Carbon Capture Improvement Act of 2021

II 117TH CONGRESS 1ST SESSION S. 1829 To amend the Internal Revenue Code of 1986 to provide for the issuance of exempt facility bonds for qualified carbon dioxide capture facilities. IN THE SENATE OF THE UNITED STATES MAY 26, 2021 Mr. BENNET (for himself and Mr. PORTMAN) 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 provide for the issuance of exempt facility bonds for qualified carbon dioxide capture facilities. 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 ‘‘Carbon Capture Im- 4 provement Act of 2021’’. 5 SEC. 2. FINDINGS. 6 Congress finds the following: 7 (1) Capture and long-term storage of carbon di- 8 oxide from coal, natural gas, and biomass-fired 9 power plants, as well as from industrial sectors such 10 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 2 •S 1829 IS as oil refining and production of fertilizer, cement, 1 and ethanol, can help protect the environment while 2 improving the economy and national security of the 3 United States. 4 (2) The United States is a world leader in the 5 field of carbon dioxide capture and long-term stor- 6 age, with many manufacturers and licensors of car- 7 bon dioxide capture technology based in the United 8 States. 9 (3) While the prospects for large-scale carbon 10 capture in the United States are promising, costs re- 11 main relatively high. Lowering the financing costs 12 for carbon dioxide capture at industrial facilities and 13 direct air capture projects would accelerate the de- 14 ployment of these technologies. 15 (4) Since 1968, tax-exempt private activity 16 bonds have been used to provide access to lower-cost 17 financing for private businesses that are purchasing 18 new capital equipment for certain specified environ- 19 mental facilities, including facilities that reduce, re- 20 cycle, or dispose of waste, pollutants, and hazardous 21 substances. 22 (5) Allowing tax-exempt financing for the pur- 23 chase of capital equipment that is used to capture 24 carbon dioxide will reduce the costs of developing 25 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 3 •S 1829 IS carbon dioxide capture projects, accelerate their de- 1 ployment, and, in conjunction with carbon dioxide 2 utilization and long-term storage, help the United 3 States meet critical environmental, economic, and 4 national security goals. 5 SEC. 3. CARBON DIOXIDE CAPTURE FACILITIES. 6 (a) IN GENERAL.—Section 142 of the Internal Rev- 7 enue Code of 1986 is amended— 8 (1) in subsection (a)— 9 (A) in paragraph (14), by striking ‘‘or’’ at 10 the end, 11 (B) in paragraph (15), by striking the pe- 12 riod at the end and inserting ‘‘, or’’, and 13 (C) by adding at the end the following new 14 paragraph: 15 ‘‘(16) qualified carbon dioxide capture facili- 16 ties.’’, and 17 (2) by adding at the end the following new sub- 18 section: 19 ‘‘(n) QUALIFIED CARBON DIOXIDE CAPTURE FACIL- 20 ITY.— 21 ‘‘(1) IN GENERAL.—For purposes of subsection 22 (a)(16), the term ‘qualified carbon dioxide capture 23 facility’ means— 24 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 4 •S 1829 IS ‘‘(A) the eligible components of an indus- 1 trial carbon dioxide facility, and 2 ‘‘(B) a direct air capture facility (as de- 3 fined in section 45Q(e)(1)). 4 ‘‘(2) DEFINITIONS.—In this subsection: 5 ‘‘(A) ELIGIBLE COMPONENT.— 6 ‘‘(i) IN GENERAL.—The term ‘eligible 7 component’ means any equipment installed 8 in an industrial carbon dioxide facility that 9 satisfies the requirements under paragraph 10 (3) and is— 11 ‘‘(I) used for the purpose of cap- 12 ture, treatment and purification, com- 13 pression, transportation, or on-site 14 storage of carbon dioxide produced by 15 the industrial carbon dioxide facility, 16 or 17 ‘‘(II) integral or functionally re- 18 lated and subordinate to a process de- 19 scribed in section 48B(c)(2), deter- 20 mined by substituting ‘carbon dioxide’ 21 for ‘carbon monoxide’ in such section. 22 ‘‘(B) INDUSTRIAL CARBON DIOXIDE FACIL- 23 ITY.— 24 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 5 •S 1829 IS ‘‘(i) IN GENERAL.—Except as pro- 1 vided in clause (ii), the term ‘industrial 2 carbon dioxide facility’ means a facility 3 that emits carbon dioxide (including from 4 any fugitive emissions source) that is cre- 5 ated as a result of any of the following 6 processes: 7 ‘‘(I) Fuel combustion. 8 ‘‘(II) Gasification. 9 ‘‘(III) Bioindustrial. 10 ‘‘(IV) Fermentation. 11 ‘‘(V) Any manufacturing industry 12 described in section 48B(c)(7). 13 ‘‘(ii) EXCEPTIONS.—For purposes of 14 clause (i), an industrial carbon dioxide fa- 15 cility shall not include— 16 ‘‘(I) any geological gas facility 17 (as defined in clause (iii)), or 18 ‘‘(II) any air separation unit 19 that— 20 ‘‘(aa) does not qualify as 21 gasification equipment, or 22 ‘‘(bb) is not a necessary 23 component of an oxy-fuel com- 24 bustion process. 25 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 6 •S 1829 IS ‘‘(iii) GEOLOGICAL GAS FACILITY.— 1 The term ‘geological gas facility’ means a 2 facility that— 3 ‘‘(I) produces a raw product con- 4 sisting of gas or mixed gas and liquid 5 from a geological formation, 6 ‘‘(II) transports or removes im- 7 purities from such product, or 8 ‘‘(III) separates such product 9 into its constituent parts. 10 ‘‘(3) CAPTURE AND STORAGE REQUIREMENT.— 11 ‘‘(A) IN GENERAL.—Subject to subpara- 12 graph (B), the eligible components of an indus- 13 trial carbon dioxide facility shall have a capture 14 and storage percentage (as determined under 15 subparagraph (C)) that is equal to or greater 16 than 65 percent. 17 ‘‘(B) EXCEPTION.—In the case of an in- 18 dustrial carbon dioxide facility with a capture 19 and storage percentage that is less than 65 per- 20 cent, the percentage of the cost of the eligible 21 components installed in such facility that may 22 be financed with tax-exempt bonds may not be 23 greater than the capture and storage percent- 24 age. 25 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 7 •S 1829 IS ‘‘(C) CAPTURE AND STORAGE PERCENT- 1 AGE.— 2 ‘‘(i) IN GENERAL.—Subject to clause 3 (ii), the capture and storage percentage 4 shall be an amount, expressed as a per- 5 centage, equal to the quotient of— 6 ‘‘(I) the total metric tons of car- 7 bon dioxide annually captured, trans- 8 ported, and injected into— 9 ‘‘(aa) a facility for geologic 10 storage, or 11 ‘‘(bb) an enhanced oil or gas 12 recovery well followed by geologic 13 storage, divided by 14 ‘‘(II) the total metric tons of car- 15 bon dioxide which would otherwise be 16 released into the atmosphere each 17 year as industrial emission of green- 18 house gas if the eligible components 19 were not installed in the industrial 20 carbon dioxide facility. 21 ‘‘(ii) LIMITED APPLICATION OF ELIGI- 22 BLE COMPONENTS.—In the case of eligible 23 components that are designed to capture 24 carbon dioxide solely from specific sources 25 VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS 8 •S 1829 IS of emissions or portions thereof within an 1 industrial carbon dioxide facility, the cap- 2 ture and storage percentage under this 3 subparagraph shall be determined based 4 only on such specific sources of emissions 5 or portions thereof.’’. 6 (b) VOLUME CAP.—Section 146(g)(4) of such Code 7 is amended by striking ‘‘paragraph (11) of section 142(a) 8 (relating to high-speed intercity rail facilities)’’ and insert- 9 ing ‘‘paragraph (11) or (16) of section 142(a)’’. 10 (c) CLARIFICATION OF PRIVATE BUSINESS USE.— 11 Section 141(b)(6) of such Code is amended by adding at 12 the end the following new subparagraph: 13 ‘‘(C) CLARIFICATION RELATING TO QUALI- 14 FIED CARBON DIOXIDE CAPTURE FACILITIES.— 15 For purposes of this subsection, the sale of car- 16 bon dioxide produced by a qualified carbon di- 17 oxide capture facility (as defined in section 18 142(n)) which is owned by a governmental unit 19 shall not constitute private business use.’’. 20 (d) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to obligations issued after Decem- 22 ber 31, 2021. 23 Æ VerDate Sep 11 2014 02:01 Jun 11, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\S1829.IS S1829 kjohnson on DSK79L0C42PROD with BILLS