Sec. 10101. Treatment of domestic greenhouse gas emissions
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The Internal Revenue Code of 1986 is amended by adding at the end the following new subtitle: Sec. 9901. Imposition of tax on combusted fossil fuel greenhouse gas emissions. Sec. 9902. Imposition of tax on greenhouse gas emissions from certain industrial processes. Sec. 9903. Imposition of tax on greenhouse gas emissions from certain product uses. Sec. 9904. Calculation of taxable emissions. Sec. 9905. Credit for state payments. Sec. 9906. Penalties for nonpayment. Sec. 9907. Definitions. There is hereby imposed a tax on fossil fuels produced within, or imported into, the United States. The tax imposed by subsection
(a)shall be the applicable amount per ton of carbon dioxide equivalent of all greenhouse gasses that would be released if the fossil fuel were combusted. For purposes of paragraph (1), the term applicable amount means— for calendar year 2027, $35 per metric ton of carbon dioxide equivalent emissions, and for each calendar year after 2027, the tax rate shall be the sum of— the previous calendar year’s tax rate, plus the sum of— 5 percentage points, plus a percentage increase in the previous year’s tax rate equal to the increase in the Consumer Price Index for the previous calendar year. For purposes of subparagraph (B), the Consumer Price Index for the previous calendar year is the average of the Consumer Price Index for all-urban consumers published by the Department of Labor as of the close of the 12-month period ending on August 31 of such calendar year. For purposes of the preceding sentence, the revision of the Consumer Price Index which is most consistent with the Consumer Price Index for calendar year 1986 shall be used. Not later than March 30, 2028, and annually thereafter, the Secretary and the Administrator shall jointly report the emissions during the calendar year ending on the preceding December 31 from sources subject to taxation under this part. The report shall determine whether the cumulative amount of annual emissions reported for the period beginning in calendar year 2027 and through the end of the preceding calendar year were less than the emissions levels specified in the following schedule: The total emissions through calendar year 2027 are 4,700 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2028 are 9,400 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2029 are 14,000 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2030 are 18,300 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2031 are 22,600 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2032 are 26,800 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2033 are 31,000 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2034 are 35,100 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2035 are 39,100 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2036 are 43,100 million metric tons of carbon dioxide equivalent. The total emissions through calendar year 2037 are 47,100 million metric tons of carbon dioxide equivalent. Not later than March 30, 2029, and every two years thereafter, the Secretary shall determine whether an adjustment is required in accordance with clause (ii). If the emission level reported under subparagraph
(A)for calendar year 2028, and every second calendar year thereafter through calendar year 2038, exceeds the level for such calendar year specified in clauses
(i)through
(xi)of subparagraph (A), then the applicable amount under paragraph
(2)for the calendar year beginning on the next January 1 following the determination in clause
(i)shall, after the increase under paragraph
(2)for such next calendar year, be increased by an additional $4 per metric ton. The tax imposed by subsection
(a)shall be paid by the owner of the fossil fuel at the point of taxation. For fossil fuels produced within the United States, the point of taxation shall be— for coal, the mine mouth or, for washed coal, the exit from the coal preparation and processing plant, for petroleum products, the exit point from the refinery, and for natural gas, the exit from the gas processing plant or, for natural gas that is not treated at a gas processing plant, the point of sale to the person who combusts the gas or incorporates it into a product that is not intended for combustion. For any fossil fuel imported into the United States, the point of taxation shall be the point at which it first enters the United States. Any manufacturer of a product that incorporates a fossil fuel that has been taxed under this section who can demonstrate to the Secretary that the fossil fuel has been transformed via the manufacture of the product so that the fossil fuel’s emissions will be reduced or eliminated over the product’s lifetime shall be entitled to a refund of the tax paid under this section on the proportion of the emissions reduced thereby, as determined by the Secretary. The Secretary, in consultation with the Administrator, shall establish by rule the criteria and process by which product manufacturers can demonstrate that the conditions in subparagraph
(A)have been satisfied. The Secretary shall publish the regulations required by this subsection no later than one year prior to the start of the calendar year referred to in section 9901(b)(2)(A). The Secretary may not collect the tax imposed by this section for any calendar year that begins less than one year after the regulations are published. Any person who sequesters greenhouse gas emissions resulting from the combustion of fossil fuel that has passed through a point of taxation shall be entitled to a refund of the tax imposed by this section. Emissions that are used for enhanced oil recovery shall be entitled for such refund provided that these emissions meet all of the criteria applicable to other emissions that qualify for such refund. The Secretary shall establish by rule the procedures by which to apply for such refunds and such refunds shall be paid within six months of the Secretary receiving an approvable application. The Secretary may not refund any amounts under this paragraph until such time as the Secretary has published the regulations described in section 45Q(f)(2). There is hereby imposed a tax on industrial process greenhouse gas emissions by certain source categories. The Congress establishes for purposes of this section a list of source categories subject to this section as follows: Iron and steel production and metallurgical coke production. Underground coal mining. Coal preparation and processing plants. Refineries. Cement production. Petrochemical production. Lime production. Ammonia production. Aluminum production. Soda ash production. Ferroalloy production. Phosphoric acid production. Glass production. Zinc production. Lead production. Magnesium production and processing. Nitric acid production. Adipic acid production. Semiconductor manufacture. Electrical transmission and distribution. The Administrator shall review the list of source categories established by this subsection not less than once every five years to determine if they should continue to be listed and publish the results of that review. The Administrator may, if appropriate, add any source categories to this list by rule. The Administrator may remove a source category from this list only if— the total emissions from the entire source category which are taxable under this section have been less than 250,000 metric tons of carbon dioxide equivalent per year for each of three consecutive years, the average emissions from facilities in the source category which are taxable under this section have been less than 25,000 metric tons of carbon dioxide equivalent per year for each of the years referred in subparagraph (A), and the Administrator determines that there is no reasonable possibility that the total emissions from the entire source category which are taxable under this section will exceed 250,000 metric tons per year of carbon dioxide equivalent within any of the five years following such determination. The Administrator may add a source category to this list only if the Administrator determines that— the total emissions from the entire source category which are taxable under this section have been greater than 250,000 metric tons per year of carbon dioxide equivalent in any two years out of the preceding five years, the average emissions from facilities in the source category which are taxable under this section have been greater than 25,000 metric tons per year of carbon dioxide equivalent in the years in which emissions from the entire source category have been greater than 250,000 tons per year, and there is a reasonable possibility that the total emissions from the entire source category which are taxable under this section will be greater than 250,000 metric tons per year of carbon dioxide equivalent in any year within the next five years following such determination. The rate of tax shall be the same as the rate given in section 9901(b)(2). The tax imposed by subsection
(a)shall be paid by the owner or operator of the point of taxation. The point of taxation shall be any facility in a source category which emits more than 25,000 metric tons of carbon dioxide equivalent subject to taxation under this section in any calendar year. There is hereby imposed a tax on non-fossil-fuel-greenhouse-gas emissions by certain manufactured products when used for their intended purposes that are manufactured within or imported into, the United States. The Congress establishes for purposes of this section a list of products subject to this section as follows: Fuel ethanol. Industrial carbonates. Carbon dioxide urea. Soda ash. Nitrous oxide. Ozone depleting substances, but not if the United States has ratified the Kigali Amendment to the Montreal Protocol and is subject to article 2J, paragraph 1 of the Amended Montreal Protocol. Biodiesel. Solid biomass fuels. The Administrator shall review the list of products established by this subsection not less than once every five years to determine if they should continue to be listed and publish the results of that review. The Administrator may, if appropriate, add any product to this list by rule. The Administrator may remove a product from this list only if— the total emissions from all of the product used within the United States has been less than 250,000 metric tons per year of carbon dioxide equivalent for each of three consecutive years, and the Administrator determines that there is no reasonable possibility that the total emissions from all of the product used in the United States will exceed 250,000 metric tons per year of carbon dioxide equivalent within any of the five years following such determination. The Administrator may add a product to this list only if the Administrator determines that— the total emissions from all of the product used within the United States has been greater than 250,000 metric tons per year of carbon dioxide equivalent in any two years out of the preceding five years, and there is a reasonable possibility that the total emissions from all of the product used within the United States will be greater than 250,000 metric tons per year of carbon dioxide equivalent in any year within the next five years following such determination. The rate of tax shall be the same as the rate given in section 9901(b)(2). The tax imposed by subsection
(a)shall be paid— for products manufactured in the United States, by the owner or operator of the point of taxation, and for products imported into the United States, by the owner of the product when it enters the United States. The point of taxation shall be— for products manufactured in the United States, the manufacturing facility, for products imported into the United States, the point at which it first enters the United States, and for domestically produced biomass fuel by a facility that emits from combusted biomass fuel more than 25,000 metric tons of carbon dioxide equivalent greenhouse gases in a year, the facility that combusts the biomass fuel. In consultation with the Department of Energy, the Administrator shall establish by rule (and may, from time to time, revise) the method by which taxable emissions under this part shall be calculated. For purposes of calculating emissions taxable under— section 9901, the Administrator shall determine by rule the amount of carbon dioxide equivalent that would be emitted if each fossil fuel were combusted, and the Administrator may establish by rule such subcategories of each fuel and the means by which it is combusted as the Administrator deems appropriate, section 9902, the Administrator may determine by rule such subcategories of any industrial process category listed in subsection 9902(b) as the Administrator deems appropriate, and section 9903, for fuel ethanol, biodiesel, and solid biomass fuels the Administrator shall determine by rule the amount of carbon dioxide equivalent that would be emitted based on the lifecycle greenhouse gas emissions of the product (excluding emissions from fossil fuels that have passed through a point of taxation), and the Administrator may determine by rule such subcategories of manufactured products listed in subsection 9903(b) as the Administrator deems appropriate. Where greenhouse gas emissions subject to taxation under any section of this part are combined with greenhouse gas emissions subject to taxation under any other section of this part, the Administrator shall ensure, to the greatest degree possible, that the methods required to determine the emissions taxable under any section of this part do not include any emissions taxable under any other section of this part. The Administrator shall not require the use of any method to calculate taxable emissions whereby the difference in cost of the method compared to the next cheapest alternative method is greater than the amount of the tax that would be paid on the additional emissions determined by the more expensive method. The Administrator shall publish the regulations required by this section no later than one year prior to the start of the calendar year referred to in section 9901(b)(2)(A). The Secretary may not collect the tax imposed by any section in this part for any calendar year that begins less than one year after the regulations applicable to each such section are published. The Secretary shall allow any person who is required to make payment for greenhouse gas emissions under this part a credit for payments made on those emissions required under any State law in the following manner: For the year given in section 9901(b)(2), a credit equal to 100 percent of the amount paid pursuant to requirements of State law. For the first year following the year used in paragraph (1), a credit equal to 80 percent of the amount paid pursuant to requirements of State law. For the second year following the year used in paragraph (1), a credit equal to 60 percent of the amount paid pursuant to requirements of State law. For the third year following the year used in paragraph (1), a credit equal to 40 percent of the amount paid pursuant to requirements of State law. For the fourth year following the year used in paragraph (1), a credit equal to 20 percent of the amount paid pursuant to requirements of State law. For all years following the year used in paragraph (5), no credit shall be allowed. Any person who fails to comply with the requirements of section 9901, 9902, or 9903 shall be liable for payment to the Secretary, without demand, of a penalty in the amount equal to 3 times the applicable amount specified by those sections for the same tax year as the year in which the person failed to comply with such requirements. Unless otherwise provided, the definitions provided herein are applicable to all provisions of this subtitle. The term Administrator means the Administrator of the Environmental Protection Agency. The term carbon dioxide equivalent means the number of metric tons of CO2 emissions with the same global warming potential over a 100-year period as one metric ton of another greenhouse gas. The term coal means any of the recognized classifications and ranks of coal, including anthracite, bituminous, semibituminous, subbituminous, lignite, and peat. The term coal preparation and processing plant means any facility (excluding underground mining operations) which prepares coal by one or more of the following processes: breaking, crushing, screening, wet or dry cleaning, and thermal drying. The term enhanced oil recovery has the meaning defined at section 1.193–1(b)(2) of title 26, Code of Federal Regulations, as in effect on the date of enactment of this section. The term facility means any physical property, plant, building, structure, source, or stationary equipment located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right-of-way and under common ownership or common control, that emits or may emit any greenhouse gas. The term fossil fuel means coal, petroleum products, or natural gas. The term greenhouse gas means carbon dioxide, nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride. The term greenhouse gas effects means the adverse effects of greenhouse gasses on health or welfare caused by the greenhouse gas’s heat-trapping potential or its effect on ocean acidification. The term lifecycle greenhouse gas emissions has the meaning given that term in section 211 of the Clear Air Act. The term natural gas means any fuel consisting in whole or in part of natural gas, including components of natural gas such as methane and ethane; liquid petroleum gas; synthetic gas derived from coal, petroleum, or natural gas liquids; or any mixture of natural gas and synthetic gas. The term petroleum products means unfinished oils, liquefied petroleum gases, pentanes plus, aviation gasoline, motor gasoline, naphtha-type jet fuel, kerosene-type jet fuel, kerosene, distillate fuel oil, residual fuel oil, petrochemical feedstocks, special naphthas, lubricants, waxes, petroleum coke, asphalt, road oil, still gas, and miscellaneous products obtained from the processing of crude oil (including lease condensate), natural gas, and other hydrocarbon compounds. The term does not include natural gas, liquefied natural gas, biofuels, methanol, and other nonpetroleum fuels. The term publish means publication in the Federal Register. The term refinery means any facility engaged in producing gasoline, kerosene, distillate fuel oils, residual fuel oils, lubricants, or other products through distillation of petroleum or through redistillation, cracking, or reforming of unfinished petroleum derivatives. The term owner with respect to any fossil fuel means any person who has legal title to the fossil fuel. The term owner or operator with respect to any fossil fuel means any person who has legal title to the fossil fuel. The term sequesters means the permanent storage of carbon dioxide or other greenhouse gas such that it does not escape into the atmosphere, and is in compliance with the regulations issued pursuant to section 45Q(f)(2). The term solid biomass means nonfossilized and biodegradable organic material originating from plants, animals, or microorganisms, including products, byproducts, residues and waste from agriculture, forestry, and related industries as well as the nonfossilized and biodegradable organic fractions of industrial and municipal wastes, but does not include gases and liquids recovered from the decomposition of nonfossilized and biodegradable organic material. The term source category means any category or subcategory regulated under part 60 of title 40, Code of Federal Regulations, or part 90 of title 40, Code of Federal Regulations. . The table of subtitles for the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Subtitle L—Greenhouse gas emissions The amendments made by this section shall apply to emissions after the later of December 31, 2025, and the date that is one year after the date regulations are promulgated under section 9914 of the Internal Revenue Code of 1986.