Sec. 80402. CARBON DIOXIDE CAPTURE FACILITIES
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## SEC. 80402 CARBON DIOXIDE CAPTURE FACILITIES ###
(a)In General Section 142(a) of the Internal Revenue Code of 1986, as amended by section 80401, is amended by striking “ or ” at the end of paragraph (15), by striking the period at the end of paragraph
(16)and inserting “ , or ”, and by adding at the end the following new paragraph: > > #### “(17) > > qualified carbon dioxide capture facilities.” > . ###
(b)Qualified Carbon Dioxide Capture Facilities Section 142 of such Code, as amended by section 80401, is amended by adding at the end the following new subsection: > > ### “(o) Qualified Carbon Dioxide Capture Facility > > > #### “(1) In general > > For purposes of subsection (a)(17), the term ‘qualified carbon dioxide capture facility’ means— > > > ##### “(A) > > the eligible components of an industrial carbon dioxide facility, and > > > ##### “(B) > > a direct air capture facility (as defined in section 45Q(e)(1)). > > > #### “(2) Definitions > > For purposes of this subsection: > > > ##### “(A) Eligible component > > > ###### “(i) In general > > The term ‘eligible component’ means any equipment which is installed in an industrial carbon dioxide facility that satisfies the requirements under paragraph
(3)and which is— > > > ###### “(I) > > used for the purpose of capture, treatment and purification, compression, transportation, or on-site storage of carbon dioxide produced by the industrial carbon dioxide facility, or > > > ###### “(II) > > integral or functionally related and subordinate to a process which converts a solid or liquid product from coal, petroleum residue, biomass, or other materials which are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon dioxide and hydrogen for direct use or subsequent chemical or physical conversion. > > > ###### “(ii) Definitions > > For purposes of this subparagraph— > > > ###### “(I) Biomass > > > ###### “(aa) In general > > The term ‘biomass’ means any— > > > ###### “(AA) > > agricultural or plant waste, > > > ###### “(BB) > > byproduct of wood or paper mill operations, including lignin in spent pulping liquors, and > > > ###### “(CC) > > other products of forestry maintenance. > > > ###### “(bb) Exclusion > > The term ‘biomass’ does not include paper which is commonly recycled. > > > ###### “(II) Coal > > The term ‘coal’ means anthracite, bituminous coal, subbituminous coal, lignite, and peat. > > > ##### “(B) Industrial carbon dioxide facility > > > ###### “(i) In general > > Except as provided in clause (ii), the term ‘industrial carbon dioxide facility’ means a facility that emits carbon dioxide (including from any fugitive emissions source) that is created as a result of any of the following processes: > > > ###### “(I) > > Fuel combustion. > > > ###### “(II) > > Gasification. > > > ###### “(III) > > Bioindustrial. > > > ###### “(IV) > > Fermentation. > > > ###### “(V) > > Any manufacturing industry relating to— > > > ###### “(aa) > > chemicals, > > > ###### “(bb) > > fertilizers, > > > ###### “(cc) > > glass, > > > ###### “(dd) > > steel, > > > ###### “(ee) > > petroleum residues, > > > ###### “(ff) > > forest products, > > > ###### “(gg) > > agriculture, including feedlots and dairy operations, and > > > ###### “(hh) > > transportation grade liquid fuels. > > > ###### “(ii) Exceptions > > For purposes of clause (i), an industrial carbon dioxide facility shall not include— > > > ###### “(I) > > any geological gas facility, or > > > ###### “(II) > > any air separation unit that— > > > ###### “(aa) > > does not qualify as gasification equipment, or > > > ###### “(bb) > > is not a necessary component of an oxy-fuel combustion process. > > > ###### “(iii) Definitions > > For purposes of this subparagraph— > > > ###### “(I) Petroleum residue > > The term ‘petroleum residue’ means the carbonized product of high-boiling hydrocarbon fractions obtained in petroleum processing. > > > ###### “(II) Geological gas facility > > The term ‘geological gas facility’ means a facility that— > > > ###### “(aa) > > produces a raw product consisting of gas or mixed gas and liquid from a geological formation, > > > ###### “(bb) > > transports or removes impurities from such product, or > > > ###### “(cc) > > separates such product into its constituent parts. > > > #### “(3) Special rule for facilities with less than 65 percent capture and storage percentage > > > ##### “(A) In general > > Subject to subparagraph (B), the eligible components of an industrial carbon dioxide facility satisfies the requirements of this paragraph if such eligible components are designed to have a capture and storage percentage (as determined under subparagraph (C)) that is equal to or greater than 65 percent. > > > ##### “(B) Exception > > In the case of an industrial carbon dioxide facility designed with a capture and storage percentage that is less than 65 percent, the percentage of the cost of the eligible components installed in such facility that may be financed with tax-exempt bonds may not be greater than the designed capture and storage percentage. > > > ##### “(C) Capture and storage percentage > > > ###### “(i) In general > > Subject to clause (ii), the capture and storage percentage shall be an amount, expressed as a percentage, equal to the quotient of— > > > ###### “(I) > > the total metric tons of carbon dioxide designed to be annually captured, transported, and injected into— > > > ###### “(aa) > > a facility for geologic storage, or > > > ###### “(bb) > > an enhanced oil or gas recovery well followed by geologic storage, divided by > > > ###### “(II) > > the total metric tons of carbon dioxide which would otherwise be released into the atmosphere each year as industrial emission of greenhouse gas if the eligible components were not installed in the industrial carbon dioxide facility. > > > ###### “(ii) Limited application of eligible components > > In the case of eligible components that are designed to capture carbon dioxide solely from specific sources of emissions or portions thereof within an industrial carbon dioxide facility, the capture and storage percentage under this subparagraph shall be determined based only on such specific sources of emissions or portions thereof. > > > #### “(4) Regulations > > The Secretary shall issue such regulations or other guidance as are necessary to carry out the provisions of this subsection, including methods for determining costs attributable to an eligible component for purposes of paragraph (3)(A).” > . ###
(c)Volume Cap **[**[26 U.S.C. 146](/us/usc/t26/s146)**]** Section 146(g) of such Code, as amended by section 80401, is amended by striking “ and ” at the end of paragraph (4), by striking the period at the end of paragraph
(5)and inserting “ , and ”, and by inserting immediately after paragraph
(5)the following new paragraph: > > #### “(6) > > 75 percent of any exempt facility bond issued as part of an issue described in paragraph
(17)of section 142(a) (relating to qualified carbon dioxide capture facilities).” > . ###
(d)Clarification of Private Business Use Section 141(b)(6) of such Code is amended by adding at the end the following new subparagraph: > > ##### “(C) Clarification relating to qualified carbon dioxide capture facilities > > For purposes of this subsection, the sale of carbon dioxide produced by a qualified carbon dioxide capture facility (as defined in section 142(o)) which is owned by a governmental unit shall not constitute private business use.” > . ###
(e)Coordination With Credit for Carbon Oxide Sequestration Section 45Q(f) of such Code is amended by adding at the end the following new paragraph: > > #### “(3) Credit reduced for certain tax-exempt bonds > > The amount of the credit determined under subsection
(a)with respect to any project for any taxable year shall be reduced by the amount which is the product of the amount so determined for such year and the lesser of ½ or a fraction— > > > ##### “(A) > > the numerator of which is the sum, for the taxable year and all prior taxable years, of the proceeds from an issue described in section 142(a)(17) used to provide financing for the project the interest on which is exempt from tax under section 103, and > > > ##### “(B) > > the denominator of which is the aggregate amount of additions to the capital account for the project for the taxable year and all prior taxable years. > > The amounts under the preceding sentence for any taxable year shall be determined as of the close of the taxable year.” ” > . ###
(f)Effective Date **[**[26 U.S.C. 45Q note](/us/usc/t26/s45Q)**]** The amendments made by this section shall apply to obligations issued after December 31, 2021.
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