It has been two years since the oil and gas company Occidental acquired the carbon capture startup Carbon Engineering. At the time, the deal was seen as a mutually beneficial arrangement, providing a significant exit for the climate tech company and granting a fossil fuel company a foothold in a sector that could potentially be worth as much as $150 billion by 2050.

We now have a clearer understanding of why Occidental was eager to acquire the pricey technology: they intend to utilize it to extract more oil.

Initially, the company stated that it would use the technology to completely offset its climate impact. However, during Occidental’s earnings call this week, CEO Vicki Hollub announced a shift in strategy, stating that injecting CO₂ into wells to increase oil production was crucial for boosting output.

Hollub emphasized the significance of removing CO₂ from the atmosphere, stating that it is a technology the United States needs, and that President Trump is aware of its business potential. The Verge was the first to report on these comments.

Hollub drew a comparison between using CO₂ in enhanced oil recovery and fracking, the technology that led to a surge in U.S. oil and gas production.

The technique employed by Carbon Engineering, known as direct air capture, which extracts CO₂ from the atmosphere, remains expensive, with costs ranging from $600 to $1,000 per metric ton. Nevertheless, the Inflation Reduction Act provides substantial incentives for utilizing captured CO₂ in enhanced oil recovery, with tax credits of up to $130 per metric ton in 2026, provided the gas is stored permanently underground. Although these incentives alone may not be sufficient to make the practice attractive, when combined with carbon credit sales, Occidental anticipates that it will be able to turn a profit by the end of the decade.

The Trump administration has been working to dismantle climate-related government incentives, particularly the Inflation Reduction Act. However, with the support of companies such as Occidental and ExxonMobil, it is possible that the tax credits could survive.

The history of carbon capture is intricately linked with fossil fuel companies, which initially began pumping oil into dwindling wells in the 1970s using CO₂ from underground deposits. In the early 1980s, pipelines began to emerge from Texas, but low oil prices hindered the widespread adoption of the technique.

Approximately a decade ago, NRG Energy took advantage of rising oil prices to construct the country’s first carbon capture facility attached to a coal-fired power plant, called Petra Nova. The facility was designed to capture about a third of one boiler’s carbon dioxide and utilize the CO₂ to boost production at a struggling oilfield southwest of Houston.

The project was successful, although not to the extent expected. Production increased from around 300 barrels per day to 6,000 barrels, a significant improvement but only half of the forecasted amount. NRG shut down Petra Nova in 2020 as oil prices plummeted during the pandemic and sold it to JX Nippon three years later.

Although oil prices have recovered, enhanced oil recovery using CO₂ remains unattractive due to the limited availability of the gas. At least, there isn’t enough CO₂ readily available to increase production by the 50 billion to 70 billion barrels that Hollub predicts the technology will unlock.

Direct air capture could potentially provide sufficient CO₂. Over the past century and a half, humans have released gigatons of the gas into the atmosphere through fossil fuel combustion. It is possible that carbon captured from the air could be used to produce “carbon negative” oil, meaning the process of drilling the oil stores more carbon than burning it releases, although further research is needed to explore this concept.

It is uncertain whether federal incentives for direct air capture will survive the next four years. However, among the tax credits in the Inflation Reduction Act, they might have the best chance of survival due to oil companies’ desire to maintain business as usual.