Carbon Capture and Sequestration Deployment Act of 2014

To facilitate the development and commercial deployment of carbon capture and sequestration technologies, and for other purposes. 1. Short title This Act may be cited as the Carbon Capture and Sequestration Deployment Act of 2014 I Carbon Capture and Sequestration Innovation Program 101. Partnerships for carbon capture and sequestration (a) Establishment of program (1) In general Not later than 1 year after the date of enactment of this Act, the Secretary of Energy (referred to in this Act as the Secretary (A) to capture or prevent carbon dioxide emissions from carbon-based fuels; (B) to enable the beneficial use of carbon dioxide; or (C) to enable the long-term storage of carbon dioxide. (2) Participation of national laboratories and universities The program— (A) shall include the participation of the National Energy Technology Laboratory; and (B) may include the participation of other National Laboratories, institutions of higher education, and other appropriate entities. (b) Cost sharing For purposes of developing and demonstrating the technologies or approaches referred to in subsection (a)(1)— (1) the Secretary shall provide at least 80 percent of the cost of the development projects; and (2) the industry participant shall provide not more than 20 percent of the cost of the development projects. (c) Authorization of appropriations There are authorized to be appropriated to the Secretary to carry out this section— (1) $110,000,000 for each of fiscal years 2015 through 2019; (2) $60,000,000 for each of fiscal years 2020 through 2024; and (3) $30,000,000 for each of fiscal years 2025 through 2029. 102. Annual Department of Energy assessment (a) In general (1) Department of Energy report Not later than 1 year after the date of enactment of this Act and annually thereafter until the Secretary determines that technology preventing the emission of, capturing, transporting, permanently storing or sequestering, or putting to beneficial use carbon dioxide is available to the commercial marketplace, the Secretary shall— (A) conduct an assessment in accordance with subsection (b) of the existing Federal programs supporting the technology; and (B) submit to the appropriate authorizing and appropriating committees of Congress a report on the results of the assessment. (2) Government Accountability Office review Not later than 1 year after the first report is provided to the appropriate authorizing and appropriating committees of Congress under paragraph (1)(B) and subsequently as needed until technology preventing the emission of, capturing, transporting, permanently storing or sequestering, and putting to beneficial use carbon dioxide is available to the commercial marketplace, the Comptroller General of the United States shall conduct a review of the report described in paragraph (1)(C) in accordance with subsection (c). (b) Department of Energy report requirements The Secretary shall include in the report required under subsection (a)(1)(B)— (1) a detailed description of the existing programs, including each major program area, that conduct or support research, development, demonstration, and deployment of technology— (A) to prevent the emission of carbon dioxide or to capture carbon dioxide from sources, including fossil fuel-based power plants; (B) to transport carbon dioxide; (C) to store or sequester captured carbon dioxide permanently; or (D) to put captured carbon dioxide to beneficial use; (2) an assessment, based on Federal Government laboratory research experience, available industry research experience, and such other data and information as the Secretary considers useful and appropriate, to determine whether each major program area and principal projects within the areas described in paragraph (1) are designed to, and will advance fundamental knowledge or achieve significant technical advancement and materially improve the technology base to effectively address the prevention of carbon dioxide emissions or capture of carbon dioxide or the transport, permanent storage, or beneficial use of captured carbon dioxide; and (3) an assessment of the estimated timeframe and costs of the Secretary necessary to reasonably conclude that technology will be available to the commercial marketplace. (c) Government Accountability Office review requirements The Comptroller General of the United States shall include in the review required under subsection (a)(2)— (1) an analysis of the estimated timeframes and costs of the Secretary, as reported pursuant to subsection (b)(3); (2) any recommendations that the Comptroller General of the United States considers appropriate and useful to improve the likelihood of achieving technological advancements to mitigate carbon dioxide emissions or to expedite the availability of carbon capture and sequestration technology for the commercial marketplace; (3) an assessment of any legal or regulatory impediment by any Federal agency or department that has arisen in relation to the deployment of carbon capture and storage technology, including any delays in the permitting of the technology or the construction or operation of any facility; and (4) any other analyses the Comptroller General of the United States considers necessary or appropriate. (d) Budget request report In the budget requests for each of fiscal years 2016 through 2030, the President shall include in the budget request of the Secretary for the Fossil Energy Program a report that assesses— (1) the progress of the Secretary in implementing the recommendations of the Comptroller General of the United States and compares the estimated costs of completing implementation of those recommendations to the requested budget levels; and (2) the progress made for the preceding fiscal year toward achieving the goals of the program for which funding is requested. II Carbon dioxide sequestration credit 201. Modifications to carbon dioxide sequestration credit (a) Allocation and certification of credit (1) In general Subsection (e) of section 45Q (e) Limitation (1) Allocation limitation No credit shall be allowed under subsection (a) with respect to qualified carbon dioxide captured by carbon capture equipment at a qualified facility for the amount of qualified carbon dioxide captured by such carbon capture equipment in excess of— (A) the portion of the national limitation allocated with respect to such carbon capture equipment under subsection (f), over (B) the amount of qualified carbon dioxide captured by such carbon capture equipment during periods before August 1, 2015, for which a credit under subsection (a) was allowed. (2) National limitation For purposes of paragraph (1)(A), the national limitation is the excess of— (A) 75,000,000 metric tons of qualified carbon dioxide, over (B) the number of metric tons of qualified carbon dioxide captured before August 1, 2015, for which a credit under subsection (a) was allowed. . (2) Allocation and certification Section 45Q of such Code is amended by adding at the end the following new subsection: (f) Allocation for and certification of carbon capture projects (1) Establishment of procedures Not later than July 1, 2015, the Secretary shall establish, by regulation, processes and procedures— (A) for allocating the national limitation under subsection (e)(2) to projects for placing carbon capture equipment in service at qualified facilities, and (B) for certifying projects for which an allocation has been made under subparagraph (A). (2) Allocations (A) Application Each applicant for an allocation under this subsection shall submit an application to the Secretary under such terms and conditions as are established by the Secretary in regulations. (B) Priority The Secretary shall rank applications received under subparagraph (A) in the following order: (i) Applicants with applications received by the Secretary on an earlier date shall be given higher priority than applicants with applications received on a later date. For purposes of this clause, any application received before the date that is 30 days after the procedures and processes described in paragraph (1) are established shall be considered to have been received on such date. (ii) In the case of applications received on the same date, those applicants concurrently applying for certification shall be given higher priority. (iii) In the case of applications received on the same date and concurrently applying for certification, those projects with the earlier date by which construction commenced shall be given higher priority. (C) Allocation to applicants Subject to subparagraph (D), the Secretary shall allocate tonnage to each applicant— (i) based on the amount requested on the application, and (ii) in order of the rank of the application under subparagraph (B), until the amount of tonnage available under this section is exhausted. Projects for which no or a partial allocation is made shall retain their ranking and shall be eligible to receive an allocation of tonnage previously allocated that is forfeited or recaptured. (D) Limitation The Secretary may not allocate to any project more than the lesser of— (i) the number of metric tons of qualified carbon dioxide projected to be captured at the qualified facility under the project during the 10-year period beginning on the date on which such project is placed in service, (ii) the number of metric tons of qualified carbon dioxide projected to be captured at the qualified facility under the project— (I) which are subject to a written, binding contract for disposal in secure geological storage (whether or not used as a tertiary injectant), or (II) for which there is a plan for such disposal by the applicant, or (iii) 15,000,000 metric tons of qualified carbon dioxide. (E) Reduction for prior credits The amount of any allocation under subparagraph (C) to any project shall be reduced by the number of metric tons of carbon dioxide captured by the carbon capture equipment with respect to such project before August 1, 2015, for which a credit was allowed under subsection (a). (3) Certification (A) In general No credit shall be allowed under subsection (a) with respect to any project for using carbon capture equipment to capture qualified carbon dioxide at a qualified facility before the date on which such project is certified under this paragraph. (B) Application for certification Each project which is allocated a portion of the national limitation shall submit an application for certification to the Secretary containing such information as the Secretary may require. Such application shall be submitted— (i) not later than— (I) 6 months after the date on which such project receives an allocation, and (II) 30 days after the later of the date on which the regulations, processes, and procedures are established under paragraph (1) or the construction start date, and (ii) not earlier than the construction start date. For purposes of this subparagraph, the term construction start date (C) Revocation of certification (i) Materially inaccurate representations The Secretary may revoke a certification under this paragraph if the Secretary determines that an applicant has made a materially inaccurate representation with respect to the project. (ii) Failure to timely place equipment in service A certification under this paragraph shall be revoked in any case in which carbon capture equipment with respect to the project is not placed in service— (I) before the date which is 5 years after the date on which the allocation was issued, in the case of a new industrial facility, or (II) before the date which is 3 years after the date on which the allocation was issued, in the case of a modification of an existing industrial facility. (D) Reallocation In any case— (i) in which a certification is revoked under subparagraph (C), or (ii) in which a taxpayer to whom an allocation is made under paragraph (2) fails to obtain certification for a project under this paragraph, the amount of national limitation which was allocated to such project under paragraph (2) shall be reallocated under such rules as established by the Secretary under regulations. (4) Public disclosure (A) In general The Secretary shall, within 30 days of making any allocation, certification, revocation, or change in the ranking of projects, publicly disclose the amount of such allocation, a description of the project for which such allocation, certification, or revocation was made, and the change in the ranking of projects, as the case may be. (B) Annual report The Secretary shall issue an annual report summarizing credits allocated and available for allocation. . (3) Conforming amendments (A) Paragraph (2) of section 45Q(c) of such Code is amended by inserting which is part of a project which is certified under subsection (f)(3) carbon capture equipment (B) Paragraph (3) of section 45Q(c) of such Code is amended by striking which at which such carbon capture equipment (b) 10-Year credit limitation Section 45Q(a) (1) in paragraph (1)(A), by inserting during the 10-year period beginning on the later of the date on which the carbon capture equipment described in subsection (c)(1) is placed in service or the date on which the project with respect to such carbon capture equipment was certified under subsection (f)(3) qualified facility (2) in paragraph (2)(A), by inserting during the 10-year period beginning on the later of the date on which the carbon capture equipment described in subsection (c)(1) is placed in service or the date on which the project with respect to such carbon capture equipment was certified under subsection (f)(3) qualified facility (c) Definition of carbon capture equipment Section 45Q(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (8) Carbon capture equipment The term carbon capture equipment . (d) Credit allowed to taxpayer performing carbon capture (1) In general Paragraph (5) of section 45Q(d) of the Internal Revenue Code of 1986 is amended to read as follows: (5) Person to whom credit is allowable (A) In general Except as provided in subparagraph (B) or in regulations prescribed by the Secretary, any credit under this section shall be allowed to the taxpayer who— (i) captures the qualified carbon dioxide, and (ii) through contract or otherwise, disposes of the qualified carbon dioxide in a manner meeting the requirements of paragraph (1)(B) or (2)(C) of subsection (a), as the case may be. (B) Election to allow credit to person disposing carbon dioxide If the person described in subparagraph (A) makes an election under this subparagraph 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 qualified carbon dioxide in a manner meeting the requirements of paragraph (1)(B) or (2)(C) of subsection (a), as the case may be, and (ii) shall not be allowable to the person described in subparagraph (A). . (2) Conforming amendments (A) Section 45Q(a) of such Code is amended by striking by the taxpayer (B) Section 45Q(c) of such Code, as amended by subsection (a), is amended by striking paragraph (1) and redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (e) Rules relating To credit recapture Paragraph (6) of section 45Q(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: Notwithstanding section 7805(b), any regulation issued pursuant to this paragraph shall apply only with respect to qualified carbon dioxide captured or disposed of after the date on which such regulation is filed with the Federal Register. (f) Effective date The amendments made by this section shall apply to carbon dioxide captured after July 31, 2015. III Incentives for carbon capture and sequestration projects 301. Federal financial incentives (a) Eligible projects Section 1703 of the Energy Policy Act of 2005 ( 42 U.S.C. 16513 (1) in subsection (b)(5), by inserting and projects described in subsection (f) (2) by adding at the end the following: (f) Carbon capture and sequestration projects (1) Definitions In this subsection: (A) Commercial scale The term commercial scale (i) to generate and sell electric power directly to consumers or for resale; and (ii) with a carbon dioxide capture system having a useful life of not fewer than 15 years. (B) Eligible unit The term eligible unit section 84E (C) Permanent geologic storage site The term permanent geologic storage site (i) the Secretary determines is capable of storing carbon dioxide; and (ii) is located in saline formations or other deep geologic storage structures. (2) Guarantees authorized Notwithstanding subsection (a)(2), the Secretary may make guarantees in amounts totaling not more than $20,000,000,000 for the following carbon capture and sequestration projects: (A) The construction of new industrial facility units or commercial scale electric generation units that are eligible units utilizing carbon capture and sequestration technology. (B) The retrofit of existing industrial facility units or commercial scale electric generation units that are eligible units providing for carbon capture and sequestration. (C) The construction of carbon dioxide transmission pipelines to transport carbon dioxide from carbon capture and sequestration facilities to— (i) sequestration sites; or (ii) sites where the carbon dioxide will be used for hydrocarbon recovery. (3) Certification of eligible units A unit shall not be eligible to receive a guarantee under paragraph (2) unless the Secretary has certified the unit pursuant to a certification process established by the Secretary by rule. . (b) Additional authorization Section 1704 of the Energy Policy Act of 2005 ( 42 U.S.C. 16514 (c) Additional authorization In addition to other amounts made available under this section, there is authorized to be appropriated such sums as are necessary to cover the credit loan subsidy costs associated with the guarantees described in section 1703(f). . (c) Tax credits (1) In general Subpart E of part IV of subchapter A of chapter 1 48E. Pioneer CCS facilities (a) Additional qualifying advanced coal project credit For purposes of section 46, the qualifying advanced coal project credit for any taxable year shall also include an additional amount equal to the applicable percentage (as determined under subsection (c)) of the incremental cost for carbon capture and sequestration systems for eligible units, determined as follows: (1) For an eligible unit that is a new electric generation unit, the incremental costs shall be the amount by which the costs incurred by the taxpayer for the unit exceed the costs of construction of a comparable supercritical pulverized coal unit without carbon capture and sequestration technology. To establish incremental costs, the taxpayer shall obtain a certified report of a qualified independent engineer estimating the differential construction cost between the eligible unit and a comparably sized supercritical pulverized coal unit without carbon capture and sequestration. The independent engineer shall utilize cost estimates for supercritical pulverized coal units available from Federal agencies, academia and/or the private sector, appropriately adjusted for size, fuel source and location. An engineering design of a hypothetical supercritical pulverized coal unit shall not be required to establish the incremental costs. (2) For an eligible unit that is a new industrial unit, the incremental costs shall be the amount by which the costs incurred by the taxpayer for the unit exceed the costs of construction of a comparable industrial unit without carbon capture and sequestration. (3) For an eligible unit that retrofits a carbon capture, transportation, and sequestration system on an existing generation or industrial unit, the incremental cost shall be the construction costs incurred by the taxpayer for the carbon capture and sequestration system. (4) The Secretary of Energy shall certify the amount of incremental cost for carbon capture and sequestration systems for eligible units in each case, based on appropriate information. (b) Eligible unit For purposes of this section, the term eligible unit (1) uses coal or petroleum coke for at least 75 percent of the fuel used by the unit, (2) uses carbon capture technology to capture and sequester not less than 65 percent of the total carbon dioxide emissions of the unit, (3) transports such captured carbon dioxide to a permanent geologic storage site in the United States or to a site on the North American continent for use for hydrocarbon recovery, and (4) provides for the permanent storage of such carbon dioxide in such site. (c) Applicable percentage (1) In general For purposes of subsection (a), the applicable percentage shall be the amount (expressed as a percentage) equal to the sum of— (A) 15 percent, and (B) the amount (expressed as a percentage) which bears the same ratio to 15 percent as the captured emissions percentage (as determined under paragraph (2)) bears to 35 percent. (2) Carbon dioxide emissions captured For purposes of paragraph (1), the captured emissions percentage shall be equal to— (A) the percentage of total carbon dioxide emissions of the eligible unit that is captured and sequestered, minus (B) 65 percentage points. (d) Election No costs for which a credit has been provided under section 48A or section 48B shall be eligible for a credit under this section. (e) Recapture The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under subsection (a) with respect to any unit that fails to attain or maintain the requirements under subsection (b). . (2) Clerical amendment The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48D the following new item: 48E. Pioneer CCS facilities. . (d) Effective date The amendments made by this section shall apply with respect to— (1) new facilities placed in service after December 31, 2014, and before January 1, 2026; and (2) the retrofit of existing facilities that commence operation with the retrofit after December 31, 2014, and before January 1, 2026.

Summary: Carbon Capture and Sequestration Deployment Act of 2014 - Directs the Department of Energy (DOE) to establish a cooperative industry-government research and development program to demonstrate innovative technologies to capture, prevent, or store carbon dioxide (CO2) emissions from carbon-based fuels or to enable the beneficial use of CO2. Requires DOE to conduct an annual assessment of existing programs supporting carbon capture and sequestration (CCS) technology until that technology is available in commerce. (CCS is a three-step process: the capture, transport, and underground injection and geologic sequestration of CO2.) Amends the Internal Revenue Code, with respect to the tax credit for CO2 sequestration, to: (1) impose limitations on the allocation of credit amounts for carbon capture projects, including a 10-year limitation on CO2 capture at a qualified facility (defined as an industrial facility which captures not less than 500,000 metric tons of CO2 in a taxable year); (2) require the Secretary of the Treasury to establish procedures for allocating the national limitation on such credit to projects for placing carbon capture equipment (i.e., equipment to capture and pressurize qualified CO2) in service at qualified facilities and for certifying projects for which an allocation has been made; and (3) identify as eligible for such credit the taxpayer who captures and disposes of the qualified CO2. Amends the Energy Policy Act of 2005 to authorize DOE to make loan guarantees to: (1) construct or retrofit coal- or petroleum coke-fired industrial facilities or electric generation facilities to utilize CCS technology, and (2) construct pipelines for the transport of CO2 to sequestration sites or to sites where the C02 will be used for hydrocarbon recovery. Expands the qualifying advanced coal project investment tax credit to include an additional amount for the costs of constructing and retrofitting such facilities.