II 110th CONGRESS 1st Session S. 2149 IN THE SENATE OF THE UNITED STATES October 4, 2007 Mr. Dorgan introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Energy Policy Act of 1992 to establish a program to provide incentives for projects to produce synthetic gas, liquid fuels, and other products from coal and other feedstocks while simultaneously reducing greenhouse gas emissions and reliance of the United States on petroleum and natural gas, and for other purposes.
1.
Short title
This Act may be cited as the Coal Fuels and Industrial Gasification Demonstration and Development Act of 2007.
2.
Coal innovation program
(a)
In general
Title XXXI of the Energy Policy Act of 1992 (42 U.S.C. 13571 et seq.) is amended by adding at the end the following:
3105.
Coal innovation program
(a)
Definitions
In this section: (1)
Administrator
The term Administrator means the Administrator of the Environmental Protection Agency. (2)
Carbon capture
The term carbon capture means the capture, separation, and compression of carbon dioxide that would otherwise be released to the atmosphere at a facility in the production of end products of a project prior to transportation of the carbon dioxide to a long-term storage site. (3)
Coal-to-liquid product
The term coal-to-liquid product means a liquid fuel resulting from the conversion of a feedstock, as described in this section. (4)
Combustible end product
The term combustible end product means any product of a facility intended to be used as a combustible fuel. (5)
Conventional baseline emissions
The term conventional baseline emissions means— (A)the lifecycle greenhouse gas emissions of a facility that produces combustible end products, using petroleum as a feedstock, that are equivalent to combustible end products produced by a facility of comparable size through an eligible project; (B)in the case of noncombustible products produced through an eligible project, the average lifecycle greenhouse gas emissions emitted by projects that— (i)are of comparable size; and (ii)produce equivalent products using conventional feedstocks; and (C)in the case of synthesized gas intended for use as a combustible fuel in lieu of natural gas produced by an eligible project, the lifecycle greenhouse gas emissions that would result from equivalent use of natural gas. (6)
Conventional feedstock
(A)
In general
The term conventional feedstock means a traditional carbon-based feedstock that— (i)is supplied to any powerplant, oil refinery, or petrochemical production facility that is located in the United States as of the date of enactment of this section; and (ii)could be made available in large quantities under a long-term contract. (B)
Inclusions
The term conventional feedstock includes— (i)coal; (ii)natural gas; and (iii)crude oil. (C)
Exclusions
The term conventional feedstock does not include— (i)petroleum coke; and (ii)biomass. (7)
Deep saline formation
The term deep saline formation means a measurable unit of rock that contains nonpotable water that is— (A)present in a stratigraphic column located beneath any fresh potable water aquifer; and (B)of a sufficient depth to store carbon dioxide in a supercritical phase. (8)
Eligible feedstock
The term eligible feedstock includes— (A)coal; (B)petroleum residue; (C)renewable biomass; and (D)any other combination of materials of which coal is the predominant component with respect to energy content. (9)
Eligible project
The term eligible project means a project— (A)that produces liquid transportation fuels, industrial chemicals, or electricity; and (B)for which— (i)with respect to a project that is selected by the Secretary during a period described in subsection (b)(2)(C)(i) or subsection (c)(3)(C)(i)— (I)the annual lifecycle greenhouse gas emissions are not greater than conventional baseline emissions; (II)at least 70 percent of the carbon dioxide that would otherwise be released to the atmosphere at the facility in the production of end products from the project is captured for long-term storage; and (III)the individual or entity carrying out the eligible project has entered into an enforceable agreement with the Secretary to implement carbon capture at the percentage that, by the end of the 5-year period after commencement of commercial operation of the eligible project achieves a reduction in carbon emissions that is not less than 70 percent; (ii)with respect to a project that is selected by the Secretary during a period described in subsection (b)(2)(C)(ii) or subsection (c)(3)(C)(ii)— (I)the annual lifecycle greenhouse gas emissions are at least 15 percent lower than conventional baseline emissions; (II)at least 80 percent of the carbon dioxide that would otherwise be released to the atmosphere at the facility in the production of end products from the project is captured for long-term storage; and (III)the individual or entity carrying out the eligible project has entered into an enforceable agreement with the Secretary to implement carbon capture at the percentage that, by the end of the 5-year period after commencement of commercial operation of the eligible project achieves a reduction in carbon emissions that is not less than 80 percent; and (iii)in the opinion of the Secretary, sufficient commitments have been secured to achieve long-term storage of captured carbon dioxide beginning as of the date of commencement of commercial operation of the project. (10)
Facility
The term facility means a facility at which the conversion of feedstocks to end products takes place. (11)
Gasification technology
The term gasification technology means any process that— (A)converts coal, petroleum residue, renewable biomass, or other material that is recovered for energy or feedstock value into a synthesis gas composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion; and (B)produces oxygen for the gasification, conditioning, or cleanup of synthetic gas to prepare the synthetic gas for downstream use. (12)
Greenhouse gas
The term greenhouse gas means any of— (A)carbon dioxide; (B)methane; (C)nitrous oxide; (D)hydrofluorocarbons; (E)perfluorocarbons; and (F)sulfur hexafluoride. (13)
Lifecycle greenhouse gas emissions
The term lifecycle greenhouse gas emissions means the aggregate quantity of greenhouse gases directly attributable to the production and transportation of end products at a facility, including the production, extraction, cultivation, distribution, and transportation of feedstocks, and the subsequent distribution and use of any combustible end products, as modified by deducting, as determined by the Administrator— (A)any greenhouse gases captured at the facility and sequestered; (B)the carbon content, expressed in units of carbon dioxide equivalent, of any feedstock that is renewable biomass; (C)the carbon content, expressed in units of carbon dioxide equivalent, of any end products that do not result in the release of carbon dioxide to the atmosphere; and (D)the acreage of terrestrial sequestration that is used to grow feedstocks to be used at the facility, including soil-root carbon storage areas at which— (i)biomass is grown on carbon-depleted soils; and (ii)carbon is stored in the soil under which the biomass is grown. (14)
Long-term storage
The term long-term storage means sequestration with an expected maximum rate of carbon dioxide leakage over a specified period of time that is consistent with the objective of reducing atmospheric concentrations of carbon dioxide, subject to a permit issued pursuant to law in effect as of the date of the sequestration. (15)
Renewable biomass
The term renewable biomass means— (A)nonmerchantable materials or precommercial thinnings that— (i)are byproducts of preventive treatments, such as trees, wood, brush, thinnings, chips, and slash, that are removed— (I)to reduce hazardous fuels; (II)to reduce or contain disease or insect infestation; or (III)to restore forest health; (ii)would not otherwise be used for higher-value products; and (iii)are harvested from National Forest System land or public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702))— (I)where permitted by law; and (II)in accordance with— (aa)applicable land management plans; and (bb)the requirements for old-growth maintenance, restoration, and management direction of paragraphs (2), (3), and (4) of subsection (e), and the requirements for large-tree retention of subsection (f), of section 102 of the Healthy Forests Restoration Act of 2003 (16 U.S.C. 6512); or (B)any organic matter that is available on a renewable or recurring basis from non-Federal land or from land belonging to an Indian tribe, or an Indian individual, that is held in trust by the United States or subject to a restriction against alienation imposed by the United States, including— (i)renewable plant material, including— (I)feed grains; (II)agricultural commodities (including any crop that is planted as an energy crop); (III)plants and trees; and (IV)algae; and (ii)waste material, including— (I)crop residue; (II)vegetative waste material (including wood waste and wood residues); (III)animal waste and byproducts (including fats, oils, greases, and manure); and (IV)food waste and yard waste. (16)
Sequestration
The term sequestration means the placement of carbon dioxide in a geological formation, including— (A)an operating oil and gas field; (B)coal bed methane recovery; (C)a depleted oil and gas field; (D)an unmineable coal seam; (E)a deep saline formation; and (F)a deep geological system. (17)
Unmineable coal seam
The term unmineable coal seam means a coal seam that is— (A)determined by the Secretary of the Interior to be economically unrecoverable (including by any foreseeable advance in mining technology); and (B)located at a depth at which the temperature and pressure at the coal seam are sufficient to maintain carbon dioxide in a supercritical phase. (b)
Financial assistance cooperative agreement program
(1)
In general
Subject to paragraph (3), not later than 1 year after the date of the enactment of this section, the Secretary shall carry out a program to provide grants for use in obtaining or carrying out any services necessary for the planning and permitting of an eligible project. (2)
Selection of eligible projects
(A)
In general
In accordance with subparagraphs (B) and (C), the Secretary shall select eligible projects to receive grants under this subsection— (i)through the conduct of a reverse auction, in which eligible projects proposed to be carried out that have the greatest percentage reduction of lifecycle greenhouse gas emissions in comparison to facilities that use conventional feedstocks and do not use carbon capture and sequestration technologies, are given priority; (ii)that, taken together, would— (I)represent a variety of geographical regions; (II)represent a variety of facilities, each of which is capable of producing a different quantity of synthetic gas, liquid fuel, or other product from coal and other feedstocks; (III)use a variety of feedstocks and types of coal; and (IV)to the extent consistent with achieving long-term storage, represent a variety of geological formations; and (iii)for which eligible projects, in the opinion of the Secretary— (I)each award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project; (II)each recipient will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively; (III)a market exists for the products of the proposed project, as evidenced by contracts or written statements of intent from potential customers; (IV)the project team of each recipient is competent in the construction and operation of the gasification technology proposed; and (V)each recipient has met such other criteria as may be established and published by the Secretary. (B)
Special consideration
In selecting eligible projects under subparagraph (A), the Secretary shall give special consideration to projects that— (i)include a feedstock that is comprised of a quantity of biomass that is greater than 5 percent of the total quantity of the feedstock (as measured by the weight of the feedstock); or (ii)participate in a regional carbon sequestration partnership, as described in the notice entitled Notice of Availability of a Financial Assistance Solicitation (67 Fed. Reg. 71540 (December 2, 2002)). (C)
Authorized quantity of eligible projects
In carrying out subparagraph (A), the Secretary shall— (i)for the 5-year period beginning on the date that is 1 year after the date of enactment of this section, select a quantity of not more than 3 eligible projects; and (ii)for the 5-year period beginning on the date that is 6 years after the date of enactment of this section, select a quantity of not more than 3 eligible projects. (3)
Maximum amount of grants
In carrying out this subsection, the Secretary shall provide not more than— (A)$20,000,000 in grant funds for any eligible project; and (B)$120,000,000 in grant funds, in the aggregate, for all eligible projects. (c)
Direct loan program
(1)
In general
Not later than 1 year after the date of enactment of this section, and subject to funds being made available in advance through appropriations Acts, the Secretary shall carry out a program to provide a total of not more than $10,000,000,000 in loans to eligible individuals and entities (as determined by the Secretary) for use in carrying out eligible projects. (2)
Application
To receive a loan from the Secretary under paragraph (1), an applicant shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require, including a written assurance that— (A)all laborers and mechanics employed by contractors or subcontractors during construction, alteration, or repair that is financed, in whole or in part, by a loan under this subsection shall be paid wages at rates that are not less than those prevailing on similar construction in the locality, as determined by the Secretary of Labor in accordance with sections 3141 through 3144, 3146, and 3147 of title 40, United States Code; and (B)the Secretary of Labor shall, with respect to the labor standards described in this paragraph, have the authority and functions set forth in Reorganization Plan Numbered 14 of 1950 (5 U.S.C. App.) and section 3145 of title 40, United States Code. (3)
Selection of eligible projects
(A)
In general
In accordance with subparagraphs (B) and (C), the Secretary shall select eligible projects to receive loans under this subsection— (i)through the conduct of a reverse auction, in which eligible projects proposed to be carried out that have the greatest percentage reduction of lifecycle greenhouse gas emissions in comparison to facilities that use conventional feedstocks and do not use carbon capture and sequestration technologies, are given priority; (ii)that, taken together, would— (I)represent a variety of geographic regions; (II)represent a variety of facilities, each of which is capable of producing a different quantity of synthetic gas, liquid fuel, or other product from coal and other feedstocks; (III)use a variety of types of feedstocks and coal; and (IV)to the extent consistent with achieving long-term storage, represent a variety of geological formations; and (iii)for which eligible projects, in the opinion of the Secretary— (I)each award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project; (II)each recipient will provide sufficient information to the Secretary for the Secretary to ensure that the qualified investment is expended efficiently and effectively; (III)a market exists for the products of the proposed project, as evidenced by contracts or written statements of intent from potential customers; (IV)the project team of each recipient is competent in the construction and operation of the gasification technology proposed; and (V)each recipient has met such other criteria as may be established and published by the Secretary. (B)
Special consideration
In selecting eligible projects under subparagraph (A), the Secretary shall give special consideration to projects that— (i)include a feedstock that is comprised of a quantity of biomass that is greater than 5 percent of the total quantity of the feedstock (as measured by the weight of the feedstock); or (ii)participate in a regional carbon sequestration partnership, as described in the notice entitled Notice of Availability of a Financial Assistance Solicitation (67 Fed. Reg. 71540 (December 2, 2002)). (C)
Authorized quantity of eligible projects
In carrying out subparagraph (A), the Secretary shall— (i)for the 5-year period beginning on the date that is 1 year after the date of enactment of this section, select a quantity of not more than 3 eligible projects; and (ii)for the 5-year period beginning on the date that is 6 years after the date of enactment of this section, select a quantity of not more than 3 eligible projects. (4)
Use of loan funds
(A)
In general
Subject to subparagraph (B), funds from a loan provided under this subsection may be used to pay up to 100 percent of the costs of capital associated with reducing lifecycle greenhouse gas emissions at the facility (including carbon dioxide capture, compression, and long-term storage, cogeneration, and gasification of biomass) carried out as part of an eligible project, including— (i)equipment relating to— (I)the air separation unit of the facility; (II)the separation or capture of carbon dioxide; (III)the purification or drying of carbon dioxide; (IV)the compression of carbon dioxide; (V)the long-term storage of carbon dioxide; (VI)the cogeneration of electric power; (VII)the cleanup of synthetic gas at the facility; and (VIII)the water-gas shift reactor of the facility; (ii)fuel handling equipment that is used for— (I)cofeeding coal and biomass to a gasification system; and (II)feeding biomass to a gasification system; and (iii)a gasification system that is designed— (I)to operate with equipment that is used for the cofeeding of coal and biomass in producing an acceptable syngas for the production of liquid fuels, industrial chemicals, or electronic power; and (II)to operate with biomass. (B)
Total project cost
Funds from a loan provided under this subsection may not be used to pay more than 50 percent of the total cost of an eligible project. (5)
Rates, terms, and repayment of loans
A loan provided under this subsection— (A)shall have an interest rate that, as of the date on which the loan is made, is equal to the cost of funds to the Department of the Treasury for obligations of comparable maturity; (B)shall have a term equal to the lesser of— (i)the projected life, in years, of the eligible project to be carried out using funds from the loan, as determined by the Secretary; and (ii)25 years; (C)may be subject to a deferral in repayment for not more than 5 years after the date on which the eligible project carried out using funds from the loan first begins operations, as determined by the Secretary; and (D)shall be made on the condition that the Secretary shall be subrogated to the rights of the recipient of the payment as specified in the loan or related agreements, including, as appropriate, the authority (notwithstanding any other provision of law)— (i)to complete, maintain, operate, lease, or otherwise dispose of any property acquired pursuant to the guarantee or a related agreement; or (ii)to permit the borrower, pursuant to an agreement with the Secretary, to continue to pursue the purposes of the project, if the Secretary determines the pursuit to be in the public interest. (d)
Methodology
(1)
In general
Not later than 18 months after the date of enactment of this section, in accordance with paragraph (2), the Administrator, in consultation with the Secretary and the Secretary of Defense, shall, by regulation, establish a methodology for use in determining the lifecycle greenhouse gas emissions of coal-derived liquid transportation fuels and other products produced using— (A)coal gasification technology; (B)coal and biomass gasification technology; (C)the Fischer-Tropsch technology; and (D)any other technology that is in commercial use. (2)
Participation of certain individuals and entities
In establishing the methodology described in paragraph (1), the Administrator, in consultation with the Secretary and the Secretary of Defense, shall seek the participation of, and consider comments provided by— (A)individuals representing private sector organizations that may be affected by the methodology; and (B)any other individual or entity that represents an interested organization. (e)
Reporting requirements
(1)
In general
Not later than 180 days after the date on which an eligible project receives from the Secretary funds from a grant under subsection (b) or a loan under subsection (c), and each 90-day period thereafter, in accordance with paragraph (2), the individual or entity carrying out the eligible project shall submit to the Administrator a report that contains, for the period covered by the report— (A)a description of— (i)the quantity and type of fossil fuels and non-carbon dioxide greenhouse gases produced, refined, imported, exported, and consumed by the eligible project; (ii)the greenhouse gas emissions in metric tons of each greenhouse gas emitted and in metric tons of carbon dioxide equivalent of each greenhouse gas emitted by the eligible project, measured using monitoring systems for fuel flow or emissions that use— (I)continuous emission monitoring; or (II)an equivalent system of comparable rigor, accuracy, and quality; and (iii)the quantity and type of— (I)feedstock fossil fuel consumption of the eligible project; and (II)process emissions of the eligible project; and (B)any other data necessary for accurate accounting of greenhouse gas emissions, as determined by the Administrator. (2)
Electronic submission of report
An individual or entity carrying out an eligible project described in paragraph (1) shall electronically submit to the Administrator each report required under that paragraph in such form and in such manner as may be required by the Administrator. (3)
No effect on other requirements
Nothing in this subsection affects any requirement in effect as of the date of enactment of this section relating to the reporting of— (A)fossil fuel production, refining, importation, exportation, or consumption data; (B)greenhouse gas emission data; or (C)other relevant data. (f)
Study of maintaining coal-to-liquid products in Strategic Petroleum Reserve
Not later than 1 year after the date of enactment of this section, the Secretary and the Secretary of Defense shall— (1)conduct a study of the feasibility and suitability of maintaining coal-to-liquid products in the Strategic Petroleum Reserve; and (2)submit to the Committee on Energy and Natural Resources and the Committee on Armed Services of the Senate and the Committee on Energy and Commerce and the Committee on Armed Services of the House of Representatives a report describing the results of the study. (g)
Report on emissions of coal-to-liquid products used as transportation fuels
(1)
In general
The Administrator, in cooperation with the Secretary, the Secretary of Defense, and the Administrator of the Federal Aviation Administration, shall— (A)carry out a research and demonstration program to evaluate the emissions of the use of coal-to-liquid fuel for transportation, including gasoline, diesel, marine, and jet fuel; (B)evaluate the effect of using coal-to-liquid transportation fuel on emissions of vehicles, including motor vehicles and nonroad vehicles, and aircraft (as those terms are defined in sections 216 and 234, respectively, of the Clean Air Act (42 U.S.C. 7550, 7574)); and (C)in accordance with paragraph (4), and not later than 540 days after the date of enactment of this section, submit to Congress a report on the effect on air and water quality, water scarcity, land use, and public health of using coal-to-liquid fuel in the transportation sector. (2)
Guidance and technical support
The Administrator, in consultation with the Secretary, shall issue any guidance or technical support documents necessary to facilitate the effective use of coal-to-liquid fuel and blends under this subsection. (3)
Requirements
The program described in paragraph (1)(A) shall take into consideration— (A)the use of neat (100 percent) coal-to-liquid fuel and blends of coal-to-liquid fuels with conventional crude oil-derived fuel for heavy-duty and light-duty diesel engines, gasoline engines, marine propulsion, and the aviation sector; (B)the production costs associated with domestic production of those fuels and prices for consumers; and (C)the overall greenhouse gas effects of— (i)substituting coal-derived fuels for crude oil-derived fuels; (ii)using carbon capture and storage technologies; and (iii)including biomass as a feedstock in the production process of the fuels. (4)
Reports
The Administrator shall submit to the Committee on Energy and Natural Resources of the Senate and the Committee on Energy and Commerce of the House of Representatives— (A)not later than 180 days after the date of enactment of this section, an interim report on actions taken to carry out this subsection; and (B)not later than 1 year after the date of enactment of this section, a final report on actions taken to carry out this subsection. (h)
Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to carry out this section.
. (b)
Conforming amendment
The table of contents of the Energy Policy Act of 1992 (42 U.S.C. prec. 13201) is amended by adding at the end of the items relating to title XXXI the following: Sec. 3105. Coal innovation program. .
3.
Tax credit for carbon dioxide sequestration
(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:
45O.
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 at a qualified facility, and (B)disposed of by the taxpayer in secure geological storage, and (2)$10 per metric ton of qualified carbon dioxide which is— (A)captured by the taxpayer at a qualified facility, and (B)used by the taxpayer as an injectant in a qualified enhanced oil or natural gas recovery project. (b)
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 or injection. (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. (c)
Qualified facility
For purposes of this section, the term qualified facility means any industrial facility— (1)which is owned by the taxpayer, (2)at which carbon capture equipment is placed in service, and (3)which captures not less than 500,000 metric tons of carbon dioxide during the taxable year. (d)
Special rules and other definitions
For purposes of this section— (1)
Only carbon dioxide captured within the United States taken into account
The credit under this section shall apply only with respect to qualified carbon dioxide the capture 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, shall establish regulations for determining adequate security measures for the geological storage of carbon dioxide under subsection (a)(1)(B) such that the carbon dioxide does not escape into the atmosphere. Such term shall include storage at deep saline formations and unmineable coal seems under such conditions as the Secretary may determine under such regulations. (3)
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. (4)
Credit attributable to taxpayer
Any credit under this section shall be attributable to the person that captures and physically or contractually ensures the disposal of or the use as a tertiary injectant of the qualified carbon dioxide, except to the extent provided in regulations prescribed by the Secretary. (5)
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. (6)
Inflation adjustment
In the case of any taxable year beginning in a calendar year after 2008, there shall be substituted for each dollar amount contained in 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 2007 for 1990. (e)
Application of section
The credit under this section shall apply with respect to qualified carbon dioxide 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 captured and disposed of or used as a tertiary injectant.
. (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 (30), by striking the period at the end of paragraph (31) and inserting , plus, and by adding at the end of following new paragraph: (32)the carbon dioxide sequestration credit determined under section 45O(a). . (c)
Clerical amendment
The table of sections for subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to other credits) is amended by adding at the end the following new section: Sec. 45O. Credit for carbon dioxide sequestration. . (d)
Effective date
The amendments made by this section shall apply carbon dioxide captured after the date of the enactment of this Act.
4.
Seven-year applicable recovery period for depreciation of qualified carbon dioxide pipeline property
(a)
In general
Section 168(e)(3)(C) of the Internal Revenue Code of 1986 (defining 7-year property) is amended by striking and at the end of clause iv), by striking the period at the end of clause (vi)(III) and inserting , and, and by inserting after clause (vi) the following new clause: (vii)any qualified carbon dioxide pipeline property— (I)the original use of which commences with the taxpayer after the date of the enactment of this clause, (II)the original purpose of which is to transport carbon dioxide, and (III)which is placed in service before January 1, 2014. . (b)
Definition of qualified carbon dioxide pipeline property
Section 168(e) of the Internal Revenue Code of 1986 (relating to classification of property) is amended by inserting at the end the following new paragraph: (8)
Qualified carbon dioxide pipeline property
The term qualified carbon dioxide pipeline property means property which is used in the United States solely to transmit qualified carbon dioxide (as defined in section 45O(b)) from the point of capture to the point of disposal (as described in section 45O(a)(1)(B)) or the point at which such qualified carbon dioxide is used as a tertiary injectant (as described in section 45O(a)(2)(B)). . (c)
Effective date
The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.
5.
Certain income and gains relating to industrial source carbon dioxide treated as qualifying income for publicly traded partnerships
(a)
In general
Subparagraph (E) of section 7704(d)(1) of the Internal Revenue Code of 1986 (defining qualifying income) is amended by inserting or industrial source carbon dioxide after timber). (b)
Effective date
The amendment made by this section shall take effect on the date of the enactment of this Act, in taxable years ending after such date.
6.
Extension and modification of alternative fuel credit
(a)
Extension
(1)
Alternative fuel credit
Paragraph (4) of section 6426(d) of the Internal Revenue Code of 1986 (relating to alternative fuel credit) is amended by striking September 30, 2009 and inserting September 30, 2019. (2)
Alternative fuel mixture credit
Paragraph (3) of section 6426(e) of such Code (relating to alternative fuel mixture credit) is amended by striking September 30, 2009 and inserting September 30, 2019. (3)
Payments
Subparagraph (C) of section 6427(e)(5) of such Code (relating to termination) is amended by striking September 30, 2009 and inserting September 30, 2019. (b)
Modifications
(1)
Alternative fuel to include compressed or liquified biomass gas
Paragraph (2) of section 6426(d) of the Internal Revenue Code of 1986 (relating to alternative fuel credit) is amended by striking and at the end of subparagraph (E), by redesignating subparagraph (F) as subparagraph (G), and by inserting after subparagraph (E) the following new subparagraph: (F)compressed or liquified biomass gas, and . (2)
Credit allowed for aviation use of fuel
Paragraph (1) of section 6426(d) of such Code is amended by inserting sold by the taxpayer for use as a fuel in aviation, after motorboat,. (c)
Carbon capture requirement for certain fuels
(1)
In general
Subsection (d) of section 6426 of the Internal Revenue Code of 1986, as amended by subsection (a), is amended by redesignating paragraph (4) as paragraph (5) and by inserting after paragraph (3) the following new paragraph: (4)
Carbon capture requirement
(A)
In general
The requirements of this paragraph are met if the fuel is certified, under such procedures as required by the Secretary, as having been produced at a facility which separates and sequesters not less than the applicable percentage of such facility's total carbon dioxide emissions. (B)
Applicable percentage
For purposes of subparagraph (A), the applicable percentage is— (i)in the case of fuel produced after the date of enactment of this paragraph and before January 1, 2014, 70 percent, and (ii)in the case of fuel produced after December 31, 2013, 80 percent. . (2)
Conforming amendment
Subparagraph (E) of section 6426(d)(2) of such Code is amended by inserting which meets the requirements of paragraph (4) and which is after any liquid fuel. (d)
Effective dates
(1)
In general
Except as provided in paragraph (2), the amendments made by this section shall apply to fuel sold or used after the date of the enactment of this Act. (2)
Carbon capture requirements
The amendments made by subsection (c) shall apply to fuel sold or used after December 31, 2007.