. Projects in hydrogen hubs and carbon storage infrastructure are creating jobs in both red and blue states.

With funding secured through FY26, the next challenge will be execution. Industry stakeholders and lawmakers alike will be watching to ensure these investments translate into operational projects and continued American leadership in global carbon management.