119-s1842

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1842 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 1842

 To amend the Internal Revenue Code of 1986 to create a credit for 
 carbon removal and storage for forest residues from wildfire 
 management.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 May 21, 2025

 Mr. Whitehouse (for himself and Mr. Schiff) introduced the following 
 bill; which was read twice and referred to the Committee on Finance

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to create a credit for 
 carbon removal and storage for forest residues from wildfire 
 management.

 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 ``Wildfire Reduction and Carbon 
Removal Act of 2025''.

SEC. 2. CREDIT FOR FOREST RESIDUE CARBON REMOVAL AND STORAGE.

    (a) In General.--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 new section:

``

SEC. 45BB. FOREST RESIDUE CARBON REMOVAL AND STORAGE.

 ``

    (a) General Rule.--For purposes of 

section 38, the forest residue 
carbon removal and storage credit for any taxable year is an amount 
equal to the applicable dollar amount per metric ton of qualified 
carbon dioxide equivalent which is--
 ``

    (1) captured by the taxpayer from qualified forest 
 residue biomass using biomass equipment which was originally 
 placed in service at a qualified forest residue biomass carbon 
 removal and storage project on or after the date of the 
 enactment of the Wildfire Reduction and Carbon Removal Act of 
 2025, and
 ``

    (2) stored by the taxpayer in secure geological storage 
 or via long-duration utilization.
 ``

    (b) Applicable Dollar Amount.--For purposes of this section--
 ``

    (1) In general.--The applicable dollar amount is--
 ``
        (A) $36, in the case of qualified carbon dioxide 
 equivalent stored in secure geological storage, and
 ``
        (B) $12, in the case of qualified carbon dioxide 
 equivalent stored via long-duration utilization.
 ``

    (2) Adjustment for inflation.--In the case of any taxable 
 year beginning in a calendar year after 2026, the $36 and $12 
 amounts under paragraph

    (1) shall each be multiplied by the 
 inflation adjustment factor determined under 

section 43

    (b)

    (3)
        (B) for such calendar year, determined by substituting 
 `2025' for `1990'.
 ``

    (3) Increased credit amount for certain facilities.--
 ``
        (A) In general.--In the case of qualified carbon 
 dioxide equivalent which is described in subsection

    (a)

    (1) and which meets the requirements of paragraphs

    (3) and

    (4) of 

section 45Q

    (h) (determined after 
 application of the modifications described in 
 subparagraph
        (B) ), the amount applicable shall be equal 
 to such amount (determined without regard to this 
 paragraph) multiplied by 5.
 ``
        (B) Modifications.--The modifications described 
 in this subparagraph are as follows:
 ``
            (i) In 

section 45Q

    (h)

    (3)
        (A) , the term 
 `qualified forest residue biomass carbon 
 removal and storage project' shall be 
 substituted for `qualified facility' each place 
 it appears, and `such project' shall be 
 substituted for `such facility' each place it 
 appears.
 ``
            (ii) In 

section 45Q

    (h)

    (3)
        (A) , the term 
 `biomass equipment' shall be substituted for 
 `carbon capture equipment' in the matter before 
 subparagraph
        (A) .
 ``
            (iii) In 

section 45Q

    (h)

    (3)
        (A)
            (ii) , by 
 disregarding the phrase `for any portion of 
 such taxable year which is within the period 
 described in paragraph

    (3)
        (A) or

    (4)
        (A) of 
 subsection

    (a) '.
 ``
            (c) Installation of Additional Biomass System Equipment at 
Existing Project.--In the case of a qualified forest residue biomass 
carbon removal and storage project placed in service before the date of 
the enactment of the Wildfire Reduction and Carbon Removal Act of 2025 
at which additional biomass equipment is placed in service on or after 
the date of the enactment of such Act, the amount of captured qualified 
carbon dioxide equivalent taken into account for purposes of subsection

    (a) is an amount (not less than zero) equal to the excess of--
 ``

    (1) the total amount of qualified carbon dioxide 
 equivalent captured at such project for the taxable year, over
 ``

    (2) the total amount of the carbon dioxide equivalent 
 capture capacity of the qualified forest residue biomass 
 project in service at such project on the day before the date 
 of the enactment of such Act.
 ``
            (d) Qualified Carbon Dioxide Equivalent.--For purposes of this 
section, the term `qualified carbon dioxide equivalent' means the net 
metric tons of carbon dioxide equivalent which--
 ``

    (1) is captured through the disposal or utilization of 
 the carbon embodied in qualified forest residue biomass, and
 ``

    (2) is measured and verified at the point of disposal or 
 utilization based on, in accordance with the rules of 
 subsection

    (f) --
 ``
        (A) project-level lifecycle analysis of 
 greenhouse gas emissions, and
 ``
        (B) project-level monitoring, reporting, and 
 verification.
 ``

    (e) Qualified Forest Residue Biomass Carbon Removal and Storage 
Project.--For purposes of this section--
 ``

    (1) In general.--
 ``
        (A) In general.--The term `qualified forest 
 residue biomass carbon removal and storage project' 
 means any project which--
 ``
            (i) uses biomass equipment to store 
 qualified carbon dioxide equivalent in secure 
 geological storage or via long-duration 
 utilization, and
 ``
            (ii) stores not less than 1,000 metric 
 tons of qualified carbon dioxide equivalent as 
 described in clause
            (i) during the taxable 
 year.
 ``
        (B) Aggregation of facilities.--The term 
 `qualified forest residue biomass carbon removal and 
 storage project' may include multiple facilities which 
 may be aggregated in order to meet the requirement of 
 subparagraph
        (A)
            (ii) .
 ``

    (2) Qualified forest residue biomass.--The term 
 `qualified forest residue biomass' means forest residues from 
 the thinning of trees no greater than 8 inches in diameter at 
 breast height and other residues (such as limbs and bark) 
 which--
 ``
        (A) meet sustainability standards issued pursuant 
 to 

section 2

    (f) of the Wildfire Reduction and Carbon 
 Removal Act of 2025, and
 ``
        (B) are produced from wildfire hazard reduction 
 or ecological restoration activities identified--
 ``
            (i) in a final United States Forest 
 Service Land Management Plan or Bureau of Land 
 Management Resource Management Plan, or
 ``
            (ii) by the United States Forest Service 
 as occurring in firesheds with significant 
 wildfire hazard potential and vegetation 
 departure.
 ``

    (f) Other Definitions and Special Rules.--For purposes of this 
section--
 ``

    (1) Secure geological storage.--Carbon dioxide equivalent 
 shall be treated as stored in secure geological storage only if 
 such carbon dioxide equivalent is stored in such wells or 
 underground storage mechanisms, including injection of bio-
 liquids or bio-solids or engineered burial of biomass, 
 appropriate to the type of biomass carbon removal as the 
 Secretary shall identify in consultation with the Secretary of 
 Energy and the Administrator of the Environmental Protection 
 Agency as having demonstrated the capability to store such 
 carbon dioxide equivalent securely for at least a 1,000-year 
 period.
 ``

    (2) Long-duration utilization.--Carbon dioxide equivalent 
 shall be treated as stored via long-duration utilization if 
 such carbon dioxide equivalent is stored in the form of 
 biochar, durable building materials, or other products which 
 remove carbon, which are determined by the Secretary in 
 collaboration with the entities described in paragraph

    (1) to 
 have demonstrated the capability to store such carbon dioxide 
 equivalent securely for at least a 100-year period, as 
 calculated based on a lifecycle analysis.
 ``

    (3) Biomass equipment.--The term `biomass equipment' 
 means any equipment used at a qualified forest residue biomass 
 carbon removal and storage project to dispose of qualified 
 forest residue biomass.
 ``

    (4) Credit not allowed for enhanced recovery 
 operations.--No credit shall be allowed under subsection

    (a) with respect to qualified carbon dioxide equivalent which is 
 used by the taxpayer as a tertiary injectant in an enhanced oil 
 or natural gas recovery project.
 ``

    (5) Coordination with other credits.--
 ``
        (A) In general.--No credit shall be allowed under 
 this section with respect to any qualifying carbon 
 dioxide removal project for any taxable year for which 
 a credit determined under 

section 45Q or 48C is allowed 
 for such taxable year.
 ``
        (B) Special rule for qualified carbon dioxide 
 removal projects integrated with clean energy 
 generation.--
 ``
            (i) In general.--In the case of any 
 qualifying carbon dioxide removal project which 
 produces electricity, hydrogen, or fuel as an 
 output of its qualifying carbon dioxide removal 
 approach, no credit shall be allowed with 
 respect to the production of such electricity, 
 hydrogen, or fuel under 

section 40B, 45, 45V, 
 45Y, or 45Z unless such electricity, hydrogen, 
 or fuel is consumed by such qualifying carbon 
 dioxide removal project.
 ``
            (ii) Energy credit and clean electricity 
 investment credit.--In the case of any 
 qualifying carbon dioxide removal project which 
 includes--
 ``
            (I) any energy property (as 
 defined in 

section 48

    (a)

    (3) ) which 
 produces electricity or hydrogen from 
 the process of carbon dioxide removal, 
 or
 ``
            (II) any qualified facility (as 
 defined in 

section 48E

    (b)

    (3) ) which 
 produces electricity or hydrogen from 
 the process of carbon dioxide removal,
 no credit shall be allowed under 

section 48 or 
 48E with respect to such energy property or 
 qualified facility.
 ``

    (6) Only qualified carbon dioxide equivalent captured and 
 disposed of or used within the united states taken into 
 account.--The credit under this section shall apply only with 
 respect to qualified carbon dioxide equivalent the capture and 
 storage or disposal of which is within--
 ``
        (A) the United States (within the meaning of 
 

section 638

    (1) ), or
 ``
        (B) a possession of the United States (within the 
 meaning of 

section 638

    (2) ).
 ``

    (7) Credit attributable to taxpayer.--
 ``
        (A) In general.--Except as provided in 
 subparagraph
        (B) or in any regulations prescribed by 
 the Secretary, any credit under this section shall be 
 attributable to the person that owns the biomass 
 equipment and physically or contractually ensures the 
 capture and storage or disposal of the qualified carbon 
 dioxide equivalent.
 ``
        (B) Election.--If the person described in 
 subparagraph
        (A) makes an election under this 
 subparagraph in such time and manner as the Secretary 
 may prescribe by regulations, the credit under this 
 section--
 ``
            (i) shall be allowable to the person that 
 stores or disposes of the qualified carbon 
 dioxide equivalent, and
 ``
            (ii) shall not be allowable to the person 
 described in subparagraph
        (A) .
 ``

    (8) Recapture.--The Secretary shall, by regulations, 
 provide for recapturing the benefit of any credit allowable 
 under subsection

    (a) with respect to any qualified carbon 
 dioxide equivalent which ceases to be stored or disposed of in 
 a manner consistent with the requirements of this section.
 ``

    (9) Credit reduced for tax-exempt bonds.--Rules similar 
 to the rule under 

section 45

    (b)

    (3) shall apply for purposes of 
 this section.
 ``

    (g) Guidance.--Not later than January 1, 2026, the Secretary 
shall issue guidance regarding implementation of this section, 
including standards on qualified forest residue biomass and 
determination of net qualified dioxide equivalent removals under this 
section.''.

    (b) Credit To Be Part of General Business Credit.--Subsection

    (b) of 

section 38 of the Internal Revenue Code of 1986 is amended by 
striking ``plus'' at the end of paragraph

    (40) , by striking the period 
at the end of paragraph

    (41) and inserting ``, plus'', and by adding at 
the end the following new paragraph:
 ``

    (42) the forest residue carbon removal and storage credit 
 determined under 

section 45BB

    (a) .''.
            (c) Elective Payment and Transfer of Credit.--

    (1) Elective payment.--Subsection

    (b) of 

section 6417 of 
 the Internal Revenue Code of 1986 is amended by adding at the 
 end the following new paragraph:
 ``

    (13) The forest residue carbon removal and storage credit 
 determined under 

section 45BB

    (a) .''.

    (2) Transfer.--

Section 6418

    (f)

    (1)
        (A) of the Internal 
 Revenue Code of 1986 is amended by adding at the end the 
 following:
 ``
            (xii) The forest residue carbon removal 
 and storage credit determined under 

section 45BB

    (a) .''.
            (d) Clerical Amendment.--The table of sections for 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 new item:

``

Sec. 45BB. Forest residue carbon removal and storage.''.

    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.

    (f) Sustainability Standards Rulemaking and Public Comment 
Period.--

    (1) Rulemaking authority.--The Secretary of the Treasury, 
 in consultation with the Secretary of Agriculture and the 
 Secretary of the Interior, shall issue regulations to establish 
 sustainability standards for the identification of qualified 
 forest residue biomass for purposes of the forest residue 
 carbon removal and storage tax credit established by this 
 section. Such regulations shall--
        (A) using the best available science, including the 
 2023 Wildfire Hazard Potential map produced by the 
 Forest Service Fire Modeling Institute and the 2023 
 Vegetation Condition Class categorization produced by 
 the Landscape Fire and Resource Management Planning 
 Tools program, identify firesheds with significant 
 wildfire hazard potential and vegetation departure from 
 a fire-adapted historical baseline from which qualified 
 forest residue biomass can be sourced;
        (B) identify regional and ecosystem-specific 
 requirements to limit eligibility to practices and 
 sites which--
            (i) have minimal negative impacts on soil 
 quality, soil fertility, soil erosion, soil 
 carbon sequestration, and site productivity;
            (ii) have minimal negative impacts on 
 biodiversity, including soil microbiota, 
 plants, and animals;
            (iii) have minimal negative impacts on 
 water quality and hydrological functioning;
            (iv) have minimal impacts on reducing or 
 displacing food production; and
            (v) have minimal substitution for existing 
 economic uses of forest products, including 
 considering reducing the maximum diameter of 
 thinned trees considered to be qualified forest 
 residue biomass; and
            (C) consider direct and indirect impacts of biomass 
 sourcing and harvest.

    (2) Public comment requirement.--Not later than 6 months 
 after the date of the enactment of this Act, the Secretary of 
 the Treasury shall publish in the Federal Register proposed 
 regulations that include sustainability standards for the 
 forest residue carbon removal and storage tax credit.

    (3) Public comment period.--
        (A) Duration.--The Secretary shall provide for a 
 period of not less than 60 days after the date of 
 publication of the proposed regulations during which 
 the public may submit comments on the proposed 
 regulations.
        (B) Consideration of comments.--The Secretary shall 
 consider all comments received during the public 
 comment period before issuing final regulations.

    (4) Final regulations.--The Secretary shall issue final 
 regulations and establish sustainability standards for the 
 carbon removal tax credit established under this section not 
 later than 90 days after the close of the public comment 
 period, taking into account feedback from the public and 
 stakeholders.

    (5) Consideration of revision.--Every 5 years, the 
 Secretary shall provide for a public comment period to consider 
 whether the sustainability standards should be updated to 
 reflect latest science. The Secretary shall consider all 
 comments received during the public comment period before 
 determining whether to update the regulations under the same 
 procedures as used to issue the original standards.

    (g) Carbon Determination Rulemaking and Public Comment Period.--

    (1) Rulemaking authority.--The Secretary of the Treasury, 
 in consultation with the Secretary of Energy and the 
 Administrator of the Environmental Protection Agency, shall 
 issue regulations to establish greenhouse gas lifecycle 
 analysis requirements and monitoring, reporting, and 
 verification requirements to determine qualified carbon dioxide 
 equivalent for the implementation of the forest residue carbon 
 removal and storage tax credit established by this section. 
 These regulations shall seek to--
        (A) to the greatest extent possible, identify best 
 available tools, models, or default values for embodied 
 or lifecycle emissions in order to facilitate 
 consistency and comparability across qualified carbon 
 dioxide removal approaches with respect to--
            (i) project-level greenhouse gas lifecycle 
 analysis;
            (ii) project-level monitoring, reporting, 
 and verification; and
            (iii) determination of net carbon dioxide 
 removal;
        (B) include reporting and verification requirements 
 which facilitate transparency and evaluation of the net 
 carbon dioxide removal claimed by the taxpayer; and
            (C) take into account best practices and 
 requirements from other carbon dioxide removal 
 accounting programs in order to minimize inefficiencies 
 and conflicting procedures.

    (2) Lifecycle analysis.--Under the proposed regulations, 
 the project-level greenhouse gas lifecycle analysis shall--
        (A) include all processes, activities, and 
 greenhouse gas emissions associated with the capture, 
 storage, and utilization of carbon dioxide equivalent, 
 including--
            (i) any mass and energy inputs and outputs 
 from raw or processed materials, including 
 biomass feedstock production, manufacture, 
 processing, transport, storage, use, and 
 disposal;
            (ii) direct land use change, estimated 
 indirect land use change, and other ecosystem 
 perturbations that affect carbon uptake of 
 forests; and
            (iii) long-term retention of carbon 
 dioxide;
        (B) only exclude any process from such analysis if 
 such process does not significantly change the outcome 
 of such analysis, with such exclusion to be noted and 
 justified;
            (C) calculate net carbon dioxide equivalent 
 removal, including accounting for uncertainty 
 associated with the estimate of net carbon dioxide 
 removal and taking into account any estimated losses 
 during carbon storage over a 100-year period; and
            (D) be consistent with the Best Practices for Life 
 Cycle Assessment of Biomass Carbon Removal and Storage 
 Technologies issued by the Department of Energy on 
 January 17, 2025.

    (3) Monitoring, reporting, and verification.--Under the 
 proposed regulations, the project-level monitoring, reporting, 
 and verification shall--
        (A) develop traceability requirements to verify the 
 source and proportion of qualified forest residue 
 biomass used in a project;
        (B) utilize independent third-party verifiers and 
 protocols for monitoring, reporting, and verification;
            (C) quantify uncertainty associated with 
 measurements and the resulting estimate of net carbon 
 dioxide removal; and
            (D) include requirements for continued monitoring 
 of the qualified project for a period determined by the 
 Secretary, in consultation with the Secretary of Energy 
 and the Administrator of the Environmental Protection 
 Agency, to be appropriate.

    (4) Public comment requirement.--Not later than 6 months 
 after the date of the enactment of this Act, the Secretary of 
 the Treasury shall publish in the Federal Register proposed 
 regulations that include lifecycle analysis and monitoring, 
 reporting, and verification requirements for the forest residue 
 carbon removal and storage tax credit.

    (5) Public comment period.--
        (A) Duration.--The Secretary shall provide for a 
 period of not less than 60 days after the date of 
 publication of the proposed regulations during which 
 the public may submit comments on the proposed 
 regulations.
        (B) Consideration of comments.--The Secretary shall 
 consider all comments received during the public 
 comment period before issuing final regulations.

    (6) Final regulations.--The Secretary shall issue final 
 regulations and establish lifecycle analysis and monitoring, 
 reporting, and verification for the carbon removal tax credit 
 established under this section not later than 90 days after the 
 close of the public comment period, taking into account 
 feedback from the public and stakeholders.

    (7) Consideration of revision.--Every 5 years, the 
 Secretary shall provide for a public comment period to consider 
 whether the lifecycle analysis and monitoring, reporting, and 
 verification requirements should be updated to reflect latest 
 science. The Secretary shall consider all comments received 
 during the public comment period before determining whether to 
 update the regulations under the same procedures as used to 
 issue the original requirements.

    (h) Secure Geological Storage Regulations.--The Secretary of the 
Treasury, in consultation with the Administrator of the Environmental 
Protection Agency and the Secretary of Energy, shall establish 
regulations for determining adequate security measures for the 
geological storage of qualified carbon dioxide equivalent in the form 
of injection of bio-liquids or bio-solids or engineered burial of 
biomass for purposes of 

section 45BB of the Internal Revenue Code of 
1986 such that the qualified carbon dioxide equivalent does not escape 
into the atmosphere over a 1,000-year period.
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