Sponsors (2)
The bill creates strong financial incentives and multipliers to accelerate biomass carbon removal and related ecological benefits, but does so at potentially high fiscal cost and with added administrative complexity, market restrictions for forest industries, and regulatory uncertainty that could delay or limit deployment.
Owners and operators of qualified biomass carbon removal projects can claim sizeable per‑ton tax credits (up to $36/ton for geological storage; $12/ton for long‑duration utilization), improving project revenue and financial viability.
High‑performing carbon removal projects that meet enhanced criteria can receive a 5× multiplier, strongly incentivizing greater, longer‑term CO2 removal and encouraging investment in higher‑quality technologies and practices.
By encouraging removal and long‑term storage of CO2e from specified forest residues, the policy supports wildfire hazard reduction and ecological restoration activities that can benefit rural communities and local ecosystems.
Taxpayers and the federal budget could face substantial costs from large per‑ton payouts and the 5× multiplier, increasing deficits or crowding out other spending priorities.
Lifecycle analysis, monitoring/reporting/verification (M/RV), monitoring requirements, and multi‑agency rulemaking create significant compliance and administrative burdens for project developers, raising costs and complexity.
Regulatory uncertainty during rulemaking and multi‑agency consultation could delay project deployment until sustainability and M/RV rules are finalized, slowing near‑term carbon removal outcomes.
Based on analysis of 2 sections of legislative text.
Creates a new tax credit for CO2e captured from forest-residue biomass: $36/ton for geological storage, $12/ton for long-duration utilization, with a 5× bonus for qualifying projects.
Official title: Amend the Internal Revenue Code of 1986 to create a credit for carbon removal and storage for forest residues from wildfire management.
Introduced May 21, 2025 by Sheldon Whitehouse · Last progress May 21, 2025
Creates a new federal tax credit for carbon dioxide removal when CO2-equivalent emissions are captured from qualified forest-residue biomass and then stored in secure geological storage or used in long-duration products. The credit sets per-ton dollar rates ($36/ton for geological storage, $12/ton for long-duration utilization), allows inflation adjustments after 2026, and includes a 5× multiplier for projects that meet enhanced criteria. Applies to biomass carbon-capture equipment placed in service at qualified projects on or after enactment, with special rules to credit only incremental capture from equipment added to pre-existing projects. The credit is claimed under the tax credit rules of the Internal Revenue Code and can be taken into account for general business tax credit calculations.