[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1842 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1842
To amend the Internal Revenue Code of 1986 to create a credit for
carbon removal and storage for forest residues from wildfire
management.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 21, 2025
Mr. Whitehouse (for himself and Mr. Schiff) 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 create a credit for
carbon removal and storage for forest residues from wildfire
management.
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 ``Wildfire Reduction and Carbon
Removal Act of 2025''.
SEC. 2. CREDIT FOR FOREST RESIDUE CARBON REMOVAL AND STORAGE.
(a) 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:
``SEC. 45BB. FOREST RESIDUE CARBON REMOVAL AND STORAGE.
``(a) General Rule.--For purposes of section 38, the forest residue
carbon removal and storage credit for any taxable year is an amount
equal to the applicable dollar amount per metric ton of qualified
carbon dioxide equivalent which is--
``(1) captured by the taxpayer from qualified forest
residue biomass using biomass equipment which was originally
placed in service at a qualified forest residue biomass carbon
removal and storage project on or after the date of the
enactment of the Wildfire Reduction and Carbon Removal Act of
2025, and
``(2) stored by the taxpayer in secure geological storage
or via long-duration utilization.
``(b) Applicable Dollar Amount.--For purposes of this section--
``(1) In general.--The applicable dollar amount is--
``(A) $36, in the case of qualified carbon dioxide
equivalent stored in secure geological storage, and
``(B) $12, in the case of qualified carbon dioxide
equivalent stored via long-duration utilization.
``(2) Adjustment for inflation.--In the case of any taxable
year beginning in a calendar year after 2026, the $36 and $12
amounts under paragraph (1) shall each be multiplied by the
inflation adjustment factor determined under section
43(b)(3)(B) for such calendar year, determined by substituting
`2025' for `1990'.
``(3) Increased credit amount for certain facilities.--
``(A) In general.--In the case of qualified carbon
dioxide equivalent which is described in subsection
(a)(1) and which meets the requirements of paragraphs
(3) and (4) of section 45Q(h) (determined after
application of the modifications described in
subparagraph (B)), the amount applicable shall be equal
to such amount (determined without regard to this
paragraph) multiplied by 5.
``(B) Modifications.--The modifications described
in this subparagraph are as follows:
``(i) In section 45Q(h)(3)(A), the term
`qualified forest residue biomass carbon
removal and storage project' shall be
substituted for `qualified facility' each place
it appears, and `such project' shall be
substituted for `such facility' each place it
appears.
``(ii) In section 45Q(h)(3)(A), the term
`biomass equipment' shall be substituted for
`carbon capture equipment' in the matter before
subparagraph (A).
``(iii) In section 45Q(h)(3)(A)(ii), by
disregarding the phrase `for any portion of
such taxable year which is within the period
described in paragraph (3)(A) or (4)(A) of
subsection (a)'.
``(c) Installation of Additional Biomass System Equipment at
Existing Project.--In the case of a qualified forest residue biomass
carbon removal and storage project placed in service before the date of
the enactment of the Wildfire Reduction and Carbon Removal Act of 2025
at which additional biomass equipment is placed in service on or after
the date of the enactment of such Act, the amount of captured qualified
carbon dioxide equivalent taken into account for purposes of subsection
(a) is an amount (not less than zero) equal to the excess of--
``(1) the total amount of qualified carbon dioxide
equivalent captured at such project for the taxable year, over
``(2) the total amount of the carbon dioxide equivalent
capture capacity of the qualified forest residue biomass
project in service at such project on the day before the date
of the enactment of such Act.
``(d) Qualified Carbon Dioxide Equivalent.--For purposes of this
section, the term `qualified carbon dioxide equivalent' means the net
metric tons of carbon dioxide equivalent which--
``(1) is captured through the disposal or utilization of
the carbon embodied in qualified forest residue biomass, and
``(2) is measured and verified at the point of disposal or
utilization based on, in accordance with the rules of
subsection (f)--
``(A) project-level lifecycle analysis of
greenhouse gas emissions, and
``(B) project-level monitoring, reporting, and
verification.
``(e) Qualified Forest Residue Biomass Carbon Removal and Storage
Project.--For purposes of this section--
``(1) In general.--
``(A) In general.--The term `qualified forest
residue biomass carbon removal and storage project'
means any project which--
``(i) uses biomass equipment to store
qualified carbon dioxide equivalent in secure
geological storage or via long-duration
utilization, and
``(ii) stores not less than 1,000 metric
tons of qualified carbon dioxide equivalent as
described in clause (i) during the taxable
year.
``(B) Aggregation of facilities.--The term
`qualified forest residue biomass carbon removal and
storage project' may include multiple facilities which
may be aggregated in order to meet the requirement of
subparagraph (A)(ii).
``(2) Qualified forest residue biomass.--The term
`qualified forest residue biomass' means forest residues from
the thinning of trees no greater than 8 inches in diameter at
breast height and other residues (such as limbs and bark)
which--
``(A) meet sustainability standards issued pursuant
to section 2(f) of the Wildfire Reduction and Carbon
Removal Act of 2025, and
``(B) are produced from wildfire hazard reduction
or ecological restoration activities identified--
``(i) in a final United States Forest
Service Land Management Plan or Bureau of Land
Management Resource Management Plan, or
``(ii) by the United States Forest Service
as occurring in firesheds with significant
wildfire hazard potential and vegetation
departure.
``(f) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Secure geological storage.--Carbon dioxide equivalent
shall be treated as stored in secure geological storage only if
such carbon dioxide equivalent is stored in such wells or
underground storage mechanisms, including injection of bio-
liquids or bio-solids or engineered burial of biomass,
appropriate to the type of biomass carbon removal as the
Secretary shall identify in consultation with the Secretary of
Energy and the Administrator of the Environmental Protection
Agency as having demonstrated the capability to store such
carbon dioxide equivalent securely for at least a 1,000-year
period.
``(2) Long-duration utilization.--Carbon dioxide equivalent
shall be treated as stored via long-duration utilization if
such carbon dioxide equivalent is stored in the form of
biochar, durable building materials, or other products which
remove carbon, which are determined by the Secretary in
collaboration with the entities described in paragraph (1) to
have demonstrated the capability to store such carbon dioxide
equivalent securely for at least a 100-year period, as
calculated based on a lifecycle analysis.
``(3) Biomass equipment.--The term `biomass equipment'
means any equipment used at a qualified forest residue biomass
carbon removal and storage project to dispose of qualified
forest residue biomass.
``(4) Credit not allowed for enhanced recovery
operations.--No credit shall be allowed under subsection (a)
with respect to qualified carbon dioxide equivalent which is
used by the taxpayer as a tertiary injectant in an enhanced oil
or natural gas recovery project.
``(5) Coordination with other credits.--
``(A) In general.--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 or 48C is allowed
for such taxable year.
``(B) 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 the production of 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.
``(6) Only qualified carbon dioxide equivalent 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 equivalent the capture and
storage or disposal 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)).
``(7) 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 the person that owns the biomass
equipment and physically or contractually ensures the
capture and storage or disposal of the qualified carbon
dioxide equivalent.
``(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
stores or disposes of the qualified carbon
dioxide equivalent, and
``(ii) shall not be allowable to the person
described in subparagraph (A).
``(8) 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 equivalent which ceases to be stored or disposed of in
a manner consistent with the requirements of this section.
``(9) Credit reduced for tax-exempt bonds.--Rules similar
to the rule under section 45(b)(3) shall apply for purposes of
this section.
``(g) Guidance.--Not later than January 1, 2026, the Secretary
shall issue guidance regarding implementation of this section,
including standards on qualified forest residue biomass and
determination of net qualified dioxide equivalent removals under this
section.''.
(b) Credit To Be Part of General Business Credit.--Subsection (b)
of section 38 of the Internal Revenue Code of 1986 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 forest residue carbon removal and storage credit
determined under section 45BB(a).''.
(c) Elective Payment and Transfer of Credit.--
(1) Elective payment.--Subsection (b) of section 6417 of
the Internal Revenue Code of 1986 is amended by adding at the
end the following new paragraph:
``(13) The forest residue carbon removal and storage credit
determined under section 45BB(a).''.
(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 forest residue carbon removal
and storage credit determined under section
45BB(a).''.
(d) Clerical 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 adding at the end the following new item:
``Sec. 45BB. Forest residue carbon removal and storage.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2025.
(f) Sustainability Standards Rulemaking and Public Comment
Period.--
(1) Rulemaking authority.--The Secretary of the Treasury,
in consultation with the Secretary of Agriculture and the
Secretary of the Interior, shall issue regulations to establish
sustainability standards for the identification of qualified
forest residue biomass for purposes of the forest residue
carbon removal and storage tax credit established by this
section. Such regulations shall--
(A) using the best available science, including the
2023 Wildfire Hazard Potential map produced by the
Forest Service Fire Modeling Institute and the 2023
Vegetation Condition Class categorization produced by
the Landscape Fire and Resource Management Planning
Tools program, identify firesheds with significant
wildfire hazard potential and vegetation departure from
a fire-adapted historical baseline from which qualified
forest residue biomass can be sourced;
(B) identify regional and ecosystem-specific
requirements to limit eligibility to practices and
sites which--
(i) have minimal negative impacts on soil
quality, soil fertility, soil erosion, soil
carbon sequestration, and site productivity;
(ii) have minimal negative impacts on
biodiversity, including soil microbiota,
plants, and animals;
(iii) have minimal negative impacts on
water quality and hydrological functioning;
(iv) have minimal impacts on reducing or
displacing food production; and
(v) have minimal substitution for existing
economic uses of forest products, including
considering reducing the maximum diameter of
thinned trees considered to be qualified forest
residue biomass; and
(C) consider direct and indirect impacts of biomass
sourcing and harvest.
(2) Public comment requirement.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of
the Treasury shall publish in the Federal Register proposed
regulations that include sustainability standards for the
forest residue carbon removal and storage tax credit.
(3) Public comment period.--
(A) Duration.--The Secretary shall provide for a
period of not less than 60 days after the date of
publication of the proposed regulations during which
the public may submit comments on the proposed
regulations.
(B) Consideration of comments.--The Secretary shall
consider all comments received during the public
comment period before issuing final regulations.
(4) Final regulations.--The Secretary shall issue final
regulations and establish sustainability standards for the
carbon removal tax credit established under this section not
later than 90 days after the close of the public comment
period, taking into account feedback from the public and
stakeholders.
(5) Consideration of revision.--Every 5 years, the
Secretary shall provide for a public comment period to consider
whether the sustainability standards should be updated to
reflect latest science. The Secretary shall consider all
comments received during the public comment period before
determining whether to update the regulations under the same
procedures as used to issue the original standards.
(g) Carbon Determination Rulemaking and Public Comment Period.--
(1) Rulemaking authority.--The Secretary of the Treasury,
in consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency, shall
issue regulations to establish greenhouse gas lifecycle
analysis requirements and monitoring, reporting, and
verification requirements to determine qualified carbon dioxide
equivalent for the implementation of the forest residue carbon
removal and storage tax credit established by this section.
These regulations shall seek to--
(A) to the greatest extent possible, identify best
available tools, models, or default values for embodied
or lifecycle 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 and verification requirements
which facilitate transparency and evaluation of the net
carbon dioxide removal claimed by the taxpayer; and
(C) take into account best practices and
requirements from other carbon dioxide removal
accounting programs in order to minimize inefficiencies
and conflicting procedures.
(2) Lifecycle analysis.--Under the proposed regulations,
the project-level greenhouse gas lifecycle analysis shall--
(A) include all processes, activities, and
greenhouse gas emissions associated with the capture,
storage, and utilization of carbon dioxide equivalent,
including--
(i) any mass and energy inputs and outputs
from raw or processed materials, including
biomass feedstock production, manufacture,
processing, transport, storage, use, and
disposal;
(ii) direct land use change, estimated
indirect land use change, and other ecosystem
perturbations that affect carbon uptake of
forests; and
(iii) long-term retention of carbon
dioxide;
(B) 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;
(C) calculate net carbon dioxide equivalent
removal, including accounting for uncertainty
associated with the estimate of net carbon dioxide
removal and taking into account any estimated losses
during carbon storage over a 100-year period; and
(D) be consistent with the Best Practices for Life
Cycle Assessment of Biomass Carbon Removal and Storage
Technologies issued by the Department of Energy on
January 17, 2025.
(3) Monitoring, reporting, and verification.--Under the
proposed regulations, the project-level monitoring, reporting,
and verification shall--
(A) develop traceability requirements to verify the
source and proportion of qualified forest residue
biomass used in a project;
(B) utilize independent third-party verifiers and
protocols for monitoring, reporting, and verification;
(C) quantify uncertainty associated with
measurements and the resulting estimate of net carbon
dioxide removal; and
(D) include requirements for continued monitoring
of the qualified project for a period determined by the
Secretary, in consultation with the Secretary of Energy
and the Administrator of the Environmental Protection
Agency, to be appropriate.
(4) Public comment requirement.--Not later than 6 months
after the date of the enactment of this Act, the Secretary of
the Treasury shall publish in the Federal Register proposed
regulations that include lifecycle analysis and monitoring,
reporting, and verification requirements for the forest residue
carbon removal and storage tax credit.
(5) Public comment period.--
(A) Duration.--The Secretary shall provide for a
period of not less than 60 days after the date of
publication of the proposed regulations during which
the public may submit comments on the proposed
regulations.
(B) Consideration of comments.--The Secretary shall
consider all comments received during the public
comment period before issuing final regulations.
(6) Final regulations.--The Secretary shall issue final
regulations and establish lifecycle analysis and monitoring,
reporting, and verification for the carbon removal tax credit
established under this section not later than 90 days after the
close of the public comment period, taking into account
feedback from the public and stakeholders.
(7) Consideration of revision.--Every 5 years, the
Secretary shall provide for a public comment period to consider
whether the lifecycle analysis and monitoring, reporting, and
verification requirements should be updated to reflect latest
science. The Secretary shall consider all comments received
during the public comment period before determining whether to
update the regulations under the same procedures as used to
issue the original requirements.
(h) Secure Geological Storage Regulations.--The Secretary of the
Treasury, in consultation with the Administrator of the Environmental
Protection Agency and the Secretary of Energy, shall establish
regulations for determining adequate security measures for the
geological storage of qualified carbon dioxide equivalent in the form
of injection of bio-liquids or bio-solids or engineered burial of
biomass for purposes of section 45BB of the Internal Revenue Code of
1986 such that the qualified carbon dioxide equivalent does not escape
into the atmosphere over a 1,000-year period.
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