Carbon Capture Improvement Act of 2021
Bill: H.R.4408 | Sponsor: Rep. Burchett, Tim (R-TN)
Policy area: Taxation

Summary:
Carbon Capture Improvement Act of 2021
This bill authorizes the issuance of tax-exempt facility bonds for the financing of qualified carbon dioxide capture facilities.
A qualified carbon dioxide capture facility is any equipment installed in an industrial carbon dioxide facility that satisfies specified capture and storage requirements and (1) is used for the capture, treatment and purification, compression, transportation, or on-site storage of carbon dioxide produced by the industrial carbon dioxide facility; or (2) is integral or functionally related and subordinate to a gasification process that converts a product from coal, petroleum residue, biomass, or other materials that are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon dioxide and hydrogen for direct use or subsequent chemical or physical conversion.

To amend the Internal Revenue Code of 1986 to provide for the issuance 
     of exempt facility bonds for qualified carbon dioxide capture 
                              facilities.

    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 Capture Improvement Act of 
2021''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Capture and long-term storage of carbon dioxide from 
        coal, natural gas, and biomass-fired power plants, as well as 
        from industrial sectors such as oil refining and production of 
        fertilizer, cement, and ethanol, can help protect the 
        environment while improving the economy and national security 
        of the United States.
            (2) The United States is a world leader in the field of 
        carbon dioxide capture and long-term storage, with many 
        manufacturers and licensors of carbon dioxide capture 
        technology based in the United States.
            (3) While the prospects for large-scale carbon capture in 
        the United States are promising, costs remain relatively high. 
        Lowering the financing costs for carbon dioxide capture at 
        industrial facilities and direct air capture projects would 
        accelerate the deployment of these technologies.
            (4) Since 1968, tax-exempt private activity bonds have been 
        used to provide access to lower-cost financing for private 
        businesses that are purchasing new capital equipment for 
        certain specified environmental facilities, including 
        facilities that reduce, recycle, or dispose of waste, 
        pollutants, and hazardous substances.
            (5) Allowing tax-exempt financing for the purchase of 
        capital equipment that is used to capture carbon dioxide will 
        reduce the costs of developing carbon dioxide capture projects, 
        accelerate their deployment, and, in conjunction with carbon 
        dioxide utilization and long-term storage, help the United 
        States meet critical environmental, economic, and national 
        security goals.

SEC. 3. CARBON DIOXIDE CAPTURE FACILITIES.

    (a) In General.--Section 142 of the Internal Revenue Code of 1986 
is amended--
            (1) in subsection (a)--
                    (A) in paragraph (14), by striking ``or'' at the 
                end;
                    (B) in paragraph (15), by striking the period at 
                the end and inserting ``, or''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(16) qualified carbon dioxide capture facilities.''; and
            (2) by adding at the end the following new subsection:
    ``(n) Qualified Carbon Dioxide Capture Facility.--
            ``(1) In general.--For purposes of subsection (a)(16), the 
        term `qualified carbon dioxide capture facility' means--
                    ``(A) the eligible components of an industrial 
                carbon dioxide facility, and
                    ``(B) a direct air capture facility (as defined in 
                section 45Q(e)(1)).
            ``(2) Definitions.--In this subsection:
                    ``(A) Eligible component.--
                            ``(i) In general.--The term `eligible 
                        component' means any equipment installed in an 
                        industrial carbon dioxide facility that 
                        satisfies the requirements under paragraph (3) 
                        and is--
                                    ``(I) used for the purpose of 
                                capture, treatment and purification, 
                                compression, transportation, or on-site 
                                storage of carbon dioxide produced by 
                                the industrial carbon dioxide facility, 
                                or
                                    ``(II) integral or functionally 
                                related and subordinate to a process 
                                described in section 48B(c)(2), 
                                determined by substituting `carbon 
                                dioxide' for `carbon monoxide' in such 
                                section.
                    ``(B) Industrial carbon dioxide facility.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), the term `industrial carbon 
                        dioxide facility' means a facility that emits 
                        carbon dioxide (including from any fugitive 
                        emissions source) that is created as a result 
                        of any of the following processes:
                                    ``(I) Fuel combustion.
                                    ``(II) Gasification.
                                    ``(III) Bioindustrial.
                                    ``(IV) Fermentation.
                                    ``(V) Any manufacturing industry 
                                described in section 48B(c)(7).
                            ``(ii) Exceptions.--For purposes of clause 
                        (i), an industrial carbon dioxide facility 
                        shall not include--
                                    ``(I) any geological gas facility 
                                (as defined in clause (iii)), or
                                    ``(II) any air separation unit 
                                that--
                                            ``(aa) does not qualify as 
                                        gasification equipment, or
                                            ``(bb) is not a necessary 
                                        component of an oxy-fuel 
                                        combustion process.
                            ``(iii) Geological gas facility.--The term 
                        `geological gas facility' means a facility 
                        that--
                                    ``(I) produces a raw product 
                                consisting of gas or mixed gas and 
                                liquid from a geological formation,
                                    ``(II) transports or removes 
                                impurities from such product, or
                                    ``(III) separates such product into 
                                its constituent parts.
            ``(3) Capture and storage requirement.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                eligible components of an industrial carbon dioxide 
                facility shall have a capture and storage percentage 
                (as determined under subparagraph (C)) that is equal to 
                or greater than 65 percent.
                    ``(B) Exception.--In the case of an industrial 
                carbon dioxide facility with a capture and storage 
                percentage that is less than 65 percent, the percentage 
                of the cost of the eligible components installed in 
                such facility that may be financed with tax-exempt 
                bonds may not be greater than the capture and storage 
                percentage.
                    ``(C) Capture and storage percentage.--
                            ``(i) In general.--Subject to clause (ii), 
                        the capture and storage percentage shall be an 
                        amount, expressed as a percentage, equal to the 
                        quotient of--
                                    ``(I) the total metric tons of 
                                carbon dioxide annually captured, 
                                transported, and injected into--
                                            ``(aa) a facility for 
                                        geologic storage, or
                                            ``(bb) an enhanced oil or 
                                        gas recovery well followed by 
                                        geologic storage, divided by
                                    ``(II) the total metric tons of 
                                carbon dioxide which would otherwise be 
                                released into the atmosphere each year 
                                as industrial emission of greenhouse 
                                gas if the eligible components were not 
                                installed in the industrial carbon 
                                dioxide facility.
                            ``(ii) Limited application of eligible 
                        components.--In the case of eligible components 
                        that are designed to capture carbon dioxide 
                        solely from specific sources of emissions or 
                        portions thereof within an industrial carbon 
                        dioxide facility, the capture and storage 
                        percentage under this subparagraph shall be 
                        determined based only on such specific sources 
                        of emissions or portions thereof.''.
    (b) Volume Cap.--Section 146(g)(4) of such Code is amended by 
striking ``paragraph (11) of section 142(a) (relating to high-speed 
intercity rail facilities)'' and inserting ``paragraph (11) or (16) of 
section 142(a)''.
    (c) Clarification of Private Business Use.--Section 141(b)(6) of 
such Code is amended by adding at the end the following new 
subparagraph:
                    ``(C) Clarification relating to qualified carbon 
                dioxide capture facilities.--For purposes of this 
                subsection, the sale of carbon dioxide produced by a 
                qualified carbon dioxide capture facility (as defined 
                in section 142(n)) which is owned by a governmental 
                unit shall not constitute private business use.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2021.
                                 <all>