Bill > S1842

This bill establishes a new tax credit for forest residue carbon removal and storage, which aims to incentivize the capture and secure storage of carbon dioxide from forest materials that are typically byproducts of wildfire management and forest thinning activities. The credit provides $36 per metric ton for carbon dioxide stored in geological sites and $12 per metric ton for long-duration utilization methods like biochar or durable building materials. To qualify, projects must capture at least 1,000 metric tons of carbon dioxide equivalent per year using biomass equipment, and the forest residues must come from tree thinning (trees no larger than 8 inches in diameter) or other forest management activities identified in specific land management plans. The bill requires the Treasury Department to develop detailed sustainability standards and lifecycle analysis rules, including a public comment period, to ensure that carbon removal practices have minimal negative impacts on soil, biodiversity, water quality, and existing economic uses of forest products. The credit can be transferred or claimed as an elective payment, and it will be part of the general business credit, with the first credits available for taxable years beginning after December 31, 2025. The legislation also includes provisions to prevent double-counting of credits and ensures that only carbon dioxide captured and stored within the United States qualifies for the tax credit.

Budget and Finance

https://www.congress.gov/bill/119th-congress/senate-bill/1842/all-info