26 U.S.C. § 48B — Qualifying gasification project credit

(a) In general. Your qualifying gasification project credit for the year is 20 percent of your qualified investment — or 30 percent if the credit was allocated under the special carbon-capture pool described below. (b) Qualified investment. This is the basis of eligible property placed in service that year as part of a qualifying gasification project — property built, reconstructed, or newly acquired by the taxpayer, and depreciable. Rules like section 48(a)(4) (minus its termination-date piece) apply for subsidized property, and rules like the pre-1990 section 46 progress-expenditure rules apply for property paid for in stages. (c) Definitions. A "qualifying gasification project" is a project that uses gasification technology, is carried out by an "eligible entity," and has some of its qualified investment certified — up to $650,000,000 per project — under the certification program below. "Gasification technology" means any process turning coal, petroleum residue, biomass, or similar recovered materials into synthesis gas (mostly carbon monoxide and hydrogen) for direct use or further processing. "Eligible property" is project property necessary for that gasification technology. "Biomass" means agricultural or plant waste, wood- or paper-mill byproducts (including lignin from pulping), and other forestry-maintenance products — but not commonly recycled paper. "Carbon capture capability" means a plant design the Secretary finds reasonably built to accommodate equipment that could later capture carbon dioxide from the gas stream for storage or use, for projects burning nonrenewable fuel. "Coal" means anthracite, bituminous coal, subbituminous coal, lignite, and peat. An "eligible entity" is someone applying mainly for a domestic project using gasification for chemicals, fertilizers, glass, steel, petroleum residues, forest products, agriculture (including feedlots and dairies), or transportation-grade liquid fuels. "Petroleum residue" is the carbonized byproduct left from processing heavy petroleum fractions. (d) Program. Within 180 days of enactment, the Secretary — with the Secretary of Energy — had to start a certification program, capped at $350,000,000 plus another $250,000,000 for projects that capture and store at least 75 percent of their carbon dioxide emissions. Certificates could only be issued during the 10 federal fiscal years starting October 1, 2005. Before certifying, the Secretary must be satisfied the applicant: can stay financially viable without more federal money; will share enough information for the Secretary to track efficient spending; has evidence of a real market for its output (contracts or written intent from customers); will get at least 90 percent of its needed fuel from its identified gasification sources; has a competent team (with preference for those with a track record on the specific domestic fuels involved); and meets any other published criteria. In deciding which projects to certify, the Secretary must give highest priority to projects that capture and store the largest share of their carbon dioxide, and high priority to those with research partnerships with eligible schools. (e) No double benefit. You can't claim this credit for the same investment that already earned a credit under section 48A. (f) Recapture. The Secretary must claw back the credit's benefit from any project that fails to reach, or keep, the carbon capture and storage levels its certification required.