109th CONGRESS
1st Session
S. 387
To amend the Internal Revenue Code of 1986 to provide tax incentives
for the investment in greenhouse gas intensity reduction projects, and for
other purposes.
IN THE SENATE OF THE UNITED STATES
February 15, 2005
Mr. HAGEL (for himself, Mr. ALEXANDER, Mr. CRAIG, and Mrs. DOLE) 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 provide tax incentives
for the investment in greenhouse gas intensity reduction projects, 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; AMENDMENT OF CODE.
(a) Short Title- This Act may be cited as the `Climate Change Technology Tax
Incentives Act of 2005'.
(b) Amendment of 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.
TITLE I--GREENHOUSE GAS INTENSITY REDUCTION TAX INCENTIVES
SEC. 101. GREENHOUSE GAS INTENSITY REDUCTION INVESTMENT TAX CREDIT.
(a) In General- Subpart D of part IV of subchapter A of chapter 1 (relating
to business-related credits) is amended by adding at the end the following
new section:
`SEC. 45J. GREENHOUSE GAS INTENSITY REDUCTION INVESTMENT CREDIT.
`(a) Allowance of Credit-
`(1) IN GENERAL- For purposes of section 38, in the case of a taxpayer's
investment in a greenhouse gas intensity reduction project approved by the
accreditation panel, the greenhouse gas intensity reduction investment credit
determined under this section for the taxable year is an amount equal to--
`(A) percentage reduction in greenhouse gas intensity certified for such
project for such year by the accreditation panel, multiplied by
`(B) the investment in such project during such year which is attributable,
directly or indirectly, to the taxpayer, as determined by the accreditation
panel.
`(2) AGGREGATE DOLLAR LIMITATION- The credit determined under paragraph
(1) for any taxable year, when added to any credit allowed to the taxpayer
with respect to the such project in any preceding taxable year, shall not
exceed 50 percent of the investment attributable to the taxpayer with respect
to such project through such taxable year.
`(b) Limitation on Aggregate Credit Allowable-
`(1) IN GENERAL- The amount of the greenhouse gas intensity reduction investment
credit determined under subsection (a) for any project, when added to all
such credits allowed to all taxpayers with respect to the such project shall
not exceed the credit dollar amount allocated to such project under this
subsection by the accreditation panel from the greenhouse gas intensity
reduction investment credit limitation for the calendar year in which such
allocation is made.
`(2) TIME FOR MAKING ALLOCATION- An allocation shall be taken into account
under paragraph (1) only if it is made not later than the close of the calendar
year in which the greenhouse gas intensity reduction project proposal with
respect to such project is approved by the accreditation panel.
`(3) OVERALL LIMITATION ON AGGREGATE CREDIT ALLOWABLE- The accreditation
panel may allocate the aggregate credit dollar amount to any such project
for a period not to exceed a 10-year period beginning with the calendar
year described in paragraph (2).
`(c) Limitation on Amount of Credits Allocated-
`(1) IN GENERAL- There is a greenhouse gas intensity reduction investment
credit limitation amount for each calendar year. Such limitation amount
is--
`(A) $245,000,000 for 2006,
`(B) $224,000,000 for 2007,
`(C) $216,000,000 for 2008,
`(D) $103,000,000 for 2009,
`(E) $27,000,000 for 2010, and
`(F) except as provided in paragraph (2), zero thereafter.
`(2) CARRYOVER OF UNUSED ISSUANCE LIMITATION- If for any calendar year the
limitation amount imposed by paragraph (1) exceeds the amount of greenhouse
gas intensity reduction investment credits allocated during such year, such
excess shall be carried forward to the succeeding calendar year as an addition
to the limitation imposed by paragraph (1).
`(d) Greenhouse Gas Intensity Reduction Project; Greenhouse Gas Intensity;
Accreditation Panel- For purposes of this section--
`(1) GREENHOUSE GAS INTENSITY REDUCTION PROJECT- The term `greenhouse gas
intensity reduction project' means any project approved under this section
by the accreditation panel. Such approval shall be based on the following
criteria:
`(A) The extent of the reduction in greenhouse gas intensity proposed
for the project.
`(B) Improvements in system efficiency.
`(C) In the case of projects located outside the United States, the extent
of technology transfer.
`(D) The existence and nature of agreements for sharing project benefits
and liability between the taxpayer and any host government.
`(2) GREENHOUSE GAS INTENSITY- The greenhouse gas intensity for any period
is equal to the volume of emissions divided by the economic activity associated
with a project.
`(3) ACCREDITATION PANEL- The term `accreditation panel' means a panel certified
by the Secretary of Commerce.
`(e) Recapture of Credit in Certain Cases-
`(1) IN GENERAL- If, at any time during the 20-year period of a greenhouse
gas intensity reduction project, there is a recapture event with respect
to such project, then the tax imposed by this chapter for the taxable year
in which such event occurs shall be increased by the credit recapture amount.
`(2) CREDIT RECAPTURE AMOUNT- For purposes of paragraph (1)--
`(A) IN GENERAL- The credit recapture amount is an amount equal to the
recapture percentage of all greenhouse gas intensity reduction investment
credits previously allowable to a taxpayer with respect to any investment
in such project that is attributable to such taxpayer.
`(B) RECAPTURE PERCENTAGE- The recapture percentage shall be 100 percent
if the recapture event occurs during the first 5 years of the project,
75 percent if the recapture event occurs during the second 5 years of
the project, 50 percent if the recapture event occurs during the third
5 years of the project, 25 percent if the recapture event occurs during
the fourth 5 years of the project, and 0 percent if the recapture event
occurs at any time after the 20th year of the project.
`(3) RECAPTURE EVENT- For purposes of paragraph (1), there is a recapture
event with respect to a greenhouse gas intensity reduction project if--
`(A) the taxpayer violates a term or condition of the approval of the
project by the accreditation panel at any time,
`(B) the taxpayer adopts a practice which the accreditation panel has
specified in its approval of the project as a practice which would tend
to defeat the purposes of the program, or
`(C) the taxpayer disposes of any ownership interest arising out of its
investment that the accreditation panel has determined is attributable
to the project, unless the accreditation panel determines that such disposition
will not have any adverse effect on the greenhouse gas intensity reduction
project.
If an event which otherwise would be a recapture event is outside the control
of the taxpayer, as determined by the accreditation panel, such event shall
not be treated as a recapture event with respect to such taxpayer.
`(A) TAX BENEFIT RULE- The tax for the taxable year shall be increased
under paragraph (1) only with respect to credits allowed by reason of
this section which were used to reduce tax liability. In the case of credits
not so used to reduce tax liability, the carryforwards and carrybacks
under section 39 shall be appropriately adjusted.
`(B) NO CREDITS AGAINST TAX- Any increase in tax under this subsection
shall not be treated as a tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter or for purposes
of section 55.
`(f) Disallowance of Double Benefit-
`(1) BASIS REDUCTION- The basis of any investment in a greenhouse gas intensity
reduction project shall be reduced by the amount of any credit determined
under this section with respect to such investment.
`(2) CHARITABLE DEDUCTION DISALLOWED- No deduction shall be allowed to a
taxpayer under section 170 with respect to any contribution which the accreditation
panel certifies to the Secretary constitutes an investment in a greenhouse
gas intensity reduction project that is attributable to such taxpayer.
`(g) Certification to Secretary- The accreditation panel shall certify to
the Secretary before January 31 of each year with respect to each taxpayer
which has made an investment in a greenhouse gas intensity reduction project--
`(1) the amount of the greenhouse gas intensity reduction investment credit
allowable to such taxpayer for the preceding calendar year,
`(2) whether a recapture event occurred with respect to such taxpayer during
the preceding calendar year, and
`(3) the credit recapture amount, if any, with respect to such taxpayer
for the preceding calendar year.
`(h) Regulations- The Secretary shall prescribe such regulations as may be
appropriate to carry out this section, including regulations--
`(1) which limit the credit for investments which are directly or indirectly
subsidized by other Federal benefits,
`(2) which prevent the abuse of the provisions of this section through the
use of related parties, and
`(3) which impose appropriate reporting requirements.'.
(b) Credit Made Part of General Business Credit- Subsection (b) of section
38 is amended by striking `plus' at the end of paragraph (18), by striking
the period at the end of paragraph (19) and inserting `, plus', and by adding
at the end the following new paragraph:
`(20) the greenhouse gas intensity reduction investment credit determined
under section 45J(a).'.
(c) Deduction for Unused Credit- Subsection (c) of section 196 is amended
by striking `and' at the end of paragraph (11), by striking the period at
the end of paragraph (12) and inserting `, and', and by adding at the end
the following new paragraph:
`(13) the greenhouse gas intensity reduction investment credit determined
under section 45J(a).'.
(d) Clerical Amendment- The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by adding at the end the following new
item:
`Sec. 45J. Greenhouse gas intensity reduction investment credit.'.
(e) Effective Date- The amendments made by this section shall apply to investments
made after December 31, 2005.
TITLE II--ENERGY EFFICIENCY PROVISIONS
Subtitle A--Renewable Energy
SEC. 201. SENSE OF THE SENATE REGARDING EXTENSION OF RENEWABLE ENERGY CREDIT.
It is the sense of the Senate that the income tax credit for electricity produced
from certain renewable resources under section 45 of the Internal Revenue
Code of 1986 should be extended through 2010.
Subtitle B--Clean Coal Incentives
PART I--CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY IMPROVEMENTS IN
EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES
SEC. 211. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL TECHNOLOGY
UNIT.
(a) Credit for Production From a Qualifying Clean Coal Technology Unit- Subpart
D of part IV of subchapter A of chapter 1 (relating to business related credits),
as amended by this Act, is amended by adding at the end the following new
section:
`SEC. 45K. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL TECHNOLOGY
UNIT.
`(a) General Rule- For purposes of section 38, the qualifying clean coal technology
production credit of any taxpayer for any taxable year is equal to--
`(1) the applicable amount of clean coal technology production credit, multiplied
by
`(2) the applicable percentage of the sum of--
`(A) the kilowatt hours of electricity, plus
`(B) each 3,413 Btu of fuels or chemicals, produced by the taxpayer during
such taxable year at a qualifying clean coal technology unit, but only
if such production occurs during the 10-year period beginning on the date
the unit was returned to service after becoming a qualifying clean coal
technology unit.
`(1) IN GENERAL- For purposes of this section, the applicable amount of
clean coal technology production credit is equal to $0.0034.
`(2) INFLATION ADJUSTMENT- For calendar years after 2005, the applicable
amount of clean coal technology production credit shall be adjusted by multiplying
such amount by the inflation adjustment factor for the calendar year in
which the amount is applied. If any amount as increased under the preceding
sentence is not a multiple of 0.01 cent, such amount shall be rounded to
the nearest multiple of 0.01 cent.
`(c) Applicable Percentage- For purposes of this section, with respect to
any qualifying clean coal technology unit, the applicable percentage is the
percentage equal to the ratio which the portion of the national megawatt capacity
limitation allocated to the taxpayer with respect to such unit under subsection
(e) bears to the total megawatt capacity of such unit.
`(d) Definitions and Special Rules- For purposes of this section--
`(1) QUALIFYING CLEAN COAL TECHNOLOGY UNIT- The term `qualifying clean coal
technology unit' means a clean coal technology unit of the taxpayer which--
`(A) on January 1, 2005--
`(i) was a coal-based electricity generating steam generator-turbine
unit which was not a clean coal technology unit, and
`(ii) had a nameplate capacity rating of not more than 300 megawatts,
`(B) becomes a clean coal technology unit as the result of the retrofitting,
repowering, or replacement of the unit with clean coal technology during
the 10-year period beginning on January 1, 2005,
`(C) is not receiving nor is scheduled to receive funding under the Clean
Coal Technology Program, the Power Plant Improvement Initiative, or the
Clean Coal Power Initiative administered by the Secretary of Energy, and
`(D) receives an allocation of a portion of the national megawatt capacity
limitation under subsection (e).
`(2) CLEAN COAL TECHNOLOGY UNIT- The term `clean coal technology unit' means
a unit which--
`(A) uses clean coal technology, including advanced pulverized coal or
atmospheric fluidized bed combustion, pressurized fluidized bed combustion,
integrated gasification combined cycle, or any other technology, for the
production of electricity,
`(B) uses an input of at least 75 percent coal to produce at least 50
percent of its thermal output as electricity,
`(C) has a design net heat rate of at least 500 less than that of such
unit as described in paragraph (1)(A),
`(D) has a maximum design net heat rate of not more than 9,500, and
`(E) meets the pollution control requirements of paragraph (3).
`(3) POLLUTION CONTROL REQUIREMENTS-
`(A) IN GENERAL- A unit meets the requirements of this paragraph if--
`(i) its emissions of sulfur dioxide, nitrogen oxide, or particulates
meet the lower of the emission levels for each such emission specified
in--
`(I) subparagraph (B), or
`(II) the new source performance standards of the Clean Air Act (42
U.S.C. 7411) which are in effect for the category of source at the
time of the retrofitting, repowering, or replacement of the unit,
and
`(ii) its emissions do not exceed any relevant emission level specified
by regulation pursuant to the hazardous air pollutant requirements of
the Clean Air Act (42 U.S.C. 7412) in effect at the time of the retrofitting,
repowering, or replacement.
`(B) SPECIFIC LEVELS- The levels specified in this subparagraph are--
`(i) in the case of sulfur dioxide emissions, 50 percent of the sulfur
dioxide emission levels specified in the new source performance standards
of the Clean Air Act (42 U.S.C. 7411) in effect on the date of the enactment
of this section for the category of source,
`(ii) in the case of nitrogen oxide emissions--
`(I) 0.1 pound per million Btu of heat input if the unit is not a
cyclone-fired boiler, and
`(II) if the unit is a cyclone-fired boiler, 15 percent of the uncontrolled
nitrogen oxide emissions from such boilers, and
`(iii) in the case of particulate emissions, 0.02 pound per million
Btu of heat input.
`(4) DESIGN NET HEAT RATE- The design net heat rate with respect to any
unit, measured in Btu per kilowatt hour (HHV)--
`(A) shall be based on the design annual heat input to and the design
annual net electrical power, fuels, and chemicals output from such unit
(determined without regard to such unit's co-generation of steam),
`(B) shall be adjusted for the heat content of the design coal to be used
by the unit if it is less than 12,000 Btu per pound according to the following
formula:
Design net heat rate = Unit net heat rate [l- {((12,000-design coal heat
content, Btu per pound)/1,000) 0.013}],
`(C) shall be corrected for the site reference conditions of--
`(i) elevation above sea level of 500 feet,
`(ii) air pressure of 14.4 pounds per square inch absolute (psia),
`(iii) temperature, dry bulb of 63«F,
`(iv) temperature, wet bulb of 54«F, and
`(v) relative humidity of 55 percent, and
`(D) if carbon capture controls have been installed with respect to any
qualifying unit and such controls remove at least 50 percent of the unit's
carbon dioxide emissions, shall be adjusted up to the design heat rate
level which would have resulted without the installation of such controls.
`(5) HHV- The term `HHV' means higher heating value.
`(6) APPLICATION OF CERTAIN RULES- The rules of paragraphs (3), (4), and
(5) of section 45(e) shall apply.
`(7) INFLATION ADJUSTMENT FACTOR-
`(A) IN GENERAL- The term `inflation adjustment factor' means, with respect
to a calendar year, a fraction the numerator of which is the GDP implicit
price deflator for the preceding calendar year and the denominator of
which is the GDP implicit price deflator for the calendar year 2003.
`(B) GDP IMPLICIT PRICE DEFLATOR- The term `GDP implicit price deflator'
means, for any calendar year, the most recent revision of the implicit
price deflator for the gross domestic product as of June 30 of such calendar
year as computed by the Department of Commerce before October 1 of such
calendar year.
`(8) NONCOMPLIANCE WITH POLLUTION LAWS- For purposes of this section, a
unit which is not in compliance with the applicable State and Federal pollution
prevention, control, and permit requirements for any period of time shall
not be considered to be a qualifying clean coal technology unit during such
period.
`(e) National Limitation on the Aggregate Capacity of Qualifying Clean Coal
Technology Units-
`(1) IN GENERAL- For purposes of this section, the national megawatt capacity
limitation for qualifying clean coal technology units is 4,000 megawatts.
`(2) ALLOCATION OF LIMITATION- The Secretary shall allocate the national
megawatt capacity limitation for qualifying clean coal technology units
in such manner as the Secretary may prescribe under the regulations under
paragraph (3).
`(3) REGULATIONS- Not later than 6 months after the date of the enactment
of this section, the Secretary shall prescribe such regulations as may be
necessary or appropriate--
`(A) to carry out the purposes of this subsection,
`(B) to limit the capacity of any qualifying clean coal technology unit
to which this section applies so that the megawatt capacity allocated
to any unit under this subsection does not exceed 300 megawatts and the
combined megawatt capacity allocated to all such units when all such units
are placed in service during the 10-year period described in subsection
(d)(1)(B), does not exceed 4,000 megawatts,
`(C) to provide a certification process under which the Secretary, in
consultation with the Secretary of Energy, shall approve and allocate
the national megawatt capacity limitation--
`(i) to encourage that units with the highest thermal efficiencies,
when adjusted for the heat content of the design coal and site reference
conditions described in subsection (d)(4)(C), and environmental performance,
be placed in service as soon as possible, and
`(ii) to allocate capacity to taxpayers which have a definite and credible
plan for placing into commercial operation a qualifying clean coal technology
unit, including--
`(II) contractual commitments for procurement and construction or,
in the case of regulated utilities, the agreement of the State utility
commission,
`(III) filings for all necessary preconstruction approvals,
`(IV) a demonstrated record of having successfully completed comparable
projects on a timely basis, and
`(V) such other factors that the Secretary determines are appropriate,
`(D) to allocate the national megawatt capacity limitation to a portion
of the capacity of a qualifying clean coal technology unit if the Secretary
determines that such an allocation would maximize the amount of efficient
production encouraged with the available tax credits,
`(E) to set progress requirements and conditional approvals so that capacity
allocations for clean coal technology units which become unlikely to meet
the necessary conditions for qualifying can be reallocated by the Secretary
to other clean coal technology units, and
`(F) to provide taxpayers with opportunities to correct administrative
errors and omissions with respect to allocations and record keeping within
a reasonable period after discovery, taking into account the availability
of regulations and other administrative guidance from the Secretary.'.
(b) Credit Treated as Business Credit- Section 38(b) (relating to current
year business credit), as amended by this Act, is amended by striking `plus'
at the end of paragraph (19), by striking the period at the end of paragraph
(20) and inserting `, plus', and by adding at the end the following new paragraph:
`(21) the qualifying clean coal technology production credit determined
under section 45K(a).'.
(c) Clerical Amendment- The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended by adding at
the end the following new item:
`Sec. 45K. Credit for production from a qualifying clean coal technology
unit.'.
(d) Effective Date- The amendments made by this section shall apply to production
after December 31, 2004, in taxable years ending after such date.
PART II--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED CLEAN
COAL TECHNOLOGIES
SEC. 212. CREDIT FOR INVESTMENT IN QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY.
(a) Allowance of Qualifying Advanced Clean Coal Technology Unit Credit- Section
46 (relating to amount of credit) is amended by striking `and' at the end
of paragraph (1), by striking the period at the end of paragraph (2) and inserting
`, and', and by adding at the end the following new paragraph:
`(3) the qualifying advanced clean coal technology unit credit.'.
(b) Amount of Qualifying Advanced Clean Coal Technology Unit Credit- Subpart
E of part IV of subchapter A of chapter 1 (relating to rules for computing
investment credit) is amended by inserting after section 48 the following
new section:
`SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY UNIT CREDIT.
`(a) In General- For purposes of section 46, the qualifying advanced clean
coal technology unit credit for any taxable year is an amount equal to 10
percent of the applicable percentage of the qualified investment in a qualifying
advanced clean coal technology unit for such taxable year.
`(b) Qualifying Advanced Clean Coal Technology Unit-
`(1) IN GENERAL- For purposes of subsection (a), the term `qualifying advanced
clean coal technology unit' means an advanced clean coal technology unit
of the taxpayer--
`(A)(i) in the case of a unit first placed in service after December 31,
2004, the original use of which commences with the taxpayer, or
`(ii) in the case of the retrofitting or repowering of a unit first placed
in service before January 1, 2005, the retrofitting or repowering of which
is completed by the taxpayer after such date, or
`(B) which is depreciable under section 167,
`(C) which has a useful life of not less than 4 years,
`(D) which is located in the United States,
`(E) which is not receiving nor is scheduled to receive funding under
the Clean Coal Technology Program, the Power Plant Improvement Initiative,
or the Clean Coal Power Initiative administered by the Secretary of Energy,
`(F) which is not a qualifying clean coal technology unit, and
`(G) which receives an allocation of a portion of the national megawatt
capacity limitation under subsection (f).
`(2) SPECIAL RULE FOR SALE-LEASEBACKS- For purposes of subparagraph (A)
of paragraph (1), in the case of a unit which--
`(A) is originally placed in service by a person, and
`(B) is sold and leased back by such person, or is leased to such person,
within 3 months after the date such unit was originally placed in service,
for a period of not less than 12 years, such unit shall be treated as
originally placed in service not earlier than the date on which such unit
is used under the leaseback (or lease) referred to in subparagraph (B).
The preceding sentence shall not apply to any property if the lessee and
lessor of such property make an election under this sentence. Such an
election, once made, may be revoked only with the consent of the Secretary.
`(3) NONCOMPLIANCE WITH POLLUTION LAWS- For purposes of this subsection,
a unit which is not in compliance with the applicable State and Federal
pollution prevention, control, and permit requirements for any period of
time shall not be considered to be a qualifying advanced clean coal technology
unit during such period.
`(c) Applicable Percentage- For purposes of this section, with respect to
any qualifying advanced clean coal technology unit, the applicable percentage
is the percentage equal to the ratio which the portion of the national megawatt
capacity limitation allocated to the taxpayer with respect to such unit under
subsection (f) bears to the total megawatt capacity of such unit.
`(d) Advanced Clean Coal Technology Unit- For purposes of this section--
`(1) IN GENERAL- The term `advanced clean coal technology unit' means a
new, retrofit, or repowering unit of the taxpayer which--
`(i) an eligible advanced pulverized coal or atmospheric fluidized bed
combustion technology unit,
`(ii) an eligible pressurized fluidized bed combustion technology unit,
`(iii) an eligible integrated gasification combined cycle technology
unit, or
`(iv) an eligible other technology unit, and
`(B) meets the carbon emission rate requirements of paragraph (6).
`(2) ELIGIBLE ADVANCED PULVERIZED COAL OR ATMOSPHERIC FLUIDIZED BED COMBUSTION
TECHNOLOGY UNIT- The term `eligible advanced pulverized coal or atmospheric
fluidized bed combustion technology unit' means a clean coal technology
unit using advanced pulverized coal or atmospheric fluidized bed combustion
technology which--
`(A) is placed in service after December 31, 2004, and before January
1, 2013, and
`(B) has a design net heat rate of not more than 8,500 (8,900 in the case
of units placed in service before 2009).
`(3) ELIGIBLE PRESSURIZED FLUIDIZED BED COMBUSTION TECHNOLOGY UNIT- The
term `eligible pressurized fluidized bed combustion technology unit' means
a clean coal technology unit using pressurized fluidized bed combustion
technology which--
`(A) is placed in service after December 31, 2004, and before January
1, 2017, and
`(B) has a design net heat rate of not more than 7,720 (8,900 in the case
of units placed in service before 2009, and 8,500 in the case of units
placed in service after 2008 and before 2013).
`(4) ELIGIBLE INTEGRATED GASIFICATION COMBINED CYCLE TECHNOLOGY UNIT- The
term `eligible integrated gasification combined cycle technology unit' means
a clean coal technology unit using integrated gasification combined cycle
technology, with or without fuel or chemical co-production, which--
`(A) is placed in service after December 31, 2004, and before January
1, 2017,
`(B) has a design net heat rate of not more than 7,720 (8,900 in the case
of units placed in service before 2009, and 8,500 in the case of units
placed in service after 2008 and before 2013), and
`(C) has a net thermal efficiency (HHV) using coal with fuel or chemical
co-production of not less than 44.2 percent (38.4 percent in the case
of units placed in service before 2009, and 40.2 percent in the case of
units placed in service after 2008 and before 2013).
`(5) ELIGIBLE OTHER TECHNOLOGY UNIT- The term `eligible other technology
unit' means a clean coal technology unit using any other technology for
the production of electricity which is placed in service after December
31, 2004, and before January 1, 2017.
`(6) CARBON EMISSION RATE REQUIREMENTS-
`(A) IN GENERAL- Except as provided in subparagraph (B), a unit meets
the requirements of this paragraph if--
`(i) in the case of a unit using design coal with a heat content of
not more than 9,000 Btu per pound, the carbon emission rate is less
than 0.60 pound of carbon per kilowatt hour, and
`(ii) in the case of a unit using design coal with a heat content of
more than 9,000 Btu per pound, the carbon emission rate is less than
0.54 pound of carbon per kilowatt hour.
`(B) ELIGIBLE OTHER TECHNOLOGY UNIT- In the case of an eligible other
technology unit, subparagraph (A) shall be applied by substituting `0.51'
and `0.459' for `0.60' and `0.54', respectively.
`(e) General Definitions- Any term used in this section which is also used
in section 45K shall have the meaning given such term in section 45M.
`(f) National Limitation on the Aggregate Capacity of Advanced Clean Coal
Technology Units-
`(1) IN GENERAL- For purposes of subsection (b)(1)(G), the national megawatt
capacity limitation is--
`(A) for qualifying advanced clean coal technology units using advanced
pulverized coal or atmospheric fluidized bed combustion technology, not
more than 1,000 megawatts (not more than 500 megawatts in the case of
units placed in service before 2009),
`(B) for such units using pressurized fluidized bed combustion technology,
not more than 500 megawatts (not more than 250 megawatts in the case of
units placed in service before 2009),
`(C) for such units using integrated gasification combined cycle technology,
with or without fuel or chemical co-production, not more than 2,000 megawatts
(not more than 1,000 megawatts in the case of units placed in service
before 2009), and
`(D) for such units using other technology for the production of electricity,
not more than 500 megawatts (not more than 250 megawatts in the case of
units placed in service before 2009).
`(2) ALLOCATION OF LIMITATION- The Secretary shall allocate the national
megawatt capacity limitation for qualifying advanced clean coal technology
units in such manner as the Secretary may prescribe under the regulations
under paragraph (3).
`(3) REGULATIONS- Not later than 6 months after the date of the enactment
of this section, the Secretary shall prescribe such regulations as may be
necessary or appropriate--
`(A) to carry out the purposes of this subsection and section 45L,
`(B) to limit the capacity of any qualifying advanced clean coal technology
unit to which this section applies so that the combined megawatt capacity
of all such units to which this section applies does not exceed 4,000
megawatts,
`(C) to provide a certification process described in section 45K(e)(3)(C),
`(D) to carry out the purposes described in subparagraphs (D), (E), and
(F) of section 45K(e)(3), and
`(E) to reallocate capacity which is not allocated to any technology described
in subparagraphs (A) through (D) of paragraph (1) because an insufficient
number of qualifying units request an allocation for such technology,
to another technology described in such subparagraphs in order to maximize
the amount of energy efficient production encouraged with the available
tax credits.
`(4) SELECTION CRITERIA- For purposes of this subsection, the selection
criteria for allocating the national megawatt capacity limitation to qualifying
advanced clean coal technology units--
`(A) shall be established by the Secretary of Energy as part of a competitive
solicitation,
`(B) shall include primary criteria of minimum design net heat rate, maximum
design thermal efficiency, environmental performance, and lowest cost
to the Government, and
`(C) shall include supplemental criteria as determined appropriate by
the Secretary of Energy.
`(g) Qualified Investment- For purposes of subsection (a), the term `qualified
investment' means, with respect to any taxable year, the basis of a qualifying
advanced clean coal technology unit placed in service by the taxpayer during
such taxable year (in the case of a unit described in subsection (b)(1)(A)(ii),
only that portion of the basis of such unit which is properly attributable
to the retrofitting or repowering of such unit).
`(h) Qualified Progress Expenditures-
`(1) INCREASE IN QUALIFIED INVESTMENT- In the case of a taxpayer who has
made an election under paragraph (5), the amount of the qualified investment
of such taxpayer for the taxable year (determined under subsection (g) without
regard to this subsection) shall be increased by an amount equal to the
aggregate of each qualified progress expenditure for the taxable year with
respect to progress expenditure property.
`(2) PROGRESS EXPENDITURE PROPERTY DEFINED- For purposes of this subsection,
the term `progress expenditure property' means any property being constructed
by or for the taxpayer and which it is reasonable to believe will qualify
as a qualifying advanced clean coal technology unit which is being constructed
by or for the taxpayer when it is placed in service.
`(3) QUALIFIED PROGRESS EXPENDITURES DEFINED- For purposes of this subsection--
`(A) SELF-CONSTRUCTED PROPERTY- In the case of any self-constructed property,
the term `qualified progress expenditures' means the amount which, for
purposes of this subpart, is properly chargeable (during such taxable
year) to capital account with respect to such property.
`(B) NONSELF-CONSTRUCTED PROPERTY- In the case of nonself-constructed
property, the term `qualified progress expenditures' means the amount
paid during the taxable year to another person for the construction of
such property.
`(4) OTHER DEFINITIONS- For purposes of this subsection--
`(A) SELF-CONSTRUCTED PROPERTY- The term `self-constructed property' means
property for which it is reasonable to believe that more than half of
the construction expenditures will be made directly by the taxpayer.
`(B) NONSELF-CONSTRUCTED PROPERTY- The term `nonself-constructed property'
means property which is not self-constructed property.
`(C) CONSTRUCTION, ETC- The term `construction' includes reconstruction
and erection, and the term `constructed' includes reconstructed and erected.
`(D) ONLY CONSTRUCTION OF QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY UNIT
TO BE TAKEN INTO ACCOUNT- Construction shall be taken into account only
if, for purposes of this subpart, expenditures therefor are properly chargeable
to capital account with respect to the property.
`(5) ELECTION- An election under this subsection may be made at such time
and in such manner as the Secretary may by regulations prescribe. Such an
election shall apply to the taxable year for which made and to all subsequent
taxable years. Such an election, once made, may not be revoked except with
the consent of the Secretary.
`(i) Coordination With Other Credits- This section shall not apply to any
property with respect to which the rehabilitation credit under section 47
or the energy credit under section 48 is allowed unless the taxpayer elects
to waive the application of such credit to such property.'.
(c) Recapture- Section 50(a) (relating to other special rules) is amended
by adding at the end the following new paragraph:
`(6) SPECIAL RULES RELATING TO QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY
UNIT- For purposes of applying this subsection in the case of any credit
allowable by reason of section 48A, the following rules shall apply:
`(A) GENERAL RULE- In lieu of the amount of the increase in tax under
paragraph (1), the increase in tax shall be an amount equal to the investment
tax credit allowed under section 38 for all prior taxable years with respect
to a qualifying advanced clean coal technology unit (as defined by section
48A(b)(1)) multiplied by a fraction the numerator of which is the number
of years remaining to fully depreciate under this title the qualifying
advanced clean coal technology unit disposed of, and the denominator of
which is the total number of years over which such unit would otherwise
have been subject to depreciation. For purposes of the preceding sentence,
the year of disposition of the qualifying advanced clean coal technology
unit shall be treated as a year of remaining depreciation.
`(B) PROPERTY CEASES TO QUALIFY FOR PROGRESS EXPENDITURES- Rules similar
to the rules of paragraph (2) shall apply in the case of qualified progress
expenditures for a qualifying advanced clean coal technology unit under
section 48A, except that the amount of the increase in tax under subparagraph
(A) of this paragraph shall be substituted for the amount described in
such paragraph (2).
`(C) APPLICATION OF PARAGRAPH- This paragraph shall be applied separately
with respect to the credit allowed under section 38 regarding a qualifying
advanced clean coal technology unit.'.
(d) Technical Amendments-
(1) Section 49(a)(1)(C) is amended by striking `and' at the end of clause
(ii), by striking the period at the end of clause (iii) and inserting `,
and', and by adding at the end the following new clause:
`(iv) the portion of the basis of any qualifying advanced clean coal
technology unit attributable to any qualified investment (as defined
by section 48A(g)).'.
(2) Section 50(a)(4) is amended by striking `and (2)' and inserting `, (2),
and (6)'.
(3) Section 50(c) is amended by adding at the end the following new paragraph:
`(6) NONAPPLICATION- Paragraphs (1) and (2) shall not apply to any qualifying
advanced clean coal technology unit credit under section 48A.'.
(4) The table of sections for subpart E of part IV of subchapter A of chapter
1 is amended by inserting after the item relating to section 48 the following
new item:
`Sec. 48A. Qualifying advanced clean coal technology unit credit.'.
(e) Effective Date- The amendments made by this section shall apply to periods
after December 31, 2004, under rules similar to the rules of section 48(m)
of the Internal Revenue Code of 1986 (as in effect on the day before the date
of the enactment of the Revenue Reconciliation Act of 1990).
SEC. 213. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY
UNIT.
(a) In General- Subpart D of part IV of subchapter A of chapter 1 (relating
to business related credits), as amended by this Act, is amended by adding
at the end the following new section:
`SEC. 45L. CREDIT FOR PRODUCTION FROM A QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY
UNIT.
`(a) General Rule- For purposes of section 38, the qualifying advanced clean
coal technology production credit of any taxpayer for any taxable year is
equal to--
`(1) the applicable amount of advanced clean coal technology production
credit, multiplied by
`(2) the applicable percentage (as determined under section 48A(c)) of the
sum of--
`(A) the kilowatt hours of electricity, plus
`(B) each 3,413 Btu of fuels or chemicals, produced by the taxpayer during
such taxable year at a qualifying advanced clean coal technology unit,
but only if such production occurs during the 10-year period beginning
on the date the unit was originally placed in service (or returned to
service after becoming a qualifying advanced clean coal technology unit).
`(b) Applicable Amount- For purposes of this section--
`(1) IN GENERAL- Except as provided in paragraph (2), the applicable amount
of advanced clean coal technology production credit with respect to production
from a qualifying advanced clean coal technology unit shall be determined
as follows:
`(A) If the qualifying advanced clean coal technology unit is producing
electricity only:
`(i) In the case of a unit originally placed in service before 2009,
if--
-------------------------------------------------------------------------------------------------------
`The design net heat rate is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-------------------------------------------------------------------------------------------------------
Not more than 8,500 $.0060 $.0038
More than 8,500 but not more than 8,750 $.0025 $.0010
More than 8,750 but less than 8,900 $.0010 $.0010.
-------------------------------------------------------------------------------------------------------
`(ii) In the case of a unit originally placed in service after 2008
and before 2013, if--
-------------------------------------------------------------------------------------------------------
`The design net heat rate is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-------------------------------------------------------------------------------------------------------
Not more than 7,770 $.0105 $.0090
More than 7,770 but not more than 8,125 $.0085 $.0068
More than 8,125 but less than 8,500 $.0075 $.0055.
-------------------------------------------------------------------------------------------------------
`(iii) In the case of a unit originally placed in service after 2012
and before 2017, if--
-------------------------------------------------------------------------------------------------------
`The design net heat rate is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-------------------------------------------------------------------------------------------------------
Not more than 7,380 $.0140 $.0115
More than 7,380 but not more than 7,720 $.0120 $.0090.
-------------------------------------------------------------------------------------------------------
`(B) If the qualifying advanced clean coal technology unit is producing
fuel or chemicals:
`(i) In the case of a unit originally placed in service before 2009,
if--
-----------------------------------------------------------------------------------------------------------------
`The unit design net thermal efficiency (HHV) is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-----------------------------------------------------------------------------------------------------------------
Not less than 40.2 percent $.0060 $.0038
Less than 40.2 but not less than 39 percent $.0025 $.0010
Less than 39 but not less than 38.4 percent $.0010 $.0010.
-----------------------------------------------------------------------------------------------------------------
`(ii) In the case of a unit originally placed in service after 2008
and before 2013, if--
-----------------------------------------------------------------------------------------------------------------
`The unit design net thermal efficiency (HHV) is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-----------------------------------------------------------------------------------------------------------------
Not less than 43.9 percent $.0105 $.0090
Less than 43.9 but not less than 42 percent $.0085 $.0068
Less than 42 but not less than 40.2 percent $.0075 $.0055.
-----------------------------------------------------------------------------------------------------------------
`(iii) In the case of a unit originally placed in service after 2012
and before 2017, if--
-----------------------------------------------------------------------------------------------------------------
`The unit design net thermal efficiency (HHV) is: The applicable amount is:
For 1st 5 years of such service For 2d 5 years of such service
-----------------------------------------------------------------------------------------------------------------
Not less than 46.3 percent $.0140 $.0115
Less than 46.3 but not less than 44.2 percent $.0120 $.0090.
-----------------------------------------------------------------------------------------------------------------
`(2) SPECIAL RULE FOR UNITS QUALIFYING FOR GREATER APPLICABLE AMOUNT WHEN
PLACED IN SERVICE- If, at the time a qualifying advanced clean coal technology
unit is placed in service, production from the unit would be entitled to
a greater applicable amount if such unit had been placed in service at a
later date, the applicable amount for such unit shall be such greater amount.
`(c) Inflation Adjustment- For calendar years after 2005, each dollar amount
in subsection (b)(1) shall be adjusted by multiplying such amount by the inflation
adjustment factor for the calendar year in which the amount is applied. If
any amount as increased under the preceding sentence is not a multiple of
0.01 cent, such amount shall be rounded to the nearest multiple of 0.01 cent.
`(d) Definitions and Special Rules- For purposes of this section--
`(1) IN GENERAL- Any term used in this section which is also used in section
45K or 48A shall have the meaning given such term in such section.
`(2) APPLICABLE RULES- The rules of paragraphs (3), (4), and (5) of section
45(e) shall apply.'.
(b) Credit Treated as Business Credit- Section 38(b) (relating to current
year business credit), as amended by this Act, is amended by striking `plus'
at the end of paragraph (20), by striking the period at the end of paragraph
(21) and inserting `, plus', and by adding at the end the following new paragraph:
`(22) the qualifying advanced clean coal technology production credit determined
under section 45L(a).'.
(c) Denial of Double Benefit- Section 29(d) (relating to other definitions
and special rules) is amended by adding at the end the following new paragraph:
`(9) DENIAL OF DOUBLE BENEFIT- This section shall not apply with respect
to any qualified fuel the production of which may be taken into account
for purposes of determining the credit under section 45L.'.
(d) Clerical Amendment- The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended by adding at
the end the following new item:
`Sec. 45L. Credit for production from a qualifying advanced clean coal technology
unit.'.
(e) Effective Date- The amendments made by this section shall apply to production
after December 31, 2004, in taxable years ending after such date.
PART III--TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT
SEC. 214. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT.
(a) In General- Section 45K, as added by this Act, is amended by adding at
the end the following new subsection:
`(f) Treatment of Person Not Able to Use Entire Credit-
`(1) ALLOWANCE OF CREDITS-
`(A) IN GENERAL- Any credit allowable under this section, section 45L,
or section 48A with respect to a facility owned by a person described
in subparagraph (B) may be transferred or used as provided in this subsection,
and the determination as to whether the credit is allowable shall be made
without regard to the tax-exempt status of the person.
`(B) PERSONS DESCRIBED- A person is described in this subparagraph if
the person is--
`(i) an organization described in section 501(c)(12)(C) and exempt from
tax under section 501(a),
`(ii) an organization described in section 1381(a)(2)(C),
`(iii) a public utility (as defined in section 136(c)(2)(B)),
`(iv) any State or political subdivision thereof, the District of Columbia,
or any agency or instrumentality of any of the foregoing,
`(v) any Indian tribal government (within the meaning of section 7871)
or any agency or instrumentality thereof, or
`(vi) the Tennessee Valley Authority.
`(A) IN GENERAL- A person described in clause (i), (ii), (iii), (iv),
or (v) of paragraph (1)(B) may transfer any credit to which paragraph
(1)(A) applies through an assignment to any other person not described
in paragraph (1)(B). Such transfer may be revoked only with the consent
of the Secretary.
`(B) REGULATIONS- The Secretary shall prescribe such regulations as necessary
to ensure that any credit described in subparagraph (A) is claimed once
and not reassigned by such other person.
`(C) TRANSFER PROCEEDS TREATED AS ARISING FROM ESSENTIAL GOVERNMENT FUNCTION-
Any proceeds derived by a person described in clause (iii), (iv), or (v)
of paragraph (1)(B) from the transfer of any credit under subparagraph
(A) shall be treated as arising from the exercise of an essential government
function.
`(3) USE OF CREDIT AS AN OFFSET- Notwithstanding any other provision of
law, in the case of a person described in clause (i), (ii), or (v) of paragraph
(1)(B), any credit to which paragraph (1)(A) applies may be applied by such
person, to the extent provided by the Secretary of Agriculture, as a prepayment
of any loan, debt, or other obligation the entity has incurred under subchapter
I of chapter 31 of title 7 of the Rural Electrification Act of 1936 (7 U.S.C.
901 et seq.), as in effect on the date of the enactment of this section.
`(A) IN GENERAL- Notwithstanding any other provision of law, in the case
of a person described in paragraph (1)(B)(vi), any credit to which paragraph
(1)(A) applies may be applied as a credit against the payments required
to be made in any fiscal year under section 15d(e) of the Tennessee Valley
Authority Act of 1933 (16 U.S.C. 831n-4(e)) as an annual return on the
appropriations investment and an annual repayment sum.
`(B) TREATMENT OF CREDITS- The aggregate amount of credits described in
paragraph (1)(A) with respect to such person shall be treated in the same
manner and to the same extent as if such credits were a payment in cash
and shall be applied first against the annual return on the appropriations
investment.
`(C) CREDIT CARRYOVER- With respect to any fiscal year, if the aggregate
amount of credits described paragraph (1)(A) with respect to such person
exceeds the aggregate amount of payment obligations described in subparagraph
(A), the excess amount shall remain available for application as credits
against the amounts of such payment obligations in succeeding fiscal years
in the same manner as described in this paragraph.
`(5) CREDIT NOT INCOME- Any transfer under paragraph (2) or use under paragraph
(3) of any credit to which paragraph (1)(A) applies shall not be treated
as income for purposes of section 501(c)(12).
`(6) TREATMENT OF UNRELATED PERSONS- For purposes of this subsection, transfers
among and between persons described in clauses (i), (ii), (iii), (iv), and
(v) of paragraph (1)(B) shall be treated as transfers between unrelated
parties.'.
(b) Effective Date- The amendment made by this section shall apply to production
after December 31, 2004, in taxable years ending after such date.
Subtitle C--Nuclear Power
SEC. 221. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER FACILITIES.
(a) In General- Subpart D of part IV of subchapter A of chapter 1 (relating
to business related credits), as amended by this Act, is amended by adding
at the end the following new section:
`SEC. 45M. CREDIT FOR PRODUCTION FROM ADVANCED NUCLEAR POWER FACILITIES.
`(a) General Rule- For purposes of section 38, the advanced nuclear power
facility production credit of any taxpayer for any taxable year is equal to
the product of--
`(1) 1.8 cents, multiplied by
`(2) the kilowatt hours of electricity--
`(A) produced by the taxpayer at an advanced nuclear power facility during
the 8-year period beginning on the date the facility was originally placed
in service, and
`(B) sold by the taxpayer to an unrelated person during the taxable year.
`(b) National Limitation-
`(1) IN GENERAL- The amount of credit which would (but for this subsection
and subsection (c)) be allowed with respect to any facility for any taxable
year shall not exceed the amount which bears the same ratio to such amount
of credit as--
`(A) the national megawatt capacity limitation allocated to the facility,
bears to
`(B) the total megawatt nameplate capacity of such facility.
`(2) AMOUNT OF NATIONAL LIMITATION- The national megawatt capacity limitation
shall be 6,000 megawatts.
`(3) ALLOCATION OF LIMITATION- The Secretary shall allocate the national
megawatt capacity limitation in such manner as the Secretary may prescribe.
`(4) REGULATIONS- Not later than 6 months after the date of the enactment
of this section, the Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this subsection. Such
regulations shall provide a certification process under which the Secretary,
after consultation with the Secretary of Energy, shall approve and allocate
the national megawatt capacity limitation.
`(1) ANNUAL LIMITATION- The amount of the credit allowable under subsection
(a) (after the application of subsection (b)) for any taxable year with
respect to any facility shall not exceed an amount which bears the same
ratio to $125,000,000 as--
`(A) the national megawatt capacity limitation allocated under subsection
(b) to the facility, bears to
`(2) OTHER LIMITATIONS- Rules similar to the rules of section 45(b) shall
apply for purposes of this section, except that paragraph (2) thereof shall
not apply to the 1.8 cents under subsection (a)(1).
`(d) Advanced Nuclear Power Facility- For purposes of this section--
`(1) IN GENERAL- The term `advanced nuclear power facility' means any advanced
nuclear facility--
`(A) which is owned by the taxpayer and which uses nuclear energy to produce
electricity, and
`(B) which is originally placed in service after the date of the enactment
of this paragraph and before January 1, 2021.
`(2) ADVANCED NUCLEAR FACILITY- For purposes of paragraph (1), the term
`advanced nuclear facility' means any nuclear facility the reactor design
for which is approved after the date of the enactment of this paragraph
by the Nuclear Regulatory Commission (and such design or a substantially
similar design of comparable capacity was not approved on or before such
date).
`(e) Other Rules to Apply- Rules similar to the rules of paragraphs (1), (2),
(3), (4), and (5) of section 45(e) shall apply for purposes of this section.'
(b) Credit Treated as Business Credit- Section 38(b), as amended by this Act,
is amended by striking `plus' at the end of paragraph (21), by striking the
period at the end of paragraph (22) and inserting `, plus', and by adding
at the end the following:
`(23) the advanced nuclear power facility production credit determined under
section 45M(a).'.
(c) Clerical Amendment- The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by this Act, is amended by adding at
the end the following:
`Sec. 45M. Credit for production from advanced nuclear power facilities.'.
(d) Effective Date- The amendments made by this section shall apply to production
in taxable years beginning after December 31, 2004.
Subtitle D--Sunset
SEC. 231. SUNSET.
(a) In General- All provisions of, and amendments made by, this title shall
not apply to taxable years beginning after December 31, 2010.
(b) Application of Certain Laws- The Internal Revenue Code of 1986 shall be
applied and administered to taxable years beginning after December 31, 2010,
as if the provisions and amendments described in subsection (a) had never
been enacted.
TITLE III--RESEARCH CREDITS
SEC. 301. SENSE OF THE SENATE REGARDING PERMANENT EXTENSION OF RESEARCH
CREDIT.
It is the sense of the Senate that the income tax credit for increasing research
activities under section 41 of the Internal Revenue Code of 1986 should be
permanently extended, the rates of the alternative incremental credit under
such section should be increased, and an alternative simplified credit for
qualified research expenses should be instituted.
END
