[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 3179 Introduced in Senate (IS)]

<DOC>






114th CONGRESS
  2d Session
                                S. 3179

 To amend the Internal Revenue Code of 1986 to improve and extend the 
                credit for carbon dioxide sequestration.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 13, 2016

Ms. Heitkamp (for herself, Mr. Whitehouse, Mr. Tester, Mr. Schatz, Mr. 
 Booker, and Mr. Kaine) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to improve and extend the 
                credit for carbon dioxide sequestration.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Carbon Capture Utilization and 
Storage Act''.

SEC. 2. EXTENSION OF ENHANCED CARBON DIOXIDE SEQUESTRATION CREDIT.

    (a) In General.--Section 45Q of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 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 using qualified 
                carbon capture equipment which is originally placed in 
                service at a qualified facility before the date of the 
                enactment of the Carbon Capture Utilization and Storage 
                Act, and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage and not used by the taxpayer as 
                described in paragraph (2)(B),
            ``(2) $10 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer using qualified 
                carbon capture equipment which is originally placed in 
                service at a qualified facility before the date of the 
                enactment of the Carbon Capture Utilization and Storage 
                Act, and
                    ``(B)(i) used by the taxpayer as a tertiary 
                injectant in a qualified enhanced oil or natural gas 
                recovery project and disposed of by the taxpayer in 
                secure geological storage, or
                    ``(ii) utilized by the taxpayer in a manner 
                described in subsection (e)(7),
            ``(3) the applicable dollar amount (as determined under 
        subsection (b)(1)) per metric ton of qualified carbon dioxide 
        which is--
                    ``(A) captured by the taxpayer using qualified 
                carbon capture equipment which is originally placed in 
                service at a qualified facility on or after the date of 
                the enactment of the Carbon Capture Utilization and 
                Storage Act, during the 12-year period beginning on the 
                date the equipment was originally placed in service, 
                and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage and not used by the taxpayer as 
                described in paragraph (4)(B), and
            ``(4) the applicable dollar amount (as determined under 
        subsection (b)(1)) per metric ton of qualified carbon dioxide 
        which is--
                    ``(A) captured by the taxpayer using qualified 
                carbon capture equipment which is originally placed in 
                service at a qualified facility on or after the date of 
                the enactment of the Carbon Capture Utilization and 
                Storage Act, during the 12-year period beginning on the 
                date the equipment was originally placed in service, 
                and
                    ``(B)(i) used by the taxpayer as a tertiary 
                injectant in a qualified enhanced oil or natural gas 
                recovery project and disposed of by the taxpayer in 
                secure geological storage, or
                    ``(ii) utilized by the taxpayer in a manner 
                described in subsection (e)(7).
    ``(b) Applicable Dollar Amount; Additional Equipment; Election.--
            ``(1) Applicable dollar amount.--
                    ``(A) In general.--The applicable dollar amount 
                shall be an amount equal to--
                            ``(i) for any taxable year beginning in a 
                        calendar year after 2015 and ending before 
                        2026--
                                    ``(I) for purposes of paragraph (3) 
                                of subsection (a), the dollar amount 
                                established by linear interpolation 
                                between $22.66 and $50 for each 
                                calendar year during such period, and
                                    ``(II) for purposes of paragraph 
                                (4) of such subsection, the dollar 
                                amount established by linear 
                                interpolation between $12.83 and $35 
                                for each calendar year during such 
                                period, and
                            ``(ii) for any taxable year beginning in a 
                        calendar year after 2025--
                                    ``(I) for purposes of paragraph (3) 
                                of subsection (a), an amount equal to 
                                the product of $50 and the inflation 
                                adjustment factor for such calendar 
                                year determined under section 
                                43(b)(3)(B) for such calendar year, 
                                determined by substituting `2024' for 
                                `1990', and
                                    ``(II) for purposes of paragraph 
                                (4) of such subsection, an amount equal 
                                to the product of $35 and the inflation 
                                adjustment factor for such calendar 
                                year determined under section 
                                43(b)(3)(B) for such calendar year, 
                                determined by substituting `2024' for 
                                `1990'.
                    ``(B) Rounding.--The applicable dollar amount 
                determined under subparagraph (A) shall be rounded to 
                the nearest cent.
            ``(2) Installation of additional carbon capture equipment 
        on existing qualified facility.--In the case of a qualified 
        facility placed in service before the date of the enactment of 
        the Carbon Capture Utilization and Storage Act, for which 
        additional qualified carbon capture equipment is placed in 
        service on or after the date of the enactment of the Carbon 
        Capture Utilization and Storage Act, the amount of qualified 
        carbon dioxide which is captured by the taxpayer shall be equal 
        to--
                    ``(A) for purposes of paragraphs (1)(A) and (2)(A) 
                of subsection (a), the lesser of--
                            ``(i) the total amount of qualified carbon 
                        dioxide captured at such facility for the 
                        taxable year, or
                            ``(ii) the total amount of the carbon 
                        dioxide capture capacity of the qualified 
                        carbon capture equipment in service at such 
                        facility on the day before the date of the 
                        enactment of the Carbon Capture Utilization and 
                        Storage Act, and
                    ``(B) for purposes of paragraphs (3)(A) and (4)(A) 
                of such subsection, an amount (not less than zero) 
                equal to the excess of--
                            ``(i) the amount described in clause (i) of 
                        subparagraph (A), over
                            ``(ii) the amount described in clause (ii) 
                        of such subparagraph.
            ``(3) Election.--For purposes of determining the carbon 
        dioxide sequestration credit under this section, a taxpayer may 
        elect to have the dollar amounts applicable under paragraph (1) 
        or (2) of subsection (a) apply in lieu of the dollar amounts 
        applicable under paragraph (3) or (4) of such subsection for 
        each metric ton of qualified carbon dioxide which is captured 
        by the taxpayer using qualified carbon capture equipment which 
        is originally placed in service at a qualified facility on or 
        after the date of the enactment of the Carbon Capture 
        Utilization and Storage Act.
    ``(c) 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, injection, or 
                utilization.
            ``(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 recaptured, recycled, and re-
        injected as part of the enhanced oil and natural gas recovery 
        process.
    ``(d) Qualified Facility and Qualified Carbon Capture Equipment.--
            ``(1) Qualified facility.--For purposes of this section, 
        the term `qualified facility' means any industrial facility--
                    ``(A)(i) the construction of which begins before 
                January 1, 2024, and--
                            ``(I) the original planning and design for 
                        such facility includes installation of 
                        qualified carbon capture equipment, or
                            ``(II) construction of qualified carbon 
                        capture equipment begins before such date, or
                    ``(ii) which is placed in service before January 1, 
                2024, and includes installation of qualified carbon 
                capture equipment, provided that construction of such 
                carbon capture equipment begins before such date, and
                    ``(B) which captures--
                            ``(i) in the case of a facility which emits 
                        not more than 500,000 metric tons of carbon 
                        dioxide into the atmosphere during the taxable 
                        year, not less than 25,000 metric tons of 
                        qualified carbon dioxide during the taxable 
                        year which is utilized in a manner described in 
                        subsection (e)(7),
                            ``(ii) in the case of an electricity 
                        generating facility which is not described in 
                        clause (i), not less than 500,000 metric tons 
                        of qualified carbon dioxide during the taxable 
                        year, or
                            ``(iii) in the case of a facility not 
                        described in clause (i) or (ii), not less than 
                        100,000 metric tons of qualified carbon dioxide 
                        during the taxable year.
            ``(2) Qualified carbon capture equipment.--For purposes of 
        this section, the term `qualified carbon capture equipment' 
        means--
                    ``(A) carbon capture equipment placed in service 
                before January 1, 2024, and
                    ``(B) carbon capture equipment the construction of 
                which begins before such date.
    ``(e) Special Rules and Other Definitions.--For purposes of this 
section--
            ``(1) Only carbon dioxide captured and disposed of or used 
        within the united states taken into account.--The credit under 
        this section shall apply only with respect to qualified carbon 
        dioxide the capture and disposal, use, or utilization 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, the Secretary of Energy, and the Secretary 
        of the Interior, shall establish regulations for determining 
        adequate security measures for the geological storage of carbon 
        dioxide under subsection (a) such that the carbon dioxide does 
        not escape into the atmosphere. Such term shall include storage 
        at deep saline formations, oil and gas reservoirs, and 
        unminable coal seams 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.--
                    ``(A) In general.--Except as provided subparagraph 
                (B) or in any regulations prescribed by the Secretary, 
                any credit under this section shall be attributable 
                to--
                            ``(i) in the case of qualified carbon 
                        dioxide captured using qualified carbon capture 
                        equipment which is originally placed in service 
                        at a qualified facility before the date of the 
                        enactment of the Carbon Capture Utilization and 
                        Storage Act, the person that captures and 
                        physically or contractually ensures the 
                        disposal, utilization, or use as a tertiary 
                        injectant of such qualified carbon dioxide, and
                            ``(ii) in the case of qualified carbon 
                        dioxide captured using qualified carbon capture 
                        equipment which is originally placed in service 
                        at a qualified facility on or after the date of 
                        the enactment of the Carbon Capture Utilization 
                        and Storage Act, the person that owns the 
                        qualified carbon capture equipment and 
                        physically or contractually ensures the capture 
                        and disposal, utilization, or use as a tertiary 
                        injectant of such qualified carbon dioxide.
                    ``(B) Election.--If the person described in 
                subparagraph (A) makes an election under this 
                subparagraph in such time and manner as the Secretary 
                may prescribe by regulations, the credit under this 
                section--
                            ``(i) shall be allowable to the person that 
                        disposes of the qualified carbon dioxide, 
                        utilizes the qualified carbon dioxide, or uses 
                        the qualified carbon dioxide as a tertiary 
                        injectant, and
                            ``(ii) shall not be allowable to the person 
                        described in subparagraph (A).
            ``(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) Utilization of qualified carbon dioxide.--
                    ``(A) In general.--For purposes of this section, 
                utilization of qualified carbon dioxide means--
                            ``(i) the fixation of such qualified carbon 
                        dioxide through photosynthesis or 
                        chemosynthesis, such as through the growing of 
                        algae or bacteria,
                            ``(ii) the chemical conversion of such 
                        qualified carbon dioxide to a material or 
                        chemical compound in which such qualified 
                        carbon dioxide is securely stored, or
                            ``(iii) the use of such qualified carbon 
                        dioxide for any other purpose for which a 
                        commercial market exists (with the exception of 
                        use as a tertiary injectant in a qualified 
                        enhanced oil or natural gas recovery project), 
                        as determined by the Secretary.
                    ``(B) Measurement.--
                            ``(i) In general.--For purposes of 
                        determining the amount of qualified carbon 
                        dioxide utilized by the taxpayer under 
                        paragraph (2)(B)(ii) or (4)(B)(ii) of 
                        subsection (a), such amount shall be equal to 
                        the metric tons of carbon dioxide which the 
                        taxpayer demonstrates, based upon an analysis 
                        of lifecycle greenhouse gas emissions and 
                        subject to such requirements as the Secretary, 
                        in consultation with the Secretary of Energy 
                        and the Administrator of the Environmental 
                        Protection Agency, determines appropriate, were 
                        captured and prevented from escaping into the 
                        atmosphere through use of a process described 
                        in subparagraph (A).
                            ``(ii) Lifecycle greenhouse gas 
                        emissions.--For purposes of clause (i), the 
                        term `lifecycle greenhouse gas emissions' has 
                        the same meaning given such term under 
                        subparagraph (H) of section 211(o)(1) of the 
                        Clean Air Act (42 U.S.C. 7545(o)(1)), as in 
                        effect on the date of the enactment of the 
                        Carbon Capture Utilization and Storage Act, 
                        except that `product' shall be substituted for 
                        `fuel' each place it appears in such 
                        subparagraph.
            ``(8) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2009, there shall be 
        substituted for each dollar amount contained in paragraphs (1) 
        and (2) of 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 `2008' 
                for `1990'.
    ``(f) Application of Section for Certain Carbon Capture 
Equipment.--In the case of any qualified carbon capture equipment 
placed in service before the date of the enactment of the Carbon 
Capture Utilization and Storage Act, the credit under this section 
shall apply with respect to qualified carbon dioxide captured using 
such equipment 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 taken into account in accordance with 
paragraphs (1) and (2) of subsection (a) during the period beginning 
after October 3, 2008.
    ``(g) Regulations.--The Secretary may prescribe such regulations 
and other guidance as may be necessary or appropriate to carry out this 
section, including regulations or other guidance to--
            ``(1) ensure proper allocation under subsection (a) for 
        qualified carbon dioxide captured by a taxpayer during the 
        taxable year ending after the date of the enactment of the 
        Carbon Capture Utilization and Storage Act, and
            ``(2) determine whether a facility satisfies the 
        requirements under subsection (d)(1) during such taxable 
        year.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.
                                 <all>