Sec. 101. Carbon dioxide and other greenhouse gas emission fees

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Chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end thereof the following new subchapter: Sec. 4691. Fee for carbon dioxide emissions. Sec. 4692. Fee on fluorinated greenhouse gases. Sec. 4693. Fee on facilities that emit greenhouse gases from processes other than fossil fuel combustion. Sec. 4694. Methane and associated emissions from the fossil fuel supply chain. Sec. 4695. Border adjustments for energy-intensive manufactured goods. Sec. 4696. Definitions and other rules. There is hereby imposed a fee in an amount equal to the applicable amount at the rate specified in paragraph

(2)on— coal— removed from any mine in the United States, or entered into the United States for consumption, use, or warehousing, petroleum products— removed from any refinery, removed from any terminal, or entered into the United States for consumption, use, or warehousing, and natural gas— delivered to an end user by any person required to submit form 176 of the Energy Information Administration (or a successor form), or sold in the United States by any processor not described in clause (i). The rate specified in this paragraph with respect to any product described in paragraph

(1)is an amount equal to the applicable amount per ton of carbon dioxide that would be emitted through the combustion of such product, as determined by the Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency (referred to in this section as the Administrator ). For purposes of this part, the applicable amount is— for calendar year 2023, $54, and subject to paragraph (3), for calendar year 2024 and any subsequent calendar year, the sum of— the product of the amount in effect under this paragraph for the preceding calendar year and 106 percent, and the inflation adjustment amount determined under paragraph (2). The inflation adjustment amount for any calendar year shall be an amount (not less than zero) equal to the product of— the amount in effect under paragraph

(1)for the preceding calendar year, and the percentage by which the CPI for the preceding calendar year exceeds the CPI for the second preceding calendar year. Rules similar to the rules of paragraphs

(4)and

(5)of section 1(f) shall apply for purposes of this paragraph. With respect to calendar year 2024 and any subsequent calendar year, the Secretary shall, not later than September 30 of each such year, make a determination based upon the report described in paragraph

(5)with regard to whether the cumulative emissions for the applicable period exceeded the cumulative emissions target for such period. If the Secretary determines, pursuant to subparagraph (A), that the cumulative emissions for the applicable period exceeded the cumulative emissions target for such period, the applicable amount for the calendar year beginning after such determination shall be equal to the product of the amount otherwise in effect (without application of this paragraph) under paragraph (1)(B) for such calendar year and 105 percent. In this paragraph: The term applicable period means, with respect to any determination made by the Secretary under this paragraph for any calendar year, the period— beginning on January 1, 2023, and ending on December 31 of the preceding calendar year. The term cumulative emissions means an amount equal to the sum of the net total anthropogenic greenhouse gas emissions and sinks for all years during the applicable period, as determined by the Administrator pursuant to paragraph (5). The term cumulative emissions target means an amount equal to the sum of the annual emissions targets for all years during the applicable period. The term annual emissions target means, with respect to any calendar year, an amount equal to the product of— net total anthropogenic greenhouse gas emissions and sinks for 2019, as determined by the Administrator pursuant to paragraph

(5)(to the extent the methodology under such paragraph is applicable), and the applicable percentage for such year, as determined under paragraph (4). In the case of calendar year 2023, the applicable percentage shall be 72 percent. In the case of calendar years 2024 through 2035, the applicable percentage shall be equal to— the applicable percentage for the preceding year, minus 2 percentage points. In the case of calendar years 2036 through 2050, the applicable percentage shall be equal to— the applicable percentage for the preceding year, minus 3.2 percentage points. In the case of any calendar year beginning after 2050, the applicable percentage shall be equal to zero. Not later than September 30, 2024, and annually thereafter, the Administrator, in consultation with the Secretary, shall make available to the public a report on the cumulative emissions during the applicable period. Not later than January 1, 2023, the Administrator shall prescribe rules for quantifying cumulative emissions under subparagraph (A), which shall— to the greatest extent practicable, employ existing data sources and accepted greenhouse gas accounting practices, while also allowing for use of state-of-the-art techniques to measure or estimate sources and sinks of greenhouse gas emissions which are not subject to fees under this subchapter, as the Administrator deems appropriate to meet the goals of this subparagraph, subject to such penalties as are determined appropriate by the Administrator, require any entity subject to fees or refunds under this subchapter to report, not later than April 1 of each calendar year, the total quantity of greenhouse gas emissions subject to fees or refunds under this subchapter for which such entity was liable during the preceding calendar year, and require any information reported pursuant to clause

(ii)to be verified by a third-party entity that, subject to such process as is determined appropriate by the Administrator, has been certified by the Administrator with respect to the qualifications, independence, and reliability of such entity. For purposes of establishing the rules described in subparagraph (B), the Administrator may elect to modify the activities of the Greenhouse Gas Reporting Program to satisfy the requirements described in clauses

(i)through

(iii)of such subparagraph. The applicable amount under this subsection shall be rounded up to the next whole dollar amount. In the case of a person who— uses any coal, petroleum product, or natural gas for which a fee has been imposed under subsection (a)(1) in a manner which results in the emission of qualified carbon dioxide, captures the resulting emitted qualified carbon dioxide at a qualified facility which is owned by such person, and disposes of such qualified carbon dioxide in secure storage in compliance with Treasury Decision 9944 (86 Fed. Reg. 4728), or utilizes such qualified carbon dioxide in a manner provided in subparagraph (D), there shall be allowed a refund, in the same manner as if it were an overpayment of the fee imposed by such subsection, to such person in the amount determined under subparagraph (B). The amount of the refund under this subparagraph is an amount equal to the product of— the applicable amount under subsection

(b)for the calendar year in which such qualified carbon dioxide was captured and disposed or utilized, and the adjusted tons of qualified carbon dioxide captured and disposed or utilized. For purposes of subparagraph (B), the adjusted tons of qualified carbon dioxide captured and disposed or utilized shall be the total tons of qualified carbon dioxide captured and disposed or utilized reduced by the amount of any anticipated leakage of carbon dioxide into the atmosphere due to imperfect storage technology or otherwise, as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency. Any refund under subparagraph

(A)shall apply only with respect to qualified carbon dioxide that has been captured and disposed or utilized within the United States. The Secretary shall, by regulations, provide for recapturing the benefit of any refund made under subparagraph

(A)with respect to any qualified carbon dioxide which is disposed in secure storage and ceases to be stored in a manner consistent with the requirements of this section. The Secretary, in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency, shall establish regulations providing for the appropriate methods and manners for the utilization of qualified carbon dioxide under subparagraph (A)(iii)(II), including the utilization of captured carbon dioxide for the production of substances such as plastics and chemicals. Such regulations shall provide for the minimization of the escape or further emission of the qualified carbon dioxide into the atmosphere. No refund shall be allowed under this paragraph with respect to any carbon dioxide which is utilized in— enhanced oil or gas recovery, or the production of fuels or any other substance which will be combusted or otherwise release greenhouse gases into the atmosphere. For purposes of this paragraph— The term qualified carbon dioxide means carbon dioxide captured from an industrial source which— would otherwise be released into the atmosphere as industrial emission of greenhouse gas, and is measured at the source of capture and verified at the point of disposal, injection, or utilization. The term qualified carbon dioxide includes the initial deposit of captured carbon dioxide used as a tertiary injectant. Such term does not include carbon dioxide that is recaptured, recycled, and re-injected as part of the enhanced oil and natural gas recovery process. The term qualified facility means any industrial facility at which carbon capture equipment is placed in service. In the case of a person who uses any coal, petroleum product, or natural gas for which a fee has been imposed under subsection (a)(1) as an input for a manufactured good (other than a product described in subparagraph (B)) that encapsulates any of the carbon dioxide that would have otherwise been emitted through combustion of such coal, petroleum product, or gas in a manner such that it does not result in the direct emission of carbon dioxide in the manufacturing or subsequent use of such good, a refund shall be allowed to such person in the same manner as if it were an overpayment of the fee imposed by such section in an amount that is equal to the product of— an amount equal to the applicable amount under subsection

(b)for the calendar year in which such good was produced, and the total tons of carbon dioxide that would have otherwise been emitted through the combustion of such coal, petroleum product, or gas. The products described in this subparagraph are— single-use plastic products (as defined in section 4696(a)(8)), and products which are commonly disposed of through incineration with a resulting release of carbon dioxide (as identified by the Secretary, in consultation with the Administrator of the Environmental Protection Agency). In the case of a person who exports any coal, petroleum product, or natural gas from the United States for which a fee has been imposed under subsection (a)(1), a refund shall be allowed to such person in the same manner as if it were an overpayment of the fee imposed by such section in an amount that is equal to the fee previously imposed under such subsection with respect to such product (determined without regard to any increase under section 4694). There is hereby imposed a fee in an amount determined under subsection

(b)on fluorinated greenhouse gases— produced at a fluorinated greenhouse gas production facility, or imported into the United States by a fluorinated greenhouse gas importer. The amount of fee imposed by subsection

(a)shall be equal to the applicable percentage (as defined in subsection (c)(4)) of the applicable amount determined under section 4691(b) per ton of carbon dioxide equivalent produced or imported. For purposes of this section— The term fluorinated greenhouse gases means sulfur hexafluoride (SF6), nitrogen trifluoride (NF3), any hydrofluorocarbon, any perfluorocarbon, any fully fluorinated linear, branched or cyclic alkane, ether, tertiary amine or aminoether, any perfluoropolyether, any hydrofluoropolyether, and any other fluorocarbon except for substances with vapor pressures of less than 1 mm of Hg absolute at 25 degrees Celsius. The term fluorinated greenhouse gas production facility means any facility which is included under the industrial gas supplier source category under subpart OO of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the Save Our Future Act . The term fluorinated greenhouse gas importer means any importer who is included under— the industrial gas supplier source category under subpart OO of part 98 of title 40, Code of Regulations, as in effect on the date of the enactment of the Save Our Future Act , or the source category under subpart QQ of such part (as so in effect). The term applicable percentage means the percentage determined in accordance with the following table: In the case of any taxable year beginning in calendar year: The applicable percentage is: 2023 10 percent 2024 20 percent 2025 30 percent 2026 40 percent 2027 50 percent 2028 60 percent 2029 70 percent 2030 80 percent 2031 90 percent 2032 or thereafter 100 percent. For purposes of determining fluorinated greenhouse gases produced or imported under subsection (a), there shall not be taken into account any fluorinated greenhouse gases exported from the United States in bulk or exported from the United States in equipment pre-charged with fluorinated greenhouse gases or containing fluorinated greenhouse gases in closed cell foams. In the case of a person who uses any fluorinated greenhouse gas for which a fee has been imposed under paragraph

(1)or

(2)of subsection

(a)as an input for a manufactured good that transforms the fluorinated greenhouse gas such that it cannot later be emitted or otherwise destroys the gas (without emissions), a refund shall be allowed to such person in the same manner as if it were an overpayment of the fee imposed by such subsection in an amount that is equal to the product of— an amount equal to the applicable percentage (as defined in subsection (c)(4)) of the applicable amount under section 4691(b), for the calendar year in which such fluorinated greenhouse gas was used or destroyed, and the excess (if any) of— the total carbon dioxide equivalent of the fluorinated greenhouse gases used or destroyed, over the total carbon dioxide equivalent of any fluorinated greenhouse gases created as the result of the transformation or destruction process. There is hereby imposed a fee in an amount equal to the product of the applicable amount determined under section 4691(b) and the total tons of carbon dioxide equivalent emissions from any facility which— is required to report emissions (or which would be required to report emissions notwithstanding any other provision of law prohibiting the implementation of or use of funds for such requirements), or to which emissions are attributed, under part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the Save Our Future Act , and emitted during the previous calendar year greenhouse gases other than through the production or combustion of coal, petroleum products, and natural gas. This section shall not apply with respect to any greenhouse gases— which are emitted by any agricultural entity from the growing of crops or the raising of livestock, or if such greenhouse gases are subject to a fee under section 4694. Not later than January 1, 2022, the Secretary, in consultation with the Administrator of the Environmental Protection Agency, the Secretary of the Interior, the Administrator of the Energy Information Administration, and the Administrator of the Pipeline and Hazardous Materials Safety Administration, shall establish and implement a program to identify all major source categories of associated emissions and collect data on associated emissions from the coal, petroleum products, and natural gas supply chains. Not later than 12 months after the date that the Secretary implements the program described in paragraph (1), and annually thereafter, the Secretary shall issue a report, to be made available to the public and the appropriate committees of Congress, on associated emissions, including— identification of all major source categories of associated emissions, and the total amount, expressed in tons of carbon dioxide equivalent, of— methane and other greenhouse gases emitted across the coal supply chain within the United States during the preceding calendar year, methane and other greenhouse gases emitted across the petroleum products supply chain within the United States during the preceding calendar year, and methane and other greenhouse gases emitted across the natural gas supply chain within the United States during the preceding calendar year. In the case of any calendar year beginning after calendar year 2022, all coal mine operators shall report their total annual methane and other associated emissions to the Secretary and the Administrator of the Environmental Protection Agency (referred to in this subsection as the Administrator ), consistent with the methodology and requirements of the Greenhouse Gas Reporting Program of the Environmental Protection Agency (referred to in this subsection as the Program ). Each annual report under subparagraph

(A)shall be filed not later than March 31 of the calendar year following the calendar year covered by the report. The Administrator shall develop a reporting methodology for any coal mines not required as of the date of enactment of this section to report emissions under the Program. Not later than 90 days after the date on which a coal mine operator submits a report under subparagraph (A), the Secretary shall impose a fee on the operator in an amount equal to the product obtained by multiplying— the applicable amount determined under section 4691(b) per ton of carbon dioxide equivalent; and the total carbon dioxide equivalent tons of methane and other associated emissions reported by the operator in the report. In the case of any calendar year beginning after calendar year 2022, all oil well operators and other entities in the petroleum products supply chain required to report under the Program shall report their total annual methane and other associated emissions to the Secretary and the Administrator, consistent with the methodology and requirements of the Program. Each annual report under subparagraph

(A)shall include emissions from low frequency, high emission events. Each annual report under subparagraph

(A)shall be filed not later than March 31 of the calendar year following the calendar year covered by the report. The Administrator shall develop a reporting methodology for— any smaller gas well operators not required as of the date of enactment of this section to report emissions under the Program; and low frequency, high emission events. Not later than 90 days after the date on which a gas well operator or other entity submits a report under subparagraph (A), the Secretary shall impose a fee on the operator or other entity in an amount equal to the product obtained by multiplying— the applicable amount determined under section 4691(b) per ton of carbon dioxide equivalent; and the total carbon dioxide equivalent tons of methane and other associated emissions reported by the operator or entity in the report. In the case of any calendar year beginning after 2022, the fee imposed under section 4691(a)(1) with respect to any coal, petroleum product, or natural gas imported into the United States (referred to in this paragraph as the applicable product ) shall be increased by the amount determined by the Secretary (in consultation with the Administrator of the Environmental Protection Agency) necessary to ensure that the total fees collected under such section with respect to such applicable product are equal to the total amount of such fees that would be collected on such applicable product if the fee imposed under section 4691(a)(1) also applied to the carbon-dioxide equivalent of the average amount of methane and other associated emissions emitted in the production of such applicable product (using a country-of-origin industry average, as determined by the Secretary in consultation with the Administrator of the Environmental Protection Agency). If an importer elects to provide reliable data (as determined by the Secretary based upon the most recent calendar year for which such data is available, which may not be for any year beginning more than 3 years prior to importation) demonstrating the average actual methane and other associated emissions generated per unit of production of the applicable product, the fee imposed under section 4691(a)(1) with respect such applicable product imported into the United States shall be increased by the amount determined by the Secretary (in consultation with the Administrator of the Environmental Protection Agency) necessary to ensure that the total fees collected under such section with respect to such applicable product are equal to the total amount of such fees that would be collected on such applicable product if the fee imposed under section 4691(a)(1) also applied to the carbon-dioxide equivalent of the actual average amount of methane and other associated emissions emitted in the production of such applicable product. The purpose of this section is to ensure the environmental effectiveness of this subchapter. In the case of any energy-intensive manufactured good which is exported from the United States and which is manufactured after December 31, 2022, the Secretary shall pay to the person exporting such good a refund equal to the amount of the cost of such good attributable to any fees imposed under this subchapter related to the manufacturing of such energy-intensive manufactured good (as determined under regulations established by the Secretary). The amount of the refund under paragraph

(1)shall be determined based on the average amount of the cost of such good, as produced by the domestic manufacturer, which is attributable to any fees imposed under this subchapter. In the case of any energy-intensive manufactured good imported into the United States after December 31, 2022, there is imposed an equivalency fee on the person importing such good in an amount equal to the amount determined under subparagraph

(B)(as determined under regulations established by the Secretary). Subject to clause (ii), the amount of the equivalency fee under subparagraph

(A)shall be an amount equal to the product of— the amount of any fees that would be imposed under this subchapter if the energy-intensive manufactured good was manufactured in the United States, multiplied by an amount equal to the quotient of— the average economy-wide carbon intensity of the country in which such good was produced (as determined by the Secretary based upon the most recent year for which reliable data is available), divided by the average economy-wide carbon intensity of the United States (as so determined). In the case of any energy-intensive manufactured good for which reliable industry-specific data is available (as determined by the Secretary), the amount of the equivalency fee under subparagraph

(A)shall be an amount equal to the amount determined under clause

(i)for such good, as determined by substituting industry-specific for economy-wide each place it appears. In the case of any energy-intensive manufactured good for which the importer of such good elects application of this subclause and provides reliable data (as determined by the Secretary based upon the most recent calendar year for which such data is available, which may not be for any year beginning more than 3 years prior to importation), the amount of the equivalency fee under subparagraph

(A)shall be an amount equal to the product of— the amount of any fees that would be imposed under this subchapter if the energy-intensive manufactured good was manufactured in the United States, multiplied by an amount equal to the quotient of— the total amount of greenhouse gas emissions related to the production of such good and any similar goods by the manufacturer and any parent company, subsidiary, or affiliate of such manufacturer during such calendar year, divided by the total number of such goods which were produced by the manufacturer and any parent company, subsidiary, or affiliate of such manufacturer during such calendar year. The amount of the equivalency fee under paragraph

(1)shall be reduced by the amount, if any, of any carbon-based fees imposed on such energy-intensive manufactured goods by the foreign nation or governmental units from which such good was imported. Under regulations established by the Secretary, foreign policies that place an indirect price on carbon through various credit or emissions trading regimes shall be treated as fees for purposes of subsection (c)(2). The Secretary shall consult with the Administrator of the Environmental Protection Agency, the Secretary of Energy, the Secretary of Commerce, and the United States Trade Representative, in establishing rules and regulations implementing the purposes of this section. The Secretary, in consultation with the Secretary of State, may adjust the applicable amounts of the refunds and equivalency fees under this section in a manner that is consistent with any obligations of the United States under an international agreement, provided that any such adjustment does not undermine the purpose of this section to prevent carbon leakage to foreign countries or result in harm to domestic manufacturers. For purposes of this subchapter: The term associated emissions means greenhouse gas emissions attributable to venting, flaring, and leakage across the supply chain or any other incidental process. Subject to subparagraph (B), the term carbon dioxide equivalent means, with respect to a greenhouse gas, the quantity of such gas that has a global warming potential equivalent to 1 metric ton of carbon dioxide, as determined pursuant to table A–1 of subpart A of part 98 of title 40, Code of Federal Regulations, as in effect on the date of the enactment of the Save Our Future Act . In the case of methane, the term carbon dioxide equivalent means the quantity of methane that has the same global warming potential over a 20-year period as 1 metric ton of carbon dioxide, as determined in accordance with the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. The term coal has the same meaning given such term under section 48A(c)(4). The term energy-intensive manufactured good means any manufactured good (other than any petroleum product or fossil fuel) for which not less than 5 percent of the cost of which is attributable to energy costs, as determined by the Secretary. Not later than 180 days after the date of the enactment of this Act, the Secretary shall publish a list of goods which qualify as energy-intensive manufactured goods. Not less frequently than annually, the Secretary shall update the list published under this subparagraph. The term greenhouse gas has the meaning given such term under section 211(o)(1)(G) of the Clean Air Act, as in effect on the date of the enactment of the Save Our Future Act . The term natural gas means— any product described in section 613A(e)(2), and any natural gas liquids produced during natural gas extraction, including ethane, propane, normal butane, isobutene, pentanes, and other hydrocarbons. The term petroleum product has the same meaning given such product under section 4612(a)(3) and shall include any natural gas liquids produced during crude oil extraction, including ethane, propane, normal butane, isobutene, pentanes, and other hydrocarbons. The term single-use plastic product means any plastic product that is routinely disposed of after a single use (including plastic packaging, film, cups, cutlery, straws, and bags), unless such product is designed to be used solely for medical purposes. The term supply chain means extraction and processing of coal and natural gas, extraction and refining of petroleum products, and the transmission, transport, storage, distribution, import, export, and other activities related to supplying coal, petroleum products, and natural gas to a consumer, not otherwise covered elsewhere in this subchapter as determined by the Administrator of the Environmental Protection Agency. The term ton means 1,000 kilograms. In the case of any greenhouse gas which is a gas, the term ton means the amount of such gas in cubic meters which is the equivalent of 1,000 kilograms on a molecular weight basis. In the case of a fraction of a ton, any fee imposed by this subchapter on such fraction shall be the same fraction of the amount of such fee imposed on a whole ton. The term United States has the meaning given such term by section 4612(a)(4). Payment of the fee imposed by sections 4691, 4692, and 4693 shall be assessed and collected in the same manner as taxes under this subtitle. The Secretary shall prescribe such regulations as may be necessary to carry out the provisions of this subchapter. . The table of subchapters for chapter 38 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Subchapter E—Carbon Dioxide and Other Greenhouse Gas Emission Fees . The amendments made by this section shall apply to periods beginning after December 31, 2022.

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86 FR 4728

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Sec. 101

Carbon dioxide and other greenhouse gas emission fees

Fed. Reg.86 FR 4728

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