Sec. 311. Carbon-targeted zero-emission electricity tax credit
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Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following: For purposes of section 38, the carbon-targeted zero-emission electricity tax credit for any taxable year is an amount equal to the product of— 2.4 cents, multiplied by the kilowatt hours of electricity— produced by the taxpayer— from qualified energy resources, and at a qualified facility, and sold by the taxpayer to an unrelated person during the taxable year.
A qualified facility shall receive an additional 0.5 cents per KWh if such facility is placed in service on a brownfield site (as defined in 42 U.S.C. 9601(39) ), landfill, abandoned mine, or reclamation site. The Secretary shall develop an additional credit, in consultation with the Secretary of Agriculture and the Director of the Fish and Wildlife Service, for new development or redevelopment projects on degraded lands that would enhance ecological co-benefits including— biodiversity, habitat connectivity, and water quality.
In the case of a qualified facility that produces electricity through combustion or gasification of a non-fossil fuel, the carbon dioxide emissions rate for such facility shall be equal to the net rate of carbon dioxide emitted into the atmosphere by such facility (taking into account the amount of lifecycle greenhouse gas emissions), in the production of electricity, expressed as grams of CO2e per KWh. In the case of biomass-based electricity production, a qualified facility must meet the required definition of renewable biomass.
For purposes of this subsection, the amount of greenhouse gases emitted into the atmosphere by a qualified facility in the production of electricity shall not include any qualified carbon dioxide or other carbon oxide (as defined in section 45Q(c)(1)(B)) that is captured by the taxpayer and— disposed of by the taxpayer in secure geological storage in a manner that satisfies the measures established by regulation under section 45Q(f)(2), or utilized by the taxpayer in a manner described in section 45Q(f)(5).
Consumption or sales shall be taken into account under this section only with respect to electricity, the production of which is within the United States or any territory or possession of the United States. For purposes of paragraph (1)(C), the kilowatt hours of electricity produced by a taxpayer at a qualified facility shall include any production in the form of useful thermal energy by any combined heat and power system property within such facility. In the case of a calendar year beginning after 2022, the 2.4 cent amount in subsection (b)(1)(A) shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale or use of the electricity occurs.
If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent. The Secretary shall, not later than April 1 of each calendar year, determine and publish in the Federal Register the inflation adjustment factor for such calendar year in accordance with this subsection. The term inflation adjustment factor means, with respect to a calendar year, a fraction, the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 2021.
The term GDP implicit price deflator means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year. For purposes of this section— For purposes of this section, the term carbon dioxide emissions rate means the amount of carbon dioxide emitted into the atmosphere by a qualified facility in the production of electricity, expressed as grams of CO2e per KWh. CO2 e per KWh The term CO2e per KWh means, with respect to any greenhouse gas, the equivalent volume of carbon dioxide emitted (as determined based on relative global warming potential) per kilowatt hour of electricity produced.
The term qualified facility means a facility that is— used for the generation of electricity, and originally placed in service after December 31, 2021, and before the United States electricity-generating sector emits a net total of zero carbon dioxide-equivalent emissions, after accounting for carbon dioxide removal strategies, located in a qualifying State, and certified to produce electricity at a carbon dioxide emission rate below the qualifying facility emission rate. For purposes of this section, a facility shall only be treated as a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.
In the case of a facility that was placed in service before January 1, 2022, but is otherwise described in paragraph (3), such facility shall be a qualified facility, but only to the extent of the increased amount of electricity produced at the facility by reason of the following: a new unit placed in service after December 31, 2021, or any efficiency improvements or additions of capacity placed in service after December 31, 2021. The qualified facility emission rate is 150 grams of CO2e per KWh.
The term qualifying state means a state determined by the Secretary, in consultation with the Secretary of Energy, to have an above-median marginal carbon dioxide emission rate for the electricity sector. The Secretary shall annually publish the list of such States. The term marginal carbon dioxide emission rate is defined as the short-run marginal emission rate for end-use load, which is the rate of emissions that would be induced by a marginal increase in a region’s load at a specific point in time.
The value is the emission rate of whichever generator would have served the marginal increase in load, modified by any relevant transmission, distribution, and efficiency losses. For purposes of this paragraph, the term combined heat and power system property has the same meaning given such term by section 48(c)(3) (without regard to subparagraphs (A)(iv), (B), and
(D)thereof). The term renewable biomass means— crop byproducts or crop residues that— are harvested from actively managed or fallow agricultural land that is cleared prior to January 1, 2021, and are procured at a rate that adequately maintains soil carbon and prevents erosion; closed-loop biomass as defined in section 1914(c)(B)(2) of the Energy Policy Act of 1992 harvested from land cleared prior to January 1, 2021; byproducts of wood or paper mill operations, including lignin in spent pulping liquors; algae; nonhazardous plant matter derived from waste— including separated yard waste, landscape right-of-way trimmings, and food waste; but not including municipal solid waste, recyclable waste paper, painted, treated or pressurized wood, or wood contaminated with plastic or metals; and vegetative matter removed from within 200 yards of any man-made structure or campground for the purposes of hazardous fuels thinning. Notwithstanding subparagraph (A), except as provided in clause (ii), the term renewable biomass does not include any matter derived from a plant that is invasive or noxious, or from a species or variety of plants that credible risk assessment tools or other credible sources determine is potentially invasive, as determined by the Secretary, in consultation with other appropriate Federal or State departments and agencies. The term renewable biomass includes matter derived from a plant that is invasive or noxious, or from a species or variety of plants that credible risk assessment tools or other credible sources determine is potentially invasive, if— the matter was removed for purposes of control or eradication of the invasive, noxious, or potentially invasive plant; and the invasive, noxious, or potentially invasive plant was not planted for the purpose of using the plant as an energy crop. The term degraded lands means land that has lost a large degree of its natural productivity due to human-caused processes, the scope of which shall be defined by the Secretary, in consultation with the Secretary of Agriculture and the Director of the Fish and Wildlife Service. If, with respect to a credit under subsection
(a)for any taxable year— a qualified facility would be the taxpayer (but for this subparagraph), such facility elects the application of this paragraph for such taxable year with respect to all (or any portion specified in such election) of such credit, and the eligible project partner specified in such election, and not the qualified facility, shall be treated as the taxpayer for purposes of this title with respect to such credit (or such portion thereof). For purposes of this paragraph, the term eligible project partner means any person who— is responsible for, or participates in, the design or construction of the qualified facility to which the credit under subsection
(a)relates, is a financial institution providing financing for the construction or operation of such facility, or has an ownership interest in such facility. In the case of a qualified facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility. Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling electricity to an unrelated person if such electricity is sold to such a person by another member of such group. Under regulations prescribed by the Secretary, rules similar to the rules of subsection
(d)of section 52 shall apply. For purposes of subsection (b)(3), the Secretary shall take into consideration only those facilities that— ensure laborers and mechanics employed by contractors and subcontractors in the performance of any qualifying advanced energy project shall be paid wages at rates not less than the prevailing rates on projects of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code, ensure that, to the maximum extent feasible, iron, steel, and manufactured products used in the facility are produced in the United States, and prioritize hiring of dislocated workers who were previously employed in manufacturing, coal power plants, or coal mining. . The Secretary of the Treasury shall implement the carbon-targeted zero-emission electricity tax credit under section 45 of the Internal Revenue Code of 1986, as added by this Act, in consultation with the Secretary of Energy. Section 38(b) is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph
(33)and inserting , plus , and by adding at the end the following new paragraph: the carbon-targeted zero-emission electricity tax credit determined under section 45U. . The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item: Sec. 45U. Carbon-targeted zero-emission electricity tax credit. . The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.
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Sec. 311
Carbon-targeted zero-emission electricity tax credit
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