II 

113TH CONGRESS 

2D SESSION S. 2288 

To amend the Internal Revenue Code of 1986 to expand existing tax credits 

to encourage the capture, utilization, and sequestration of carbon dioxide. 

IN THE SENATE OF THE UNITED STATES 

MAY 5, 2014 

Mr. ROCKEFELLER 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 expand 

existing tax credits to encourage the capture, utilization, 

and sequestration of carbon dioxide. 

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 ‘‘Expanding Carbon 

5 Capture through Enhanced Oil Recovery Act of 2014’’. 


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1 SEC. 2. EXPANSION OF TAX CREDIT FOR CAPTURE, UTILI2 ZATION, AND SEQUESTRATION OF CARBON 

3 DIOXIDE. 

4 (a) TECHNICAL AMENDMENT.—Section 45Q of the 

5 Internal Revenue Code of 1986 is amended by striking the 

6 section heading and inserting the following: 

7 ‘‘SEC. 45Q–1. STANDARD CARBON DIOXIDE SEQUESTRATION 

8 CREDIT.’’. 

9 (b) EXPANSION OF CARBON DIOXIDE SEQUESTRA10 TION CREDIT.—Subpart D of part IV of subchapter A of 

11 chapter 1 of the Internal Revenue Code of 1986 is amend12 ed by inserting after section 45Q–1, as redesignated by 

13 subsection (a), the following new section: 

14 ‘‘SEC. 45Q–2. COMPETITIVELY BID CARBON DIOXIDE SE15 QUESTRATION CREDIT. 

16 ‘‘(a) ALLOWANCE OF CREDIT.— 

17 ‘‘(1) IN GENERAL.—For purposes of section 38, 

18 the carbon dioxide sequestration credit determined 

19 under this section for any taxable year is equal to 

20 the amount determined under subsection (c)(2) that 

21 is allocated to the qualified facility and certified for 

22 such year for the capture, compression, and trans23 port of qualified carbon dioxide. 

24 ‘‘(2) CREDIT CLAIMED BY TAXPAYER WHO CAP25 TURES, USES, AND DISPOSES OF CARBON DIOX26 IDE.—Except as provided in paragraph (3) and purVerDate Mar 15 2010 22:55 May 05, 2014 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2288.IS S2288

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1 suant to such requirements as are determined appro2 priate by the Secretary, the credit allowed under this 

3 section shall be attributable to the taxpayer who 

4 captured, used (or contracted for use), and disposed 

5 (or contracted for disposal) of the qualified carbon 

6 dioxide. 

7 ‘‘(3) ELECTION TO ALLOW CREDIT TO BE

8 CLAIMED BY TAXPAYER WHO USES AND DISPOSES

9 OF CARBON DIOXIDE.—A taxpayer described in 

10 paragraph (2) may elect, pursuant to such require11 ments as are determined appropriate by the Sec12 retary, to permit the credits allowed under this sec13 tion to be attributable to the person who used and 

14 disposed of the qualified carbon dioxide. 

15 ‘‘(b) GENERAL REQUIREMENTS.— 

16 ‘‘(1) IN GENERAL.—Not later than 12 months 

17 after the date of the enactment of this section and 

18 after providing opportunity for public notice and 

19 comment, the Secretary, in consultation with the 

20 Secretary of Energy, shall establish a process for an21 nual competitive bidding for carbon dioxide seques22 tration credits under this section that includes the 

23 following: 

24 ‘‘(A) Establishment of individual project 

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1 tration credits to different forms of qualified 

2 projects. 

3 ‘‘(B) Annual solicitation of bids for alloca4 tion of carbon dioxide sequestration credits for 

5 qualified projects within each individual project 

6 tranche. 

7 ‘‘(C) Allocation of credits, on a per project 

8 basis, for the applicable crediting period. 

9 ‘‘(D) Allocation of credits in a manner that 

10 ensures a net increase in revenue for the Fed11 eral Government over a reasonable period of 

12 time (as determined by the Secretary). 

13 ‘‘(E) Establishment of procedures for certi14 fying qualified projects that have received an al15 location of carbon dioxide sequestration credits. 

16 ‘‘(2) PURPOSE.—The purpose of this section 

17 is— 

18 ‘‘(A) to reduce the incremental cost of car19 bon dioxide capture, compression, and trans20 port, 

21 ‘‘(B) to accelerate the deployment and ad22 vancement of technologies that capture carbon 

23 dioxide, 


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1 ‘‘(C) to significantly increase domestic oil 

2 production through expansion of enhanced oil 

3 recovery using anthropogenic carbon dioxide, 

4 ‘‘(D) to reduce the amount of anthropo5 genic carbon dioxide that is released into the 

6 atmosphere and contributing to climate change, 

7 and 

8 ‘‘(E) to produce a net increase in revenues 

9 for the Federal Government over a reasonable 

10 period of time from additional tax revenue and 

11 royalties collected on oil recovered through 

12 qualified enhanced oil recovery projects. 

13 ‘‘(c) ANNUAL COMPETITIVE BIDDING AND ALLOCA14 TION OF CREDITS.— 

15 ‘‘(1) APPLICATION PROCESS.— 

16 ‘‘(A) IN GENERAL.—For purposes of the 

17 annual competitive bidding process under this 

18 section, the Secretary shall— 

19 ‘‘(i) solicit bids for allocations of car20 bon dioxide sequestration credits from ap21 plications for qualified projects within each 

22 individual project tranche (as described in 

23 subparagraph (C)), and 


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1 ‘‘(ii) require that an applicant submit2 ting a bid for carbon dioxide sequestration 

3 credits for a qualified project— 

4 ‘‘(I) be limited to bidding within 

5 a single project tranche for the 

6 project, and 

7 ‘‘(II) include as part of their 

8 bid— 

9 ‘‘(aa) subject to subpara10 graph (D), the proposed dollar 

11 amount of the carbon dioxide se12 questration credit per metric ton 

13 of qualified carbon dioxide, and 

14 ‘‘(bb) the projected metric 

15 tonnage of qualified carbon diox16 ide associated with the project 

17 over the crediting period (as de18 fined in subsection (f)(4)). 

19 ‘‘(B) APPLICATION REQUIREMENTS.—An 

20 application under subparagraph (A) shall con21 tain such information as the Secretary may re22 quire in order to make a determination regard23 ing an allotment of carbon dioxide sequestration 

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1 cation shall be protected as provided in section 

2 552(b)(4) of title 5, United States Code. 

3 ‘‘(C) PROJECT TRANCHES.—The Secretary 

4 shall establish 3 individual project tranches for 

5 qualified projects in each of the following cat6 egories: 

7 ‘‘(i) Electric power projects (as de8 scribed in subsection (f)(6)). 

9 ‘‘(ii) First-tranche industrial projects 

10 (as described in subsection (f)(8)). 

11 ‘‘(iii) Second-tranche industrial 

12 projects (as described in subsection 

13 (f)(15)). 

14 ‘‘(D) PER TON MINIMUM AND MAXIMUM.— 

15 The Secretary, in consultation with the Sec16 retary of Energy, shall establish minimum and 

17 maximum dollar amounts for the proposed dol18 lar amount of the carbon dioxide sequestration 

19 credit per metric ton of qualified carbon dioxide 

20 in each project tranche. 

21 ‘‘(2) ALLOCATION OF CREDITS.— 

22 ‘‘(A) IN GENERAL.—Following the receipt 

23 of bids pursuant to the application process de24 scribed in paragraph (1), the Secretary, in con25 sultation with the Secretary of Energy, shall alVerDate Mar 15 2010 22:55 May 05, 2014 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2288.IS S2288

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1 locate carbon dioxide sequestration credits to 

2 qualified projects with each project tranche. 

3 ‘‘(B) ALLOCATION TO LOWEST BIDDER.— 

4 The Secretary shall allocate the carbon dioxide 

5 sequestration credits to qualified projects on the 

6 basis of the proposed dollar amount for the car7 bon dioxide sequestration credit per metric ton 

8 of qualified carbon dioxide contained in the bid 

9 submitted by the applicant, with credits to be 

10 allocated in the order of the lowest submitted 

11 bid. 

12 ‘‘(C) AMOUNT ALLOCATED PER QUALIFIED

13 PROJECT.— 

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

15 (ii), the amount of the carbon dioxide se16 questration credit allocated to a qualified 

17 project shall be equal to the product of— 

18 ‘‘(I) subject to paragraph (1)(D), 

19 the proposed dollar amount of the car20 bon dioxide sequestration credit per 

21 metric ton of qualified carbon dioxide 

22 (as proposed pursuant to paragraph 

23 (1)(A)(ii)(II)(aa)), and 

24 ‘‘(II) subject to clause (iii), the 

25 projected metric tonnage of qualified 


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1 carbon dioxide associated with the 

2 project over the crediting period (as 

3 projected pursuant to paragraph 

4 (1)(A)(ii)(II)(bb)). 

5 ‘‘(ii) READJUSTMENT OF CREDIT

6 AMOUNT BASED ON CRUDE OIL PRICE.— 

7 For each crediting year during the cred8 iting period, the amount of the carbon di9 oxide sequestration credit shall be equal to 

10 the product of— 

11 ‘‘(I) the amount of the credit, as 

12 determined under clause (i) in the al13 location year, and 

14 ‘‘(II) the quotient of— 

15 ‘‘(aa) the annual average 

16 West Texas Intermediate Crude 

17 Oil price (per 42-gallon barrel) 

18 for the year in which the bid for 

19 carbon dioxide sequestration 

20 credits was made, divided by 

21 ‘‘(bb) the annual average 

22 West Texas Intermediate Crude 

23 Oil price (per 42-gallon barrel) 

24 for the applicable crediting year. 


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1 ‘‘(iii) LIMITATION FOR CERTAIN

2 PROJECTS.—For purposes of determining 

3 the amount of carbon dioxide sequestration 

4 credits allocated to a industrial project de5 scribed in subsection (f)(14)(B)(ii) or an 

6 electric power project described in sub7 section (f)(14)(B)(iii), the projected metric 

8 tonnage of qualified carbon dioxide associ9 ated with the project over the crediting pe10 riod shall not be greater than the product 

11 of— 

12 ‘‘(I) 1,000,000 metric tons, and 

13 ‘‘(II) the number of crediting 

14 years in the crediting period. 

15 ‘‘(D) MAXIMUM LEVEL OF CREDITS.— 

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

17 (ii), the total amount of carbon dioxide se18 questration credits allocated to all qualified 

19 projects within each project tranche shall 

20 not exceed the maximum amount as estab21 lished for the applicable year, as follows: 

22 ‘‘(I) ELECTRIC POWER

23 PROJECTS.—The amount of carbon 

24 dioxide sequestration credits allotted 


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1 to electric power projects shall not ex2 ceed— 

3 ‘‘(aa) for any allocation year 

4 during the period between the 

5 first annual competitive bidding 

6 process and the third annual 

7 competitive bidding process, 

8 $1,350,000,000, 

9 ‘‘(bb) for any allocation year 

10 during the period between the 

11 fourth annual competitive bid12 ding process and the seventh an13 nual competitive bidding process, 

14 $2,700,000,000, 

15 ‘‘(cc) for the allocation year 

16 in which the eighth annual com17 petitive bidding process occurs, 

18 $4,050,000,000, 

19 ‘‘(dd) for the allocation year 

20 in which the ninth annual com21 petitive bidding process occurs, 

22 $5,400,000,000, and 

23 ‘‘(ee) for the allocation year 

24 in which the tenth annual com25 petitive bidding process occurs 


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1 and each subsequent allocation 

2 year, $6,750,000,000. 

3 ‘‘(II) FIRST-TRANCHE INDUS4 TRIAL PROJECTS.—The amount of 

5 carbon dioxide sequestration credits 

6 allotted to first-tranche industrial 

7 projects for any allocation year shall 

8 not exceed $400,000,000. 

9 ‘‘(III) SECOND-TRANCHE INDUS10 TRIAL PROJECTS.—The amount of 

11 carbon dioxide sequestration credits 

12 allotted to second-tranche industrial 

13 projects shall not exceed— 

14 ‘‘(aa) for any allocation year 

15 during the period between the 

16 first annual competitive bidding 

17 process and the third annual 

18 competitive bidding process, 

19 $300,000,000, and 

20 ‘‘(bb) for the allocation year 

21 in which the fourth annual com22 petitive bidding process occurs 

23 and each subsequent allocation 

24 year, $600,000,000. 


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1 ‘‘(ii) ROLLOVER OF UNALLOCATED

2 CREDIT AMOUNTS.— 

3 ‘‘(I) IN GENERAL.—For purposes 

4 of clause (i), the maximum amount of 

5 carbon dioxide sequestration credits 

6 available to be allocated to all quali7 fied projects within each project 

8 tranche for any applicable allocation 

9 year shall be increased by the amount 

10 of unallocated credits within such 

11 tranche for the preceding year. 

12 ‘‘(II) UNALLOCATED CREDITS.— 

13 For purposes of this clause, the 

14 amount of unallocated credits within a 

15 project tranche for an applicable allo16 cation year shall be equal to the dif17 ference between— 

18 ‘‘(aa) the applicable max19 imum amount of carbon dioxide 

20 sequestration credits available to 

21 be allocated to all qualified 

22 projects within the project 

23 tranche for such year, and 

24 ‘‘(bb) the total amount of 

25 carbon dioxide sequestration 


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1 credits allocated to all qualified 

2 projects within the project 

3 tranche for such year. 

4 ‘‘(iii) TOTAL AMOUNT PROVIDED TO

5 QUALIFIED PROJECT FOR CREDITING PE6 RIOD TO BE COUNTED IN ALLOCATION

7 YEAR.—For purposes of determining the 

8 total amount of carbon dioxide sequestra9 tion credits allocated in an applicable allo10 cation year under this subparagraph, the 

11 total amount allocated to a qualified 

12 project for all crediting years during the 

13 crediting period shall be treated as a single 

14 allocation for the allocation year. 

15 ‘‘(d) CERTIFICATION.— 

16 ‘‘(1) CERTIFICATION PROCESS.—Not later than 

17 90 days after a carbon dioxide sequestration credit 

18 has been allocated to a qualified project, the Sec19 retary shall certify the amount of the credit that has 

20 been allocated and that the applicant has provided 

21 sufficient documentation and qualifying evidence to 

22 demonstrate that— 

23 ‘‘(A) for a qualified project described in 

24 subsection (f)(14)(B)(i), the project will be con25 structed and operated in accordance with the 


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1 requirements under this section during the 

2 crediting period, or 

3 ‘‘(B) for a qualified project described in 

4 clause (ii) or (iii) of subsection (f)(14)(B), the 

5 project will operate in accordance with the re6 quirements under this section during the cred7 iting period. 

8 ‘‘(2) DOCUMENTATION.—The Secretary, after 

9 providing opportunity for public notice and com10 ment, shall establish specifications for documenta11 tion required under paragraph (1), which shall in12 clude sufficient evidence that— 

13 ‘‘(A) the applicant has established a plan 

14 or entered into a binding contract for disposal 

15 of all qualified carbon dioxide, 

16 ‘‘(B) for a qualified project described in 

17 subsection (f)(14)(B)(i), the applicant has es18 tablished a plan for timely construction, instal19 lation, and operation of carbon capture equip20 ment, and 

21 ‘‘(C) for a qualified project described in 

22 clause (ii) or (iii) of subsection (f)(14)(B), the 

23 project has received assistance or has been allo24 cated funding pursuant to the requirements 

25 under such clauses. 


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1 ‘‘(3) QUALIFYING EVIDENCE.—For purposes of 

2 paragraph (1), the term ‘qualifying evidence’ 

3 means— 

4 ‘‘(A) the execution of a binding commit5 ment (which may be subject to customary clos6 ing conditions) by an appropriate entity (such 

7 as a lender or the board of directors of the enti8 ty that owns the qualified project) to provide 

9 adequate financing for construction of the 

10 project and installation of the necessary carbon 

11 capture equipment, 

12 ‘‘(B) the execution of a binding commit13 ment by the applicant to execute a surety bond, 

14 in such amount as is determined appropriate by 

15 the Secretary, not later than 2 years after the 

16 date the Secretary certifies the qualified project 

17 under this subsection, or 

18 ‘‘(C) for purposes of an electric power 

19 project, the execution of an authorization— 

20 ‘‘(i) by the appropriate State agency 

21 or regulatory authority to permit recovery 

22 of the costs related to construction of the 

23 qualified project and installation of the 

24 necessary carbon capture equipment 

25 through imposition of a surcharge on the 


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1 retail consumers of the electric utility that 

2 owns such project, or 

3 ‘‘(ii) by the State legislature to permit 

4 recovery of the costs related to construc5 tion of the qualified project and installa6 tion of the necessary carbon capture equip7 ment through imposition of a surcharge on 

8 the retail consumers of any electric utility 

9 that is required, pursuant to State law, to 

10 purchase some or all of the net electrical 

11 output from the qualified project. 

12 ‘‘(4) REVOCATION OF CERTIFICATION.— 

13 ‘‘(A) MATERIALLY INACCURATE REP14 RESENTATION.—The Secretary may refuse to 

15 issue a certification or may revoke a certifi16 cation previously issued to a qualified project if 

17 the Secretary determines that the applicant 

18 made a materially inaccurate representation 

19 with respect to the documentation or evidence 

20 submitted by the applicant pursuant to the re21 quirements under this subsection. 

22 ‘‘(B) FAILURE TO BEGIN CONSTRUCTION

23 OR PLACE EQUIPMENT IN SERVICE.—The Sec24 retary shall revoke a certification previously 

25 issued to a qualified project if— 


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1 ‘‘(i) construction of the project has 

2 not begun within 2 years after the date of 

3 certification, or 

4 ‘‘(ii) subject to subparagraph (C), the 

5 project has not placed in service the re6 quired carbon capture equipment— 

7 ‘‘(I) in the case of a project that 

8 proposed to retrofit or upgrade its ex9 isting carbon capture equipment to in10 crease carbon capture capacity, within 

11 3 years after the date of certification, 

12 or 

13 ‘‘(II) in the case of a project that 

14 proposed construction of a new facil15 ity, within 5 years after the date of 

16 certification. 

17 ‘‘(C) EXTENSIONS.— 

18 ‘‘(i) FIRST EXTENSION.—An applicant 

19 that has failed to place in service the re20 quired carbon capture equipment by the 

21 applicable dates described in subparagraph 

22 (B)(ii) may receive an extension of up to 

23 180 days before revocation of certification, 

24 provided— 


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1 ‘‘(I) that the applicant request an 

2 extension not later than 90 days be3 fore the applicable date under sub4 paragraph (B)(ii), and 

5 ‘‘(II) barring construction disrup6 tions beyond the control of the appli7 cant, that the applicant maintains a 

8 continuous program of construction 

9 that involves continuing physical work 

10 of a significant nature, as determined 

11 by the Secretary. 

12 ‘‘(ii) SECOND EXTENSION.—An appli13 cant that has failed to place in service the 

14 required carbon capture equipment before 

15 expiration of an extension granted under 

16 clause (i) may receive an additional exten17 sion of up to 180 days before revocation of 

18 certification, provided— 

19 ‘‘(I) that the applicant request 

20 the additional extension not later than 

21 90 days before expiration of the ex22 tension granted under clause (i), and 

23 ‘‘(II) barring construction disrup24 tions beyond the control of the appli25 cant, that the applicant maintains a 


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1 continuous program of construction 

2 that involves continuing physical work 

3 of a significant nature, as determined 

4 by the Secretary. 

5 ‘‘(D) BEGIN CONSTRUCTION.—For pur6 poses of subparagraph (B)(i), construction of a 

7 qualified project begins when— 

8 ‘‘(i) physical work of a significant na9 ture has begun, or 

10 ‘‘(ii) the applicant pays or incurs 5 

11 percent or more of the total cost of the 

12 project. 

13 ‘‘(5) REALLOCATION.— 

14 ‘‘(A) IN GENERAL.—Any carbon dioxide 

15 sequestration credits that have been allocated to 

16 a qualified project that does not receive certifi17 cation, or has had its certification revoked, shall 

18 be rescinded, with the amount of such credits to 

19 be made available for reallocation pursuant to 

20 the process described under subsection (c) and 

21 any additional requirements as are determined 

22 appropriate by the Secretary. 

23 ‘‘(B) RECAPTURE OF CREDIT.—The Sec24 retary shall provide for recapturing the benefit 

25 of any credit allotted to a qualified project that 


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1 does not receive certification, or has had its cer2 tification revoked. 

3 ‘‘(6) PUBLIC DISCLOSURE AND ANNUAL RE4 PORTS.— 

5 ‘‘(A) DISCLOSURE OF CERTIFICATION OR

6 REVOCATION.—Not later than 30 days after 

7 issuing a certification or revocation under this 

8 subsection, the Secretary shall publicly dis9 close— 

10 ‘‘(i) the amount of the credit associ11 ated with the certification or revocation, 

12 and 

13 ‘‘(ii) a description of the qualified pro14 jected associated with such certification or 

15 revocation. 

16 ‘‘(B) ANNUAL REPORT.—The Secretary 

17 shall annually publish a report regarding the 

18 carbon dioxide sequestration credits allowed 

19 under this section, including the amount of 

20 credits that— 

21 ‘‘(i) have been certified under this 

22 subsection, and 

23 ‘‘(ii) are available for allocation dur24 ing the next annual competitive bidding 

25 process within each project tranche. 


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1 ‘‘(e) REVIEW AND MODIFICATION.— 

2 ‘‘(1) EXTERNAL REVIEW.—The Secretary, 

3 through such methods as are determined appro4 priate, shall establish an external review of the an5 nual competitive bidding process by a panel of inde6 pendent experts to— 

7 ‘‘(A) propose recommendations to— 

8 ‘‘(i) improve the annual competitive 

9 bidding process, 

10 ‘‘(ii) ensure the transparency, effec11 tiveness, and efficiency of such process, 

12 and 

13 ‘‘(iii) ensure that the purposes de14 scribed in subsection (b)(2) are being 

15 achieved through such process, and 

16 ‘‘(B) for purposes of a review described in 

17 paragraph (2)(B), evaluate the impact of the 

18 annual competitive bidding process on incre19 mental oil production and Federal revenues. 

20 ‘‘(2) REQUIREMENTS FOR EXTERNAL RE21 VIEW.—The review process described in paragraph 

22 (1) shall be completed not later than— 

23 ‘‘(A) 180 days prior to the fourth annual 

24 competitive bidding process after the date of 

25 the enactment of this section, and 


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1 ‘‘(B) every four years after the previous re2 view under this subsection. 

3 ‘‘(3) MODIFICATION.—Following any review 

4 completed under this subsection, the Secretary, in 

5 consultation with the Secretary of Energy, may mod6 ify the annual competitive bidding process to adopt 

7 recommendations included in the review and ensure 

8 that the purposes described in subsection (b)(2) are 

9 being achieved through such process, including ad10 justment of the minimum and maximum dollar 

11 amounts for the proposed dollar amount of the car12 bon dioxide sequestration credit per metric ton of 

13 qualified carbon dioxide, as established under sub14 section (c)(1)(D). 

15 ‘‘(4) REVENUE DETERMINATIONS.— 

16 ‘‘(A) IN GENERAL.—Not later than 7 years 

17 after the date of the enactment of this section, 

18 and every 4 years thereafter, the Secretary, in 

19 consultation with the Chairman of the Securi20 ties and Exchange Commission and the Sec21 retary of Energy, shall conduct a study to de22 termine— 

23 ‘‘(i) the actual and projected increase 

24 in Federal revenues that is attributable to 

25 increases in oil production from enhanced 


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1 oil recovery methods using qualified carbon 

2 dioxide that is captured from qualified 

3 projects, and 

4 ‘‘(ii) the actual and projected decrease 

5 in Federal revenues that is attributable to 

6 the credits allowed under this section. 

7 ‘‘(B) REPORT TO CONGRESS.—If the Sec8 retary determines that the projected decrease in 

9 revenues described in clause (ii) of subpara10 graph (A) is greater than the projected increase 

11 in revenues described in clause (i) of such sub12 paragraph, the Secretary shall submit to Con13 gress a report that provides a detailed analysis 

14 of the projections and recommendations for fur15 ther legislative or administrative action. 

16 ‘‘(f) DEFINITIONS.—In this section: 

17 ‘‘(1) ALLOCATION YEAR.—The term ‘allocation 

18 year’ means the year in which the Secretary allo19 cates carbon dioxide sequestration credits to quali20 fied projects. 

21 ‘‘(2) ANNUAL CAPTURE CAPACITY.—The term 

22 ‘annual capture capacity’ means the average annual 

23 amount of qualified carbon dioxide that is projected 

24 to be captured, compressed, and transported over 

25 the crediting period. 


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1 ‘‘(3) CARBON CAPTURE EQUIPMENT.—The term 

2 ‘carbon capture equipment’ means equipment to cap3 ture and pressurize qualified carbon dioxide. 

4 ‘‘(4) CREDITING PERIOD.—The term ‘crediting 

5 period’ means the period, for up to 10 crediting 

6 years (as described in paragraph (5)), subsequent 

7 to— 

8 ‘‘(A) for a qualified project described in 

9 paragraph (14)(B)(i), the date on which the 

10 carbon capture equipment is placed into service, 

11 or 

12 ‘‘(B) for a qualified project described in 

13 clause (ii) or (iii) of paragraph (14)(B), the 

14 date on which the project is certified under sub15 section (d). 

16 ‘‘(5) CREDITING YEAR.—The term ‘crediting 

17 year’ means a year during the crediting period in 

18 which the taxpayer may claim the carbon dioxide se19 questration credit. 

20 ‘‘(6) ELECTRIC POWER PROJECT.— 

21 ‘‘(A) IN GENERAL.—The term ‘electric 

22 power project’ means a project, including a 

23 polygeneration project, that— 

24 ‘‘(i) subject to subparagraph (B), uses 

25 coal or petroleum residuals as feedstock 


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1 and has a post-carbon capture equivalent 

2 emissions rate that is equal to or less than 

3 780 pounds per megawatt hour under nor4 mal operating conditions, or 

5 ‘‘(ii) subject to subparagraph (B), 

6 uses natural gas for greater than 50 per7 cent of its feedstock and has a post-carbon 

8 capture equivalent emissions rate that is 

9 equal to or less than 400 pounds per 

10 megawatt hour under normal operating 

11 conditions. 

12 ‘‘(B) EMISSIONS REDUCTIONS.—Beginning 

13 with the annual competitive bidding process 

14 that occurs 5 years after the initial annual com15 petitive bidding process, and every 5 years 

16 thereafter, the applicable post-carbon capture 

17 equivalent emissions rate under clauses (i) and 

18 (ii) of subparagraph (A) shall be reduced by 15 

19 percent from the applicable rate for the pre20 ceding 5-year period, provided that the Sec21 retary has determined, in consultation with the 

22 Secretary of Energy, that such reduction is 

23 both technologically and economically feasible. 

24 ‘‘(7) ENERGY OUTPUT.—The term ‘energy out25 put’ means the total amount of chemical and therVerDate Mar 15 2010 22:55 May 05, 2014 Jkt 039200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S2288.IS S2288

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1 mal energy generated by the conversion of a feed2 stock. 

3 ‘‘(8) FIRST-TRANCHE INDUSTRIAL PROJECT.— 

4 ‘‘(A) IN GENERAL.—The term ‘first5 tranche industrial project’ means an industrial 

6 project that employs 1 or more of the following 

7 processes: 

8 ‘‘(i) Natural gas processing. 

9 ‘‘(ii) Fermentation. 

10 ‘‘(iii) Ammonia production. 

11 ‘‘(iv) Existing gasification of— 

12 ‘‘(I) coal, 

13 ‘‘(II) petroleum residuals, 

14 ‘‘(III) biomass, or 

15 ‘‘(IV) waste streams. 

16 ‘‘(B) EXISTING GASIFICATION.—For pur17 poses of this paragraph, the term ‘existing gas18 ification’ means a gasification process used by 

19 an industrial project that has been placed in 

20 service on or before the date on which the appli21 cant submits a bid for an allocation of carbon 

22 dioxide sequestration credits. 

23 ‘‘(9) INDUSTRIAL PROJECT.—The term ‘indus24 trial project’ means a project for which the electrical 


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1 power output is 50 percent or less of the total en2 ergy output of such project. 

3 ‘‘(10) POLYGENERATION PROJECT.—The term 

4 ‘polygeneration project’ means a project— 

5 ‘‘(A) that produces both electricity and an6 other marketable product, such as chemicals or 

7 alternative liquid or gaseous fuels, 

8 ‘‘(B) that is able to supply not less than 

9 150 megawatts of electricity for sale to a power 

10 distribution system, and 

11 ‘‘(C) for which greater than 50 percent of 

12 the energy output from the gasification process 

13 is provided to the power block. 

14 ‘‘(11) POWER BLOCK.—The term ‘power block’ 

15 means a steam turbine electric generating unit or a 

16 gas turbine combined cycle unit in an electric power 

17 project (including a polygeneration project). 

18 ‘‘(12) QUALIFIED CARBON DIOXIDE.— 

19 ‘‘(A) IN GENERAL.—The term ‘qualified 

20 carbon dioxide’ means carbon dioxide that is— 

21 ‘‘(i) captured from a source described 

22 in subparagraph (B), 

23 ‘‘(ii) used, or contracted for use, by 

24 the taxpayer as a tertiary injectant in a 

25 qualified enhanced oil recovery project, and 


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1 ‘‘(iii) disposed of, or contracted for 

2 disposal, by the taxpayer in secure geologi3 cal storage. 

4 ‘‘(B) SOURCES OF QUALIFIED CARBON DI5 OXIDE.—The sources described in this subpara6 graph are as follows: 

7 ‘‘(i) Electric power generation. 

8 ‘‘(ii) Chemical production. 

9 ‘‘(iii) Gasification of coal. 

10 ‘‘(iv) Petroleum residuals. 

11 ‘‘(v) Biomass and waste streams. 

12 ‘‘(vi) Natural gas processing. 

13 ‘‘(vii) Fermentation. 

14 ‘‘(viii) Clinker production. 

15 ‘‘(ix) Fluidized catalytic cracking and 

16 other refinery processes. 

17 ‘‘(x) Steel and aluminum production. 

18 ‘‘(xi) Mining and manufacturing. 

19 ‘‘(13) QUALIFIED ENHANCED OIL RECOVERY

20 PROJECT.—The term ‘qualified enhanced oil recov21 ery project’ means any project— 

22 ‘‘(A) which involves the use of qualified 

23 carbon dioxide as a tertiary injectant (in ac24 cordance with sound engineering principles) and 

25 which can reasonably be expected to result in 


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1 more than an insignificant increase in the 

2 amount of crude oil which will ultimately be re3 covered, and 

4 ‘‘(B) which is located within the United 

5 States (within the meaning of section 638(1)). 

6 ‘‘(14) QUALIFIED PROJECT.— 

7 ‘‘(A) IN GENERAL.—The term ‘qualified 

8 project’ means a project— 

9 ‘‘(i) described in subparagraph (B), 

10 and 

11 ‘‘(ii) at which carbon capture equip12 ment is placed in service to capture quali13 fied carbon dioxide from 1 or more sources 

14 described in paragraph (12)(B) within a 

15 single project tranche. 

16 ‘‘(B) CATEGORIES OF PROJECTS.—The 

17 projects described in this subparagraph are as 

18 follows: 

19 ‘‘(i) A project that captures qualified 

20 carbon dioxide using carbon capture equip21 ment that is placed in service after Decem22 ber 31, 2014, including retrofits or up23 grades of existing carbon capture equip24 ment that increases carbon capture capac25 ity. 


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1 ‘‘(ii) An electric power project that— 

2 ‘‘(I) received assistance under 

3 subtitle A of title IV of the Energy 

4 Policy Act of 2005 (42 U.S.C. 15961 

5 et seq.), and 

6 ‘‘(II) captures qualified carbon 

7 dioxide using carbon capture equip8 ment that was placed in service before 

9 December 31, 2014. 

10 ‘‘(iii) An electric power project or an 

11 industrial project that— 

12 ‘‘(I) was allocated funding by the 

13 Department of Energy for large-scale 

14 carbon capture and sequestration 

15 projects from the amount appro16 priated for fossil energy research and 

17 development under title IV of division 

18 A of the American Recovery and Rein19 vestment Act of 2009 (Public Law 

20 111–5, 123 Stat. 139), and 

21 ‘‘(II) captures qualified carbon 

22 dioxide using carbon capture equip23 ment that was placed in service before 

24 December 31, 2014. 


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1 ‘‘(15) SECOND-TRANCHE INDUSTRIAL

2 PROJECT.— 

3 ‘‘(A) IN GENERAL.—The term ‘second4 tranche industrial project’ means an industrial 

5 project that employs 1 or more of the following 

6 processes: 

7 ‘‘(i) New-build gasification of— 

8 ‘‘(I) coal, 

9 ‘‘(II) petroleum residuals, 

10 ‘‘(III) biomass, or 

11 ‘‘(IV) waste streams. 

12 ‘‘(ii) A refinery for production of ce13 ment, steel, or iron. 

14 ‘‘(iii) Hydrogen production. 

15 ‘‘(B) NEW-BUILD GASIFICATION.—For 

16 purposes of this paragraph, the term ‘new-build 

17 gasification’ means a gasification process used 

18 by an industrial project that is placed in service 

19 after the date on which the applicant submits 

20 a bid for an allocation of carbon dioxide seques21 tration credits. 

22 ‘‘(16) SECURE GEOLOGICAL STORAGE.—The 

23 term ‘secure geological storage’ has the same mean24 ing given to such term under section 45Q–1(d)(2). 


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1 ‘‘(g) DENIAL OF DOUBLE BENEFIT.—A credit shall 

2 not be allowed under this section for any carbon dioxide 

3 for which a credit is allowed under section 45Q–1.’’. 

4 (c) CONFORMING AMENDMENTS.— 

5 (1) TABLE OF SECTIONS.—The table of sections 

6 for subpart D of part IV of subchapter A of chapter 

7 1 of such Code is amended by striking the item re8 lating to section 45Q and inserting the following new 

9 items: 

‘‘Sec. 45Q–1. Standard carbon dioxide sequestration credit. 

‘‘Sec. 45Q–2. Competitively bid carbon dioxide sequestration credit.’’. 

10 (2) GENERAL BUSINESS CREDIT.—Section 

11 38(b) of such Code is amended— 

12 (A) by striking paragraph (34), 

13 (B) by redesignating paragraphs (35) and 

14 (36) as paragraphs (36) and (37), and 

15 (C) by inserting after paragraph (33) the 

16 following new paragraphs: 

17 ‘‘(34) the standard carbon dioxide sequestration 

18 credit determined under section 45Q–1(a), 

19 ‘‘(35) the competitively bid carbon dioxide se20 questration credit determined under section 45Q– 

21 2(a),’’. 

22 (3) DENIAL OF DOUBLE BENEFIT.—Section 

23 45Q–1(d) of such Code is amended by adding at the 

24 end the following new paragraph: 


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1 ‘‘(8) DENIAL OF DOUBLE BENEFIT.—A credit 

2 shall not be allowed under this section for any car3 bon dioxide for which a credit is allowed under sec4 tion 45Q–2.’’. 

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

6 this section shall apply to carbon dioxide captured after 

7 December 31, 2014. 

Æ 


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