Qualified Agricultural Carbon Sequestration Act of 2022
This bill allows certain qualified applicants (i.e., farms) a new tax credit for the abatement and sequestration of carbon dioxide emissions related to certain agricultural activities.
The bill requires the Department of the Treasury to establish a qualified agricultural carbon sequestration and abatement program to consider and award certifications for farms eligible for the credit.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9121 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 9121
To amend the Internal Revenue Code of 1986 to establish a tax credit
for abatement and sequestration of carbon dioxide equivalent through
agricultural methods.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 30, 2022
Mr. Ryan of Ohio introduced the following bill; which was referred to
the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to establish a tax credit
for abatement and sequestration of carbon dioxide equivalent through
agricultural methods.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Qualified Agricultural Carbon
Sequestration Act of 2022''.
SEC. 2. QUALIFIED AGRICULTURAL CARBON SEQUESTRATION CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 45Z the following new section:
``SEC. 45AA. QUALIFIED AGRICULTURAL CARBON SEQUESTRATION CREDIT.
``(a) In General.--For purposes of section 38, in the case of a
qualified applicant, the qualified agricultural carbon sequestration
credit for the taxable year is an amount equal to the sum of--
``(1) the carbon dioxide equivalent abatement credit,
``(2) the carbon dioxide equivalent sequestration credit,
and
``(3) the early adopter credit.
``(b) Carbon Dioxide Equivalent Abatement Credit.--
``(1) In general.--The amount of the carbon dioxide
equivalent abatement credit for the taxable year shall be equal
to the applicable dollar amount per metric ton of qualified
carbon dioxide equivalent abatement by a qualified applicant.
``(2) Qualified carbon dioxide equivalent abatement.--For
purposes of this subsection, the term `qualified carbon dioxide
equivalent abatement' means the amount (not less than zero)
equal to--
``(A) the amount of carbon dioxide equivalent
emitted into the atmosphere by the qualified applicant
during the counterfactual baseline year, minus
``(B) the amount of carbon dioxide equivalent
emitted into the atmosphere by such farm during the
taxable year.
``(3) Applicable dollar amount.--
``(A) For purposes of this subsection, the
applicable dollar amount shall be an amount equal to--
``(i) for any taxable year beginning in a
calendar year after 2022 and before 2027, the
dollar amount established by linear
interpolation between $22.66 and $50 for each
calendar year during such period, and
``(ii) for any taxable year beginning in a
calendar year after 2026, an amount equal to
the product of $50 and the inflation adjustment
factor determined under section 43(b)(3)(B) for
such calendar year, determined by substituting
`2025' for `1990'.
``(B) Rounding.--The applicable dollar amount
determined under subparagraph (A) shall be rounded to
the nearest cent.
``(4) Limitation.--For purposes of this subsection, the
carbon dioxide equivalent abatement credit shall only be
allowed in each taxable year subsequent to the counterfactual
baseline year.
``(c) Carbon Dioxide Equivalent Sequestration Credit.--
``(1) In general.--The amount of the carbon sequestration
credit for any taxable year shall be an amount equal to the sum
of--
``(A) the qualifying amount, plus
``(B) an amount equal to the sum of any carbon
sequestration allotment for such taxable year.
``(2) Qualifying amount.--For purposes of this subsection,
the term qualifying amount means--
``(A) in the case of a taxable year for which
qualified carbon sequestration by a qualified applicant
is greater than zero, 10 percent of the applicable
dollar amount per metric ton of such qualified carbon
sequestration by such applicant, and
``(B) in the case of a taxable year for which
qualified carbon sequestration by a qualified applicant
is equal to or less than zero, 0 percent of such
applicable dollar amount.
``(3) Applicable dollar amount.--
``(A) In general.--The applicable dollar amount
shall be an amount equal to--
``(i) for any taxable year beginning in a
calendar year after 2022 and before 2027, the
dollar amount established by linear
interpolation between $12.83 and $35 for each
calendar year during such period, and
``(ii) for any taxable year beginning in a
calendar year after 2026, an amount equal to
the product of $35 and the inflation adjustment
factor for such calendar year determined under
section 43(b)(3)(B) for such calendar year,
determined by substituting `2025' for `1990'.
``(B) Rounding.--The applicable dollar amount
determined under paragraph (1) shall be rounded to the
nearest cent.
``(4) Carbon sequestration allotment.--For purposes of this
subsection, the term `carbon sequestration allotment' means,
for each of the 9 taxable years subsequent to any taxable year
described in paragraph (1)(A), an amount equal to the amount
described in such paragraph.
``(5) Qualified carbon sequestration.--
``(A) In general.--For purposes of this subsection,
the term `qualified carbon sequestration' means the
amount (not less than zero) equal to--
``(i) the stock of soil organic carbon
stored in the soil of the qualified farm during
the taxable year, minus
``(ii) the stock of soil organic carbon
stored in the soil of such farm during the
preceding taxable year.
``(B) First year.--For purposes of the first
taxable year beginning after the date on which a
taxable entity after the date the taxpayer becomes a
qualified applicant, the taxable year described in
subparagraph (A)(ii) shall be the counterfactual
baseline year.
``(6) Recapture.--The Secretary shall, by regulations,
provide for recapturing the benefit of any carbon sequestration
credit allowable under this subsection with respect to any
carbon which ceases to be sequestered in a manner consistent
with the requirements under this section for a period of not
less than 10 years.
``(d) Early Adopter Credit.--
``(1) In general.--The amount of the early adopter credit
for any taxable year shall be an amount equal to the applicable
dollar amount per metric ton of early adopter carbon
sequestration.
``(2) Early adopter carbon sequestration.--For purposes of
this subsection, the term `early adopter carbon sequestration'
means the amount (not less than zero) equal to--
``(A) the stock of soil organic carbon stored in
the soil of the qualified farm during the taxable year,
minus
``(B) the average stock of soil organic carbon
stored in the soil of other farms in the county in
which such qualified farm is located during the taxable
year.
``(3) Credit may be taken only once.--The credit under this
subsection may only be taken with respect to a qualified farm
in the first year a credit is allowed to such farm under this
section.
``(4) Applicable dollar amount.--
``(A) In general.--The applicable dollar amount
shall be an amount equal to--
``(i) for any taxable year beginning in a
calendar year after 2022 and before 2027, the
dollar amount established by linear
interpolation between $12.83 and $35 for each
calendar year during such period, and
``(ii) for any taxable year beginning in a
calendar year after 2026, an amount equal to
the product of $35 and the inflation adjustment
factor for such calendar year determined under
section 43(b)(3)(B) for such calendar year,
determined by substituting `2025' for `1990'.
``(B) Rounding.--The applicable dollar amount
determined under paragraph (1) shall be rounded to the
nearest cent.
``(e) Qualified Applicant.--For purposes of this section, the term
`qualified applicant' means a farm (including the taxpayer with
operational control over sequestration on such farm, or a third party
project developer or aggregator acting on the taxpayer's behalf) which
has been certified by the Secretary pursuant to subsection (f).
``(f) Qualified Agricultural Carbon Sequestration and Abatement
Program.--
``(1) In general.--Not later than 180 days after the date
of enactment of this section, the Secretary, after consultation
with the Secretary of Agriculture, shall establish a qualified
agricultural carbon sequestration and abatement program to
consider and award certifications for qualified applicants
eligible for credits under this section.
``(2) Application.--An applicant under this subsection
shall submit an application containing such information as the
Secretary may require, including information required for the
selection described in paragraph (3).
``(3) Selection.--In determining which applicants to
certify under this subsection, the Secretary shall do the
following:
``(A) Certify the manner and methods by which the
taxpayer will measure the amount of carbon dioxide
equivalent abatement and sequestration. Such manner and
methods shall be consistent with current best
practices, with measured changes independently verified
by the Secretary of Agriculture as--
``(i) real,
``(ii) additional,
``(iii) based on a realistic and credible
baseline,
``(iv) quantified, monitored, reported, and
verified,
``(v) having a clear and transparent chain
of custody,
``(vi) representing permanent emissions
reductions,
``(vii) assessed and mitigated against
potential increase in emissions elsewhere,
``(viii) only counted once towards a
mitigation obligation, and
``(ix) causing no net harm.
``(B) Assess and approve independent greenhouse gas
crediting programs which register projects and credits
involving qualified farms.
``(4) 5-year certification.--A certification under
paragraph (3) shall be valid for a period of 5 years after the
date such certification is issued.
``(g) Counterfactual Baseline Year.--For purposes of this section,
the term `counterfactual baseline year' means the year in which the
Secretary certifies a qualified applicant under subsection (f).
``(h) Requirements Regarding Carbon Dioxide Equivalent.--The credit
under this section shall apply only with respect to carbon dioxide
equivalent the abatement or sequester of which is--
``(1) within the United States or a possession of the
United States, and
``(2) measured on a qualified farm and verified using the
methods or independent greenhouse gas crediting programs
certified by the Secretary under subsection (f)(3).
``(i) Regulations.--Not later than 14 months after the date of
enactment of this section, the Secretary shall, after consultation with
the Secretary of Agriculture, prescribe such regulations and guidance
as may be necessary or appropriate to carry out this section, including
regulations or guidance to--
``(1) establish the method and frequency by which soil
samples are taken from qualified farms to determine the amount
of carbon which is sequestered in the soil of such farms,
``(2) provide rules for the treatment of credits in cases
where a qualified farm is sold or transferred to another person
subsequent to the baseline year, and
``(3) provide rules for the early adopter credit in
subsection (d).''.
(b) Conforming Amendments.--
(1) Section 38(b) of such Code is amended by striking
``plus'' at the end of paragraph (37), by striking the period
at the end of paragraph (38) and inserting ``, plus'', and by
adding at the end the following new paragraph:
``(39) the qualified agricultural carbon sequestration
credit determined under section 45AA(a).''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 45Z the following new item:
``Sec. 45AA. Qualified agricultural carbon sequestration credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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