II 

117TH CONGRESS 

1ST SESSION S. 986 

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. 

IN THE SENATE OF THE UNITED STATES 

MARCH 25, 2021 

Ms. SMITH (for herself, Mrs. CAPITO, Mr. WHITEHOUSE, Mr. CRAMER, Mr. 

SCHATZ, Mr. HOEVEN, Mr. MANCHIN, Mr. BARRASSO, Mr. COONS, Mr. 

GRASSLEY, Mr. LUJA ́N, 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 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Carbon Capture, Utili5 zation, and Storage Tax Credit Amendments Act of 

6 2021’’. 


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1 SEC. 2. EXTENSION OF CREDIT FOR CARBON OXIDE SE2 QUESTRATION. 

3 Section 45Q(d)(1) of the Internal Revenue Code of 

4 1986 is amended by striking ‘‘January 1, 2026’’ and in5 serting ‘‘January 1, 2031’’. 

6 SEC. 3. ELECTIVE PAYMENT FOR CARBON OXIDE SEQUES7 TRATION AND QUALIFYING ADVANCED COAL 

8 PROJECTS. 

9 (a) IN GENERAL.—Subchapter B of chapter 65 of the 

10 Internal Revenue Code of 1986 is amended by adding at 

11 the end the following new section: 

12 ‘‘SEC. 6431. ELECTIVE PAYMENT FOR CARBON OXIDE SE13 QUESTRATION AND QUALIFYING ADVANCED 

14 COAL PROJECTS. 

15 ‘‘(a) ENERGY PROPERTY.—In the case of a taxpayer 

16 making an election (at such time and in such manner as 

17 the Secretary may provide) under this section with respect 

18 to any portion of— 

19 ‘‘(1) a carbon oxide sequestration credit which 

20 would (without regard to this section) be determined 

21 under section 45Q with respect to such taxpayer, or 

22 ‘‘(2) a qualifying advanced coal project credit 

23 which would (without regard to this section) be de24 termined under section 48A with respect to such 

25 taxpayer, 


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1 such taxpayer shall be treated as making a payment 

2 against the tax imposed by subtitle A for the taxable year 

3 equal to the amount of such portion. 

4 ‘‘(b) TIMING.—The payment described in subsection 

5 (a) shall be treated as made on the later of the due date 

6 of the return of tax for such taxable year or the date on 

7 which such return is filed. 

8 ‘‘(c) EXCLUSION FROM GROSS INCOME.—Gross in9 come of the taxpayer shall be determined without regard 

10 to this section. 

11 ‘‘(d) DENIAL OF DOUBLE BENEFIT.—Solely for pur12 poses of section 38, in the case of a taxpayer making an 

13 election under this section, the carbon oxide sequestration 

14 credit determined under section 45Q or the qualifying ad15 vanced coal project credit determined under section 48A 

16 shall be reduced by the amount of the portion of such 

17 credit with respect to which the taxpayer makes such elec18 tion. 

19 ‘‘(e) SPECIAL RULES.—In the case of a taxpayer 

20 making an election under this section with respect to the 

21 qualifying advanced coal project credit determined under 

22 section 48A, the credit subject to such an election shall 

23 be determined notwithstanding— 

24 ‘‘(1) section 50(b)(3), and 


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1 ‘‘(2) in the case of any entity described in sec2 tion 50(b)(4)(A)(i), section 50(b)(4).’’. 

3 (b) SPECIAL RULE FOR PROCEEDS OF TRANSFERS

4 FOR MUTUAL OR COOPERATIVE ELECTRIC COMPANIES.— 

5 Section 501(c)(12)(I) of the Internal Revenue Code of 

6 1986 is amended by inserting ‘‘or 6431(a)’’ after ‘‘section 

7 45J(e)(1)’’. 

8 (c) CLERICAL AMENDMENT.—The table of sections 

9 for subchapter B of chapter 65 of such Code is amended 

10 by adding at the end the following new item: 

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

11 (d) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to taxable years beginning after 

13 the date of enactment of this Act. 

14 SEC. 4. ALLOWANCE OF CERTAIN CARBON SEQUESTRATION 

15 CREDITS AGAINST THE BASE EROSION MIN16 IMUM TAX. 

17 (a) IN GENERAL.—Section 59A(b)(1)(B)(ii) of the 

18 Internal Revenue Code of 1986 is amended by striking 

19 ‘‘plus’’ and the end of subclause (I), by redesignating sub20 clause (II) as subclause (IV), and by inserting after sub21 clause (I) the following new subclauses: 

22 ‘‘(II) the credit allowed under 

23 section 38 for the taxable year which 

24 is properly allocable to the carbon diVerDate Sep 11 2014 22:12 Apr 18, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S986.IS S986

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1 oxide sequestration credit determined 

2 under section 45Q(a), 

3 ‘‘(III) the credit allowed under 

4 section 38 for the taxable year which 

5 is properly allocable to the investment 

6 credit determined under section 46, 

7 but only to the extent properly allo8 cable to the qualifying advanced coal 

9 project credit determined under sec10 tion 48A, plus’’. 

11 (b) APPLICATION TO TAXABLE YEARS BEGINNING

12 AFTER 2025.—Subparagraph (B) of section 59A(b)(2) of 

13 the Internal Revenue Code of 1986 is amended to read 

14 as follows: 

15 ‘‘(B) by applying subparagraph (B)(ii) 

16 thereof without regard to subclauses (I) and 

17 (IV).’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to base erosion payments (as de20 fined in section 59A(d) of the Internal Revenue Code of 

21 1986) paid or incurred in taxable years beginning after 

22 December 31, 2017. 


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1 SEC. 5. MODIFICATIONS OF QUALIFYING ADVANCED COAL 

2 PROJECT CREDIT. 

3 (a) SEQUESTRATION REQUIREMENT FOR CERTAIN

4 EQUIPMENT.—Section 48A(e)(1)(G) of the Internal Rev5 enue Code of 1986 is amended by inserting ‘‘and 60 per6 cent in the case of an application for a reallocation of cred7 its under subsection (d)(4) with respect to an electrical 

8 generating unit in existence on October 3, 2008’’ after 

9 ‘‘under subsection (d)(4)’’. 

10 (b) NAMEPLATE GENERATING CAPACITY REQUIRE11 MENT.—Section 48A(e)(1)(C) of such Code is amended by 

12 striking ‘‘400 megawatts’’ and inserting ‘‘200 

13 megawatts’’. 

14 (c) ADVANCED COAL-BASED GENERATION TECH15 NOLOGY REQUIREMENTS.— 

16 (1) IN GENERAL.—Section 48A(f)(1) of such 

17 Code is amended by striking ‘‘generation technology 

18 if—’’ and all that follows through ‘‘the unit is de19 signed’’ and inserting ‘‘generation technology if the 

20 unit is designed’’. 

21 (2) CONFORMING AMENDMENTS.—Section 

22 48A(f) of such Code is amended— 

23 (A) by striking all that precedes ‘‘the pur24 pose of this section’’ and inserting the fol25 lowing: 


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1 ‘‘(f) ADVANCED COAL-BASED GENERATION TECH2 NOLOGY.—For’’, 

3 (B) by striking ‘‘in subparagraph (B)’’ in 

4 the second sentence and inserting ‘‘in this sub5 section’’, and 

6 (C) by striking paragraphs (2) and (3). 

7 (d) PERFORMANCE REQUIREMENTS IN CASE OF

8 BEST AVAILABLE CONTROL TECHNOLOGY.—Section 

9 48A(f) of such Code, as amended by this Act, is amended 

10 by adding at the end the following: ‘‘In the case of a ret11 rofit of a unit which has undergone a best available control 

12 technology analysis after August 8, 2005, with respect to 

13 the removal or emissions of any pollutant which is SO2

14 or NOx, the removal or emissions design level with respect 

15 to such pollutant shall be the level determined in such 

16 analysis.’’. 

17 (e) CLARIFICATION OF REALLOCATION AUTHOR18 ITY.—Section 48A(d)(4) of the Internal Revenue Code of 

19 1986 is amended— 

20 (1) in subparagraph (A)— 

21 (A) by striking ‘‘Not later than 6 years 

22 after the date of enactment of this section, the’’ 

23 and inserting ‘‘The’’, and 

24 (B) by inserting ‘‘and every 6 months 

25 thereafter until all credits available under this 


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1 section have been allowed’’ after ‘‘the date 

2 which is 6 years after the date of enactment of 

3 this section’’, 

4 (2) in subparagraph (B)— 

5 (A) by striking ‘‘may reallocate credits 

6 available under clauses (i) and (ii) of paragraph 

7 (3)(B)’’ and inserting ‘‘shall reallocate credits 

8 remaining available under paragraph (3)’’, 

9 (B) by striking ‘‘or’’ at the end of clause 

10 (i), and 

11 (C) by striking clause (ii) and inserting the 

12 following: 

13 ‘‘(ii) any applicant for certification 

14 which submitted an accepted application 

15 has subsequently failed to satisfy the re16 quirements under paragraph (2)(D), or 

17 ‘‘(iii) any certification made pursuant 

18 to paragraph (2) has been revoked pursu19 ant to paragraph (2)(E).’’, and 

20 (3) in subparagraph (C)— 

21 (A) by striking ‘‘clause (i) or (ii) of para22 graph (3)(B)’’ and inserting ‘‘paragraph (3)’’, 

23 (B) by striking ‘‘is authorized to’’ and in24 serting ‘‘shall’’, and 


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1 (C) by striking ‘‘an additional program’’ 

2 and inserting ‘‘additional programs’’. 

3 (f) EFFECTIVE DATE.— 

4 (1) IN GENERAL.—Except as provided in para5 graph (2), the amendments made by this section 

6 shall apply to allocations and reallocations after the 

7 date of the enactment of this Act. 

8 (2) REALLOCATION.—The amendments made 

9 by subsection (e) shall apply to credits remaining 

10 available under section 48A(d)(3) of the Internal 

11 Revenue Code of 1986 on the date of the enactment 

12 of this Act. 

13 SEC. 6. ENHANCEMENT OF CARBON OXIDE SEQUESTRA14 TION CREDIT FOR DIRECT AIR CAPTURE FA15 CILITIES. 

16 (a) IN GENERAL.—Section 45Q of the Internal Rev17 enue Code of 1986 is amended— 

18 (1) in subsection (b)(1)— 

19 (A) in subparagraph (A), by striking ‘‘The 

20 applicable dollar amount’’ and inserting ‘‘Sub21 ject to subparagraph (B), the applicable dollar 

22 amount’’, and 

23 (B) by striking subparagraph (B) and in24 serting the following: 


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1 ‘‘(B) SPECIAL RULE FOR DIRECT AIR CAP2 TURE FACILITIES.— 

3 ‘‘(i) IN GENERAL.—Subject to clause 

4 (ii), for any taxable year beginning in a 

5 calendar year after 2021, in the case of 

6 any qualified facility described in sub7 section (d)(2)(C), the applicable dollar 

8 amount shall be an amount equal to— 

9 ‘‘(I) for purposes of paragraph 

10 (3) of subsection (a), an amount equal 

11 to the product of $120 and the infla12 tion adjustment factor for such cal13 endar year determined under section 

14 43(b)(3)(B) for such calendar year, 

15 determined by substituting ‘2020’ for 

16 ‘1990’, and 

17 ‘‘(II) for purposes of paragraph 

18 (4) of such subsection, an amount 

19 equal to the product of $75 and the 

20 inflation adjustment factor for such 

21 calendar year determined under sec22 tion 43(b)(3)(B) for such calendar 

23 year, determined by substituting 

24 ‘2020’ for ‘1990’. 


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1 ‘‘(ii) USE IN ENHANCED OIL OR NAT2 URAL GAS RECOVERY PROJECT.—For any 

3 taxable year beginning in a calendar year 

4 after 2030, this subparagraph shall not 

5 apply with respect to any qualified carbon 

6 oxide which is used by the taxpayer in a 

7 manner described in subsection 

8 (a)(4)(B)(i). 

9 ‘‘(C) ROUNDING.—The applicable dollar 

10 amount determined under subparagraph (A) or 

11 (B) shall be rounded to the nearest cent.’’, and 

12 (2) in subsection (d)(2)— 

13 (A) in subparagraph (B), by striking ‘‘or’’ 

14 at the end, and 

15 (B) by striking subparagraph (C) and in16 serting the following: 

17 ‘‘(C) in the case of a direct air capture fa18 cility, not less than 10,000 metric tons of quali19 fied carbon oxide during the taxable year, or 

20 ‘‘(D) in the case of any facility not de21 scribed in subparagraph (A), (B), or (C), not 

22 less than 100,000 metric tons of qualified car23 bon oxide during the taxable year.’’. 


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1 (b) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2021. 

Æ 


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