Renewable Chemicals Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2532 To amend the Internal Revenue Code of 1986 to provide credits for the production of renewable chemicals and investments in renewable chemical production facilities, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 14, 2021 Mr. PASCRELL (for himself and Mr. FITZPATRICK) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide credits for the production of renewable chemicals and investments in renewable chemical production facilities, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Renewable Chemicals 4 Act of 2021’’. 5 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 2532 IH SEC. 2. CREDITS FOR PRODUCTION OF RENEWABLE CHEMI- 1 CALS AND INVESTMENTS IN RENEWABLE 2 CHEMICAL PRODUCTION FACILITIES. 3 (a) PRODUCTION OF RENEWABLE CHEMICALS.— 4 (1) IN GENERAL.—Subpart D of part IV of 5 subchapter A of chapter 1 of the Internal Revenue 6 Code of 1986 is amended by adding at the end the 7 following new section: 8 ‘‘SEC. 45U. CREDIT FOR PRODUCTION OF RENEWABLE 9 CHEMICALS. 10 ‘‘(a) IN GENERAL.—For purposes of section 38, the 11 production credit for renewable chemicals for any taxable 12 year is an amount (determined separately for each renew- 13 able chemical) equal to— 14 ‘‘(1) 15 percent of the sales price of each pound 15 of a renewable chemical— 16 ‘‘(A) produced— 17 ‘‘(i) by the taxpayer, or 18 ‘‘(ii) for the taxpayer by a contract 19 manufacturer under a binding written 20 agreement, and 21 ‘‘(B) sold for its fair market value at retail 22 by the taxpayer during the taxable year, re- 23 duced by 24 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 2532 IH ‘‘(2) a percentage equal to so much of the per- 1 centage of the renewable chemical as is not biobased 2 content. 3 ‘‘(b) LIMITATION.—The amount of the credit deter- 4 mined under subsection (a) with respect to a renewable 5 chemical sold during any taxable year shall not exceed the 6 credit amount allocated for purposes of this section by the 7 Secretary to the taxpayer with respect to such chemical 8 for such taxable year under section 48E. 9 ‘‘(c) DEFINITIONS.—For purposes of this section— 10 ‘‘(1) RENEWABLE CHEMICAL.—The term ‘re- 11 newable chemical’ means any chemical which— 12 ‘‘(A) is produced in the United States (or 13 in a territory or possession of the United 14 States) from renewable biomass, 15 ‘‘(B) is not less than 95 percent biobased 16 content, 17 ‘‘(C) is not sold or used for the production 18 of any food, feed, fuel, or pharmaceuticals, 19 ‘‘(D) is approved to use the USDA Cer- 20 tified Biobased Product label under section 21 9002(b) of the Farm Security and Rural In- 22 vestment Act of 2002 (7 U.S.C. 8102(b)), and 23 ‘‘(E) is a chemical intermediate (as such 24 term is defined in section 3201.109 of title 7, 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 2532 IH Code of Federal Regulations (or successor regu- 1 lations)). 2 ‘‘(2) BIOBASED CONTENT.—The term ‘biobased 3 content’ means, with respect to any renewable chem- 4 ical, the biobased content of the total mass of or- 5 ganic carbon in such chemical (expressed as a per- 6 centage), determined by testing representative sam- 7 ples using the American Society for Testing and Ma- 8 terials (ASTM) D6866. 9 ‘‘(3) RENEWABLE BIOMASS.—The term ‘renew- 10 able biomass’ has the meaning given such term in 11 section 9001(13) of the Farm Security and Rural 12 Investment Act of 2002 (7 U.S.C. 8101(13)). 13 ‘‘(d) NATIONAL LIMITATION ON CREDITS FOR RE- 14 NEWABLE CHEMICALS.—See section 48E(e) for rules re- 15 lating to national limitation on credits under this section. 16 ‘‘(e) COORDINATION WITH INVESTMENT CREDIT FOR 17 RENEWABLE CHEMICAL PRODUCTION FACILITIES.—See 18 section 48E(f) for rules coordinating section 48E with this 19 section. 20 ‘‘(f) TERMINATION.—Notwithstanding any other pro- 21 vision of this section or section 48E, the Secretary may 22 not allocate any credit amount under this section to any 23 taxable year which begins more than 5 years after the date 24 of the enactment of this section.’’. 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 2532 IH (2) CREDIT TO BE PART OF GENERAL BUSI- 1 NESS CREDIT.—Subsection (b) of section 38 of such 2 Code is amended by striking ‘‘plus’’ at the end of 3 paragraph (32), by striking the period at the end of 4 paragraph (33) and inserting ‘‘, plus’’, and by add- 5 ing at the end the following new paragraph: 6 ‘‘(34) the renewable chemicals production credit 7 determined under section 45U(a).’’. 8 (b) INVESTMENT CREDIT IN LIEU OF PRODUCTION 9 CREDIT.— 10 (1) IN GENERAL.—Section 46 of the Internal 11 Revenue Code of 1986 is amended by striking ‘‘and’’ 12 at the end of paragraph (5), by striking the period 13 at the end of paragraph (6) and inserting ‘‘, and’’, 14 and by adding at the end the following new para- 15 graph: 16 ‘‘(7) the renewable chemical production facili- 17 ties credit.’’. 18 (2) RENEWABLE CHEMICAL PRODUCTION FA- 19 CILITIES CREDIT.—Subpart E of part IV of sub- 20 chapter A of chapter 1 of such Code is amended by 21 inserting after section 48D the following: 22 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 2532 IH ‘‘SEC. 48E. INVESTMENT CREDIT FOR RENEWABLE CHEM- 1 ICAL PRODUCTION FACILITIES. 2 ‘‘(a) IN GENERAL.—For purposes of section 46, the 3 renewable chemical production facilities credit for any tax- 4 able year is an amount equal to 30 percent of the basis 5 of any eligible property which is a part of a renewable 6 chemical production facility placed in service by the tax- 7 payer during such taxable year. 8 ‘‘(b) LIMITATION.—The amount of the credit deter- 9 mined under subsection (a) with respect to a renewable 10 chemical production facility of the taxpayer during any 11 taxable year shall not exceed the credit amount allocated 12 for purposes of this section by the Secretary to the tax- 13 payer for such taxable year under subsection (e). 14 ‘‘(c) RENEWABLE CHEMICAL PRODUCTION FACIL- 15 ITY.—For purposes of this section— 16 ‘‘(1) IN GENERAL.—The term ‘renewable chem- 17 ical production facility’ means a facility— 18 ‘‘(A) which is owned by the taxpayer, 19 ‘‘(B) which is originally placed in service 20 after the date of the enactment of this section 21 and before the first day of the taxable year 22 which begins 6 years after the date of the en- 23 actment of this section, 24 ‘‘(C) with respect to which— 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 2532 IH ‘‘(i) no credit has been allowed under 1 section 45U for chemicals produced at 2 such facility in any previous taxable year, 3 and 4 ‘‘(ii) the taxpayer makes an irrev- 5 ocable election to have this section apply, 6 and 7 ‘‘(D) which is primarily used to produce 8 renewable chemicals. 9 ‘‘(2) ELIGIBLE PROPERTY.—The term ‘eligible 10 property’ means any property— 11 ‘‘(A) which is— 12 ‘‘(i) tangible personal property, or 13 ‘‘(ii) other tangible property (not in- 14 cluding a building or its structural compo- 15 nents), 16 but only if such property is used as an integral 17 part of the renewable chemical production facil- 18 ity, and 19 ‘‘(B) with respect to which depreciation (or 20 amortization in lieu of depreciation) is allow- 21 able. 22 ‘‘(3) RENEWABLE CHEMICAL.—The term ‘re- 23 newable chemical’ has the meaning given such term 24 by section 45U(c)(1). 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 2532 IH ‘‘(d) CERTAIN QUALIFIED PROGRESS EXPENDI- 1 TURES RULES MADE APPLICABLE.—Rules similar to the 2 rules of subsections (c)(4) and (d) of section 46 (as in 3 effect on the day before the enactment of the Revenue 4 Reconciliation Act of 1990) shall apply for purposes of 5 this section. 6 ‘‘(e) NATIONAL LIMITATION ON CREDITS FOR RE- 7 NEWABLE CHEMICALS.— 8 ‘‘(1) IN GENERAL.—Not later than 180 days 9 after the date of the enactment of this section, the 10 Secretary, in consultation with the Secretary of Ag- 11 riculture, shall establish a program to allocate credit 12 amounts under this section and section 45U to tax- 13 payers who produce renewable chemicals for taxable 14 years ending after the date of the enactment of this 15 section. 16 ‘‘(2) LIMITATIONS.— 17 ‘‘(A) AGGREGATE LIMITATION.—The total 18 amount of credits that may be allocated under 19 such program shall not exceed $500,000,000. 20 ‘‘(B) TAXPAYER LIMITATION.—The 21 amount of credits that may be allocated to any 22 taxpayer under such program shall not exceed 23 $125,000,000. For purposes of the preceding 24 sentence, all persons treated as a single em- 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 2532 IH ployer under subsection (a) or (b) of section 52, 1 or subsection (m) or (o) of section 414, shall be 2 treated as one taxpayer. 3 ‘‘(3) SELECTION CRITERIA.—In determining to 4 which taxpayers to make allocations of the credit 5 amount under such program, the Secretary shall 6 take into consideration— 7 ‘‘(A) the number of jobs created and main- 8 tained (directly and indirectly) in the United 9 States (including territories and possessions of 10 the United States) as a result of such allocation 11 during the credit period and thereafter, 12 ‘‘(B) the degree to which the production of 13 the renewable chemical demonstrates reduced 14 dependence on imported feedstocks, petroleum, 15 non-renewable resources, or other fossil fuels, 16 ‘‘(C) the technological innovation involved 17 in the production method of the renewable 18 chemical, 19 ‘‘(D) the energy efficiency and reduction in 20 lifecycle greenhouse gases of the renewable 21 chemical or of the production method of the re- 22 newable chemical, 23 ‘‘(E) whether there is a reasonable expec- 24 tation of commercial viability, 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 2532 IH ‘‘(F) whether the renewable chemical has 1 an established market, and 2 ‘‘(G) whether the renewable chemical is 3 currently being produced in commercial quan- 4 tities. 5 ‘‘(4) REVIEW AND REALLOCATION.— 6 ‘‘(A) REVIEW.—Not later than 6 years 7 after the date of the enactment of this section, 8 the Secretary shall review the credits allocated 9 under this section. 10 ‘‘(B) REALLOCATION.—If the Secretary 11 determines that unused credits are available for 12 reallocation after the review described in sub- 13 paragraph (A), the Secretary is authorized to 14 conduct an additional program for applications 15 for certification. 16 ‘‘(5) DISCLOSURE OF ALLOCATIONS.—The Sec- 17 retary shall, upon making an allocation of credit 18 amount under this section, publicly disclose the iden- 19 tity of the taxpayer and the amount of the credit 20 with respect to such taxpayer. 21 ‘‘(f) COORDINATION WITH PRODUCTION CREDIT FOR 22 RENEWABLE CHEMICALS.—If a taxpayer makes an elec- 23 tion under subsection (c)(1)(C)(ii) with respect to a renew- 24 able chemical production facility, a credit shall not be al- 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 2532 IH lowed under section 45U for any renewable chemical pro- 1 duced by such facility. 2 ‘‘(g) REGULATIONS.—The Secretary shall issue such 3 regulations or other guidance as may be necessary to carry 4 out this section and section 45U. 5 ‘‘(h) TERMINATION.—The Secretary may not allocate 6 any credit amount under this section to any taxable year 7 which begins more than 5 years after the date of the en- 8 actment of this section.’’. 9 (c) CREDITS ALLOWABLE AGAINST ALTERNATIVE 10 MINIMUM TAX.—Subparagraph (B) of section 38(c)(4) of 11 the Internal Revenue Code of 1986 is amended by redesig- 12 nating clauses (x) through (xii) as clauses (xii) through 13 (xiv), respectively, and by inserting after clause (ix) the 14 following new clauses: 15 ‘‘(x) the credit determined under sec- 16 tion 45U, 17 ‘‘(xi) the credit determined under sec- 18 tion 46 to the extent that such credit is at- 19 tributable to the renewable chemical pro- 20 duction facilities credit under section 21 48E,’’. 22 (d) CLERICAL AMENDMENTS.— 23 (1) The table of sections for subpart D of part 24 IV of subchapter A of chapter 1 of the Internal Rev- 25 VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 2532 IH enue Code of 1986 is amended by adding at the end 1 the following new item: 2 ‘‘Sec. 45U. Credit for production of renewable chemicals.’’. (2) The table of sections for subpart E of part 3 IV of subchapter A of chapter 1 of such Code is 4 amended by adding at the end the following new 5 item: 6 ‘‘Sec. 48E. Investment credit for renewable chemical production facilities.’’. (e) EFFECTIVE DATES.—The amendments made by 7 this section shall apply to renewable chemicals produced 8 and renewable chemical production facilities placed in 9 service after the date of the enactment of this Act, in tax- 10 able years ending after such date. 11 Æ VerDate Sep 11 2014 08:56 May 28, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6301 E:\BILLS\H2532.IH H2532 kjohnson on DSK79L0C42PROD with BILLS