This bill introduces a tax credit for capturing methane from mining activities, incentivizing its use for energy and reducing atmospheric emissions.
Carol Miller
Representative
WV-1
The "Methane Reduction and Economic Growth Act" introduces a tax credit for capturing qualified methane from mining activities, incentivizing the reduction of methane emissions. This credit applies to facilities that begin construction before January 1, 2036, and capture at least 2,500 metric tons of CO2e methane annually, provided the captured methane is used for energy or injected into a pipeline. The goal is to promote the use of methane capture equipment and reduce the release of methane into the atmosphere from mining operations. These provisions are effective for qualified methane captured after December 31, 2024.
New Tax Credit Proposed for Mining Companies That Capture Methane: Starts 2025, Must Capture 2,500 Metric Tons Annually
The "Methane Reduction and Economic Growth Act" aims to cut down on methane emissions from mining by offering a tax break. Basically, if mining companies capture methane that would otherwise be released into the atmosphere, they can get a tax credit for it. This applies to methane captured after December 31, 2024.
Turning Waste into Energy (and Tax Credits)
This bill amends section 45Q(f) of the Internal Revenue Code, adding a new paragraph (10) that specifically deals with methane from mining. To qualify, the methane has to be captured from a "qualified facility"—think boreholes, wells, or vent shafts at a mine. These facilities need to:
- Start construction before January 1, 2036.
- Begin building the methane capture equipment before that same date.
- Snag at least 2,500 metric tons of CO2e methane per year. That's a specific measure to ensure they are making a meaningful reduction.
From Capture to Credit: What Happens to the Methane?
The captured methane can't just be vented. The bill specifies, in paragraph (10)(A)(ii), that it needs to be either:
- Injected into a pipeline system that meets certain standards for energy use.
- Used directly to produce heat or other energy, with minimal release back into the atmosphere.
So, picture a mining operation that used to vent methane. Now, they install equipment to capture it. That captured methane, measured at the source and verified when it's used (as defined in paragraph (10)(C)), could then power generators or heat buildings. The company gets a tax credit, and less methane goes into the atmosphere.
Real-World Rollout
Imagine a coal mine in West Virginia. Instead of methane leaking out, it's now captured and used to generate electricity, powering local homes. Or consider a copper mine in Arizona using captured methane to fuel its operations, reducing its reliance on other energy sources. These are the kinds of scenarios this bill aims to encourage.
While the tax credit could boost investment in methane capture technology, there's also a practical challenge. Companies will need to carefully measure and verify the captured methane to meet the bill's requirements. It's not just about capturing any methane; it's about capturing a significant amount and using it in a way that genuinely reduces emissions. The 2,500 metric ton threshold ensures that the credit goes to operations making a substantial effort.