Carbon dioxide and other greenhouse gas emission fees

(a)

In general

Chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end thereof the following new subchapter:

Carbon dioxide and other greenhouse gas emission fees

Sec. 4691. Fee for carbon dioxide emissions.

Sec. 4692. Fee for non-carbon dioxide greenhouse gas emissions.

Sec. 4693. Escaped methane.

Sec. 4694. Border adjustments.

Sec. 4695. Definitions and other rules.

4691.

Fee for carbon dioxide emissions

(a)

In general

(1)

Fossil fuel products producing carbon emissions

(A)

In general

There is hereby imposed a fee in an amount equal to the applicable amount at the rate specified in subparagraph (B) on—(i)coal—(I)removed from any mine in the United States, or(II)entered into the United States for consumption, use, or warehousing,(ii)petroleum products—(I)removed from any refinery,(II)removed from any terminal, or(III)entered into the United States for consumption, use, or warehousing, and(iii)natural gas—(I)entered into any processor, or(II)entered into the United States for consumption, use, or warehousing.(B)

Rate

The rate specified in this subparagraph with respect to any product described in subparagraph (A) is an amount equal to the applicable amount per ton of carbon dioxide that would be emitted through the combustion of such product (as determined by the Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency).(2)

Emissions attributable to other substances

There is hereby imposed a fee in an amount equal to the applicable amount per ton of carbon dioxide emitted—(A)from any facility which—(i)is required to report emissions, or to which emissions are attributed, under subpart A of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act, and(ii)emits not less than 25,000 tons of carbon dioxide emissions during the previous calendar year, and(B)by reason of the combustion or processing of any product other than coal, petroleum products, and natural gas.(b)

Applicable amount

(1)

In general

For purposes of this part, the applicable amount is—(A)for calendar year 2015, $42,(B)for any calendar year following a year which is not a national emissions target attainment year, the sum of—(i)the product of the amount in effect under this subparagraph for the preceding calendar year and 102 percent, and(ii)the inflation adjustment amount determined under paragraph (2), and(C)for any calendar year following a year which is a national emissions target attainment year, the sum of—(i)the amount in effect under this subparagraph for the preceding calendar year, and(ii)the inflation adjustment amount determined under paragraph (2).(2)

Inflation adjustment amount

(A)

In general

The inflation adjustment amount for any calendar year shall be an amount (not less than zero) equal to the product of—(i)the amount determined under paragraph (1)(B)(i) or (1)(C)(i), as applicable, for such year, and(ii)the percentage by which the CPI for the preceding calendar year exceeds the CPI for the second preceding calendar year.(B)

CPI

Rules similar to the rules of paragraphs (4) and (5) of section 1(f) shall apply for purposes of this paragraph.(3)

Rounding

The applicable amount under this subsection shall be rounded up to the next whole dollar amount.(4)

National emissions target attainment year

For purposes of paragraph (1), a calendar year is a national emissions target attainment year if the level of greenhouse gas emissions in the United States for the calendar year does not exceed 20 percent of the level of greenhouse gas emissions in the United States for calendar year 2005 as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency.(c)

Refunds for capturing carbon dioxide and production of certain goods

(1)

Carbon dioxide capture, utilization, and storage

(A)

In general

In the case of a person who—(i)uses any coal, petroleum product, or natural gas for which a fee has been imposed under subsection (a)(1) in a manner which results in the emission of qualified carbon dioxide,(ii)captures the resulting emitted qualified carbon dioxide at a qualified facility, and(iii)(I)disposes of such qualified carbon dioxide in secure storage, or(II)utilizes such qualified carbon dioxide in a manner provided in subparagraph (D),

there shall be allowed a refund, in the same manner as if it were an overpayment of the fee imposed by such subsection, to such person in amount determined under subparagraph (B).

(B)

Amount of refund

The amount of the refund under this subparagraph is an amount equal to the product of—(i)the applicable amount under subsection (b) for the calendar year in which such qualified carbon dioxide was captured and disposed or utilized, and(ii)the adjusted tons of qualified carbon dioxide captured and disposed or utilized.(C)

Adjusted total tons

For purposes of subparagraph (B), the adjusted tons of qualified carbon dioxide captured and disposed or utilized shall be the total tons of qualified carbon dioxide captured and disposed or utilized reduced by the amount of any anticipated leakage of carbon dioxide into the atmosphere due to imperfect storage technology or otherwise, as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency.(D)

Requirements

(i)

In general

Any refund under subparagraph (A) shall apply only with respect to qualified carbon dioxide that has been captured and disposed or utilized within the United States.(ii)

Disposal and secure storage

(I)

Secure storage

The Secretary, in consultation with the Administrator of the Environmental Protection Agency and the Secretary of Energy, shall establish regulations similar to the regulations under section 45Q(d)(2) for determining adequate security measures for the secure storage of qualified carbon dioxide for purposes of subparagraph (A)(iii)(I).(II)

Recapture

The Secretary shall, by regulations, provide for recapturing the benefit of any refund made under subparagraph (A) with respect to any qualified carbon dioxide which is disposed in secure storage and ceases to be stored in a manner consistent with the requirements of this section.(iii)

Utilization

The Secretary, in consultation with the Administrator of the Environmental Protection Agency, shall establish regulations providing for the appropriate methods and manners for the utilization of qualified carbon dioxide under subparagraph (A)(iii)(II), including the utilization of captured carbon dioxide for enhanced oil or gas recovery and the production of substances such as plastics, biofuels, and chemicals. Such regulations shall provide for the minimization of the escape or further emission of the qualified carbon dioxide into the atmosphere.(E)

Qualified carbon dioxide; qualified facility

For purposes of this paragraph—(i)

Qualified carbon dioxide

The term qualified carbon dioxide has the same meaning given that term under section 45Q(b).(ii)

Qualified facility

The term qualified facility has the same meaning given that term under section 45Q(c), determined without regard to paragraph (3) thereof.(2)

Manufacture of certain goods

In the case of a person who uses any coal, petroleum product, or natural gas for which a fee has been imposed under subsection (a)(1) as an input for a manufactured good that encapsulates carbon dioxide in a manner such that it does not result in the direct emission of carbon dioxide in the manufacturing or subsequent use of such good, a refund shall be allowed to such person in the same manner as if it were an overpayment of the fee imposed by such section in an amount that is equal to the product of—(A)an amount equal to the applicable amount under subsection (b) for the calendar year in which such product was used, and(B)the total tons of carbon dioxide that would have otherwise been emitted through the combustion of such product.(3)

Exports

In the case of a person who exports any coal, petroleum product, or natural gas from the United States for which a fee has been imposed under subsection (a)(1), a refund shall be allowed to such person in the same manner as if it were an overpayment of the fee imposed by such section in an amount that is equal to the fee previously imposed under such section with respect to such product.

4692.

Fee for non-carbon dioxide greenhouse gas emissions

(a)

In general

There is hereby imposed a fee in an amount determined under subsection (b) on the emission (including attributed emissions) of any greenhouse gas other than carbon dioxide from any greenhouse gas emissions source.(b)

Amount of fee

The amount of fee imposed by subsection (a) shall be equal to the applicable amount determined under section 4691(b) per ton of carbon dioxide equivalent emitted by the greenhouse gas emissions source.(c)

Greenhouse gas emissions source

The term greenhouse gas emissions source means any facility which—(1)is required to report emissions (or which would be required to report emissions notwithstanding any other provision of law prohibiting the implementation of or use of funds for such requirements), or to which emissions are attributed, under part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act, and(2)emits during the previous calendar year greenhouse gases (not including carbon dioxide) at a rate equal to the carbon dioxide equivalent of not less than 25,000 tons.(d)

Special rules

For purposes of determining emissions under subsections (a) and (c)(2), there shall not be taken into account—(1)the emission of fluorinated greenhouse gases other than nitrogen trifluoride from any facility that is included under—(A)the electrical transmission and distribution equipment use source category under subpart DD of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act,(B)the electronics manufacturing source category under subpart I of such part, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act,(C)in the case of a facility that transforms or destroys such gases, the industrial gas supplier source category under subpart OO of such part, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act, or(D)the electrical equipment manufacturing or refurbishment category under subpart SS of such part, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act, or(2)the emission of trifluoride from any facility that is included under—(A)the industrial gas supplier source category under subpart OO of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act, or(B)the source category for importers and exporters of fluorinated greenhouse gases contained in pre-charged equipment or closed-cell foams under subpart QQ of such part, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act.

4693.

Escaped methane

(a)

Reporting program

(1)

In general

Not later than January 1, 2016, the Secretary of the Treasury, in consultation with the Administrator of the Environmental Protection Agency and the Administrator of the Energy Information Administration, shall establish and implement a program to provide for the collection of data on methane emissions by major non-natural sources, including methane emissions attributable to the extraction and distribution of coal, petroleum products, and natural gas.(2)

Annual report

Not later than 12 months after the date that the Secretary implements the program described in paragraph (1), and annually thereafter, the Secretary shall issue a report, to be made available to the public and the appropriate Committees of Congress, on methane emissions, including—(A)identification of all major non-natural source categories of methane emissions,(B)the total amount, expressed in tons of carbon dioxide equivalent, of—(i)methane emissions attributable to the extraction and distribution of coal within the United States during the preceding calendar year,(ii)methane emissions attributable to the extraction and distribution of petroleum products within the United States during the preceding calendar year, and(iii)methane emissions attributable to the extraction and distribution of natural gas within the United States during the preceding calendar year, and(C)the total amount, expressed in tons of carbon dioxide equivalent, of—(i)greenhouse gas emissions attributable to the extraction, distribution, and combustion of coal within the United States during the preceding calendar year,(ii)greenhouse gas emissions attributable to the extraction, distribution, and combustion of petroleum products within the United States during the preceding calendar year, and(iii)greenhouse gas emissions attributable to the extraction, distribution, and combustion of natural gas within the United States during the preceding calendar year.(b)

Supplementary fee for escaped methane

(1)

Coal

In the case of any calendar year beginning after 2016, the fee imposed under section 4691(a)(1) with respect to coal shall be increased by the amount determined by the Secretary (in consultation with the Administrator of the Environmental Protection Agency) necessary to ensure that the total fees collected under such section with respect to coal are equal to the total amount of such fees that would be collected on coal if the fee imposed under section 4691(a)(1) applied to the carbon-dioxide equivalent of methane emissions reported under subsection (a)(2)(B)(i).(2)

Petroleum products

In the case of any calendar year beginning after 2016, the fee imposed under section 4691(a)(1) with respect to petroleum products shall be increased by the amount determined by the Secretary (in consultation with the Administrator of the Environmental Protection Agency) necessary to ensure that the total fees collected under such section with respect to petroleum products are equal to the total amount of such fees that would be collected on petroleum products if the fee imposed under section 4691(a)(1) applied to the carbon-dioxide equivalent of methane emissions reported under subsection (a)(2)(B)(ii).(3)

Natural gas

In the case of any calendar year beginning after 2016, the fee imposed under section 4691(a)(1) with respect to natural gas shall be increased by the amount determined by the Secretary (in consultation with the Administrator of the Environmental Protection Agency) necessary to ensure that the total fees collected under such section with respect to natural gas are equal to the total amount of such fees that would be collected on natural gas if the fee imposed under section 4691(a)(1) applied to the carbon-dioxide equivalent of methane emissions reported under subsection (a)(2)(B)(iii).

4694.

Border adjustments

(a)

Exports

(1)

In general

In the case of any good exported from the United States that—(A)is manufactured using as an input—(i)any coal, petroleum product, or natural gas that is subject to a fee under section 4691(a)(1) or 4693(b), or(ii)any product manufactured in a facility that is subject to a fee under section 4691(a)(2) or 4692(a), and(B)as a result of such fee, has been determined by the Secretary to be placed at a competitive disadvantage in foreign markets against similar goods that are manufactured using inputs not subject to equivalent greenhouse gas or carbon content taxes or fees,

the Secretary may provide an equivalency refund to the person exporting such good in an amount determined under paragraph (2).

(2)

Equivalency refund

For any good identified by the Secretary under paragraph (1), the amount determined under this paragraph shall be equal to the difference between—(A)the amount of the cost of such good attributable to any fees imposed under this subchapter on inputs used in the manufacturing of such good (as determined under regulations established by the Secretary), and(B)the amount, if any, of the cost of such good which would be attributable to comparable greenhouse gas or carbon content taxes or fees imposed by the foreign nation or substantial governmental unit to which such good is exported if the inputs used in the manufacturing of such good were subject to such taxes or fees (as determined under regulations established by the Secretary).(b)

Imports

(1)

In general

In the case of any good imported into the United States—(A)that is manufactured using as an input—(i)any coal, petroleum product, or natural gas that is not subject to a fee under section 4691(a)(1) or 4693(b), or(ii)any product manufactured in a facility that is not subject to a fee under section 4691(a)(2) or 4692(a), and(B)is placed at a competitive disadvantage compared to similar goods in the domestic market which are manufactured using inputs subject to such a fee, as determined under regulations established by the Secretary,

the Secretary may impose an equivalency fee on the person importing such good in an amount determined under paragraph (2).

(2)

Equivalency fee

For any good identified by the Secretary under paragraph (1), the amount determined under this paragraph shall be equal to the difference between—(A)the amount of the cost of such good which would be attributable to any fees imposed under this subchapter on inputs used in the manufacturing of such good if the inputs used in manufacturing such good were subject to such fees (as determined under regulations established by the Secretary), and(B)the amount, if any, of the cost of such good which is attributable to comparable greenhouse gas or carbon content taxes or fees imposed by the foreign nation or substantial governmental unit from which such good is imported (as determined under regulations established by the Secretary).(c)

Regulatory authority

The Secretary shall consult with the Administrator of the Environmental Protection Agency and the Secretary of Energy in establishing rules and regulations implementing the purposes of this section.

4695.

Definitions and other rules

(a)

Definitions

For purposes of this subchapter:(1)

Carbon dioxide equivalent

(A)

In general

Except as provided under subparagraph (B), the term carbon dioxide equivalent means, with respect to a greenhouse gas, the quantity of such gas that has a global warming potential equivalent to 1 metric ton of carbon dioxide, as determined pursuant to table A–1 of subpart A of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act.(B)

Exception for hydrofluorocarbons

In the case of hydrofluorocarbons emitted from any facility that is included under—(i)the industrial gas supplier source category under subpart OO of part 98 of title 40, Code of Federal Regulations, or(ii)the source category for importers and exporters of fluorinated greenhouse gases contained in pre-charged equipment or closed-cell foams under subpart QQ of such part,

the term carbon dioxide equivalent means 10 percent of the quantity of such hydrofluorocarbons that has a global warming potential equivalent to 1 metric ton of carbon dioxide, as determined pursuant to table A–1 of subpart A of such part, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act.

(2)

Greenhouse gas

The term greenhouse gas has the meaning given such term under section 211(o)(1)(G) of the Clean Air Act, as in effect on the date of the enactment of the American Opportunity Carbon Fee Act.(3)

Coal

The term coal has the same meaning given such term under section 48A(c)(4).(4)

Petroleum product

The term petroleum product has the same meaning given such product under section 4612(a)(3).(5)

Ton

(A)

In general

The term ton means 1,000 kilograms. In the case of any greenhouse gas which is a gas, the term ton means the amount of such gas in cubic meters which is the equivalent of 1,000 kilograms on a molecular weight basis.(B)

Fractional part of ton

In the case of a fraction of a ton, any fee imposed by this subchapter on such fraction shall be the same fraction of the amount of such fee imposed on a whole ton.(6)

United States

The term United States has the meaning given such term by section 4612(a)(4).(b)

Other rules

(1)

Assessment and collection

Subject to subsection (d), payment of the fee imposed by sections 4691, 4692, and 4693 shall be assessed and collected in the same manner as taxes under this subtitle.(2)

Regulations

The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subchapter.

(b)

Clerical amendment

The table of subchapters for chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:

SUBCHAPTER E—Carbon dioxide and other greenhouse gas emission fees

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2014.