Carbon Capture Improvement Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3861 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 HOUSE OF REPRESENTATIVES JULY 19, 2019 Mr. BURCHETT 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 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 2019’’. 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 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 3861 IH 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, as well as the beneficial use of carbon dioxide 7 in enhanced oil recovery operations, with many man- 8 ufacturers and licensors of carbon dioxide capture 9 technology based in the United States. 10 (3) While the prospects for large-scale carbon 11 capture in the United States are promising, costs re- 12 main relatively high. Lowering the financing costs 13 for carbon dioxide capture projects would accelerate 14 the deployment of this technology, and if the cap- 15 tured carbon dioxide is subsequently sold for indus- 16 trial use, such as for use in enhanced oil recovery 17 operations, the economic prospects are further im- 18 proved. 19 (4) Since 1968, tax-exempt private activity 20 bonds have been used to provide access to lower-cost 21 financing for private businesses that are purchasing 22 new capital equipment for certain specified environ- 23 mental facilities, including facilities that reduce, re- 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 3861 IH cycle, or dispose of waste, pollutants, and hazardous 1 substances. 2 (5) Allowing tax-exempt financing for the pur- 3 chase of capital equipment that is used to capture 4 carbon dioxide will reduce the costs of developing 5 carbon dioxide capture projects, accelerate their de- 6 ployment, and, in conjunction with carbon dioxide 7 utilization and long-term storage, help the United 8 States meet critical environmental, economic, and 9 national security goals. 10 SEC. 3. CARBON DIOXIDE CAPTURE FACILITIES. 11 (a) IN GENERAL.—Section 142 of the Internal Rev- 12 enue Code of 1986 is amended— 13 (1) in subsection (a)— 14 (A) in paragraph (14), by striking ‘‘or’’ at 15 the end, 16 (B) in paragraph (15), by striking the pe- 17 riod at the end and inserting ‘‘, or’’, and 18 (C) by adding at the end the following new 19 paragraph: 20 ‘‘(16) qualified carbon dioxide capture facili- 21 ties.’’, and 22 (2) by adding at the end the following new sub- 23 section: 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 3861 IH ‘‘(n) QUALIFIED CARBON DIOXIDE CAPTURE FACIL- 1 ITY.— 2 ‘‘(1) IN GENERAL.—For purposes of subsection 3 (a)(16), the term ‘qualified carbon dioxide capture 4 facility’ means the eligible components of an indus- 5 trial carbon dioxide facility. 6 ‘‘(2) DEFINITIONS.—In this subsection: 7 ‘‘(A) ELIGIBLE COMPONENT.— 8 ‘‘(i) IN GENERAL.—The term ‘eligible 9 component’ means any equipment installed 10 in an industrial carbon dioxide facility that 11 satisfies the requirements under paragraph 12 (3) and is— 13 ‘‘(I) used for the purpose of cap- 14 ture, treatment and purification, com- 15 pression, transportation, or on-site 16 storage of carbon dioxide produced by 17 the industrial carbon dioxide facility, 18 or 19 ‘‘(II) integral or functionally re- 20 lated and subordinate to a process de- 21 scribed in section 48B(c)(2), deter- 22 mined by substituting ‘carbon dioxide’ 23 for ‘carbon monoxide’ in such section. 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 3861 IH ‘‘(B) INDUSTRIAL CARBON DIOXIDE FACIL- 1 ITY.— 2 ‘‘(i) IN GENERAL.—Except as pro- 3 vided in clause (ii), the term ‘industrial 4 carbon dioxide facility’ means a facility 5 that emits carbon dioxide (including from 6 any fugitive emissions source) that is cre- 7 ated as a result of any of the following 8 processes: 9 ‘‘(I) Fuel combustion. 10 ‘‘(II) Gasification. 11 ‘‘(III) Bioindustrial. 12 ‘‘(IV) Fermentation. 13 ‘‘(V) Any manufacturing industry 14 described in section 48B(c)(7). 15 ‘‘(ii) EXCEPTIONS.—For purposes of 16 clause (i), an industrial carbon dioxide fa- 17 cility shall not include— 18 ‘‘(I) any geological gas facility 19 (as defined in clause (iii)), or 20 ‘‘(II) any air separation unit 21 that— 22 ‘‘(aa) does not qualify as 23 gasification equipment, or 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 3861 IH ‘‘(bb) is not a necessary 1 component of an oxy-fuel com- 2 bustion process. 3 ‘‘(iii) GEOLOGICAL GAS FACILITY.— 4 The term ‘geological gas facility’ means a 5 facility that— 6 ‘‘(I) produces a raw product con- 7 sisting of gas or mixed gas and liquid 8 from a geological formation, 9 ‘‘(II) transports or removes im- 10 purities from such product, or 11 ‘‘(III) separates such product 12 into its constituent parts. 13 ‘‘(3) CAPTURE AND STORAGE REQUIREMENT.— 14 ‘‘(A) IN GENERAL.—Subject to subpara- 15 graph (B), the eligible components of an indus- 16 trial carbon dioxide facility shall have a capture 17 and storage percentage (as determined under 18 subparagraph (C)) that is equal to or greater 19 than 65 percent. 20 ‘‘(B) EXCEPTION.—In the case of an in- 21 dustrial carbon dioxide facility with a capture 22 and storage percentage that is less than 65 per- 23 cent, the percentage of the cost of the eligible 24 components installed in such facility that may 25 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 3861 IH be financed with tax-exempt bonds may not be 1 greater than the capture and storage percent- 2 age. 3 ‘‘(C) CAPTURE AND STORAGE PERCENT- 4 AGE.— 5 ‘‘(i) IN GENERAL.—Subject to clause 6 (ii), the capture and storage percentage 7 shall be an amount, expressed as a per- 8 centage, equal to the quotient of— 9 ‘‘(I) the total metric tons of car- 10 bon dioxide annually captured, trans- 11 ported, and injected into— 12 ‘‘(aa) a facility for geologic 13 storage, or 14 ‘‘(bb) an enhanced oil or gas 15 recovery well followed by geologic 16 storage, divided by 17 ‘‘(II) the total metric tons of car- 18 bon dioxide which would otherwise be 19 released into the atmosphere each 20 year as industrial emission of green- 21 house gas if the eligible components 22 were not installed in the industrial 23 carbon dioxide facility. 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 3861 IH ‘‘(ii) LIMITED APPLICATION OF ELIGI- 1 BLE COMPONENTS.—In the case of eligible 2 components that are designed to capture 3 carbon dioxide solely from specific sources 4 of emissions or portions thereof within an 5 industrial carbon dioxide facility, the cap- 6 ture and storage percentage under this 7 subparagraph shall be determined based 8 only on such specific sources of emissions 9 or portions thereof.’’. 10 (b) VOLUME CAP.—Section 146(g)(4) of such Code 11 is amended by striking ‘‘paragraph (11) of section 142(a) 12 (relating to high-speed intercity rail facilities)’’ and insert- 13 ing ‘‘paragraph (11) or (16) of section 142(a)’’. 14 (c) CLARIFICATION OF PRIVATE BUSINESS USE.— 15 Section 141(b)(6) of such Code is amended by adding at 16 the end the following new subparagraph: 17 ‘‘(C) CLARIFICATION RELATING TO QUALI- 18 FIED CARBON DIOXIDE CAPTURE FACILITIES.— 19 For purposes of this subsection, the sale of car- 20 bon dioxide produced by a qualified carbon di- 21 oxide capture facility (as defined in section 22 142(n)) which is owned by a governmental unit 23 shall not constitute private business use.’’. 24 VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 3861 IH (d) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to obligations issued after Decem- 2 ber 31, 2019. 3 Æ VerDate Sep 11 2014 02:03 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\H3861.IH H3861 pamtmann on DSKBFK8HB2PROD with BILLS