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S. 986: Carbon Capture, Utilization, and Storage Tax Credit Amendments Act of 2021


The text of the bill below is as of Mar 25, 2021 (Introduced).


II

117th CONGRESS

1st Session

S. 986

IN THE SENATE OF THE UNITED STATES

March 25, 2021

(for herself, Mrs. Capito, Mr. Whitehouse, Mr. Cramer, Mr. Schatz, Mr. Hoeven, Mr. Manchin, Mr. Barrasso, Mr. Coons, Mr. Grassley, Mr. Luján, Ms. Ernst, Mr. Durbin, and Ms. Klobuchar) 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 provide for a 5-year extension of the carbon oxide sequestration credit, and for other purposes.

1.

Short title

This Act may be cited as the Carbon Capture, Utilization, and Storage Tax Credit Amendments Act of 2021.

2.

Extension of credit for carbon oxide sequestration

Section 45Q(d)(1) of the Internal Revenue Code of 1986 is amended by striking January 1, 2026 and inserting January 1, 2031.

3.

Elective payment for carbon oxide sequestration and qualifying advanced coal projects

(a)

In general

Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

6431.

Elective payment for carbon oxide sequestration and qualifying advanced coal projects

(a)

Energy property

In the case of a taxpayer making an election (at such time and in such manner as the Secretary may provide) under this section with respect to any portion of—

(1)

a carbon oxide sequestration credit which would (without regard to this section) be determined under section 45Q with respect to such taxpayer, or

(2)

a qualifying advanced coal project credit which would (without regard to this section) be determined under section 48A with respect to such taxpayer,

such taxpayer shall be treated as making a payment against the tax imposed by subtitle A for the taxable year equal to the amount of such portion.
(b)

Timing

The payment described in subsection (a) shall be treated as made on the later of the due date of the return of tax for such taxable year or the date on which such return is filed.

(c)

Exclusion from gross income

Gross income of the taxpayer shall be determined without regard to this section.

(d)

Denial of double benefit

Solely for purposes of section 38, in the case of a taxpayer making an election under this section, the carbon oxide sequestration credit determined under section 45Q or the qualifying advanced coal project credit determined under section 48A shall be reduced by the amount of the portion of such credit with respect to which the taxpayer makes such election.

(e)

Special rules

In the case of a taxpayer making an election under this section with respect to the qualifying advanced coal project credit determined under section 48A, the credit subject to such an election shall be determined notwithstanding—

(1)

section 50(b)(3), and

(2)

in the case of any entity described in section 50(b)(4)(A)(i), section 50(b)(4).

.

(b)

Special rule for proceeds of transfers for mutual or cooperative electric companies

Section 501(c)(12)(I) of the Internal Revenue Code of 1986 is amended by inserting or 6431(a) after section 45J(e)(1).

(c)

Clerical amendment

The table of sections for subchapter B of chapter 65 of such Code is amended by adding at the end the following new item:

Sec. 6431. Elective payment for carbon oxide sequestration and qualifying advanced coal projects.

.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.

4.

Allowance of certain carbon sequestration credits against the base erosion minimum tax

(a)

In general

Section 59A(b)(1)(B)(ii) of the Internal Revenue Code of 1986 is amended by striking plus and the end of subclause (I), by redesignating subclause (II) as subclause (IV), and by inserting after subclause (I) the following new subclauses:

(II)

the credit allowed under section 38 for the taxable year which is properly allocable to the carbon dioxide sequestration credit determined under section 45Q(a),

(III)

the credit allowed under section 38 for the taxable year which is properly allocable to the investment credit determined under section 46, but only to the extent properly allocable to the qualifying advanced coal project credit determined under section 48A, plus

.

(b)

Application to taxable years beginning after 2025

Subparagraph (B) of section 59A(b)(2) of the Internal Revenue Code of 1986 is amended to read as follows:

(B)

by applying subparagraph (B)(ii) thereof without regard to subclauses (I) and (IV).

.

(c)

Effective date

The amendments made by this section shall apply to base erosion payments (as defined in section 59A(d) of the Internal Revenue Code of 1986) paid or incurred in taxable years beginning after December 31, 2017.

5.

Modifications of qualifying advanced coal project credit

(a)

Sequestration requirement for certain equipment

Section 48A(e)(1)(G) of the Internal Revenue Code of 1986 is amended by inserting and 60 percent in the case of an application for a reallocation of credits under subsection (d)(4) with respect to an electrical generating unit in existence on October 3, 2008 after under subsection (d)(4).

(b)

Nameplate generating capacity requirement

Section 48A(e)(1)(C) of such Code is amended by striking 400 megawatts and inserting 200 megawatts.

(c)

Advanced coal-Based generation technology requirements

(1)

In general

Section 48A(f)(1) of such Code is amended by striking generation technology if— and all that follows through the unit is designed and inserting generation technology if the unit is designed.

(2)

Conforming amendments

Section 48A(f) of such Code is amended—

(A)

by striking all that precedes the purpose of this section and inserting the following:

(f)

Advanced coal-Based generation technology

For

,

(B)

by striking in subparagraph (B) in the second sentence and inserting in this subsection, and

(C)

by striking paragraphs (2) and (3).

(d)

Performance requirements in case of best available control technology

Section 48A(f) of such Code, as amended by this Act, is amended by adding at the end the following: In the case of a retrofit of a unit which has undergone a best available control technology analysis after August 8, 2005, with respect to the removal or emissions of any pollutant which is SO2 or NOx, the removal or emissions design level with respect to such pollutant shall be the level determined in such analysis..

(e)

Clarification of reallocation authority

Section 48A(d)(4) of the Internal Revenue Code of 1986 is amended—

(1)

in subparagraph (A)—

(A)

by striking Not later than 6 years after the date of enactment of this section, the and inserting The, and

(B)

by inserting and every 6 months thereafter until all credits available under this section have been allowed after the date which is 6 years after the date of enactment of this section,

(2)

in subparagraph (B)—

(A)

by striking may reallocate credits available under clauses (i) and (ii) of paragraph (3)(B) and inserting shall reallocate credits remaining available under paragraph (3),

(B)

by striking or at the end of clause (i), and

(C)

by striking clause (ii) and inserting the following:

(ii)

any applicant for certification which submitted an accepted application has subsequently failed to satisfy the requirements under paragraph (2)(D), or

(iii)

any certification made pursuant to paragraph (2) has been revoked pursuant to paragraph (2)(E).

, and

(3)

in subparagraph (C)—

(A)

by striking clause (i) or (ii) of paragraph (3)(B) and inserting paragraph (3),

(B)

by striking is authorized to and inserting shall, and

(C)

by striking an additional program and inserting additional programs.

(f)

Effective date

(1)

In general

Except as provided in paragraph (2), the amendments made by this section shall apply to allocations and reallocations after the date of the enactment of this Act.

(2)

Reallocation

The amendments made by subsection (e) shall apply to credits remaining available under section 48A(d)(3) of the Internal Revenue Code of 1986 on the date of the enactment of this Act.

6.

Enhancement of carbon oxide sequestration credit for direct air capture facilities

(a)

In general

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

(1)

in subsection (b)(1)—

(A)

in subparagraph (A), by striking The applicable dollar amount and inserting Subject to subparagraph (B), the applicable dollar amount, and

(B)

by striking subparagraph (B) and inserting the following:

(B)

Special rule for direct air capture facilities

(i)

In general

Subject to clause (ii), for any taxable year beginning in a calendar year after 2021, in the case of any qualified facility described in subsection (d)(2)(C), the applicable dollar amount shall be an amount equal to—

(I)

for purposes of paragraph (3) of subsection (a), an amount equal to the product of $120 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting 2020 for 1990, and

(II)

for purposes of paragraph (4) of such subsection, an amount equal to the product of $75 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting 2020 for 1990.

(ii)

Use in enhanced oil or natural gas recovery project

For any taxable year beginning in a calendar year after 2030, this subparagraph shall not apply with respect to any qualified carbon oxide which is used by the taxpayer in a manner described in subsection (a)(4)(B)(i).

(C)

Rounding

The applicable dollar amount determined under subparagraph (A) or (B) shall be rounded to the nearest cent.

, and

(2)

in subsection (d)(2)—

(A)

in subparagraph (B), by striking or at the end, and

(B)

by striking subparagraph (C) and inserting the following:

(C)

in the case of a direct air capture facility, not less than 10,000 metric tons of qualified carbon oxide during the taxable year, or

(D)

in the case of any facility not described in subparagraph (A), (B), or (C), not less than 100,000 metric tons of qualified carbon oxide during the taxable year.

.

(b)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.