Tax credit for carbon dioxide captured from industrial sources and used in enhanced oil and natural gas recovery

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business credits) is amended by adding at the end the following new section:

45J.

Credit for carbon dioxide captured from industrial sources and used as a tertiary injectant in enhanced oil and natural gas recovery

(a)

General rule

For purposes of section 38, the captured carbon dioxide tertiary injectant credit for any taxable year is an amount equal to the product of— (1)the credit amount, and (2)the qualified carbon dioxide captured from industrial sources and used as a tertiary injectant in qualified enhanced oil and natural gas recovery which is attributable to the taxpayer. (b)

Credit amount

For purposes of this section— (1)

In general

The credit amount is $0.75 per 1,000 standard cubic feet. (2)

Inflation adjustment

In the case of any taxable year beginning in a calendar year after 2004, there shall be substituted for the $0.75 amount under paragraph (1) an amount equal to the product of— (A)$0.75, 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 2003 for 1990. (c)

Qualified carbon dioxide

For purposes of this section— (1)

In general

The term qualified carbon dioxide means carbon dioxide captured from an anthropogenic source that— (A)would otherwise be released into the atmosphere as industrial emission of greenhouse gas, (B)is measurable at the source of capture, (C)is compressed, treated, and transported via pipeline, (D)is sold as a tertiary injectant in qualified enhanced oil and natural gas recovery, and (E)is permanently sequestered in geological formations as a result of the enhanced oil and natural gas recovery process. (2)

Anthropogenic source

An anthropogenic source of carbon dioxide is an industrial source, including any of the following types of plants, and facilities related to such plant— (A)a coal and natural gas fired electrical generating power station, (B)a natural gas processing and treating plant, (C)an ethanol plant, (D)a fertilizer plant, and (E)a chemical plant. (3)

Definitions

(A)

Qualified enhanced oil and natural gas recovery

The term qualified enhanced oil and natural gas recovery has the meaning given such term by section 43(c)(2). (B)

Tertiary injectant

The term tertiary injectant has the same meaning as when used within section 193(b)(1). (d)

Other definitions and special rules

For purposes of this section— (1)

Only carbon dioxide captured within the United States taken into account

Sales shall be taken into account under this section only with respect to qualified carbon dioxide 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)

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 re-captured, recycled, and re-injected as part of the enhanced oil and natural gas recovery process. (3)

Credit attributable to taxpayer

Any credit under this section shall be attributable to the person that captures, treats, compresses, transports and sells the carbon dioxide for use as a tertiary injectant in enhanced oil and natural gas recovery, except to the extent provided in regulations prescribed by the Secretary.

(b)

Conforming amendment

Section 38(b) of the Internal Revenue Code of 1986 (relating to general business credit) is amended by striking plus at the end of paragraph (18), by striking the period at the end of paragraph (19) and inserting , plus, and by adding at the end of following new paragraph:

(20)the captured carbon dioxide tertiary injectant credit determined under section 45J(a).

(c)

Clerical amendment

The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code (relating to other credits) is amended by adding at the end the following new section:

Sec. 45J. Credit for carbon dioxide captured from industrial sources and used as a tertiary injectant in enhanced oil and natural gas recovery

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.