Capitalizing on American Methane Act of 2017

To amend the Internal Revenue Code of 1986 to allow a credit against income tax for facilities using a qualified methane conversion technology to provide transportation fuels and chemicals. 1. Short title This Act may be cited as the Capitalizing on American Methane Act of 2017 2. Incentives for innovative fuel production through qualified methane conversion technology (a) Inclusion of qualified methane conversion technology in gasification project credit (1) In general Paragraph (2) of section 48B(c) (2) Gasification technology The term gasification technology (A) any process which converts a solid or liquid product from coal, petroleum residue, biomass, or other materials which are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion, and (B) any qualified methane conversion technology. . (2) Qualified methane conversion technology Subsection (c) of section 48B of such Code is amended by adding at the end the following new paragraph: (9) Qualified methane conversion technology (A) In general The term qualified methane conversion technology (i) to replace or reduce the quantity of petroleum present in a fuel used in motor vehicles, motor vehicle engines, nonroad vehicles, nonroad engines, or aircraft if— (I) the lifecycle greenhouse gas emissions associated with the production and combustion is, on an ongoing basis, not more than such emissions from the equivalent conventional fuel produced from conventional petroleum sources, (II) the sulfur concentration is not more than 2 parts per million, and (III) such production is at a facility which, during the taxable year, has an annual total production capacity of not more than 150,000,000 gallons of liquid transportation fuel, or (ii) for the production of chemicals (within the meaning of paragraph (7)(A)). (B) Primary purpose of facility If a facility uses qualified methane conversion technology to produce both fuels and chemicals, the requirements described in subparagraph (A)(i) shall apply only if the primary use of the facility is to produce fuels. (C) Exclusion The term qualified methane conversion technology . (3) Increase in credit available for methane conversion projects (A) In general Paragraph (1) of section 48B(d) of such Code is amended by striking plus , plus (C) $500,000,000 for qualifying gasification projects that rely primarily on qualified methane conversion technology. No qualifying gasification project shall receive more than $100,000,000 under the program. . (B) Period of issuance Paragraph (2) of section 48B(d) of such Code is amended to read as follows: (2) Period of issuance (A) In general A certificate of eligibility under subparagraphs (A) and (B) of paragraph (1) may be issued only before October 1, 2027. (B) Qualified methane conversion technology A certificate of eligibility under subparagraph (C) of paragraph (1) may be issued only during the 10-fiscal year period beginning on the first October 1 which is on or after the date of the enactment of this paragraph. . (C) Selection priorities Paragraph (4) of section 48B(d) of such Code is amended to read as follows: (4) Selection priorities (A) In general In determining which qualifying gasification projects, other than projects using qualified methane conversion technology, to certify under this section, the Secretary shall— (i) give highest priority to projects with the greatest separation and sequestration percentage of total carbon dioxide emissions, and (ii) give high priority to applicant participants who have a research partnership with an eligible educational institution (as defined in section 529(e)(5)). (B) Chemicals projects using qualified methane conversion technology In determining which qualifying gasification projects that produce chemicals using qualified methane conversion technology to certify under this section, the Secretary shall give priority to proj­ects involving a production process that has significant environmental benefits over the production of the same chemical from petroleum products. . (b) Inclusion of qualified methane conversion technology in alternative fuel credit Paragraph (2) of section 6426(d) and , and (H) liquid fuel produced through qualified methane conversion technology (as defined in section 48B(c)(9)(A)) at a facility the construction of which begins before October 1, 2027. . (c) Effective date The amendments made by this section shall take effect on the date of the enactment of this Act.

Summary: Capitalizing on American Methane Act of 2017 This bill amends the Internal Revenue Code to: (1) include in the tax credit for investment in a qualifying gasification project any qualified methane conversion technology, and (2) allow an alternative fuel excise tax credit for liquid fuel produced through qualified methane conversion technology at a facility the construction of which begins before October 1, 2027. The bill defines "qualified methane conversion technology" as a process for the molecular conversion of a fuel consisting principally of methane into hydrocarbons and the use of such hydrocarbons to replace or reduce the quantity of petroleum present in motor vehicle fuel and for the production of chemicals.