1.This Act may be cited as
the Future Fuels Act of
2008
.
2.Subtitle A of
title XVI of the Energy Policy Act of 2005 (Public Law 109–58; 119 Stat. 1109)
is amended by adding at the end the following:
1602.
(a)
(1)The Future Fuels Corporation (referred to in this section
as the Corporation
) is established as a government
corporation.
(2)The
Corporation shall be subject to—
(A)this section;
and
(B)chapter 91 of
title 31, United States Code.
(3)
(A)The Corporation shall be managed by a board of directors
composed of 7 individuals who are citizens of the United States, appointed by
the President, by and with the advice and consent of the Senate.
(B)The
board of directors shall annually elect a Chairperson from among the members of
the board of directors.
(C)The
term of a member of the board of directors shall be 4 years.
(4)The
Secretary shall transfer to the Corporation, from amounts appropriated and
allocated to it, such sums as may be necessary to meet the requirements of this
section.
(b)Beginning in fiscal year 2009, funds transferred by the
Secretary to the Corporation under subsection (a)(4) shall be expended by the
Corporation to—
(1)promote and
deploy coal and coal cofired polygeneration technologies;
(2)reduce—
(A)the carbon
footprint of coal consumption; and
(B)the production of
coal-based byproducts; and
(3)conduct
widespread carbon sequestration research, development, and deployment
activities.
.
3.Carbon capture
and storage research, development, and demonstration programSection 963 of the Energy Policy Act of 2005
(42 U.S.C.
16293) is amended—
(1)in the section heading, by striking
and
sequestration
and inserting and storage
;
(2)in subsection (a), by striking and
sequestration
and inserting and storage
; and
(3)by striking subsections (c) and (d) and
inserting the following:
(c)
(1)The Secretary shall
establish a program under which the Secretary shall conduct activities
necessary to achieve the goal of annually sequestering at least 1,000,000 tons
of carbon dioxide by January 1, 2015.
(2)Not later than 180 days after the date of enactment
of the Future Fuels Act of 2008, the Secretary shall—
(A)verify and
analyze the results of any assessment conducted by any other Federal agency or
a State relating to geological storage capacity and the potential for carbon
injection rates, including a risk analysis of any potential geologic storage
areas assessed; and
(B)submit to the
appropriate committees of Congress a report that describes the results of the
verification and analyses under subparagraph (A).
(3)As
soon as practicable after the date of enactment of the Future Fuels Act of
2008, the Secretary shall submit to the appropriate committees of Congress
recommendations on appropriate regulatory and advisory mechanisms for—
(A)the determination
of best technologies;
(B)the
identification and evaluation of state-of-the-art research, development, and
deployment strategies for carbon capture and storage technologies;
(C)the selection and
operation of carbon dioxide sequestration sites; and
(D)the transfer of
liability for the sites to the United States.
(4)As soon as practicable after the date of enactment of
this Act, the Secretary shall develop model interstate compacts to govern the
transportation, injection, and storage of carbon dioxide.
(5)The
Secretary shall conduct geological sequestration demonstration projects
involving carbon dioxide sequestration operations in a variety of candidate
geological settings, including—
(A)oil and gas
reservoirs;
(B)unmineable coal
seams;
(C)deep saline
aquifers;
(D)basalt and shale
formations; and
(E)terrestrial
sequestration, including restoration project sites provided assistance by the
Abandoned Mine Reclamation Fund established by section 401 of the Surface
Mining Control and Reclamation Act of 1977 (30 U.S.C. 1231).
(d)Authorization of appropriations
(1)There are authorized to be appropriated to carry out this
section—
(A)$100,000,000 for
each of fiscal years 2009 and 2010;
(B)$105,000,000 for
fiscal year 2011;
(C)$110,000,000 for
fiscal year 2012;
(D)$115,000,000 for
fiscal year 2013; and
(E)$120,000,000 for
fiscal year 2014.
(2)Funds made available for a fiscal year under paragraph
(1)—
(A)shall remain
available until expended, but not later than September 30, 2014; and
(B)may be
reprogrammed, at the discretion of the Secretary, for expenditure for other
demonstration projects under this title only after—
(i)September 30,
2010; and
(ii)the Secretary
provides notice of the proposed reprogramming to the appropriate committees of
Congress.
.
4.Standby loans
for qualifying coal-to-liquid projectsSection 1702 of the Energy Policy Act of
2005 (42 U.S.C. 16512) is amended by adding at the end the following:
(k)Standby loans
for qualifying coal-to-liquid projects
(1)In
this subsection:
(A)The term cap price means the market price
specified in a standby loan agreement above which the qualifying CTL project is
required to make payments to the United States.
(B)Conventional
baseline emissionsThe term conventional baseline
emissions means—
(i)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 a qualifying CTL
project;
(ii)in the case of
noncombustible products produced through a qualifying CTL 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
(iii)in the case of
synthesized gas intended for use as a combustible fuel in lieu of natural gas
produced by a qualifying CTL project, the lifecycle greenhouse gas emissions
that would result from equivalent use of natural gas.
(C)The term direct loan
has the meaning given
the term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C.
661a).
(D)The term eligible entity means an entity that
conducts a qualifying CTL project.
(E)The
term facility means a facility at which the conversion of
feedstocks to end products takes place.
(F)The term full term means the full term of a
standby loan agreement, as specified in the standby loan agreement under
paragraph (2)(A)(ii)(III), which shall not be more than the lesser of—
(i)30 years;
or
(ii)90 percent of
the projected useful life of the qualifying CTL project, as determined by the
Secretary.
(G)Lifecycle
greenhouse gas emissionsThe term lifecycle greenhouse gas
emissions means the difference between—
(i)the aggregate
quantity of greenhouse gases attributable to the production and transportation
of end products at a facility, including the production, extraction,
cultivation, distribution, marketing, and transportation of feedstocks, and the
subsequent distribution and use of any combustible end products; and
(ii)(I)any greenhouse gases
captured at the facility and sequestered;
(II)the carbon content, expressed in units
of carbon dioxide equivalent, of any feedstock that is a renewable biomass;
and
(III)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.
(H)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 under
any law in effect as of the date of the sequestration.
(I)The term market price means the average
quarterly price of a petroleum price index specified in the standby loan
agreement.
(J)The term minimum price means a market price
specified in the standby loan agreement below which the United States is
obligated to make disbursements to the qualifying CTL project.
(K)The
term output means all or a portion of the liquid or gaseous
transportation fuels produced from the qualifying CTL project, as specified in
the standby loan agreement.
(L)The term primary term means the initial term of
a standby loan agreement, as specified in the agreement under paragraph
(2)(A)(ii)(II), which shall not be more than the lesser of—
(i)20 years;
or
(ii)75 percent of
the projected useful life of the qualifying CTL project, as determined by the
Secretary.
(M)The term qualifying CTL project means a
commercial-scale project that converts coal to industrial feedstocks or 1 or
more liquid or gaseous fuels for transportation or other uses or a project
conducted at a facility that converts petroleum refinery waste products
(including petroleum coke) into 1 or more liquid or gaseous transportation
fuels—
(i)that demonstrates
the capture, sequestration, disposal, or use of the carbon dioxide produced in
the conversion process; and
(ii)for
which—
(I)the annual
lifecycle greenhouse gas emissions of the project are at least 20 percent lower
than conventional baseline emissions;
(II)at least 75
percent of the carbon dioxide that would otherwise be released to the
atmosphere at the facility in the production of end products of the project is
captured for long-term storage; and
(III)the eligible
entity 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 qualifying
CTL project—
- (aa)represents the
best available technology; and
- (bb)achieves a
reduction in carbon emissions that is not less than 75 percent.
(N)The term standby loan agreement means a
loan agreement entered into under paragraph (2)(A)(i).
(2)
(A)
(i)The Secretary may enter into standby loan agreements for
the conduct of not more than 10 qualifying CTL projects, at least 1 of which
may be a qualifying CTL project primarily designed to produce pipeline-quality
natural gas from domestic coal.
(ii)A
standby loan agreement entered into under clause (i) shall—
(I)provide for a
direct loan from the Secretary to the eligible entity for the qualifying CTL
project;
(II)specify the
primary term of the standby loan agreement;
(III)specify the
full term of the standby loan agreement; and
(IV)establish a cap
price and a minimum price for the primary term of the standby loan
agreement.
(B)
(i)Simultaneously with entering into a standby loan
agreement under subparagraph (A), the Secretary may enter into a profit-sharing
agreement with the eligible entity.
(ii)Under
a profit-sharing agreement, if the market price exceeds the cap price in a
calendar quarter, a profit-sharing payment shall be made for the calendar
quarter, in an amount equal to the difference between—
(I)the amount that
is equal to the product obtained by multiplying—
- (aa)the amount that
is equal to the difference between—
(AA)the market
price; and
(BB)the cap price;
and
- (bb)the output of
the qualifying CTL project; and
(II)the total amount
of any loan repayments made for the calendar quarter.
(3)
(A)A
loan subject to a standby loan agreement shall be disbursed during the primary
term of the standby loan agreement during any period in which the market price
falls below the minimum price.
(B)
(i)Subject to subparagraph (B), the total amount of
disbursements in any calendar quarter under subparagraph (A) shall be equal to
the product obtained by multiplying—
(I)the difference
between—
- (aa)the minimum
price; and
- (bb)the market
price; and
(II)the output of
the qualifying CTL project.
(ii)Notwithstanding
clause (i), the total amount of disbursements in any calendar quarter shall be
not more than the total amount of disbursements specified in the applicable
standby loan agreement.
(4)
(A)Subject to subparagraph (B), the Secretary shall
establish terms and conditions, including interest rates and amortization
schedules, for the repayment of a loan under this subsection within the full
term of the standby loan agreement.
(B)In
establishing the terms and conditions under subparagraph (A), the Secretary
shall provide that—
(i)if, in any
calendar quarter during the primary term of the standby loan agreement, the
market price is less than the cap price—
(I)the qualifying
CTL project may elect to defer some or all of the repayment obligations due
during the applicable calendar quarter; and
(II)if an election
is made under subclause (I), any unpaid obligations will continue to accrue
interest during the deferral period;
(ii)(I)if, in any calendar
quarter during the primary term of the agreement, the market price is greater
than the cap price, the qualifying CTL project shall meet the scheduled
repayment obligation and any deferred repayment obligations, but shall not be
required to pay in the applicable calendar quarter an amount that is more than
the product obtained by multiplying—
- (aa)the amount that is equal to the
difference between—
(AA)the market price; and
(BB)the cap price; and
- (bb)the output of the qualifying CTL
project; and
(II)the qualifying CTL project may elect to
defer any repayment obligation in excess of the amount determined under
subclause (I); and
(C)at the end of the
primary term of the standby loan agreement, the cumulative amount of any
deferred repayment obligations and any accrued interest shall be amortized
(with interest) over the remainder of the full term of the standby loan
agreement.
(5)Compliance with
Federal credit reform Act
(A)Upfront payment
of cost of loanNo standby loan agreement may be entered into
under this subsection unless the eligible entity, on execution of the standby
loan agreement, makes an upfront payment to the United States that the Director
of the Office of Management and Budget determines is equal to the cost of the
loan, as determined under 502(5)(B) of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a(5)(B)).
(B)Minimization of
risk to the governmentIn making the determination of the cost of
the loan for purposes of establishing the upfront payment under subparagraph
(A), the Secretary and the Director of the Office of Management and Budget
shall take into consideration the extent to which the minimum price and the cap
price reflect historical patterns of volatility in actual oil prices relative
to projections of future oil prices, based on—
(i)publicly
available data from the Energy Information Administration; and
(ii)statistical
methods and analyses that are appropriate for the analysis of volatility in
energy prices.
(C)
(i)The value to the United States of an upfront payment
under subparagraph (A) and any profit-sharing payments under paragraph (2)(B)
shall be taken into account for purposes of section 502(5)(B)(iii) of the
Federal Credit Reform Act of 1990 (2 U.S.C. 661a(5)(B)(iii)) in determining the
cost to the Federal Government of a loan under this subsection.
(ii)If a loan under this subsection has no cost to the Federal
Government, the requirements of section 504(b) of the Federal Credit Reform Act
of 1990 (2 U.S.C. 661c(b)) shall be considered to be satisfied.
(6)
(A)A qualifying CTL project receiving a loan under this
subsection may not, during the primary term of the standby loan agreement,
receive a Federal loan guarantee under—
(i)subsection (a);
or
(ii)any other
law.
(B)Subrogation,
fees, and full faith and creditSubsections (g)(2), (h), and (j)
shall apply to standby loans under this subsection to the same extent the
provisions apply to loan
guarantees.
.
5.Credit for
multi-product pipeline construction
(a)Subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
section:
45Q.Coal-based
transportation fuel pipeline credit
(a)For purposes of section 38, in the case of an eligible
taxpayer, the coal-based transportation fuel pipeline credit for any taxable
year is an amount equal to the applicable amount for each gallon of qualified
average daily throughput with respect to an eligible pipeline during the
taxable year.
(b)For purposes of subsection (a), the applicable amount is
an amount equal to—
(1)$0.02 per gallon
for the first 1,000,000 gallons of qualified average daily throughput,
and
(2)$0.01 per gallon
for the number of gallons of qualified average daily throughput in excess of
1,000,000 gallons.
(c)Qualified
average daily throughputFor purposes of this section—
(1)The term qualified average daily throughput
means the average of the amount of qualified fuel which enters the eligible
pipeline on each day during the taxable year.
(2)
(A)No amount of qualified fuel entering an eligible pipeline
shall be taken into account for any day after December 31, 2015.
(B)In the case of any taxable year which includes December 31,
2015, any day in such taxable year following such date shall not be taken into
account in determining the qualified average daily throughput for such
year.
(d)For purposes of this section—
(1)The term eligible taxpayer means any
taxpayer who owns an eligible pipeline.
(2)The term eligible pipeline means a
pipeline—
(A)the original use
of which commences with the taxpayer,
(B)which is placed
in service by the taxpayer after the date of the enactment of this Act and
before December 31, 2012,
(C)no written
binding contract for the construction of which was in effect on or before
December 31, 2007, and
(D)which is used for
the transportation of fuels derived from coal.
Rules
similar to the rules of section 179C(c)(2) shall apply for purposes of this
paragraph.(3)The term qualified fuel means any liquid fuel
derived from coal, or coal and biomass (as defined in section 45K(c)(3))
through the Fischer-Tropsch processor another process converting coal into
liquid
fuel.
.
(b)Section 38(b) of such 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 coal-based transportation fuel pipeline
credit under section
45Q(a).
.
(c)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. 45Q. Coal-based transportation fuel
pipeline
credit.
.
(d)The amendments made by this subsection shall apply to
property placed in service after the date of the enactment of this Act.
6.Incentives to
capture coalmine methane
(a)Section 45K of the Internal Revenue Code of 1986
(relating to credit for producing fuel from a nonconventional source) is
amended by adding at the end the following new subsection:
(h)Application to
coalmine methane gas
(1)This section shall apply to coalmine methane gas—
(A)captured or
extracted by the taxpayer after the date of the enactment of this subsection
and before the date that is 5 years after the date of the enactment of this
subsection, and
(B)utilized as a
fuel source or sold by or on behalf of the taxpayer to an unrelated person
after the date of the enactment of this subsection and before the date that is
5 years after the date of the enactment of this subsection.
(2)For purposes of this paragraph, the term
coalmine methane gas means any methane gas which is—
(A)liberated during
qualified coal mining operations, or
(B)extracted up to 5
years in advance of qualified coal mining operations as part of a specific plan
to mine a coal deposit.
(3)Special rule
for advanced extractionIn the case of coalmine methane gas which
is captured in advance of qualified coal mining operations, the credit under
subsection (a) shall be allowed only after the date the coal extraction occurs
in the immediate area where the coalmine methane gas was removed.
(4)Noncompliance
with pollution lawsFor purposes of subparagraphs (B) and (C),
coal mining operations which are not in compliance with the applicable State
and Federal pollution prevention, control, and permit requirements for any
period of time shall not be considered to be qualified coal mining operations
during such
period.
.
(b)The amendments made by this section shall take effect on the
date of the enactment of this Act.
7.Expanded clean
coal technology incentives
(a)Expansion and
modification of advanced coal project investment credit
(1)Credit rate
parity among projectsSection 48A(a) of the Internal Revenue Code
of 1986 (relating to qualifying advanced coal project credit) is amended by
striking equal to
and all that follows and inserting
equal to 30 percent of the qualified investment for such taxable
year.
.
(2)Expansion of
aggregate creditsSection 48A(d)(3)(A) of such Code (relating to
aggregate credits) is amended by striking $1,300,000,000
and
inserting $8,300,000,000
.
(3)Authorization
of additional projects
(A)Subparagraph (B) of section 48A(d)(3) of such Code
(relating to aggregate credits) is amended to read as follows:
(B)Of the dollar amount in subparagraph (A), the Secretary
is authorized to certify—
(i)$800,000,000 for
integrated gasification combined cycle projects the application for which is
submitted during the period described in paragraph (2)(A)(i),
(ii)$500,000,000 for
projects which use other advanced coal-based generation technologies the
application for which is submitted during the period described in paragraph
(2)(A)(i),
(iii)$4,200,000,000 for integrated gasification
combined cycle projects the application for which is submitted during the
period described in paragraph (2)(A)(ii), and
(iv)$2,800,000,000
for other advanced coal-based generation technology projects the application
for which is submitted during the period described in paragraph
(2)(A)(ii).
.
(B)Application
period for additional projectsSubparagraph (A) of section
48A(d)(2) of such Code (relating to certification) is amended to read as
follows:
(A)Each applicant for certification under this paragraph
shall submit an application meeting the requirements of subparagraph (B). An
applicant may only submit an application—
(i)for an allocation
from the dollar amount specified in clause (i) or (ii) of paragraph (3)(A)
during the 3-year period beginning on the date the Secretary establishes the
program under paragraph (1), and
(ii)for an
allocation from the dollar amount specified in clause (iii) or (iv) of
paragraph (3)(A) during the 3-year period beginning at the earlier of the
termination of the period described in clause (i) or the date prescribed by the
Secretary.
.
(C)Capture and
sequestration of carbon dioxide emissions requirementSection
48A(e)(1) of such Code (relating to requirements) is amended by striking
and
at the end of subparagraph (E), by striking the period at
the end of subparagraph (F) and inserting , and
, and by adding
at the end the following new subparagraph:
(G)in the case of
any project the application for which is submitted during the period described
in paragraph (2)(A)(ii), the project includes equipment to separate and
sequester 65 percent of such project's total carbon dioxide
emissions.
.
(4)Paragraph (1) of section 48A(e) of such Code is amended
by adding at the end the following new flush sentence:
For
purposes of subparagraph (C), in determining total nameplate generating
capacity, the Secretary shall use the electric output that is guaranteed by the
provider or supplier of the advanced coal-based generation technology based
upon a certified heat and material heat
balance..
(5)The amendments made by this subsection shall take effect on
the date of the enactment of this Act.
(b)
(1)Subpart I of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 is amended by adding at the end the following new
section:
54C.
(a)For purposes of this subchapter, the term clean
coal energy bond means any bond issued as part of an issue if—
(1)the bond is
issued by a qualified issuer pursuant to an allocation by the Secretary to such
issuer of a portion of the national clean coal energy bond limitation under
subsection (c)(2),
(2)100 percent or
more of the available project proceeds from the sale of such issue are to be
used for capital expenditures incurred by qualified borrowers for 1 or more
qualified projects, and
(3)the qualified
issuer designates such bond for purposes of this section and the bond is in
registered form.
(b)Qualified
project; special use rules
(1)The term qualified project means a
qualifying advanced coal project (as defined in section 48A(c)(1)) placed in
service by a qualified borrower.
(2)For purposes of subsection (a)(2), a qualified project may
be refinanced with proceeds of a clean coal energy bond only if the
indebtedness being refinanced (including any obligation directly or indirectly
refinanced by such indebtedness) was originally incurred by a qualified
borrower after the date of the enactment of this section.
(3)For
purposes of subsection (a)(2), a clean coal energy bond may be issued to
reimburse a qualified borrower for amounts paid after the date of the enactment
of this section with respect to a qualified project, but only if—
(A)prior to the
payment of the original expenditure, the qualified borrower declared its intent
to reimburse such expenditure with the proceeds of a clean coal energy
bond,
(B)not later than 60
days after payment of the original expenditure, the qualified issuer adopts an
official intent to reimburse the original expenditure with such proceeds,
and
(C)the reimbursement is made not later than 18
months after the date the original expenditure is paid.
(4)Treatment of
changes in useFor purposes of subsection (a)(2), the proceeds of
an issue shall not be treated as used for a qualified project to the extent
that a qualified borrower takes any action within its control which causes such
proceeds not to be used for a qualified project. The Secretary shall prescribe
regulations specifying remedial actions that may be taken (including conditions
to taking such remedial actions) to prevent an action described in the
preceding sentence from causing a bond to fail to be a clean coal energy
bond.
(c)Limitation on
amount of bonds designated
(1)There is a national clean coal energy bond limitation
of $2,000,000,000.
(2)The Secretary shall allocate the amount described in
paragraph (1) among qualified projects in such manner as the Secretary
determines appropriate, except that the Secretary may not allocate more than
$1,250,000,000 of the national clean coal energy bond limitation to finance
qualified projects of qualified borrowers which are governmental bodies.
(d)Qualified
issuer; qualified borrowerFor purposes of this section—
(1)The term qualified issuer means—
(A)a clean coal
energy bond lender,
(B)a cooperative
electric company, or
(C)a governmental
body.
(2)The term qualified borrower means—
(A)a mutual or
cooperative electric company described in section 501(c)(12) or 1381(a)(2)(C),
or
(B)a governmental
body.
(3)Cooperative
electric companyThe term cooperative electric
company means a mutual or cooperative electric company described in
section 501(c)(12) or section 1381(a)(2)(C), or a not-for-profit electric
utility which has received a loan or loan guarantee under the Rural
Electrification Act.
(4)Clean coal
energy bond lenderThe term clean coal energy bond
lender means a lender which is a cooperative which is owned by, or has
outstanding loans to, 100 or more cooperative electric companies and is in
existence on February 1, 2002, and shall include any affiliated entity which is
controlled by such lender.
(5)The term governmental body means any State,
territory, possession of the United States, the District of Columbia, Indian
tribal government, and any political subdivision thereof.
(e)Special rules
relating to pool bondsNo portion of a clean coal energy bond
which is a pooled financing bond may be allocable to any loan unless the
borrower has entered into a written loan commitment for such portion prior to
the issue date of such issue.
(f)Other
definitions and special rulesFor purposes of this
section—
(1)The term pooled financing bond shall
have the meaning given such term by section 149(f)(4)(A).
(2)Ratable
principal amortization requiredA bond shall not be treated as a
clean coal energy bond unless it is part of an issue which provides for an
equal amount principal to be paid by the qualified issuer during each 12-month
period that the issue is outstanding (other than the first 12-month
period).
(g)A
bond shall not be treated as a clean coal energy bond if such bond is issued
after December 31,
2012.
.
(2)
(A)Paragraph (1) of
section 54A(d) is amended to read as follows:
(1)Qualified tax
credit bondThe term qualified tax credit bond
means—
(A)a qualified
forestry conservation bond, or
(B)a clean coal
energy bond,
which is
part of an issue that meets requirements of paragraphs (2), (3), (4), (5), and
(6)..
(B)Subparagraph (C) of
section 54A(d)(2), as added by section 106, is amended to read as
follows:
(C)For purposes of this paragraph, the term qualified
purpose means—
(i)in
the case of a qualified forestry conservation bond, a purpose specified in
section 54B(e), and
(ii)in the case of a
clean coal energy bond, a qualified project specified in section
54C(b).
.
(C)The table of sections for subpart I of part
IV of subchapter A of chapter 1 is amended by adding at the end the following
new item:
Sec. 54C. Clean coal energy
bonds.
.
(3)The Secretary of the Treasury shall issues
regulations required under section 54C of the Internal Revenue Code of 1986 (as
added by this section) not later than 120 days after the date of the enactment
of this Act.
(4)The amendments made by this subsection shall apply to bonds
issued after December 31, 2007.
(c)Tax credit for
carbon dioxide sequestration
(1)Subpart D of part IV of subchapter A of chapter 1 of the
Internal Revenue Code of 1986 (relating to business credits), as amended by
this Act, is amended by adding at the end the following new section:
45R.Credit for
carbon dioxide sequestration
(a)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)For purposes of this section—
(1)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)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)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 definitionsFor purposes of this section—
(1)Only carbon
dioxide captured within the United States taken into accountThe
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 storageThe 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)The term tertiary injectant has the same
meaning as when used within section 193(b)(1).
(4)Qualified
enhanced oil or natural gas recovery projectThe 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 taxpayerAny 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)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)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)This
section shall not apply to qualified carbon dioxide after the date that is 5
years after the date of the enactment of this
Act.
.
(2)Section 38(b) of such Code (relating to general
business credit), as amended by this Act, is amended by striking
plus
at the end of paragraph (33), by striking the period at the
end of paragraph (34) and inserting , plus
, and by adding at the
end of following new paragraph:
(35)the carbon dioxide sequestration credit
determined under section
45R(a).
.
(3)The table of sections for subpart B of part IV of
subchapter A of chapter 1 of such Code (relating to other credits), as amended
by this Act, is amended by adding at the end the following new section:
Sec. 45R. Credit for carbon dioxide
sequestration.
.
(4)The amendments made by this subsection shall apply carbon
dioxide captured after the date of the enactment of this Act.