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:

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 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 a tertiary 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 and stored or used within the United States taken into account

The credit under this section shall apply only with respect to qualified carbon dioxide— (A)the capture of which is within the United States (within the meaning of section 638(1)) or a possession of the United States (within the meaning of section 638(2)), and (B)which is stored in secure geological storage, or used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project, located within the United States (as so defined) or a possession of the United States (as so defined). (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 unminable coal seems 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

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. (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)

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 (32), by striking the period at the end of paragraph (33) and inserting , plus, and by adding at the end of following new paragraph:

(34)the carbon dioxide sequestration credit determined under section 45Q(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. 4QO. 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.