Sec. 203. Variable price support for carbon dioxide sequestration
1,571 words·~7 min read·
/bill/113/s/2152/is/section-203A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
In this section: The term carbon dioxide price difference means the amount calculated in accordance with subsection (f)(1). The term design capacity means a project that has the capacity to capture— not fewer than 3,000,000 tons of carbon dioxide annually; or fewer than 3,000,000 tons of carbon dioxide annually if agreed to by the Secretary and project owner. The term eligible project means a project that— captures and sells carbon dioxide that is used for enhanced recovery and generates electricity or gaseous or liquid fuels, or is a qualified polygeneration plant (as defined in section 48E(c) of the Internal Revenue Code of 1986); is located in the United States; uses coal as not less than 75 percent of the project fuel source; captures not less than 50 percent of carbon dioxide produced by coal conversion; has reached design capacity; and has a contract with an enhanced recovery company that is for a period that is equal to or greater than the subsidy period.
The term enhanced recovery means enhanced oil recovery and enhanced gas recovery. The term lowest bid means a bid made by an applicant to the program that has the least cost to the Federal Government, as compared to competing bids. The term market price of oil means the price of oil as reported in a public oil market index such as the New York Mercantile Exchange. The term program means the Enhanced Recovery Program established under subsection (b). The term qualifying carbon dioxide means carbon dioxide that is captured from an eligible project and is eligible for variable price support.
The term rate means the ratio bid by the project owner of the price of carbon dioxide to the market price of oil, and that is used to calculate the synthetic price of carbon dioxide. The term Secretary means the Secretary of Energy. The term strike price of carbon dioxide means the price of carbon dioxide bid by the project owner— below which a project will receive a subsidy; and above which the project owner will make payments to the Federal Government. The term subsidy period means the period of time, not to exceed 10 years, bid by the project owner during which the eligible project will be eligible to receive a subsidy under this section.
The term synthetic price of carbon dioxide means the price of carbon dioxide calculated by multiplying the market price of oil by the rate. The term variable price support means financial support provided by the Federal Government in an amount equal to the carbon dioxide price difference for each ton of qualifying carbon dioxide provided directly to the owner of an eligible project selected to receive assistance under this section. There is established in the Department of Energy a variable price support program, to be known as the Enhanced Recovery Program , to accelerate the construction and operation of eligible advanced coal-fueled projects that capture carbon dioxide emissions and sell or use the carbon dioxide for enhanced recovery.
The purpose of the program shall be— to reduce the cost of carbon capture by providing variable price support to carbon capture and sequestration project owners to enable the owner to finance eligible projects; to advance the development and widespread use of carbon capture technology; and to increase the domestic production of oil and natural gas in the United States. In carrying out the program, the Secretary, in consultation with the Secretary of the Treasury, is authorized to provide variable price support for eligible projects— for which an application is submitted to the Secretary under subsection (d); that are selected under the competitive bidding process under subsection (e); and for which a variable price support agreement to implement the payment terms described in subsections
(f)and
(g)is executed. The Secretary shall provide variable price support to an eligible project under this section for a period of not more than 10 years beginning on the date on which the eligible project reaches design capacity. To be eligible to receive variable price support under paragraph (1), a project owner shall enter into a profit-sharing agreement with the Secretary at the time that the variable price support agreement is executed. Once every calendar quarter, for each project owner subject to a profit-sharing agreement executed under subparagraph (A), the Secretary shall calculate whether the synthetic price of carbon dioxide is greater than the strike price of carbon dioxide, and, if so, request from the project owner a profit-sharing payment for that quarter, in an amount equal to— the difference between the synthetic price of carbon dioxide and the strike price of carbon dioxide; less any repayments made under subsection
(g)during that calendar quarter. An owner of an eligible project desiring variable price support under this section shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require. Once every year, the Secretary shall solicit bids from applicants for an allocation of the funding made available under subsection
(h)to provide variable price support to eligible projects. Applicants participating in the competitive bidding process shall submit a bid for an eligible project that includes— the strike price of carbon dioxide for a ton of qualifying carbon dioxide; a rate; a plan for the project for a period of not more than 10 years; and the projected tonnage of qualifying carbon dioxide that the eligible project will capture and sell for enhanced recovery over the project period. For each fiscal year, the Secretary shall— determine the cost to the Federal Government of each bid submitted under paragraph (2); and select 1 or more of the lowest bids until all of the available funding authorized by subsection
(h)is obligated; or if the Secretary determines that no bids submitted under paragraph
(2)are acceptable to the Secretary, reject the bids. In carrying out a variable price support agreement entered into under subsection (c), the Secretary shall calculate the carbon dioxide price difference as a dollar amount equal to— the strike price of carbon dioxide; less the synthetic price of carbon dioxide in a qualifying ton. Payments between the Secretary and the project owner shall be made as follows: If the amount calculated in paragraph
(1)is a positive number, the Secretary shall pay to the project owner an amount equal to the product obtained by multiplying— the carbon dioxide price difference calculated under paragraph (1); and the quantity in tons of qualifying carbon dioxide sold for enhanced recovery. If the amount calculated in paragraph
(1)is a negative number, the project owner shall pay to the Secretary an amount equal to the product obtained by multiplying— the absolute value of the carbon dioxide price difference calculated under paragraph (1); and the quantity in tons of qualifying carbon dioxide sold for enhanced recovery. Payments between the Secretary and the project owner made under subparagraphs
(A)and
(B)shall be reconciled on an annual basis based on— daily carbon dioxide sales records reported by the project owner; and the daily price of West Texas intermediate crude oil listed in the New York Mercantile Exchange. The Secretary shall establish terms and conditions for a variable price support agreement entered into under subsection (c)(1)(C). The repayment terms of any variable price support agreement shall commence if, during the subsidy period of the agreement, and subject to the limitations described in paragraph (3), the amount calculated under subsection (f)(1) is a positive number. The repayment terms described in paragraph
(2)shall be subject to the following limitations: If, during any calendar quarter during the subsidy period of the variable price support agreement, the synthetic price of carbon dioxide is less than the strike price of carbon dioxide, the project owner may elect to defer all or part of the repayment obligations of the project owner due in that quarter and any unpaid obligations will continue to accrue interest. If, during any calendar quarter during the subsidy period of the variable price support agreement, the synthetic price of carbon dioxide is greater than the strike price of carbon dioxide, the project owner— shall meet the scheduled repayment obligations plus any deferred repayment obligations; but shall not be required to pay in that quarter an amount that is greater than the amount equal to the product obtained by multiplying— the excess of the synthetic price of carbon dioxide over the strike price of carbon dioxide; and the output of the project. At the end of the subsidy period of the agreement, the cumulative amount of any deferred repayment obligations, together with accrued interest, shall be amortized (with interest) over the remainder of the full term of the agreement. Prior to selecting bids under subsection (e)(3) for a fiscal year, the Secretary shall make available to carry out the program the following amounts, to be allocated from unobligated funds of the Department of Energy. Years: Available Credit: Year 1 $1,350,000 Year 2 $1,350,000 Year 3 $1,350,000 Year 4 $2,700,000 Year 5 $2,700,000 Year 6 $2,700,000 Year 7 $4,050,000 Year 8 $5,400,000 Year 9 and thereafter $6,750,000. If the amounts made available under paragraph
(1)for a fiscal year are not used during the applicable fiscal year— the program shall be extended for an additional fiscal year; and the amounts authorized under paragraph
(1)that were not used during the applicable fiscal year shall be carried over to carry out the program during the additional fiscal year.