H.R. 1881: Methane Reduction and Economic Growth Act

This bill, known as the Methane Reduction and Economic Growth Act, proposes to amend existing tax law in the United States related to methane capture from mining activities. Here is a breakdown of its key components:

1. Establishment of a New Incentive Credit

The bill introduces a specific tax credit for mining companies that capture methane, classifying it as the "mine methane capture incentive credit." This credit would apply to methane that is captured during mining operations and includes specific conditions for its use and measurement.

2. Definition of Qualified Methane

Under the bill, "qualified methane" is defined as methane that:

• Is captured during mining activities, which may include work from underground, abandoned, or surface mines.
• Would have otherwise been released into the atmosphere as a greenhouse gas (GHG) emission.
• Is measured at the source of capture and verified when injected or utilized.

3. Requirements for Methane Capture Equipment

The bill specifies that "methane capture equipment" must connect the mining site to either:

• A pipeline system (either preexisting or new), or
• Energy generation equipment.

4. Usage of Captured Methane

Captured methane must be used in certain ways to qualify for the tax credit. These uses include:

• Injecting the captured methane into a pipeline according to specific regulatory guidelines.
• Utilizing the methane for producing heat (for industrial applications or to heat structures) with minimal release into the atmosphere.

5. Construction and Operational Timeline

For a facility to qualify under the bill, the construction of:

• The methane capture equipment must start before January 1, 2036.
• The facility must capture at least 2,500 metric tons of CO2 equivalent methane in a taxable year.

6. Effective Date

The provisions of the bill would take effect for methane captured after December 31, 2024.

Relevant Companies

• BTU (Peabody Energy): As a coal company involved in mining operations, it may benefit from the new credit if it captures methane emissions from its mining activities.
• ARCH (Arch Resources): Similar to Peabody, Arch Resources could also take advantage of the tax incentive by implementing methane capture technologies in its mining practices.
• NM (Newmont Corporation): Operating in the mining sector, Newmont may find opportunities for methane capture related to their mining processes, which could generate federal tax benefits.