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HB 431

Injection wells; fees assessed on certain wells, notice and participation for local governments provided, study commission established

2026 Regular Session

Alabama proposes taxing underground carbon dioxide storage operations to generate state revenue from emerging carbon capture and storage industries.

Read for the first time and referred to the Senate Committee on Finance and Taxation General Fund
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Bill Summary · HB 431

Legislative bill overview

HB 431 proposes to establish a new tax on underground carbon dioxide storage operations in Alabama. The bill would create a revenue mechanism specifically targeting companies that inject and store CO2 beneath the state's surface, likely as part of carbon capture and storage (CCS) initiatives. This is currently in the early stages of the legislative process, having just been referred to the House Ways and Means Committee.

Why is this important

Carbon capture and storage is increasingly viewed as a climate mitigation strategy, with companies potentially receiving federal tax credits and incentives for CCS operations. A state-level tax on these operations could affect the economic viability of CCS projects in Alabama and influence how much revenue the state captures from this emerging industry. This reflects growing state-level policy discussions about balancing environmental goals with fiscal interests.

Potential points of contention

  • Economic competitiveness: A CO2 storage tax could make Alabama less attractive for CCS projects compared to other states without such taxes, potentially driving investment elsewhere
  • Federal-state coordination: The interaction between state taxes and existing federal tax credits/incentives for carbon capture is unclear and could create complexity
  • Industry burden vs. climate benefit: Whether the tax appropriately balances revenue generation with support for climate-related technologies that may offer broader environmental benefits

Compiled from official sources — confirm details with the bill’s official record.

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