Carbon Capture Act

Summary: Carbon Capture Act  This bill amends the Internal Revenue Code to extend and modify the tax credit for carbon dioxide (CO2) sequestration. The bill modifies the credit to:   allow certain new industrial or direct air capture facilities to qualify for the credit if construction begins before 2024;   allow qualified projects to claim the credit for 15 years, beginning on the date the equipment was originally placed in service;   increase the credit amounts for certain projects placed in service upon or after the enactment of this bill;  expand the purposes for which captured CO2 may be used; modify the requirements for the amount of CO2 that must be captured;   specify that the 75 million metric ton cap on the CO2 that may qualify for the credit applies only to projects placed in service before the enactment of this bill;   allow the credit to be transferred from the entity that owns and uses the capture equipment to the entity that disposes of or uses the CO2; and allow certain facilities that were placed in service after 2015 and have not previously claimed the credit to be treated as placed in service on the date of the enactment of this bill.  

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Carbon Capture Act''.

SEC. 2. EXTENSION OF ENHANCED CARBON DIOXIDE SEQUESTRATION CREDIT.

    (a) In General.--Section 45Q of the Internal Revenue Code of 1986 
is amended to read as follows:

``SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

    ``(a) General Rule.--For purposes of section 38, the carbon dioxide 
sequestration credit for any taxable year is an amount equal to the sum 
of--
            ``(1) $20 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility before the date of the enactment of 
                the Carbon Capture Act, and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage and not used by the taxpayer as 
                described in paragraph (2)(B),
            ``(2) $10 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility before the date of the enactment of 
                the Carbon Capture Act, and
                    ``(B)(i) 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
                    ``(ii) utilized by the taxpayer in a manner 
                described in subsection (e)(7),
            ``(3) the applicable dollar amount per metric ton of 
        qualified carbon dioxide which is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility on or after the date of the 
                enactment of the Carbon Capture Act, during the 15-year 
                period beginning on the date the equipment was 
                originally placed in service, and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage and not used by the taxpayer as 
                described in paragraph (4)(B), and
            ``(4) the applicable dollar amount per metric ton of 
        qualified carbon dioxide which is--
                    ``(A) captured by the taxpayer using carbon capture 
                equipment which is originally placed in service at a 
                qualified facility on or after the date of the 
                enactment of the Carbon Capture Act, during the 15-year 
                period beginning on the date the equipment was 
                originally placed in service, and
                    ``(B)(i) 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
                    ``(ii) utilized by the taxpayer in a manner 
                described in subsection (e)(7).
A taxpayer that captures qualified carbon dioxide as provided under 
paragraph (1), (2), (3) or (4) and that enters into contractual 
arrangements with another person to ensure the disposal, use, or 
utilization required under paragraph (1), (2), (3) or (4), as the case 
may be, shall be treated as having disposed, captured, or used such 
qualified carbon dioxide to the extent disposed, captured, or used by 
such other persons pursuant to such contractual arrangements.
    ``(b) Applicable Dollar Amount; Additional Equipment; Election.--
            ``(1) Applicable dollar amount.--For purposes of subsection 
        (a)--
                    ``(A) In general.--The applicable dollar amount 
                shall be an amount equal to--
                            ``(i) for taxable years beginning after 
                        2016 and before 2026, the dollar amount 
                        established by linear interpolation between 
                        $12.83 and $35 for each calendar year during 
                        such period, and
                            ``(ii) for taxable years beginning after 
                        2025, an amount equal to the product of $35 and 
                        the inflation adjustment factor for such 
                        calendar year determined under section 
                        43(b)(3)(B) for such calendar year, determined 
                        by substituting `2024' for `1990'.
                    ``(B) Rounding.--The applicable dollar amount 
                determined under subparagraph (A) shall be rounded to 
                the nearest cent.
            ``(2) Installation of additional carbon capture equipment 
        on existing qualified facility.--In the case of a qualified 
        facility placed in service before the date of the enactment of 
        the Carbon Capture Storage Act, for which additional carbon 
        capture equipment is placed in service on or after the date of 
        the enactment of such Act, the amount of qualified carbon 
        dioxide which is captured by the taxpayer shall be equal to--
                    ``(A) for purposes of paragraphs (1)(A) and (2)(A) 
                of subsection (a), the lesser of--
                            ``(i) the total amount of qualified carbon 
                        dioxide captured at such facility for the 
                        taxable year, or
                            ``(ii) the total amount of the carbon 
                        dioxide capture capacity of the carbon capture 
                        equipment in service at such facility on the 
                        day before the date of the enactment of the 
                        Carbon Capture Act, and
                    ``(B) for purposes of paragraphs (3)(A) and (4)(A) 
                of such subsection, an amount equal to the excess (if 
                any) of--
                            ``(i) the amount described in subparagraph 
                        (A)(i), over
                            ``(ii) the amount described in subparagraph 
                        (A)(ii).
            ``(3) Election.--For purposes of determining the carbon 
        dioxide sequestration credit under this section, a taxpayer may 
        elect to have the dollar amount applicable under paragraph (1) 
        or (2) of subsection (a) apply in lieu of the dollar amounts 
        applicable under paragraph (3) or (4) of such subsection for 
        each metric ton of qualified carbon dioxide which is captured 
        by the taxpayer using carbon capture equipment which is 
        originally placed in service at a qualified facility on or 
        after the date of the enactment of the Carbon Capture Act.
    ``(c) Qualified Carbon Dioxide.--For purposes of this section:
            ``(1) In general.--The term `qualified carbon dioxide' 
        means carbon dioxide or other carbon oxides captured--
                    ``(A)(i) from an industrial source which would 
                otherwise be released into the atmosphere as industrial 
                emission of greenhouse gas, or would otherwise lead to 
                such release, or
                    ``(ii) directly from the ambient air, and
                    ``(B) is measured at the source of capture and 
                verified at the point of disposal, injection, or 
                utilization.
            ``(2) 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 recaptured, recycled, and re-
        injected as part of the enhanced oil and natural gas recovery 
        process.
    ``(d) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means any industrial facility or direct air 
capture facility--
            ``(1) the construction of which begins before January 1, 
        2024, and--
                    ``(A) the original planning and design for such 
                facility includes installation of carbon capture 
                equipment, or
                    ``(B) the construction of carbon capture equipment 
                with respect to such facility begins before such date, 
                and
            ``(2) which captures--
                    ``(A) in the case of a facility which emits not 
                more than 500,000 metric tons of carbon dioxide into 
                the atmosphere during the taxable year, not less than 
                25,000 metric tons of qualified carbon dioxide during 
                the taxable year which is utilized in a manner 
                described in subsection (e)(7), or
                    ``(B) in the case of a facility not described in 
                subparagraph (A), not less than 100,000 metric tons of 
                qualified carbon dioxide during the taxable year.
    ``(e) Special Rules and Other Definitions.--For purposes of this 
section--
            ``(1) Only carbon dioxide captured and secured or used 
        within the united states taken into account.--The credit under 
        this section shall apply only with respect to qualified carbon 
        dioxide the capture and disposal, use, or utilization 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)).
            ``(2) Secure geological storage.--The Secretary, in 
        consultation with the Administrator of the Environmental 
        Protection Agency, the Secretary of Energy, and the Secretary 
        of the Interior, shall establish regulations for determining 
        adequate security measures for the geological storage of 
        qualified carbon dioxide under subsection (a) such that the 
        qualified carbon dioxide does not escape into the atmosphere. 
        Such term shall include storage at deep saline formations, oil 
        and gas reservoirs, and unminable coal seams under such 
        conditions as the Secretary may determine under such 
        regulations.
            ``(3) Tertiary injectant.--The term `tertiary injectant' 
        has the same meaning as when used within section 193(b)(1).
            ``(4) 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.
            ``(5) Credit attributable to taxpayer.--
                    ``(A) In general.--Except as provided subparagraph 
                (B) or in any regulations prescribed by the Secretary, 
                any credit under this section shall be attributable 
                to--
                            ``(i) in the case of qualified carbon 
                        dioxide captured using carbon capture equipment 
                        which is originally placed in service at a 
                        qualified facility before the date of the 
                        enactment of the Carbon Capture Act, the person 
                        that captures and physically or contractually 
                        ensures the disposal, utilization, or use as a 
                        tertiary injectant of such qualified carbon 
                        dioxide, and
                            ``(ii) in the case of qualified carbon 
                        dioxide captured using carbon capture equipment 
                        which is originally placed in service at a 
                        qualified facility on or after the date of the 
                        enactment of the Carbon Capture Act, or with 
                        regard to which an election has been made under 
                        subsection (f)(2), the person that owns the 
                        carbon capture equipment and physically or 
                        contractually ensures the capture and disposal, 
                        utilization, or use as a tertiary injectant of 
                        such qualified carbon dioxide.
                    ``(B) Election.--If the person described in 
                subparagraph (A) makes an election under this 
                subparagraph at such time and in such manner as the 
                Secretary may prescribe by regulations, the credit 
                under this section--
                            ``(i) shall be allowable to the person that 
                        disposes of the qualified carbon dioxide, 
                        utilizes the qualified carbon dioxide, or uses 
                        the qualified carbon dioxide as a tertiary 
                        injectant, and
                            ``(ii) shall not be allowable to the person 
                        described in subparagraph (A).
            ``(6) 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.
            ``(7) Utilization of qualified carbon dioxide.--
                    ``(A) In general.--For purposes of this section, 
                utilization of qualified carbon dioxide means--
                            ``(i) the chemical conversion of such 
                        qualified carbon dioxide to a material or 
                        chemical compound in which such qualified 
                        carbon dioxide is securely stored, or
                            ``(ii) the use of such qualified carbon 
                        dioxide for any other purpose for which a 
                        commercial market exists (other than use as a 
                        tertiary injectant in a qualified enhanced oil 
                        or natural gas recovery project), as determined 
                        by the Secretary.
                    ``(B) Measurement.--For purposes of determining the 
                amount of qualified carbon dioxide utilized by the 
                taxpayer under paragraph (2)(B)(ii) or (4)(B)(ii) of 
                subsection (a), such amount shall be equal to the 
                metric tons of carbon dioxide which the taxpayer 
                demonstrates, based upon an analysis of lifecycle 
                greenhouse gas emissions and subject to such 
                requirements as the Secretary, in consultation with the 
                Secretary of Energy and the Administrator of the 
                Environmental Protection Agency, determines 
                appropriate, were captured and prevented from escaping 
                into the atmosphere through use of a process described 
                in subparagraph (A).
            ``(8) Direct air capture facility.--For purposes of this 
        section, the term `direct air capture facility' means any 
        facility which uses carbon capture equipment to capture carbon 
        from the ambient air. Such a term does not include facilities 
        capturing carbon dioxide that is deliberately released from 
        naturally-occurring subsurface springs.
            ``(9) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2009, there shall be 
        substituted for the dollar amount contained in paragraphs (1) 
        and (2) of subsection (a) an amount equal to the product of--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the inflation adjustment factor for such 
                calendar year determined under section 43(b)(3)(B) for 
                such calendar year, determined by substituting `2008' 
                for `1990'.
    ``(f) Application of Section for Certain Carbon Capture 
Equipment.--
            ``(1) In general.--Except as provided in paragraph (2), in 
        the case of any carbon capture equipment placed in service 
        before the date of the enactment of the Carbon Capture Act, the 
        credit under this section shall apply with respect to qualified 
        carbon dioxide captured using such equipment before the end of 
        the calendar year in which the Secretary, in consultation with 
        the Administrator of the Environmental Protection Agency, 
        certifies that 75,000,000 metric tons of qualified carbon 
        dioxide have been taken into account in accordance with 
        paragraphs (1) and (2) of subsection (a) during the period 
        beginning after October 3, 2008.
            ``(2) Special rule for certain facilities not claiming 
        prior credit.--In the case of any qualified facility--
                    ``(A) which captures not less than 100,000 metric 
                tons of carbon dioxide during the taxable year,
                    ``(B) which is placed in service after December 31, 
                2015, and
                    ``(C) with respect to which no credit has been 
                allowed under this section (as in effect on the day 
                before the date of the enactment of such Act) by any 
                person for any taxable year beginning prior to the date 
                of enactment of such Act,
        the taxpayer may elect to treat such qualified facility as 
        placed in service on the date of enactment of such Act.
    ``(g) Regulations.--The Secretary may prescribe such regulations 
and other guidance as may be necessary or appropriate to carry out this 
section, including regulations or other guidance to--
            ``(1) ensure proper allocation under subsection (a) for 
        qualified carbon dioxide captured by a taxpayer during the 
        taxable year ending after the date of the enactment of the 
        Carbon Capture Act, and
            ``(2) determine whether a facility satisfies the 
        requirements under subsection (d)(1) during such taxable 
        year.''.
    (b) Effective Date.--Except to the extent provided in section 
45Q(f) of such Code, as amended by this Act, the amendments made by 
this section shall apply to property placed in service on after the 
date of the enactment of this Act.