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[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.
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