[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5369 Introduced in Senate (IS)]
<DOC>
118th CONGRESS
2d Session
S. 5369
To amend the Internal Revenue Code of 1986 to establish a technology-
neutral tax credit for increased investment in next-generation carbon
dioxide removal technologies.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 21, 2024
Mr. Bennet (for himself and Ms. Murkowski) 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 establish a technology-
neutral tax credit for increased investment in next-generation carbon
dioxide removal technologies.
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 Dioxide Removal Investment
Act''.
SEC. 2. ESTABLISHMENT OF TECHNOLOGY-NEUTRAL CREDIT FOR CARBON DIOXIDE
REMOVAL.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 45AA the following new section:
``SEC. 45BB. TECHNOLOGY-NEUTRAL CREDIT FOR CARBON DIOXIDE REMOVAL.
``(a) In General.--For purposes of section 38, the carbon dioxide
removal credit for any taxable year is an amount equal to the
applicable amount per metric tons of net carbon dioxide removal (as
determined pursuant to subsection (e)) achieved by a qualifying carbon
dioxide removal project during the 12-year period beginning on the date
such project was originally placed in service.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a), the
applicable amount shall be--
``(A) in the case of a qualifying carbon dioxide
removal project which uses installed carbon capture
equipment to capture point-source carbon dioxide
originating from the combustion or processing of
biomass feedstocks, $110, and
``(B) in the case of a qualifying carbon dioxide
removal project which is not described in subparagraph
(A), $250.
``(2) Inflation adjustment.--
``(A) In general.--In the case of any taxable year
beginning in a calendar year after 2025, the dollar
amounts in paragraph (1) shall each be adjusted by
multiplying such amount by the inflation adjustment
factor for the calendar year in which the carbon
dioxide removal occurs.
``(B) Annual computation.--The Secretary shall, not
later than April 1 of each calendar year, determine and
publish in the Federal Register the inflation
adjustment factor for such calendar year in accordance
with this subsection.
``(C) Inflation adjustment factor.--The term
`inflation adjustment factor' has the same meaning
given such term under section 45Y(c)(3), except that
such section shall be applied by substituting `calendar
year 2024' for `calendar year 1992'.
``(D) Rounding rule.--If any amount as increased
under subparagraph (A) is not a multiple of $1, such
amount shall be rounded to the nearest multiple of $1.
``(c) Definitions.--In this section--
``(1) Carbon dioxide equivalent.--The term `carbon dioxide
equivalent' means with respect to a greenhouse gas, the
quantity of such gas that has a global warming potential
equivalent to 1 metric ton of carbon dioxide.
``(2) Carbon dioxide removal.--The term `carbon dioxide
removal' means the removal of carbon dioxide from the
atmosphere through--
``(A) the capture of carbon dioxide from the
ambient air or upper hydrosphere, and
``(B) the storage of such carbon dioxide.
``(3) Net carbon dioxide removal.--The term `net carbon
dioxide removal' means carbon dioxide removal, net of any
associated greenhouse gas emissions (as measured in metric tons
of carbon dioxide equivalent on a lifecycle basis).
``(4) Qualifying carbon dioxide removal approach.--
``(A) In general.--The term `qualifying carbon
dioxide removal approach' means, with respect to any
qualifying carbon dioxide removal project, a set of
similar technologies--
``(i) which achieve carbon dioxide removal
through--
``(I) direct air capture and
storage,
``(II) enhanced carbon
mineralization and rock weathering,
``(III) terrestrial biomass-based
carbon dioxide removal,
``(IV) marine-based carbon dioxide
removal, or
``(V) any other means, and
``(ii) which satisfy each of the following
criteria (as determined by the Secretary, in
consultation with the Secretary of Energy and,
as deemed necessary, the head of any other
relevant Federal agency):
``(I) Expected to provide net
carbon dioxide removal based on
project-level lifecycle analysis, as
described in subsection (e)(2).
``(II) Has a high likelihood, based
on scientific understanding, of storing
the captured carbon dioxide for at
least 1,000 years, including through
geologic storage, utilization, or other
means.
``(III) Demonstrates the ability to
quantify net carbon dioxide removal,
within a range of plus or minus 20
percent with a 95 percent confidence
interval based on public demonstrations
and field trials.
``(B) Terrestrial biomass-based carbon dioxide
removal.--
``(i) In general.--In the case of any
approach which uses terrestrial biomass to
capture carbon dioxide, such approach shall use
eligible biomass feedstocks.
``(ii) Eligible biomass feedstock.--For
purposes of this subparagraph, the term
`eligible biomass feedstock' means a feedstock
which is derived from--
``(I) agricultural wastes and
residues from land actively cultivated
before the date of enactment of this
section, provided that--
``(aa) there is not less
than a 50 percent retention of
residues, or
``(bb) an alternate
retention rate or best practice
(as certified under clause
(iii)(III)(aa)) is achieved,
``(II) non-invasive organic
material grown on brownfield sites or
abandoned mine sites, including organic
material grown exclusively for purposes
of being used by a qualifying carbon
dioxide removal project,
``(III) algae or other aquatic
photosynthesizing organisms,
``(IV) food waste,
``(V) removal of invasive plant
species,
``(VI) other wastes and residues
derived from--
``(aa) landscape or right-
of-way trimming,
``(bb) biomass removed for
wildfire hazard reduction
within 200 feet of structures,
``(cc) wood and paper mill
waste, or
``(dd) downed wood from
extreme weather events, or
``(VII) any other source which is
certified pursuant to clause
(iii)(III)(bb).
``(iii) Study and certification.--
``(I) Study.--Not later than 1 year
after the date of enactment of this
section, the National Academies of
Sciences, Engineering, and Medicine, in
consultation with the Secretary of
Energy and the Secretary of
Agriculture, shall complete 2 separate
studies with respect to the following:
``(aa) For purposes of
clause (ii)(I)(bb), recommend
adequate thresholds for residue
retention rates and other best
practices for various crops and
environmental conditions, with
the goal of maintaining soil
organic carbon, soil health,
and biodiversity.
``(bb) For purposes of
clause (ii)(VII), evaluate the
suitability as additional
sources for eligible biomass
feedstocks of--
``(AA) biomass
grown on marginal lands
that have been or are
under intensive
cultivation, and
``(BB) forest
residues (such as small
diameter thinning,
limbs, and bark)
related to wildfire
hazard reduction or
ecological forest
management with no
alternative options for
valorization.
``(II) Feedstock study.--For
purposes of the study described in
subclause (I)(bb), such study shall--
``(aa) assess--
``(AA) the
potential risk of the
feedstocks described in
such subclause
displacing food crop
production, decreasing
food crop yield,
displacing the use of
forest residues for
durable products, and
other direct and
indirect land-use
impacts,
``(BB) the impact
of use of such
feedstocks on forest
and agricultural soils,
including impacts on
erosion and carbon and
nutrient cycling, and
``(CC) the impact
of use of such
feedstocks on
biodiversity, and
``(bb) provide guidance for
robust lifecycle assessment of
such feedstocks.
``(III) Certification.--Following
the completion of each study described
in subclause (I), the Secretary of
Energy, in consultation with the
Secretary of Agriculture, shall, based
on the recommendations or evaluations
of such study, certify--
``(aa) for purposes of
clause (ii)(I)(bb), any
alternate retention rates or
best practices, and
``(bb) for purposes of
clause (ii)(VII), any
additional sources for eligible
biomass feedstocks.
``(C) Marine-based carbon dioxide removal.--
``(i) In general.--In the case of any
approach which uses the physical, chemical, or
biological properties of the ocean to achieve
carbon dioxide removal, such approach shall use
a certified marine carbon dioxide removal
approach.
``(ii) Certified marine carbon dioxide
removal approach.--For purposes of this
subparagraph, the term `certified marine carbon
dioxide removal approach' means an approach
which--
``(I) meets the standards
established under clause (iii), and
``(II) is certified under clause
(iv).
``(iii) Standards.--
``(I) In general.--Not later than 1
year after the date of enactment of
this section, the Administrator of the
National Oceanic and Atmospheric
Administration, in consultation with
the Administrator of the Environmental
Protection Agency and the Director of
the Bureau of Ocean Energy Management,
shall establish science-based
environmental safety standards which
apply to all qualifying carbon dioxide
removal approaches which use the
physical, chemical, or biological
properties of the ocean to achieve
carbon dioxide removal, with such
standards as will ensure that an
approach is not likely to have
significant adverse environmental
impact, which shall include accounting
for--
``(aa) the positive and
negative environmental impacts
of such approach (including at-
site deployment impacts and
upstream and downstream
impacts),
``(bb) the level of
certainty with respect to the
type and magnitude of such
impacts, and
``(cc) the quantity and
quality of the body of research
related to such impacts.
``(II) Reversal of negative
environmental impacts caused by climate
change.--For purposes of subclause (I),
positive environmental impacts of any
qualifying carbon dioxide removal
approach shall include any local
reversal of negative environmental
impacts caused by climate change.
``(III) Reevaluation.--Not later
than 3 years after the establishment of
the standards under subclause (I), and
every 3 years thereafter, the
Administrator of the National Oceanic
and Atmospheric Administration, in
consultation with the Administrator of
the Environmental Protection Agency and
the Director of the Bureau of Ocean
Energy Management, shall review such
standards and, pursuant to the
requirements under such subclause,
update such standards as necessary.
``(iv) Certification.--Not later than 1
year after the date of enactment of this
section and every 2 years thereafter, the
Administrator of the National Oceanic and
Atmospheric Administration, in consultation
with the Administrator of the Environmental
Protection Agency and the Director of the
Bureau of Ocean Energy Management, shall
certify any approach which satisfies the
standards established under clause (iii).
``(5) Qualifying carbon dioxide removal project.--The term
`qualifying carbon dioxide removal project' means a project--
``(A) which--
``(i) is owned by the taxpayer,
``(ii) is engaged in carbon dioxide removal
through use of a qualifying carbon dioxide
removal approach, and
``(iii) is placed in service at an
established location or set of locations, and
``(B) the construction of which begins before
January 1, 2035.
``(d) Selection of Qualifying Carbon Dioxide Removal Approaches.--
``(1) In general.--Not later than 1 year after date of
enactment of this section, the Secretary, in consultation with
the Secretary of Energy, shall establish a selection process to
determine qualifying carbon dioxide removal approaches pursuant
to the requirements in subsection (c)(4).
``(2) Initial list.--Not later than 18 months after date of
enactment of this section, the Secretary, in consultation with
the Secretary of Energy, shall, pursuant to the process
described in paragraph (1), compile and publish an initial list
of qualifying carbon dioxide removal approaches according to
requirements in subsection (c)(4).
``(3) Update.--Not later than 1 year after the publication
of the list described in paragraph (2) and annually thereafter,
the Secretary, in consultation with the Secretary of Energy,
shall, pursuant to the process described in paragraph (1),
compile and publish any additional qualifying carbon dioxide
removal approaches according to requirements in subsection
(c)(4).
``(e) Determination of Amount of Net Carbon Dioxide Removal.--
``(1) In general.--Not later than 1 year after date of
enactment of this section, the Secretary, in consultation with
the Secretary of Energy and the Administrator of the
Environmental Protection Agency, shall establish a process for
taxpayers to determine and publicly report net carbon dioxide
removal through a qualifying carbon dioxide removal project, as
determined based on--
``(A) project-level greenhouse gas lifecycle
analysis, and
``(B) project-level monitoring, reporting, and
verification.
``(2) Lifecycle analysis.--For purposes of paragraph
(1)(A), the project-level greenhouse gas lifecycle analysis
shall--
``(A) be based on protocols which are subject to
such requirements as are determined by the Secretary,
in consultation with the Secretary of Energy and
Administrator of the Environmental Protection Agency,
to be appropriate,
``(B) include all processes and activities
associated with the capture and storage of carbon
dioxide, including--
``(i) any mass and energy inputs and
outputs from raw materials, including biomass
feedstocks, manufacture, transport, storage,
sale, use and disposal,
``(ii) land use change and other ecosystem
perturbations, and
``(iii) long-term retention of carbon
dioxide,
``(C) calculate net carbon dioxide removal,
including accounting for uncertainty associated with
the estimate of net carbon dioxide removal, and
``(D) only exclude any process from such analysis
if such process does not significantly change the
outcome of such analysis, with such exclusion to be
noted and justified.
``(3) Monitoring, reporting, and verification.--For
purposes of paragraph (1)(B), the project-level monitoring,
reporting, and verification shall--
``(A) be based on protocols which are subject to
such requirements as are determined by the Secretary,
in consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
to be appropriate,
``(B) include the use of independent third-party
verifiers (as certified by the Secretary), and
``(C) quantify uncertainty associated with
measurements and the resulting estimate of net carbon
dioxide removal.
``(4) Goals.--The process established under paragraph (1)
shall seek to--
``(A) to the greatest extent possible, identify
best available tools, models, or default values for
embodied emissions in order to facilitate consistency
and comparability across qualified carbon dioxide
removal approaches with respect to--
``(i) project-level greenhouse gas
lifecycle analysis,
``(ii) project-level monitoring, reporting,
and verification, and
``(iii) determination of net carbon dioxide
removal,
``(B) include reporting requirements which
facilitate transparency and evaluation of the net
carbon dioxide removal claimed by the taxpayer, and
``(C) take into account best practices from other
carbon dioxide removal accounting programs in order to
minimize inefficiencies and conflicting procedures.
``(5) Review.--
``(A) In general.--Not later than 3 years after
date of enactment of this section, and every 3 years
thereafter, the Secretary, in consultation with the
Secretary of Energy and the Administrator of the
Environmental Protection Agency--
``(i) shall conduct an panel-based review
by external experts (which may include
representatives from government, academia,
civil society, and the private sector) of the
process established under paragraph (1) to
improve the requirements for greenhouse gas
lifecycle analysis and monitoring, reporting,
and verification based on the best available
science at the time of such review, and
``(ii) based on the review described in
clause (i), may adjust any requirements
applicable under this subsection.
``(B) Application of updated requirements.--Any
adjustment under subparagraph (A)(ii) with respect to
determination of net carbon dioxide removal shall only
apply to taxable years beginning after the date of such
adjustment.
``(f) Special Rules.--
``(1) Only carbon dioxide removal within the united states
taken into account.--The credit under this section shall apply
only with respect to carbon dioxide removal which is within--
``(A) the United States (within the meaning of
section 638(1)),
``(B) a possession of the United States (within the
meaning of section 638(2)), or
``(C) any marine environment which is subject to
regulation by the United States.
``(2) Ownership interests.--In the case of a qualifying
carbon dioxide removal project in which more than 1 person has
an ownership interest, except to the extent provided in
regulations prescribed by the Secretary, net carbon dioxide
removal achieved by such project shall be allocated among such
persons in proportion to their respective ownership interests
with respect to the gross net carbon dioxide removal from such
project.
``(3) Coordination with other credits.--
``(A) Carbon oxide sequestration credit.--No credit
shall be allowed under this section with respect to any
qualifying carbon dioxide removal project for any
taxable year for which a credit determined under
section 45Q is allowed under section 38 for such
taxable year.
``(B) Qualifying advanced energy project credit.--
No credit shall be allowed under this section with
respect to any qualifying carbon dioxide removal
project for which a credit determined under section 48C
is allowed under section 38 for the taxable year or any
prior taxable year.
``(C) Special rule for qualified carbon dioxide
removal projects integrated with clean energy
generation.--
``(i) In general.--In the case of any
qualifying carbon dioxide removal project which
produces electricity, hydrogen, or fuel as an
output of its qualifying carbon dioxide removal
approach, no credit shall be allowed with
respect to such electricity, hydrogen, or fuel
under section 40B, 45, 45V, 45Y, or 45Z unless
such electricity, hydrogen, or fuel is consumed
by such qualifying carbon dioxide removal
project.
``(ii) Energy credit and clean electricity
investment credit.--In the case of any
qualifying carbon dioxide removal project which
includes--
``(I) any energy property (as
defined in section 48(a)(3)) which
produces electricity or hydrogen from
the process of carbon dioxide removal,
or
``(II) any qualified facility (as
defined in section 48E(b)(3)) which
produces electricity or hydrogen from
the process of carbon dioxide removal,
no credit shall be allowed under section 48 or
48E with respect to such energy property or
qualified facility.''.
(b) Elective Payment and Transfer of Credit.--
(1) Elective payment.--Section 6417 of the Internal Revenue
Code of 1986 is amended--
(A) in subsection (b)--
(i) by designating paragraphs (10) through
(12) as paragraphs (11) through (13),
respectively, and
(ii) by inserting after paragraph (9) the
following:
``(10) The carbon dioxide removal credit under section
45BB.'', and
(B) in subsection (d)(1)--
(i) in subparagraph (E), by striking ``(C),
or (D)'' each place it appears and inserting
``(C), (D), or (E)'',
(ii) by redesignating subparagraph (E) (as
amended by clause (i)) as subparagraph (F), and
(iii) by inserting after subparagraph (D)
the following:
``(E) Election with respect to carbon dioxide
removal credit.--
``(i) In general.--If a taxpayer other than
an entity described in subparagraph (A) makes
an election under this subparagraph with
respect to any taxable year in which such
taxpayer has, after December 31, 2024, placed
in service any qualifying carbon dioxide
removal project (as defined in section
45BB(c)), such taxpayer shall be treated as an
applicable entity for purposes of this section
for such taxable year, but only with respect to
the credit described in subsection (b)(10).
``(ii) Limitation.--
``(I) In general.--Except as
provided in subclause (II), if a
taxpayer makes an election under this
subparagraph with respect to any
taxable year, such taxpayer shall be
treated as having made such election
for each of the 11 succeeding taxable
years.
``(II) Exception.--A taxpayer may
elect to revoke the application of the
election made under this subparagraph
to any taxable year described in
subclause (I). Any such election, if
made, shall apply to the applicable
year specified in such election and
each subsequent taxable year within the
period described in subclause (I). Any
election under this subclause may not
be subsequently revoked.''.
(2) Transfer.--Section 6418(f)(1)(A) of the Internal
Revenue Code of 1986 is amended by adding at the end the
following:
``(xii) The carbon dioxide removal credit
under section 45BB.''.
(c) Credit To Be Part of General Business Credit.--Section 38(b) of
the Internal Revenue Code of 1986, as amended by sections 13105, 13701,
and 13704 of Public Law 117-169, is amended by striking ``plus'' at the
end of paragraph (40), by striking the period at the end of paragraph
(41) and inserting ``, plus'', and by adding at the end the following
new paragraph:
``(42) the carbon dioxide removal credit determined under
section 45BB(a).''.
(d) Conforming Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by inserting after the item relating to section 45AA
the following new item:
``Sec. 45BB. Technology-neutral credit for carbon dioxide removal.''.
(e) Effective Date.--The amendments made by this Act shall apply to
property placed in service after December 31, 2024.
<all>