S. 425 – Enhancing Energy Recovery Act

AI-Generated Summary

Updated November 24, 2025 at 3:03 AM UTC

The Enhancing Energy Recovery Act amends the Internal Revenue Code’s carbon‑oxide sequestration credit (section 45Q) to treat different uses of captured carbon more equally. It expands the types of qualified uses, sets a base credit of $17 per ton for 2025‑2026 (inflation‑adjusted thereafter), and provides a higher $36 per ton credit for certain applications. The changes apply to tax years starting after 2024.

Key Provisions

Updates the definition of qualified carbon oxide uses to include (i) secure geological storage, (ii) use as a tertiary injectant in enhanced oil or gas recovery projects (with subsequent storage), and (iii) other uses described in subsection (f)(5).
Sets the carbon‑oxide sequestration tax credit at $17 per ton for taxable years beginning in 2025‑2026, then adjusts it for inflation after 2026 using the factor from section 43(b)(3)(B).
Provides a higher credit of $36 per ton for certain uses, replacing the $17 amount in those cases.
Removes or revises several cross‑references in section 45Q to align the text with the new definitions and credit amounts.
Adds a conforming amendment to section 6417(d)(3)(C)(i)(II)(bb) to reflect the updated references.
Makes the changes effective for taxable years beginning after December 31, 2024.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (text: CR S668)

Finance Committee

February 5, 2025

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SenateIntro Referral

Introduced in Senate

February 5, 2025

SenateIntro Referral

Read twice and referred to the Committee on Finance. (text: CR S668)

Finance Committee

February 5, 2025

Floor Debate

3 members

What members said about S. 425 on the floor

2 Republicans1 Democrat

Sen. John ThuneR-SD · Feb 5, 2025

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Sen. John BarrassoR-WY · Feb 5, 2025

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Sen. Richard J. DurbinD-IL · Feb 5, 2025

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Sen. John BarrassoR-WY · Feb 5, 2025

Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.

Bill Text

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Introduced in SenateIssued February 5, 2025

II

119th CONGRESS

1st Session

S. 425

IN THE SENATE OF THE UNITED STATES

February 5, 2025

Mr. Barrasso (for himself, Mr. Lankford, Mr. Cassidy, Mr. Hoeven, Mr. Justice, and Mr. Sheehy 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 modify the carbon oxide sequestration credit to ensure parity for different uses and utilizations of qualified carbon oxide.

1.

Short title

This Act may be cited as the Enhancing Energy Recovery Act.

2.

Parity for different uses and utilizations of qualified carbon oxide

(a)

In general

Section 45Q of the Internal Revenue Code of 1986 is amended—

(1)

in subsection (a)—

(A)

in paragraph (2)(B)(ii), by adding and at the end,

(B)

in paragraph (3), by striking subparagraph (B) and inserting the following:

(B)

(i)

disposed of by the taxpayer in secure geological storage and not used by the taxpayer as described in clause (ii) or (iii),

(ii)

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

(iii)

utilized by the taxpayer in a manner described in subsection (f)(5).

, and

(C)

by striking paragraph (4), and

(2)

in subsection (b)—

(A)

in paragraph (1)—

(i)

by striking subparagraph (A) and inserting the following:

(A)

Except as provided in subparagraph (B) or (C), the applicable dollar amount shall be an amount equal to—

(i)

for any taxable year beginning in a calendar year after 2024 and before 2027, $17, and

(ii)

for any taxable year beginning in a calendar year after 2026, an amount equal to the product of $17 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)

in subparagraph (B), by striking shall be applied and all that follows through the period and inserting shall be applied by substituting $36 for $17 each place it appears.,

(B)

in paragraph (2)(B), by striking paragraphs (3)(A) and (4)(A) and inserting paragraph (3)(A), and

(C)

in paragraph (3), by striking the dollar amounts applicable under paragraph (3) or (4) and inserting the dollar amount applicable under paragraph (3),

(3)

in subsection (f)—

(A)

in paragraph (5)(B)(i), by striking (4)(B)(ii) and inserting (3)(B)(iii), and

(B)

in paragraph (9), by striking paragraphs (3) and (4) of subsection (a) and inserting subsection (a)(3), and

(4)

in subsection (h)(3)(A)(ii), by striking paragraph (3)(A) or (4)(A) of subsection (a) and inserting subsection (a)(3)(A).

(b)

Conforming amendment

Section 6417(d)(3)(C)(i)(II)(bb) of the Internal Revenue Code of 1986 is amended by striking paragraph (3)(A) or (4)(A) of section 45Q(a) and inserting section 45Q(a)(3)(A).

(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2024.