[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1535 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1535

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 12, 2017

 Ms. Heitkamp (for herself, Mrs. Capito, Mr. Whitehouse, Mr. Barrasso, 
Mr. Kaine, Mr. Graham, Mr. Schatz, Mr. Blunt, Mr. Booker, Mr. Portman, 
  Mr. Tester, Mr. Cochran, Mr. Casey, Ms. Klobuchar, Mr. Durbin, Mr. 
    Franken, Mr. Brown, Mr. Warner, Mr. Donnelly, Mr. Manchin, Ms. 
Duckworth, Mr. Peters, Mr. Coons, Mr. Bennet, and Mr. King) 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, expand, 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 ``Furthering carbon capture, 
Utilization, Technology, Underground storage, and Reduced Emissions 
Act'' or the ``FUTURE Act''.

SEC. 2. ENHANCEMENT OF 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 OXIDE SEQUESTRATION.

    ``(a) General Rule.--For purposes of section 38, the carbon oxide 
sequestration credit for any taxable year is an amount equal to the sum 
of--
            ``(1) $20 per metric ton of qualified carbon oxide which 
        is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility before the date of the enactment of 
                the FUTURE 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 oxide which 
        is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility before the date of the enactment of 
                the FUTURE 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 (f)(5),
            ``(3) the applicable dollar amount (as determined under 
        subsection (b)(1)) per metric ton of qualified carbon oxide 
        which is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility on or after the date of the 
                enactment of the FUTURE 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 oxide 
        which is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility on or after the date of the 
                enactment of the FUTURE 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 (f)(5).
    ``(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 2016 and ending before 
                        2027--
                                    ``(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 2026--
                                    ``(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 `2025' 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 `2025' 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 FUTURE Act, for which additional carbon capture equipment 
        is placed in service on or after the date of the enactment of 
        such Act, the amount of qualified carbon oxide 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 
                        oxide captured at such facility for the taxable 
                        year, or
                            ``(ii) the total amount of the carbon 
                        dioxide capture capacity of the carbon capture 
                        equipment in service at such facility on the 
                        day before the date of the enactment of the 
                        FUTURE 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 
        oxide 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 oxide which is captured by 
        the taxpayer using carbon capture equipment which is originally 
        placed in service at a qualified facility on or after the date 
        of the enactment of the FUTURE Act.
    ``(c) Qualified Carbon Oxide.--For purposes of this section--
            ``(1) In general.--The term `qualified carbon oxide' 
        means--
                    ``(A) any carbon dioxide which--
                            ``(i) is captured from an industrial source 
                        by carbon capture equipment which is originally 
                        placed in service before the date of the 
                        enactment of the FUTURE Act,
                            ``(ii) would otherwise be released into the 
                        atmosphere as industrial emission of greenhouse 
                        gas or lead to such release, and
                            ``(iii) is measured at the source of 
                        capture and verified at the point of disposal, 
                        injection, or utilization,
                    ``(B) any carbon dioxide or other carbon oxide 
                which--
                            ``(i) is captured from an industrial source 
                        by carbon capture equipment which is originally 
                        placed in service on or after the date of the 
                        enactment of the FUTURE Act,
                            ``(ii) would otherwise be released into the 
                        atmosphere as industrial emission of greenhouse 
                        gas or lead to such release, and
                            ``(iii) is measured at the source of 
                        capture and verified at the point of disposal, 
                        injection, or utilization, or
                    ``(C) in the case of a direct air capture facility, 
                any carbon dioxide which--
                            ``(i) is captured directly from the ambient 
                        air, and
                            ``(ii) is measured at the source of capture 
                        and verified at the point of disposal, 
                        injection, or utilization.
            ``(2) Recycled carbon oxide.--The term `qualified carbon 
        oxide' includes the initial deposit of captured carbon oxide 
        used as a tertiary injectant. Such term does not include carbon 
        oxide that is recaptured, recycled, and re-injected as part of 
        the enhanced oil and natural gas recovery process.
    ``(d) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means any industrial facility or direct air 
capture facility--
            ``(1) the construction of which begins before January 1, 
        2024, and--
                    ``(A) construction of carbon capture equipment 
                begins before such date, or
                    ``(B) the original planning and design for such 
                facility includes installation of carbon capture 
                equipment, and
            ``(2) which captures--
                    ``(A) in the case of a facility which emits not 
                more than 500,000 metric tons of carbon oxide into the 
                atmosphere during the taxable year, not less than 
                25,000 metric tons of qualified carbon oxide during the 
                taxable year which is utilized in a manner described in 
                subsection (f)(5),
                    ``(B) in the case of an electricity generating 
                facility which is not described in subparagraph (A), 
                not less than 500,000 metric tons of qualified carbon 
                oxide during the taxable year, or
                    ``(C) in the case of a direct air capture facility 
                or any facility not described in subparagraph (A) or 
                (B), not less than 100,000 metric tons of qualified 
                carbon oxide during the taxable year.
    ``(e) Definitions.--For purposes of this section--
            ``(1) Direct air capture facility.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                term `direct air capture facility' means any facility 
                which uses carbon capture equipment to capture carbon 
                dioxide directly from the ambient air.
                    ``(B) Exception.--The term `direct air capture 
                facility' shall not include any facility which captures 
                carbon dioxide--
                            ``(i) which is deliberately released from 
                        naturally occurring subsurface springs, or
                            ``(ii) using natural photosynthesis.
            ``(2) 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.
            ``(3) Tertiary injectant.--The term `tertiary injectant' 
        has the same meaning as when used within section 193(b)(1).
    ``(f) Special Rules.--
            ``(1) Only qualified carbon oxide 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 oxide 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 
        qualified carbon oxide under subsection (a) such that the 
        qualified carbon oxide 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) Credit attributable to taxpayer.--
                    ``(A) In general.--Except as provided in 
                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 oxide 
                        captured using carbon capture equipment which 
                        is originally placed in service at a qualified 
                        facility before the date of the enactment of 
                        the FUTURE Act, the person that captures and 
                        physically or contractually ensures the 
                        disposal, utilization, or use as a tertiary 
                        injectant of such qualified carbon oxide, and
                            ``(ii) in the case of qualified carbon 
                        oxide captured using carbon capture equipment 
                        which is originally placed in service at a 
                        qualified facility on or after the date of the 
                        enactment of the FUTURE Act, the person that 
                        owns the carbon capture equipment and 
                        physically or contractually ensures the capture 
                        and disposal, utilization, or use as a tertiary 
                        injectant of such qualified carbon oxide.
                    ``(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 oxide, 
                        utilizes the qualified carbon oxide, or uses 
                        the qualified carbon oxide as a tertiary 
                        injectant, and
                            ``(ii) shall not be allowable to the person 
                        described in subparagraph (A).
            ``(4) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any qualified carbon oxide 
        which ceases to be captured, disposed of, or used as a tertiary 
        injectant in a manner consistent with the requirements of this 
        section.
            ``(5) Utilization of qualified carbon oxide.--
                    ``(A) In general.--For purposes of this section, 
                utilization of qualified carbon oxide means--
                            ``(i) the fixation of such qualified carbon 
                        oxide through photosynthesis or chemosynthesis, 
                        such as through the growing of algae or 
                        bacteria,
                            ``(ii) the chemical conversion of such 
                        qualified carbon oxide to a material or 
                        chemical compound in which such qualified 
                        carbon oxide is securely stored, or
                            ``(iii) the use of such qualified carbon 
                        oxide 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 
                        oxide 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 qualified carbon oxide 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--
                                    ``(I) captured and permanently 
                                isolated from the atmosphere, or
                                    ``(II) displaced from being emitted 
                                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 
                        FUTURE Act, except that `product' shall be 
                        substituted for `fuel' each place it appears in 
                        such subparagraph.
            ``(6) Election for applicable facilities.--
                    ``(A) In general.--For purposes of this section, in 
                the case of an applicable facility, for any taxable 
                year in which such facility captures not less than 
                500,000 metric tons of qualified carbon oxide during 
                the taxable year, the person described in paragraph 
                (3)(A)(ii) may elect to have such facility, and any 
                carbon capture equipment placed in service at such 
                facility, deemed as having been placed in service on 
                the date of the enactment of the FUTURE Act.
                    ``(B) Applicable facility.--For purposes of this 
                paragraph, the term `applicable facility' means a 
                qualified facility--
                            ``(i) which was placed in service before 
                        the date of the enactment of the FUTURE Act, 
                        and
                            ``(ii) for which no taxpayer claimed a 
                        credit under this section in regards to such 
                        facility for any taxable year ending before the 
                        date of the enactment of such Act.
            ``(7) 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'.
    ``(g) Application of Section for Certain Carbon Capture 
Equipment.--In the case of any carbon capture equipment placed in 
service before the date of the enactment of the FUTURE Act, the credit 
under this section shall apply with respect to qualified carbon oxide 
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, during the period 
beginning after October 3, 2008, a total of 75,000,000 metric tons of 
qualified carbon oxide have been taken into account in accordance 
with--
            ``(1) subsection (a) of this section, as in effect on the 
        day before the date of the enactment of the FUTURE Act, and
            ``(2) paragraphs (1) and (2) of subsection (a) of this 
        section.
    ``(h) 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 oxide captured by a taxpayer during the 
        taxable year ending after the date of the enactment of the 
        FUTURE 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.
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