S 1842119th CongressIntroduced

Wildfire Reduction and Carbon Removal Act of 2025

Introduced: May 21, 2025

Economy & TaxesEnvironment & Climate

Standard Summary

Comprehensive overview in 1-2 paragraphs

The Wildfire Reduction and Carbon Removal Act of 2025 creates a new tax credit (Section 45BB) within the general business credit for reducing atmospheric carbon by processing forest residues generated from wildfire management. Eligible projects must capture carbon dioxide from qualified forest residue biomass, and either store it in secure geological storage (underground) or store it via long-duration utilization (for example, in biochar or durable building materials). The credit amounts are $36 per metric ton for CO2 equivalent stored securely, and $12 per metric ton for CO2e stored via long-duration utilization. The credit is adjustable for inflation after 2026 and, in some cases, can be multiplied by 5 for certain advanced facilities. The bill also introduces detailed rules on eligibility, how carbon removals are measured and verified (lifecycle analysis and monitoring/reporting/verification), and requirements for sustainability standards and storage safety. It delays the credit’s effective date to taxable years beginning after December 31, 2025, and allows electing payment or transfer of the credit. The act emphasizes avoiding double-dipping with other clean-energy or carbon-capture credits and requires regulatory processes and public input to establish standards. In short, the bill aims to turn wildfire-management byproducts into a financial incentive for removing CO2 from the atmosphere, while setting rigorous standards to ensure environmental integrity and public oversight.

Key Points

1Creation of a new credit (Section 45BB) for forest residue carbon removal and storage, based on the amount of qualified CO2e captured from forest residues and stored or utilized in a long-duration, secure way.
2- Two credit paths: $36 per metric ton for secure geological storage; $12 per metric ton for long-duration utilization.
3- Inflation adjustments after 2026 and potential 5x credit enhancement for certain qualifying facilities.
4Eligibility and project requirements.
5- A “qualified forest residue biomass carbon removal and storage project” must store at least 1,000 metric tons of CO2e in a taxable year and may aggregate multiple facilities to reach this threshold.
6- Qualified forest residue biomass means forest residues from thinning of trees up to 8 inches in diameter and other residues (limbs, bark) that meet sustainability standards and come from wildfire hazard reduction or ecological restoration activities identified in specific federal land-management plans or high-wildfire-potential firesheds.
7Methods of storage and credit rules.
8- Secure geological storage: long-term underground storage or similar methods secure for at least 1,000 years.
9- Long-duration utilization: storage in products like biochar or durable building materials, secure for at least 100 years (per lifecycle analysis).
10- Projects must use biomass equipment to dispose of residues and must meet lifecycle-analysis and monitoring/verification standards.
11Interaction with other credits and project outputs.
12- No credit under this section for any year in which a qualifying carbon dioxide removal project also receives a credit under sections 45Q or 48C.
13- If a project tied to clean energy generation (electricity, hydrogen, or fuel) outputs those products, credits under several energy/CER credits may be disallowed unless the outputs are used by the project itself.
14- If the project includes energy properties producing electricity or hydrogen, certain related credits (e.g., 48, 48E) may be unavailable.
15Tax administration features.
16- The credit is part of the general business credit and can be elected for payment or transferred to another party (subject to certain rules).
17- The credit is generally limited to CO2e captured and stored or disposed of within the United States or its possessions.
18- Recapture provisions and rules to adjust or claw back credits if storage/disposal ceases to meet requirements.
19Regulatory framework and public participation.
20- The Treasury, in consultation with Energy and EPA, must issue sustainability standards for identifying eligible forest-residue biomass and for lifecycle analysis, with public comment periods and periodic updates every five years.
21- The Treasury, in consultation with Energy and EPA, must issue regulations on lifecycle analysis, monitoring, reporting, and verification to determine net CO2e removals, with public comment and final regulations within specified timelines.
22- A separate rulemaking authority governs security standards for geological storage to ensure long-term containment.
23Effective date.
24- The amendments apply to taxable years beginning after December 31, 2025.

Impact Areas

Primary group/area affected- Owners and operators of forest-residue biomass projects, including biomass energy/processing facilities and other sites that capture and store CO2e from forest residues.- Land managers and forestry operations engaged in wildfire hazard reduction or ecological restoration activities that produce qualified forest residue biomass.- Taxpayers who own or operate biomass equipment and are responsible for capturing and storing or utilizing CO2e.Secondary group/area affected- Federal agencies (Treasury, Energy, EPA, Interior/Agriculture) implementing sustainability standards, lifecycle analysis, and monitoring/reporting/verification requirements.- Regions with wildfire hazard potential and appropriate firesheds identified for sourcing qualified biomass.- Construction, biochar, building materials, and other industries involved in long-duration utilization products.Additional impacts- Potential environmental benefits from wildfire hazard reduction and increased carbon removal, alongside requirements to protect soil health, water quality, biodiversity, and food production through regulatory standards.- Administrative costs and compliance burden for project developers to meet lifecycle analyses, MRV protocols, and sustainability standards.- Implications for the carbon market and interactions with existing carbon-capture tax credits (e.g., 45Q, 48C) and energy credits, including possible effects on project design to maximize compatibility with credits.- Public engagement and transparency through mandated rulemaking and periodic updates, with opportunities for stakeholder input.Qualified forest residue biomass: biomass from thinning and other forest byproducts (e.g., limbs, bark) that come from forest management activities and meet sustainability standards.Qualified carbon dioxide equivalent (CO2e): net CO2e removed, after accounting for lifecycle emissions and storage effectiveness, verified at disposal or utilization point.Secure geological storage: long-term underground storage intended to prevent CO2e release for about 1,000 years.Long-duration utilization: storing carbon in products (e.g., biochar, durable materials) with an effective storage horizon of about 100 years.Lifecycle analysis: a comprehensive accounting of all emissions and removals across the project’s entire life cycle, used to determine net removals.

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