S. 3628 - EXTEND the Energy Efficiency Incentives Act of 2006

109th CONGRESS
2d Session

S. 3628

To amend the Internal Revenue Code of 1986 to improve and extend certain energy-related tax provisions, and for other purposes.

IN THE SENATE OF THE UNITED STATES

June 29, 2006

Ms. SNOWE (for herself, Mrs. FEINSTEIN, and Mr. KERRY) introduced the following bill; which was read twice and referred to the Committee on Finance

A BILL

To amend the Internal Revenue Code of 1986 to improve and extend certain energy-related tax provisions, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; ETC.

(a) Short Title- This Act may be cited as the `EXTEND the Energy Efficiency Incentives Act of 2006'.

(b) Amendment of 1986 Code- Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

Sec. 1. Short title; etc.

TITLE I--NON-BUSINESS ENERGY IMPROVEMENTS

Sec. 101. Performance based energy improvements for non-business property.

Sec. 102. Extension and modification of credit for nonbusiness energy property.

Sec. 103. Modification of credit for solar electric property and solar hot water property.

TITLE II--BUSINESS-RELATED ENERGY IMPROVEMENTS

Sec. 201. Extension and clarification of new energy efficient home credit.

Sec. 202. Extension and modification of deduction for energy efficient commercial buildings.

Sec. 203. Deduction for energy efficient low-rise buildings.

Sec. 204. Energy efficient property deduction.

Sec. 205. Extension of investment tax credit with respect to solar energy property and qualified fuel cell property.

TITLE III--INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS

Sec. 301. Credit for energy savings certifications.

TITLE I--NON-BUSINESS ENERGY IMPROVEMENTS

SEC. 101. PERFORMANCE BASED ENERGY IMPROVEMENTS FOR NON-BUSINESS PROPERTY.

(a) In General- Subpart A of part IV of subchapter A of chapter 1 is amended by inserting after section 25D the following new section:

`SEC. 25E. PERFORMANCE BASED ENERGY IMPROVEMENTS.

`(a) In General- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount of qualified energy efficiency expenditures paid or incurred by the taxpayer during the taxable year.

`(b) Limitations-

`(1) IN GENERAL- The amount allowed as a credit under subsection (a) shall not exceed--

`(A) in the case of a principal residence that achieves a qualified energy savings of 50 percent or more, $2,000, and

`(B) in the case of a principal residence which achieves a qualified energy savings of less than 50 percent, the product of--

`(i) the qualified energy savings achieved, and

`(ii) $4,000.

`(2) MINIMUM AMOUNT OF QUALIFIED ENERGY SAVINGS- No credit shall be allowed under subsection (a) with respect to any principal residence which achieves a qualified energy savings of less than 20 percent.

`(c) Qualified Energy Efficiency Expenditures- For purposes of this section:

`(1) IN GENERAL- The term `qualified energy efficiency expenditures' means any amount paid or incurred which is related to producing qualified energy savings in a principal residence of the taxpayer which is located in the United States.

`(2) NO DOUBLE BENEFIT FOR CERTAIN EXPENDITURES- The term `qualified energy efficiency expenditures' shall not include any expenditure for which a deduction or credit is otherwise allowed to the taxpayer under this chapter.

`(3) PRINCIPAL RESIDENCE- The term `principal residence' has the same meaning as when used in section 121, except that--

`(A) no ownership requirement shall be imposed, and

`(B) the period for which a building is treated as used as a principal residence shall also include the 60-day period ending on the 1st day on which it would (but for this subparagraph) first be treated as used as a principal residence.

`(d) Qualified Energy Savings- For purposes of this section--

`(1) IN GENERAL- The term `qualified energy savings' means, with respect to any principal residence, the amount (measured as a percentage) by which--

`(A) the annual energy use with respect to the principal residence after qualified energy efficiency expenditures are made, as certified under paragraph (2), is less than

`(B) the annual energy use with respect to the principal residence before the qualified energy efficiency expenditures were made, as certified under paragraph (2).

In determining annual energy use under subparagraph (B), any energy efficiency improvements which are not attributable to qualified energy efficiency expenditures shall be disregarded.

`(2) CERTIFICATION-

`(A) IN GENERAL- The Secretary, in consultation with the Secretary of Energy, shall prescribe the procedures and methods for the making of certifications under this paragraph based on the Residential Energy Services Network (RESNET) Technical Guidelines in effect on the date of the enactment of this section.

`(B) QUALIFIED INDIVIDUALS- Any certification made under this paragraph may only be made by an individual who is recognized by an organization certified by the Secretary for such purposes.

`(e) Special Rules- For purposes of this section rules similar to the rules under paragraphs (4), (5), (6), (7), (8), and (9) of section 25D(e) and section 25C(e)(2) shall apply.

`(f) Basis Adjustments- For purposes of this subtitle, if a credit is allowed under this section with respect to any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

`(g) Termination- This section shall not apply with respect to any property placed in service after December 31, 2010.'.

(b) Interim Guidance on Certification-

(1) IN GENERAL- Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury, in consultation with the Secretary of Energy, shall issue interim guidance on--

(A) the procedures and methods for making certifications under sections 25E(d)(2)(A) and 179E(d)(2)(A) of the Internal Revenue Code of 1986, as added by subsection (a) and section 203, respectively; and

(B) the recognition of qualified individuals under sections 25E(d)(2)(B) and 179E(d)(2)(B) of such Code for the purpose of making such certifications.

(2) CONSULTATION WITH STAKEHOLDERS-

(A) IN GENERAL- The Secretary of the Treasury, in issuing guidance pursuant to paragraph (1), shall consider comments from energy efficiency experts and other interested parties.

(B) OTHER CONSIDERATIONS- In the case of guidance issued pursuant to paragraph (1)(B), the Secretary of the Treasury shall also consider--

(i) the Residential Energy Services Network Technical Guidelines and other pertinent guidelines for evaluating energy savings;

(ii) energy modeling software, including software accredited through the Residential Energy Services Network; and

(iii) quality assurance procedures of the Building Performance Institute, Home Performance through Energy Star, and the Residential Energy Services Network.

(1) IN GENERAL- The Secretary of the Treasury shall establish a procedure for individuals and businesses to petition for the approval of alternative methods of certification under sections 25E(d)(2)(A) and 179E(d)(2)(A) of the Internal Revenue Code of 1986, as added by subsection (a) and section 203, respectively.

(2) DETERMINATION- The Secretary of the Treasury shall make a determination on the approval or disapproval of such alternative methods of certification not later than 90 days after receiving a petition under paragraph (1).

(d) Conforming Amendments-

(1) Section 1016(a) is amended by striking `and' at the end of paragraph (36), by striking the period at the end of paragraph (37) and inserting `, and', and by adding at the end the following new paragraph:

`(38) to the extent provided in section 25E(f).'.

(2) The table of sections for subpart A of part IV of subchapter A chapter 1 is amended by inserting after the item relating to section 25D the following new item:

`Sec. 25E. Performance based energy improvements.'.

(e) Effective Dates- The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after the date of the enactment of this Act.

SEC. 102. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY PROPERTY.

(a) Extension- Subsection (g) of section 25C of the Internal Revenue Code of 1986 (relating to termination) is amended by striking `December 31, 2007' and inserting `December 31, 2010'.

(b) Modifications for Residential Energy Efficiency Property Expenditures-

(1) INCREASED LIMITATION FOR OIL FURNACES AND NATURAL GAS, PROPANE, AND OIL HOT WATER BOILERS-

(A) IN GENERAL- Subparagraphs (B) and (C) of section 25C(b)(3) are amended to read as follows:

`(B) $150 for any qualified natural gas furnace or qualified propane furnace, and

`(C) $300 for--

`(i) any item of energy-efficient building property, and

`(ii) any qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler.'.

(B) CONFORMING AMENDMENT- Clause (ii) of section 25C(d)(2)(A) is amended to read as follows:

`(ii) any qualified natural gas furnace, qualified propane furnace, qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler, or'.

(2) MODIFICATIONS OF STANDARDS FOR ENERGY-EFFICIENT BUILDING PROPERTY-

(A) ELECTRIC HEAT PUMPS- Subparagraph (B) of section 25C(d)(3) is amended to read as follows:

`(A) an electric heat pump which achieves the highest efficiency tier established by the Consortium for Energy Efficiency, as in effect on January 1, 2007.'.

(B) CENTRAL AIR CONDITIONERS- Section 25C(d)(3)(D) is amended by striking `2006' and inserting `2007'.

`(4) QUALIFIED NATURAL GAS, PROPANE, AND OIL FURNACES AND HOT WATER BOILERS-

`(A) QUALIFIED NATURAL GAS FURNACE- The term `qualified natural gas furnace' means any natural gas furnace which achieves an annual fuel utilization efficiency rate of not less than 95.

`(B) QUALIFIED NATURAL GAS HOT WATER BOILER- The term `qualified natural gas hot water boiler' means any natural gas hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 95.

`(C) QUALIFIED PROPANE FURNACE- The term `qualified propane furnace' means any propane furnace which achieves an annual fuel utilization efficiency rate of not less than 95.

`(D) QUALIFIED PROPANE HOT WATER BOILER- The term `qualified propane hot water boiler' means any propane hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 95.

`(E) QUALIFIED OIL FURNACES- The term `qualified oil furnace' means any oil furnace which achieves an annual fuel utilization efficiency rate of not less than 90.

`(F) QUALIFIED OIL HOT WATER BOILER- The term `qualified oil hot water boiler' means any oil hot water boiler which achieves an annual fuel utilization efficiency rate of not less than 90.'.

(1) IN GENERAL- Paragraph (1) of section 25C(c) is amended by inserting `, or an asphalt roof with appropriate cooling granules,' before `which meet the Energy Star program requirements'.

(2) BUILDING ENVELOPE COMPONENT- Subparagraph (D) of section 25C(c)(2) is amended--

(A) by inserting `or asphalt roof' after `metal roof', and

(B) by inserting `or cooling granules' after `pigmented coatings'.

(d) Elimination of Credit for Qualified Energy Efficiency Improvements in 2010-

(1) IN GENERAL- Subsection (a) of section 25C of the Internal Revenue Code of 1986 is amended to read as follows:

`(a) Allowance of Credit- In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the amount of residential energy property expenditures paid or incurred by the taxpayer during the taxable year.'.

(2) CONFORMING AMENDMENTS-

(A) Section 25C(b) of such Code, as amended by subsection (b)(1), is amended by striking paragraphs (1) and (2) and by redesignating paragraph (3) as paragraph (1).

(B) Section 25C(b)(1) of such Code, as redesignated by subparagraph (A), is amended by striking `by reason of subsection (a)(2)'.

(e) Effective Dates-

(1) IN GENERAL- Except as provided in paragraphs (2) and (3), the amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

(2) SUBSECTION (b)- The amendments made by subsection (b) shall apply to property placed in service after December 31, 2006.

(3) SUBSECTION (d)- The amendments made by subsection (d) shall apply to property placed in service after December 31, 2009.

SEC. 103. MODIFICATION OF CREDIT FOR SOLAR ELECTRIC PROPERTY AND SOLAR HOT WATER PROPERTY.

(a) In General- Subsection (a) of section 25D (relating to allowance of credit) is amended by striking paragraphs (1) and (2) and inserting the following:

`(1) 100 percent of the qualified solar electric property expenditures made by the taxpayer during such year,

`(2) 100 percent of the qualified solar hot water property expenditures made by the taxpayer during such year, and'.

(b) Limitations-

(1) IN GENERAL- Paragraph (1) of section 25D(b) is amended by striking subparagraphs (A) and (B) and inserting the following:

`(A) $2 with respect to each peak watt of capacity of qualified solar electric property for which qualified solar electric property expenditures are made,

`(B) in the case of qualified solar water heating property expenditures, an amount equal to--

`(i) in the case of a dwelling unit which uses electricity to heat water, $0.35 with respect to each kilowatt per year of savings of qualified solar hot water property for which qualified solar water heating property expenditures are made, or

`(ii) in the case of a dwelling unit which uses natural gas to heat water, $7 with respect to each annual Therm of natural gas savings of qualified solar hot water property for which qualified solar water heating property expenditures are made, and'.

(2) DETERMINATION OF SAVINGS- Paragraph (1) of section 25D(b) is amended by adding at the end the following new flush sentence:

`For purposes of subparagraph (B), savings shall be determined under regulations prescribed by the Secretary based on the OG-300 Standard for the Annual Performance of OG-300 Certified Systems of the Solar Rating and Certification Corporation.'.

(1) IN GENERAL- Section 25D(d) is amended--

(A) by redesignating paragraph (3) as paragraph (5), and

(B) by striking paragraphs (1) and (2) and inserting the following:

`(1) QUALIFIED SOLAR ELECTRIC PROPERTY EXPENDITURES- The term ` qualified solar electric property expenditures' means any amount paid or incurred for qualified solar electric property.

`(2) QUALIFIED SOLAR ELECTRIC PROPERTY- The term `qualified solar electric property' means solar electric property (as defined in section 179F(c)(2)(B)) installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.

`(3) QUALIFIED SOLAR WATER HEATING PROPERTY EXPENDITURES- The term `qualified solar water heating property expenditures' means any amount paid or incurred for qualified solar hot water property.

`(4) QUALIFIED SOLAR HOT WATER PROPERTY- The term `qualified solar hot water property' means solar hot water property (as defined in section 179F(c)(2)(C)) installed on or in connection with a dwelling unit located in the United States and used as a residence by the taxpayer.'.

(2) CONFORMING AMENDMENTS-

(A) Section 25D(e)(2) is amended by striking `property described in paragraph (1) and (2) of subsection (d)' and inserting `qualified solar electric property or qualified solar hot water property'.

(B) Section 25D(e)(4)(C) is amended by striking `paragraphs (1), (2), and (3)' and inserting `paragraphs (1),(3), and (5)'.

(d) Dollar Amounts in Case of Joint Occupancy- Clauses (i) and (ii) of section 25D(e)(4)(A) are amended to read as follows:

`(i) $2 in the case of each peak watt of capacity of qualified solar electric property for which qualified solar electric property expenditures are made,

`(ii) in the case of qualified solar water heating property expenditures, an amount equal to--

`(I) in the case of a dwelling unit which uses electricity to heat water, $0.35 with respect to each kilowatt per year of savings of qualified solar hot water property for which qualified solar water heating property expenditures are made, or

`(II) in the case of a dwelling unit which uses natural gas to heat water, $7 with respect to each annual Therm of natural gas savings of qualified solar hot water property for which qualified solar water heating property expenditures are made, and'.

(e) Extension of Credit- Subsection (g) of section 25D is amended by striking `2007' and inserting `2010'.

(f) Effective Date- The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.

TITLE II--BUSINESS-RELATED ENERGY IMPROVEMENTS

SEC. 201. EXTENSION AND CLARIFICATION OF NEW ENERGY EFFICIENT HOME CREDIT.

(a) Extension- Subsection (g) of section 45L (relating to termination) is amended by striking `December 31, 2007' and inserting `December 31, 2010'.

(b) Clarification-

(1) IN GENERAL- Paragraph (1) of section 45L(a) is amended by striking `and' at the end of subparagraph (A) and by striking subparagraph (B) and inserting the following:

`(B) acquired by a person from such eligible contractor, and

`(C) used by any person as a residence during the taxable year.'.

(2) EFFECTIVE DATE- The amendments made by this subsection shall take effect as if included in section 1332 of the Energy Policy Act of 2005.

SEC. 202. EXTENSION AND MODIFICATION OF DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL BUILDINGS.

(a) Extension- Subsection (h) of section 179D (relating to termination) is amended to read as follows:

`(h) Termination- This section shall not apply with respect to property--

`(1) which is certified under subsection (d)(6) after December 31, 2011, or

`(2) which is placed in service after December 31, 2013.'.

(b) Increase in Maximum Amount of Deduction-

(1) IN GENERAL- Subparagraph (A) of section 179D(b)(1) is amended by striking `$1.80' and inserting `$2.25'.

(2) PARTIAL ALLOWANCE- Paragraph (1) of section 179D(d) is amended--

(A) by striking `$.60' and inserting `$0.75', and

(B) by striking `$1.80' and inserting `$2.25'.

(1) REQUIREMENTS FOR COMPUTER SOFTWARE USED IN CALCULATING ENERGY AND POWER CONSUMPTION COSTS- Computer software used in preparing a calculation under section 179D(d)(2) of the Internal Revenue Code of 1986 shall automatically--

(A) generate the features, energy use, and energy and power consumption costs of a reference building that meets Standard 90.1-2001 (as defined under section 179D(c)(2) of such Code), and

(B) compare such features, energy use, and consumption costs to the features, energy use, and consumption costs of the building or system with respect to which the calculation is being made.

(2) TARGETS FOR PARTIAL ALLOWANCE OF CREDIT- The targets established by the Secretary of Treasury under section 179D(b)(1)(B) of the Internal Revenue Code of 1986 shall be based on prescriptive criteria that can be modeled explicitly.

(d) Effective Date- The amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.

SEC. 203. DEDUCTION FOR ENERGY EFFICIENT LOW-RISE BUILDINGS.

(a) In General- Part VI of subchapter B of chapter 1 is amended by inserting after section 179D the following new section:

`SEC. 179E. ENERGY EFFICIENT LOW-RISE BUILDINGS DEDUCTION.

`(a) In General- There shall be allowed as a deduction an amount equal to the amount of qualified energy efficiency expenditures paid or incurred by the taxpayer during the taxable year.

`(b) Limitations-

`(1) IN GENERAL- The amount allowed as a credit under subsection (a) shall not exceed--

`(A) in the case of a qualified low-rise building that achieves a qualified energy savings of 50 percent or more, $6,000, and

`(B) in the case of a qualified low-rise building which achieves a qualified energy savings of less than 50 percent, the product of--

`(i) the qualified energy savings achieved, and

`(ii) $12,000.

`(2) MINIMUM AMOUNT OF QUALIFIED ENERGY SAVINGS- No credit shall be allowed under subsection (a) with respect to any qualified low-rise building which achieves a qualified energy savings of less than 20 percent.

`(c) Qualified Energy Efficiency Expenditures- For purposes of this section:

`(1) IN GENERAL- The term `qualified energy efficiency expenditures' means any amount paid or incurred which is related to producing qualified energy savings in a qualified low-rise building of the taxpayer which is located in the United States.

`(2) NO DOUBLE BENEFIT FOR CERTAIN EXPENDITURES- The term `qualified energy efficiency expenditures' shall not include any expenditure for any property for which a deduction has been allowed to the taxpayer under section 179F.

`(3) QUALIFIED LOW-RISE BUILDING- The term `qualified low-rise building' means a building--

`(A) with respect to which depreciation is allowable under section 167, and

`(B) which is not within the scope of Standard 90.1-2001 (as defined under section 179D(c)(2)).

`(d) Qualified Energy Savings- For purposes of this section--

`(1) IN GENERAL- The term `qualified energy savings' means, with respect to any qualified low-rise building, the amount (measured as a percentage) by which--

`(A) the annual energy use with respect to the qualified low-rise building after qualified energy efficiency expenditures are made, as certified under paragraph (2), is less than

`(B) the annual energy use with respect to the qualified low-rise building before the qualified energy efficiency expenditures were made, as certified under paragraph (2).

In determining annual energy use under subparagraph (B), any energy efficiency improvements which are not attributable to qualified energy efficiency expenditures shall be disregarded.

`(2) CERTIFICATION-

`(A) IN GENERAL- The Secretary, in consultation with the Secretary of Energy, shall prescribe the procedures and method for the making of certifications under this paragraph based on the Residential Energy Services Network (RESNET) Technical Guidelines in effect on the date of the enactment of this Act.

`(B) QUALIFIED INDIVIDUALS- Any certification made under this paragraph may only be made by an individual who is recognized by an organization certified by the Secretary for such purposes.

`(e) Special Rules- For purposes of this section, rules similar to the rules under paragraphs (8) and (9) of section 25D(e) shall apply.

`(g) Termination- This section shall not apply with respect to any property placed in service after December 31, 2010.'.

(b) Conforming Amendments-

(1) Section 1016(a), as amended by section 101, is amended by striking `and' at the end of paragraph (37), by striking the period at the end of paragraph (38) and inserting `, and', and by adding at the end the following new paragraph:

`(39) to the extent provided in section 179E(f).'.

(2) Section 1245(a) is amended by inserting `179E,' after `179D,' both places it appears in paragraphs (2)(C) and (3)(C).

(3) Section 1250(b)(3) is amended by inserting `or 179E' after `section 179D'.

(4) Section 263(a)(1) is amended by striking `or' at the end of subparagraph (J), by striking the period at the end of subparagraph (K) and inserting `, or', and by inserting after subparagraph (K) the following new subparagraph:

`(L) expenditures for which a deduction is allowed under section 179E.'.

(5) Section 312(k)(3)(B) is amended by striking `179, 179A, 179B, 179C, or 179D' each place it appears in the heading and text and inserting `179, 179A, 179B, 179C, 179D, or 179E'.

(6) The table of sections for part VI of subchapter B is amended by inserting after the item relating to section 179D the following new item:

`Sec. 179E. Energy efficient low-rise buildings deduction.'.

(c) Effective Date- The amendments made by this section shall apply to amounts paid or incurred in taxable years beginning after the date of the enactment of this Act.

SEC. 204. ENERGY EFFICIENT PROPERTY DEDUCTION.

(a) In General- Part VI of subchapter B of chapter 1, as amended by section 203, is amended by inserting after section 179E the following new section:

`SEC. 179F. ENERGY EFFICIENT PROPERTY.

`(a) In General- There shall be allowed as a deduction an amount equal to the energy efficient property expenditures paid or incurred by the taxpayer during the taxable year

`(b) Limitation- The amount of the deduction allowed under subsection (a) for any taxable years shall not exceed--

`(1) $150 for any advanced main air circulating fan,

`(2) $450 for any qualified natural gas furnace or qualified propane furnace,

`(3) $900 for--

`(A) any item of energy-efficient building property, and

`(B) any qualified oil furnace, qualified natural gas hot water boiler, qualified propane hot water boiler, or qualified oil hot water boiler.

`(4) $9 with respect to each peak watt of capacity of solar electric property,

`(5) in the case of solar hot water property, an amount equal to--

`(A) in the case of a dwelling unit which uses electricity to heat water, $1 with respect to each kilowatt per year of savings of such solar hot water property, or

`(B) in the case of a dwelling unit which uses natural gas to heat water, $21 with respect to each annual Therm of natural gas savings of such solar hot water property.

For purposes of paragraph (5), savings shall be determined under regulations prescribed by the Secretary based on the OG-300 Standard for the Annual Performance of OG-300 Certified Systems of the Solar Rating and Certification Corporation.

`(c) Energy Efficient Property Expenditures- For purposes of this section--

`(1) IN GENERAL- The term `energy efficient property expenditures' means expenditures paid by the taxpayer for qualified energy property which is--

`(A) of a character subject to the allowance for depreciation, and

`(B) originally placed in service by the taxpayer.

`(2) QUALIFIED ENERGY PROPERTY-

`(A) IN GENERAL- The term `qualified energy property' has the meaning given such term by section 25C(d)(2), except that such term shall include solar electric property and solar hot water property.

`(B) SOLAR ELECTRIC PROPERTY- The term `solar electric property' means property which uses solar energy to generate electricity.

`(C) SOLAR HOT WATER PROPERTY- The term `solar hot water property' means property used to heat water if at least half of the energy used by such property for such purpose is derived from the sun.

`(d) Basis Adjustments- For purposes of this subtitle, if a credit is allowed under this section with respect to any expenditure with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed.

`(e) Termination- This section shall not apply with respect to any property placed in service after December 31, 2010.'.

(b) No Double Benefit- Section 179D(c) is amended by adding at the end the following new paragraph:

`(3) CERTAIN PROPERTY EXCLUDED- The term `energy efficient commercial building property' does not include any property with respect to which a credit has been allowed to the taxpayer under section 179F.'.

(1) Section 1016(a), as amended by section 203, is amended by striking `and' at the end of paragraph (38), by striking the period at the end of paragraph (39) and inserting `, and', and by adding at the end the following new paragraph:

`(40) to the extent provided in section 179E(e).'.

(2) Section 1245(a), as amended by section 203 is amended by inserting `179F,' after `179E,' both places it appears in paragraphs (2)(C) and (3)(C).

(3) Section 1250(b)(3), as amended by section 203, is amended by inserting `or 179F' after `section 179E'.

(4) Section 263(a)(1), as amended by section 203, is amended by striking `or' at the end of subparagraph (K), by striking the period at the end of subparagraph (L) and inserting `, or', and by inserting after subparagraph (L) the following new subparagraph:

`(M) expenditures for which a deduction is allowed under section 179F.'.

(5) Section 312(k)(3)(B), as amended by section 203, is amended by striking `179, 179A, 179B, 179C, 179D, or 179E' each place it appears in the heading and text and inserting `179, 179A, 179B, 179C, 179D, 179E, or 179F'.

(6) The table of sections for part VI of subchapter B is amended by inserting after the item relating to section 179E the following new item:

`Sec. 179F. Energy efficient property.'.

(d) Effective Date- The amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.

SEC. 205. EXTENSION OF INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR ENERGY PROPERTY AND QUALIFIED FUEL CELL PROPERTY.

(a) Solar Energy Property- Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) are each amended by striking `2008' and inserting `2012'.

(b) Eligible Fuel Cell Property- Paragraph (1)(E) of section 48(c) is amended by striking `2007' and inserting `2011'.

TITLE III--INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS

SEC. 301. CREDIT FOR ENERGY SAVINGS CERTIFICATIONS.

(a) In General- Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

`SEC. 45N. ENERGY SAVINGS CERTIFICATION CREDIT.

`(a) In General- For purposes of section 38, the energy savings certification credit determined under this section for any taxable year is an amount equal to the sum of--

`(1) the qualified training and certification costs paid or incurred by the taxpayer which may be taken into account for such taxable year, plus

`(2) the qualified certification equipment expenditures paid or incurred by the taxpayer which may be taken into account for such taxable year.

`(b) Qualified Training and Certification Costs-

`(1) IN GENERAL- The term `qualified training and certification costs' means costs paid or incurred for training which is required for the taxpayer or employees of the taxpayer to be certified by the Secretary under section 25D(d)(2)(B) or 179E(d)(2)(B) for the purpose of certifying energy savings.

`(2) LIMITATION- The qualified training and certification costs taken into account under subsection (a)(1) for the taxable year with respect to any individual shall not exceed $500 reduced by the amount of the credit allowed under subsection (a)(1) to the taxpayer (or any predecessor) with respect to such individual for all prior taxable years.

`(3) YEAR COSTS TAKEN INTO ACCOUNT- Qualified training and certifications costs with respect to any individual shall not be taken into account under subsection (a)(1) before the taxable year in which the individual with respect to whom such costs are paid or incurred has performed 25 certifications under sections 25E(d)(2)(A) and 179E(d)(2)(A).

`(c) Qualified Certification Equipment Expenditures-

`(1) IN GENERAL- The term `qualified training equipment expenditures' means costs paid or incurred for--

`(A) blower doors,

`(B) duct leakage testing equipment,

`(C) flue gas combustion equipment, and

`(D) digital manometers.

`(2) LIMITATION-

`(A) IN GENERAL- The qualified certification equipment expenditures taken into account under subsection (a)(2) with respect to any taxpayer for any taxable year shall not exceed $1,000.

`(B) LIMITATION ON INDIVIDUAL ITEMS- The qualified certification equipment expenditures taken into account under subsection (a)(2) shall not exceed--

`(i) $500 with respect to any blower door or duct leakage testing equipment, and

`(ii) $100 with respect to any flue gas combustion equipment or digital manometer.

`(3) YEAR EXPENDITURES TAKEN INTO ACCOUNT- The qualified certification equipment expenditures of any taxpayer shall not be taken into account under subsection (a)(2) before the taxable year in which the taxpayer has performed 25 certifications under sections 25E(d)(2)(A) and 179E(d)(2)(A).

`(d) Special Rules-

`(1) AGGREGATION RULES- For purposes of this section, all persons treated as a single employer under subsections (a) and (b) of section 52 shall be treated as 1 person.

`(2) BASIS REDUCTION- The basis of any property shall be reduced by the portion of the cost of such property taken into account under subsection (a).

`(3) DENIAL OF DOUBLE BENEFIT-

`(A) IN GENERAL- No deduction shall be allowed for that portion of the expenses otherwise allowable as a deduction for the taxable year which is equal to the amount taken into account under subsection (a) for such taxable year.

`(B) AMOUNT PREVIOUSLY DEDUCTED- No credit shall be allowed under subsection (a) with respect to any amount for which a deduction has been allowed in any preceding taxable year.'.

(b) Credit Treated as Part of General Business Credit- Section 38(b) is amended by striking `and' at the end of paragraph (29), by striking the period at the end of paragraph (30) and inserting `plus', and by adding at the end the following new paragraph:

`(31) the energy savings certification credit determined under section 45N(a).'.

(1) Section 1016(a), as amended by this Act, is amended by striking `and' at the end of paragraph (39), by striking the period at the end of paragraph (40) and inserting `and', and by adding at the end the following new paragraph:

`(41) to the extent provided in section 45N(d)(2).'.

(2) The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 45M the following new item:

`Sec. 45N. Energy savings certification credit.'.

(d) Effective Date- The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act.

END