II
110th CONGRESS
2d Session
S. 3345
IN THE SENATE OF THE UNITED STATES
July 26, 2008
Mr. Rockefeller introduced the following bill; which was read twice and referred to the Committee on Finance
A BILL
To promote the capture and sequestration of carbon dioxide, to promote the use of energy produced from coal, and for other purposes.
Short title
This Act may be cited as
the Future Fuels Act of
2008
.
Future Fuels Corporation
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:
Future Fuels Corporation
Establishment
In general
The Future Fuels Corporation (referred to in this section
as the Corporation
) is established as a government
corporation.
Administration
The Corporation shall be subject to—
this section; and
chapter 91 of title 31, United States Code.
Board of directors
In general
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.
Chairperson
The board of directors shall annually elect a Chairperson from among the members of the board of directors.
Term
The term of a member of the board of directors shall be 4 years.
Transfers
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.
Use of funds
Beginning in fiscal year 2009, funds transferred by the Secretary to the Corporation under subsection (a)(4) shall be expended by the Corporation to—
promote and deploy coal and coal cofired polygeneration technologies;
reduce—
the carbon footprint of coal consumption; and
the production of coal-based byproducts; and
conduct widespread carbon sequestration research, development, and deployment activities.
.
Carbon capture and storage research, development, and demonstration program
Section 963 of the Energy Policy Act of 2005 (42 U.S.C. 16293) is amended—
in the section heading, by striking
and
sequestration
and inserting and storage
;
in subsection (a), by striking and
sequestration
and inserting and storage
; and
by striking subsections (c) and (d) and inserting the following:
Programmatic activities
Goal
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.
Review of existing data
Not later than 180 days after the date of enactment of the Future Fuels Act of 2008, the Secretary shall—
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
submit to the appropriate committees of Congress a report that describes the results of the verification and analyses under subparagraph (A).
Recommendations
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—
the determination of best technologies;
the identification and evaluation of state-of-the-art research, development, and deployment strategies for carbon capture and storage technologies;
the selection and operation of carbon dioxide sequestration sites; and
the transfer of liability for the sites to the United States.
Interstate compacts
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.
Demonstration project
The Secretary shall conduct geological sequestration demonstration projects involving carbon dioxide sequestration operations in a variety of candidate geological settings, including—
oil and gas reservoirs;
unmineable coal seams;
deep saline aquifers;
basalt and shale formations; and
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).
Authorization of appropriations
In general
There are authorized to be appropriated to carry out this section—
$100,000,000 for each of fiscal years 2009 and 2010;
$105,000,000 for fiscal year 2011;
$110,000,000 for fiscal year 2012;
$115,000,000 for fiscal year 2013; and
$120,000,000 for fiscal year 2014.
Availability of funds
Funds made available for a fiscal year under paragraph (1)—
shall remain available until expended, but not later than September 30, 2014; and
may be reprogrammed, at the discretion of the Secretary, for expenditure for other demonstration projects under this title only after—
September 30, 2010; and
the Secretary provides notice of the proposed reprogramming to the appropriate committees of Congress.
.
Standby loans for qualifying coal-to-liquid projects
Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is amended by adding at the end the following:
Standby loans for qualifying coal-to-liquid projects
Definitions
In this subsection:
Cap price
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.
Conventional baseline emissions
The term conventional baseline emissions means—
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;
in the case of noncombustible products produced through a qualifying CTL project, the average lifecycle greenhouse gas emissions emitted by projects that—
are of comparable size; and
produce equivalent products using conventional feedstocks; and
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.
Direct loan
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).
Eligible entity
The term eligible entity means an entity that conducts a qualifying CTL project.
Facility
The term facility means a facility at which the conversion of feedstocks to end products takes place.
Full term
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—
30 years; or
90 percent of the projected useful life of the qualifying CTL project, as determined by the Secretary.
Lifecycle greenhouse gas emissions
The term lifecycle greenhouse gas emissions means the difference between—
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
any greenhouse gases captured at the facility and sequestered;
the carbon content, expressed in units of carbon dioxide equivalent, of any feedstock that is a renewable biomass; and
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.
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 under any law in effect as of the date of the sequestration.
Market price
The term market price means the average quarterly price of a petroleum price index specified in the standby loan agreement.
Minimum price
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.
Output
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.
Primary term
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—
20 years; or
75 percent of the projected useful life of the qualifying CTL project, as determined by the Secretary.
Qualifying CTL project
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—
that demonstrates the capture, sequestration, disposal, or use of the carbon dioxide produced in the conversion process; and
for which—
the annual lifecycle greenhouse gas emissions of the project are at least 20 percent lower than conventional baseline emissions;
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
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—
represents the best available technology; and
achieves a reduction in carbon emissions that is not less than 75 percent.
Standby loan agreement
The term standby loan agreement means a loan agreement entered into under paragraph (2)(A)(i).
Agreements
Standby loan agreement
In general
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.
Requirements
A standby loan agreement entered into under clause (i) shall—
provide for a direct loan from the Secretary to the eligible entity for the qualifying CTL project;
specify the primary term of the standby loan agreement;
specify the full term of the standby loan agreement; and
establish a cap price and a minimum price for the primary term of the standby loan agreement.
Profit-sharing agreement
In general
Simultaneously with entering into a standby loan agreement under subparagraph (A), the Secretary may enter into a profit-sharing agreement with the eligible entity.
Requirements
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—
the amount that is equal to the product obtained by multiplying—
the amount that is equal to the difference between—
the market price; and
the cap price; and
the output of the qualifying CTL project; and
the total amount of any loan repayments made for the calendar quarter.
Loan disbursements
Disbursement
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.
Amount
In general
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—
the difference between—
the minimum price; and
the market price; and
the output of the qualifying CTL project.
Limitation
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.
Loan repayments
In general
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.
Limitations
In establishing the terms and conditions under subparagraph (A), the Secretary shall provide that—
if, in any calendar quarter during the primary term of the standby loan agreement, the market price is less than the cap price—
the qualifying CTL project may elect to defer some or all of the repayment obligations due during the applicable calendar quarter; and
if an election is made under subclause (I), any unpaid obligations will continue to accrue interest during the deferral period;
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—
the amount that is equal to the difference between—
the market price; and
the cap price; and
the output of the qualifying CTL project; and
the qualifying CTL project may elect to defer any repayment obligation in excess of the amount determined under subclause (I); and
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.
Compliance with Federal credit reform Act
Upfront payment of cost of loan
No 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)).
Minimization of risk to the government
In 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—
publicly available data from the Energy Information Administration; and
statistical methods and analyses that are appropriate for the analysis of volatility in energy prices.
Treatment of payments
In general
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.
No cost
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.
Applicable law
No double benefit
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—
subsection (a); or
any other law.
Subrogation, fees, and full faith and credit
Subsections (g)(2), (h), and (j) shall apply to standby loans under this subsection to the same extent the provisions apply to loan guarantees.
.
Credit for multi-product pipeline construction
In general
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:
Coal-based transportation fuel pipeline credit
In general
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.
Applicable amount
For purposes of subsection (a), the applicable amount is an amount equal to—
$0.02 per gallon for the first 1,000,000 gallons of qualified average daily throughput, and
$0.01 per gallon for the number of gallons of qualified average daily throughput in excess of 1,000,000 gallons.
Qualified average daily throughput
For purposes of this section—
In general
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.
Termination
In general
No amount of qualified fuel entering an eligible pipeline shall be taken into account for any day after December 31, 2015.
Special rule
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.
Other definitions
For purposes of this section—
Eligible taxpayer
The term eligible taxpayer means any taxpayer who owns an eligible pipeline.
Eligible pipeline
The term eligible pipeline means a pipeline—
the original use of which commences with the taxpayer,
which is placed in service by the taxpayer after the date of the enactment of this Act and before December 31, 2012,
no written binding contract for the construction of which was in effect on or before December 31, 2007, and
which is used for the transportation of fuels derived from coal.
Qualified fuel
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.
.
Conforming amendment
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:
the coal-based transportation fuel pipeline credit under section 45Q(a).
.
Clerical amendment
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.
.
Effective date
The amendments made by this subsection shall apply to property placed in service after the date of the enactment of this Act.
Incentives to capture coalmine methane
In General
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:
Application to coalmine methane gas
In general
This section shall apply to coalmine methane gas—
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
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.
Coalmine methane gas
For purposes of this paragraph, the term coalmine methane gas means any methane gas which is—
liberated during qualified coal mining operations, or
extracted up to 5 years in advance of qualified coal mining operations as part of a specific plan to mine a coal deposit.
Special rule for advanced extraction
In 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.
Noncompliance with pollution laws
For 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.
.
Effective date
The amendments made by this section shall take effect on the date of the enactment of this Act.
Expanded clean coal technology incentives
Expansion and modification of advanced coal project investment credit
Credit rate parity among projects
Section 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.
.
Expansion of aggregate credits
Section 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
.
Authorization of additional projects
In general
Subparagraph (B) of section 48A(d)(3) of such Code (relating to aggregate credits) is amended to read as follows:
Particular projects
Of the dollar amount in subparagraph (A), the Secretary is authorized to certify—
$800,000,000 for integrated gasification combined cycle projects the application for which is submitted during the period described in paragraph (2)(A)(i),
$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),
$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
$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).
.
Application period for additional projects
Subparagraph (A) of section 48A(d)(2) of such Code (relating to certification) is amended to read as follows:
Application period
Each applicant for certification under this paragraph shall submit an application meeting the requirements of subparagraph (B). An applicant may only submit an application—
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
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.
.
Capture and sequestration of carbon dioxide emissions requirement
Section
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:
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.
.
Nameplate capacity
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.
.
Effective date
The amendments made by this subsection shall take effect on the date of the enactment of this Act.
Clean coal energy bonds
In general
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:
Clean coal energy bonds
Clean coal energy bond
For purposes of this subchapter, the term clean coal energy bond means any bond issued as part of an issue if—
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),
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
the qualified issuer designates such bond for purposes of this section and the bond is in registered form.
Qualified project; special use rules
In general
The term qualified project means a qualifying advanced coal project (as defined in section 48A(c)(1)) placed in service by a qualified borrower.
Refinancing rules
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.
Reimbursement
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—
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,
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
the reimbursement is made not later than 18 months after the date the original expenditure is paid.
Treatment of changes in use
For 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.
Limitation on amount of bonds designated
National limitation
There is a national clean coal energy bond limitation of $2,000,000,000.
Allocation by secretary
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.
Qualified issuer; qualified borrower
For purposes of this section—
Qualified issuer
The term qualified issuer means—
a clean coal energy bond lender,
a cooperative electric company, or
a governmental body.
Qualified borrower
The term qualified borrower means—
a mutual or cooperative electric company described in section 501(c)(12) or 1381(a)(2)(C), or
a governmental body.
Cooperative electric company
The 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.
Clean coal energy bond lender
The 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.
Governmental body
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.
Special rules relating to pool bonds
No 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.
Other definitions and special rules
For purposes of this section—
Pooled financing bond
The term pooled financing bond shall have the meaning given such term by section 149(f)(4)(A).
Ratable principal amortization required
A 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).
Termination
A bond shall not be treated as a clean coal energy bond if such bond is issued after December 31, 2012.
.
Conforming amendments
Paragraph (1) of section 54A(d) is amended to read as follows:
Qualified tax credit bond
The term qualified tax credit bond means—
a qualified forestry conservation bond, or
a clean coal energy bond,
.
Subparagraph (C) of section 54A(d)(2), as added by section 106, is amended to read as follows:
Qualified purpose
For purposes of this paragraph, the term qualified purpose means—
in the case of a qualified forestry conservation bond, a purpose specified in section 54B(e), and
in the case of a clean coal energy bond, a qualified project specified in section 54C(b).
.
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.
.
Issuance of regulations
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.
Effective date
The amendments made by this subsection shall apply to bonds issued after December 31, 2007.
Tax credit for carbon dioxide sequestration
In general
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:
Credit for carbon dioxide sequestration
General rule
For purposes of section 38, the carbon dioxide sequestration credit for any taxable year is an amount equal to the sum of—
$20 per metric ton of qualified carbon dioxide which is—
captured by the taxpayer at a qualified facility, and
disposed of by the taxpayer in secure geological storage, and
$10 per metric ton of qualified carbon dioxide which is—
captured by the taxpayer at a qualified facility, and
used by the taxpayer as a tertiary injectant in a qualified enhanced oil or natural gas recovery project.
Qualified carbon dioxide
For purposes of this section—
In general
The term qualified carbon dioxide means carbon dioxide captured from an industrial source which—
would otherwise be released into the atmosphere as industrial emission of greenhouse gas, and
is measured at the source of capture and verified at the point of disposal or injection.
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.
Qualified facility
For purposes of this section, the term qualified facility means any industrial facility—
which is owned by the taxpayer,
at which carbon capture equipment is placed in service, and
which captures not less than 500,000 metric tons of carbon dioxide during the taxable year.
Special rules and other definitions
For purposes of this section—
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—
the United States (within the meaning of section 638(1)), or
a possession of the United States (within the meaning of section 638(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.
Tertiary injectant
The term tertiary injectant has the same meaning as when used within section 193(b)(1).
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.
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.
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.
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—
such dollar amount, multiplied by
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
.
Termination
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.
.
Conforming amendment
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:
the carbon dioxide sequestration credit determined under section 45R(a).
.
Clerical amendment
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:
.
Effective date
The amendments made by this subsection shall apply carbon dioxide captured after the date of the enactment of this Act.