[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3179 Introduced in Senate (IS)]
<DOC>
114th CONGRESS
2d Session
S. 3179
To amend the Internal Revenue Code of 1986 to improve and extend the
credit for carbon dioxide sequestration.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 13, 2016
Ms. Heitkamp (for herself, Mr. Whitehouse, Mr. Tester, Mr. Schatz, Mr.
Booker, and Mr. Kaine) introduced the following bill; which was read
twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to improve and extend the
credit for carbon dioxide sequestration.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Carbon Capture Utilization and
Storage Act''.
SEC. 2. EXTENSION OF ENHANCED CARBON DIOXIDE SEQUESTRATION CREDIT.
(a) In General.--Section 45Q of the Internal Revenue Code of 1986
is amended to read as follows:
``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.
``(a) General Rule.--For purposes of section 38, the carbon dioxide
sequestration credit for any taxable year is an amount equal to the sum
of--
``(1) $20 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer using qualified
carbon capture equipment which is originally placed in
service at a qualified facility before the date of the
enactment of the Carbon Capture Utilization and Storage
Act, and
``(B) disposed of by the taxpayer in secure
geological storage and not used by the taxpayer as
described in paragraph (2)(B),
``(2) $10 per metric ton of qualified carbon dioxide which
is--
``(A) captured by the taxpayer using qualified
carbon capture equipment which is originally placed in
service at a qualified facility before the date of the
enactment of the Carbon Capture Utilization and Storage
Act, and
``(B)(i) used by the taxpayer as a tertiary
injectant in a qualified enhanced oil or natural gas
recovery project and disposed of by the taxpayer in
secure geological storage, or
``(ii) utilized by the taxpayer in a manner
described in subsection (e)(7),
``(3) the applicable dollar amount (as determined under
subsection (b)(1)) per metric ton of qualified carbon dioxide
which is--
``(A) captured by the taxpayer using qualified
carbon capture equipment which is originally placed in
service at a qualified facility on or after the date of
the enactment of the Carbon Capture Utilization and
Storage Act, during the 12-year period beginning on the
date the equipment was originally placed in service,
and
``(B) disposed of by the taxpayer in secure
geological storage and not used by the taxpayer as
described in paragraph (4)(B), and
``(4) the applicable dollar amount (as determined under
subsection (b)(1)) per metric ton of qualified carbon dioxide
which is--
``(A) captured by the taxpayer using qualified
carbon capture equipment which is originally placed in
service at a qualified facility on or after the date of
the enactment of the Carbon Capture Utilization and
Storage Act, during the 12-year period beginning on the
date the equipment was originally placed in service,
and
``(B)(i) used by the taxpayer as a tertiary
injectant in a qualified enhanced oil or natural gas
recovery project and disposed of by the taxpayer in
secure geological storage, or
``(ii) utilized by the taxpayer in a manner
described in subsection (e)(7).
``(b) Applicable Dollar Amount; Additional Equipment; Election.--
``(1) Applicable dollar amount.--
``(A) In general.--The applicable dollar amount
shall be an amount equal to--
``(i) for any taxable year beginning in a
calendar year after 2015 and ending before
2026--
``(I) for purposes of paragraph (3)
of subsection (a), the dollar amount
established by linear interpolation
between $22.66 and $50 for each
calendar year during such period, and
``(II) for purposes of paragraph
(4) of such subsection, the dollar
amount established by linear
interpolation between $12.83 and $35
for each calendar year during such
period, and
``(ii) for any taxable year beginning in a
calendar year after 2025--
``(I) for purposes of paragraph (3)
of subsection (a), an amount equal to
the product of $50 and the inflation
adjustment factor for such calendar
year determined under section
43(b)(3)(B) for such calendar year,
determined by substituting `2024' for
`1990', and
``(II) for purposes of paragraph
(4) of such subsection, an amount equal
to the product of $35 and the inflation
adjustment factor for such calendar
year determined under section
43(b)(3)(B) for such calendar year,
determined by substituting `2024' for
`1990'.
``(B) Rounding.--The applicable dollar amount
determined under subparagraph (A) shall be rounded to
the nearest cent.
``(2) Installation of additional carbon capture equipment
on existing qualified facility.--In the case of a qualified
facility placed in service before the date of the enactment of
the Carbon Capture Utilization and Storage Act, for which
additional qualified carbon capture equipment is placed in
service on or after the date of the enactment of the Carbon
Capture Utilization and Storage Act, the amount of qualified
carbon dioxide which is captured by the taxpayer shall be equal
to--
``(A) for purposes of paragraphs (1)(A) and (2)(A)
of subsection (a), the lesser of--
``(i) the total amount of qualified carbon
dioxide captured at such facility for the
taxable year, or
``(ii) the total amount of the carbon
dioxide capture capacity of the qualified
carbon capture equipment in service at such
facility on the day before the date of the
enactment of the Carbon Capture Utilization and
Storage Act, and
``(B) for purposes of paragraphs (3)(A) and (4)(A)
of such subsection, an amount (not less than zero)
equal to the excess of--
``(i) the amount described in clause (i) of
subparagraph (A), over
``(ii) the amount described in clause (ii)
of such subparagraph.
``(3) Election.--For purposes of determining the carbon
dioxide sequestration credit under this section, a taxpayer may
elect to have the dollar amounts applicable under paragraph (1)
or (2) of subsection (a) apply in lieu of the dollar amounts
applicable under paragraph (3) or (4) of such subsection for
each metric ton of qualified carbon dioxide which is captured
by the taxpayer using qualified carbon capture equipment which
is originally placed in service at a qualified facility on or
after the date of the enactment of the Carbon Capture
Utilization and Storage Act.
``(c) Qualified Carbon Dioxide.--For purposes of this section--
``(1) In general.--The term `qualified carbon dioxide'
means carbon dioxide captured from an industrial source which--
``(A) would otherwise be released into the
atmosphere as industrial emission of greenhouse gas,
and
``(B) is measured at the source of capture and
verified at the point of disposal, injection, or
utilization.
``(2) Recycled carbon dioxide.--The term `qualified carbon
dioxide' includes the initial deposit of captured carbon
dioxide used as a tertiary injectant. Such term does not
include carbon dioxide that is recaptured, recycled, and re-
injected as part of the enhanced oil and natural gas recovery
process.
``(d) Qualified Facility and Qualified Carbon Capture Equipment.--
``(1) Qualified facility.--For purposes of this section,
the term `qualified facility' means any industrial facility--
``(A)(i) the construction of which begins before
January 1, 2024, and--
``(I) the original planning and design for
such facility includes installation of
qualified carbon capture equipment, or
``(II) construction of qualified carbon
capture equipment begins before such date, or
``(ii) which is placed in service before January 1,
2024, and includes installation of qualified carbon
capture equipment, provided that construction of such
carbon capture equipment begins before such date, and
``(B) which captures--
``(i) in the case of a facility which emits
not more than 500,000 metric tons of carbon
dioxide into the atmosphere during the taxable
year, not less than 25,000 metric tons of
qualified carbon dioxide during the taxable
year which is utilized in a manner described in
subsection (e)(7),
``(ii) in the case of an electricity
generating facility which is not described in
clause (i), not less than 500,000 metric tons
of qualified carbon dioxide during the taxable
year, or
``(iii) in the case of a facility not
described in clause (i) or (ii), not less than
100,000 metric tons of qualified carbon dioxide
during the taxable year.
``(2) Qualified carbon capture equipment.--For purposes of
this section, the term `qualified carbon capture equipment'
means--
``(A) carbon capture equipment placed in service
before January 1, 2024, and
``(B) carbon capture equipment the construction of
which begins before such date.
``(e) Special Rules and Other Definitions.--For purposes of this
section--
``(1) Only carbon dioxide captured and disposed of or used
within the united states taken into account.--The credit under
this section shall apply only with respect to qualified carbon
dioxide the capture and disposal, use, or utilization of which
is within--
``(A) the United States (within the meaning of
section 638(1)), or
``(B) a possession of the United States (within the
meaning of section 638(2)).
``(2) Secure geological storage.--The Secretary, in
consultation with the Administrator of the Environmental
Protection Agency, the Secretary of Energy, and the Secretary
of the Interior, shall establish regulations for determining
adequate security measures for the geological storage of carbon
dioxide under subsection (a) such that the carbon dioxide does
not escape into the atmosphere. Such term shall include storage
at deep saline formations, oil and gas reservoirs, and
unminable coal seams under such conditions as the Secretary may
determine under such regulations.
``(3) Tertiary injectant.--The term `tertiary injectant'
has the same meaning as when used within section 193(b)(1).
``(4) Qualified enhanced oil or natural gas recovery
project.--The term `qualified enhanced oil or natural gas
recovery project' has the meaning given the term `qualified
enhanced oil recovery project' by section 43(c)(2), by
substituting `crude oil or natural gas' for `crude oil' in
subparagraph (A)(i) thereof.
``(5) Credit attributable to taxpayer.--
``(A) In general.--Except as provided subparagraph
(B) or in any regulations prescribed by the Secretary,
any credit under this section shall be attributable
to--
``(i) in the case of qualified carbon
dioxide captured using qualified carbon capture
equipment which is originally placed in service
at a qualified facility before the date of the
enactment of the Carbon Capture Utilization and
Storage Act, the person that captures and
physically or contractually ensures the
disposal, utilization, or use as a tertiary
injectant of such qualified carbon dioxide, and
``(ii) in the case of qualified carbon
dioxide captured using qualified carbon capture
equipment which is originally placed in service
at a qualified facility on or after the date of
the enactment of the Carbon Capture Utilization
and Storage Act, the person that owns the
qualified carbon capture equipment and
physically or contractually ensures the capture
and disposal, utilization, or use as a tertiary
injectant of such qualified carbon dioxide.
``(B) Election.--If the person described in
subparagraph (A) makes an election under this
subparagraph in such time and manner as the Secretary
may prescribe by regulations, the credit under this
section--
``(i) shall be allowable to the person that
disposes of the qualified carbon dioxide,
utilizes the qualified carbon dioxide, or uses
the qualified carbon dioxide as a tertiary
injectant, and
``(ii) shall not be allowable to the person
described in subparagraph (A).
``(6) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any credit allowable
under subsection (a) with respect to any qualified carbon
dioxide which ceases to be captured, disposed of, or used as a
tertiary injectant in a manner consistent with the requirements
of this section.
``(7) Utilization of qualified carbon dioxide.--
``(A) In general.--For purposes of this section,
utilization of qualified carbon dioxide means--
``(i) the fixation of such qualified carbon
dioxide through photosynthesis or
chemosynthesis, such as through the growing of
algae or bacteria,
``(ii) the chemical conversion of such
qualified carbon dioxide to a material or
chemical compound in which such qualified
carbon dioxide is securely stored, or
``(iii) the use of such qualified carbon
dioxide for any other purpose for which a
commercial market exists (with the exception of
use as a tertiary injectant in a qualified
enhanced oil or natural gas recovery project),
as determined by the Secretary.
``(B) Measurement.--
``(i) In general.--For purposes of
determining the amount of qualified carbon
dioxide utilized by the taxpayer under
paragraph (2)(B)(ii) or (4)(B)(ii) of
subsection (a), such amount shall be equal to
the metric tons of carbon dioxide which the
taxpayer demonstrates, based upon an analysis
of lifecycle greenhouse gas emissions and
subject to such requirements as the Secretary,
in consultation with the Secretary of Energy
and the Administrator of the Environmental
Protection Agency, determines appropriate, were
captured and prevented from escaping into the
atmosphere through use of a process described
in subparagraph (A).
``(ii) Lifecycle greenhouse gas
emissions.--For purposes of clause (i), the
term `lifecycle greenhouse gas emissions' has
the same meaning given such term under
subparagraph (H) of section 211(o)(1) of the
Clean Air Act (42 U.S.C. 7545(o)(1)), as in
effect on the date of the enactment of the
Carbon Capture Utilization and Storage Act,
except that `product' shall be substituted for
`fuel' each place it appears in such
subparagraph.
``(8) Inflation adjustment.--In the case of any taxable
year beginning in a calendar year after 2009, there shall be
substituted for each dollar amount contained in paragraphs (1)
and (2) of subsection (a) an amount equal to the product of--
``(A) such dollar amount, multiplied by
``(B) the inflation adjustment factor for such
calendar year determined under section 43(b)(3)(B) for
such calendar year, determined by substituting `2008'
for `1990'.
``(f) Application of Section for Certain Carbon Capture
Equipment.--In the case of any qualified carbon capture equipment
placed in service before the date of the enactment of the Carbon
Capture Utilization and Storage Act, the credit under this section
shall apply with respect to qualified carbon dioxide captured using
such equipment before the end of the calendar year in which the
Secretary, in consultation with the Administrator of the Environmental
Protection Agency, certifies that 75,000,000 metric tons of qualified
carbon dioxide have been taken into account in accordance with
paragraphs (1) and (2) of subsection (a) during the period beginning
after October 3, 2008.
``(g) Regulations.--The Secretary may prescribe such regulations
and other guidance as may be necessary or appropriate to carry out this
section, including regulations or other guidance to--
``(1) ensure proper allocation under subsection (a) for
qualified carbon dioxide captured by a taxpayer during the
taxable year ending after the date of the enactment of the
Carbon Capture Utilization and Storage Act, and
``(2) determine whether a facility satisfies the
requirements under subsection (d)(1) during such taxable
year.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
<all>