Environmental concerns about carbon emissions coupled with the oil industry’s need to secure additional CO₂ for enhanced oil recovery (CO₂-EOR) projects have sparked interest in the potential that CO₂-EOR may have in jumpstarting carbon capture and sequestration (CCS). However, existing studies on the viability of coupling CO₂-EOR with CCS have generally placed more focus on either the engineering or economic aspects of the problem. Most engineering studies focus on the technical aspects of the CO₂-EOR project to produce the maximum amount of oil, while simultaneously storing the most CO₂ during the production process with the economics as an afterthought, while most economic studies found have focused on a singular aspect of the issue such as impacts of exogenously varying injection rates. Furthermore, modelling efforts have stopped at the end of the productive life of the field. We build a unique two-stage dynamic optimization model, which simultaneously addresses engineering and economic policy aspects, to study the viability of coupling CO₂-EOR transitioning into CCS. Our model includes a carbon tax for emissions, which becomes a subsidy for full scale sequestration after oil production has ceased; this allows us to explore the transition from CO₂-EOR, our first stage, to sole CO₂ sequestration in our second stage for a single field. We maximize the operator’s profits across both stages, while tracking the responsiveness of oil production and total carbon movements to both price and policy changes. We pair our optimization model with a reservoir simulation model, allowing us to mimic actual field behavior, giving our work a more realistic representation of both production and sequestration profiles. Our results suggest that small increases in the level of carbon tax can have large and discontinuous impacts on net sequestration. This stems from the observed transition from limited natural sources of CO₂ to more expensive captured CO₂ resulting from the implemented policy. With appropriate taxes, total volumes of captured CO₂ sequestered across both stages are equivalent to 30 to 40% of the emissions from the use of the oil produced. With the credits oil producers receive from sequestering CO₂, which equate to the tax, relatively high carbon taxes incentivize additional sequestration without significantly impacting the supply of oil. This, alongside maintaining a steady stream of profits, is a win-win situation for energy security and the climate.