S.Amdt. 3238

SA 3238. Mr. WYDEN (for himself, Mr. Bennet, Ms. Cantwell, Mr.
Schumer, Ms. Stabenow, Mr. Menendez, Mr. Carper, Mr. Cardin, Mrs.
Murray, Mr. Durbin, Ms. Klobuchar, Mr. Whitehouse, Mrs. Shaheen, Mr.
Coons, and Mr. Schatz) submitted an amendment intended to be proposed
to amendment SA 2953 proposed by Ms. Murkowski to the bill S. 2012, to
provide for the modernization of the energy policy of the United
States, and for other purposes; which was ordered to lie on the table;
as follows:

At the end, add the following:

TITLE VI--INVESTING IN CLEAN ENERGY

SEC. 6001. AMENDMENT OF 1986 CODE.

Except as otherwise expressly provided, whenever in this
title 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.

Subtitle A--Clean Energy Tax Credits

SEC. 6011. CLEAN ENERGY PRODUCTION CREDIT.

(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. 45S. CLEAN ENERGY PRODUCTION CREDIT.

``(a) Amount of Credit.--
``(1) In general.--For purposes of section 38, the clean
energy production credit for any taxable year is an amount
equal to the product of--
``(A) the applicable credit rate (as determined under
paragraph (2)), multiplied by
``(B) the kilowatt hours of electricity--
``(i) produced by the taxpayer at a qualified facility, and
``(ii)(I) sold by the taxpayer to an unrelated person
during the taxable year, or
``(II) in the case of a qualified facility which is
equipped with a metering device which is owned and operated
by an unrelated person, sold, consumed, or stored by the
taxpayer during the taxable year.
``(2) Applicable credit rate.--
``(A) In general.--
``(i) Maximum credit rate.--Except as provided in clause
(ii), the applicable credit rate is 1.5 cents.
``(ii) Reduction of credit based on greenhouse gas emission
rate.--The applicable credit rate shall be reduced (but not
below zero) by an amount which bears the same ratio to the
amount in effect under clause (i) as the greenhouse gas
emissions rate for the qualified facility bears to 372 grams
of CO<inf>2</inf>e per KWh.
``(B) Rounding.--If any amount determined under
subparagraph (A)(ii) is not a multiple of 0.1 cent, such
amount shall be rounded to the nearest multiple of 0.1 cent.
``(b) Greenhouse Gas Emissions Rate.--
``(1) In general.--For purposes of this section, the term
`greenhouse gas emissions rate' means the amount of
greenhouse gases emitted into the atmosphere by a qualified
facility in the production of electricity, expressed as grams
of CO<inf>2</inf>e per KWh.
``(2) Non-fossil fuel combustion and gasification.--In the
case of a qualified facility which produces electricity
through combustion or gasification of a non-fossil fuel, the
greenhouse gas emissions rate for such facility shall be
equal to the net rate of greenhouse gases emitted into the
atmosphere by such facility in the production of electricity,
expressed as grams of CO<inf>2</inf>e per KWh.
``(3) Establishment of safe harbor for qualified
facilities.--
``(A) In general.--The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall,
by regulation, establish safe-harbor greenhouse gas emissions
rates for types or categories of qualified facilities, which
a taxpayer may elect to use for purposes of this section.
``(B) Rounding.--In establishing the safe-harbor greenhouse
gas emissions rates for qualified facilities, the Secretary
may round such rates to the nearest multiple of 37.2 grams of
CO<inf>2</inf>e per KWh (or, in the case of a greenhouse gas
emissions rate which is less than 18.6 grams of
CO<inf>2</inf>e per KWh, by rounding such rate to zero).
``(4) Carbon capture and sequestration equipment.--For
purposes of this subsection, the amount of greenhouse gases
emitted into the atmosphere by a qualified facility in the
production of electricity shall not include any qualified
carbon dioxide (as defined in section 48E(c)(3)(A)) that is
captured and disposed of by the taxpayer.
``(c) Inflation Adjustment.--
``(1) In general.--In the case of a calendar year beginning
after 2018, the 1.5 cent amount in clause (i) of subsection
(a)(2)(A) shall be adjusted by multiplying such amount by the
inflation adjustment factor for the calendar year in which
the sale or use of the electricity occurs. If any amount as
increased under the preceding sentence is not a multiple of
0.1 cent, such amount shall be rounded to the nearest
multiple of 0.1 cent.
``(2) Annual computation.--The Secretary shall, not later
than April 1 of each calendar year, determine and publish in
the Federal Register the inflation adjustment factor for such
calendar year in accordance with this subsection.
``(3) Inflation adjustment factor.--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 1992. The term `GDP implicit price deflator' means the
most recent revision of the implicit price deflator for the
gross domestic product as computed and published by the
Department of Commerce before March 15 of the calendar year.
``(d) Credit Phase-out.--
``(1) In general.--Subject to paragraph (3), if the
Secretary, in consultation with the Secretary of Energy and
the Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States are equal to or
less than 72 percent of the annual greenhouse gas emissions
from electrical production in the United States for calendar
year 2005, the amount of the clean energy production credit
under subsection (a) for any qualified facility placed in
service during a calendar year described in paragraph (2)
shall be equal to the product of--
``(A) the amount of the credit determined under subsection
(a) without regard to this subsection, multiplied by
``(B) the phase-out percentage under paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage under
this paragraph is equal to--
``(A) for a facility placed in service during the first
calendar year following the calendar year in which the
determination described in paragraph (1) is made, 75 percent,
``(B) for a facility placed in service during the second
calendar year following such determination year, 50 percent,
``(C) for a facility placed in service during the third
calendar year following such determination year, 25 percent,
and
``(D) for a facility placed in service during any calendar
year subsequent to the year described in subparagraph (C), 0
percent.
``(3) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States for each year
before calendar year 2026 are greater than the percentage
specified in paragraph (1), then the determination described
in such paragraph shall be deemed to have been made for
calendar year 2025.
``(e) Definitions.--In this section:
``(1) CO<inf>2</inf>e per kwh.--The term `CO<inf>2</inf>e
per KWh' means, with respect to any greenhouse gas, the
equivalent carbon dioxide per kilowatt hour of electricity
produced.
``(2) Greenhouse gas.--The term `greenhouse gas' has the
same meaning given such term under section 211(o)(1)(G) of
the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on
the date of the enactment of this section.
``(3) Qualified facility.--
``(A) In general.--Subject to subparagraphs (B) and (C),
the term `qualified facility' means a facility which is--
``(i) used for the generation of electricity, and
``(ii) originally placed in service after December 31,
2017.
``(B) 10-year production credit.--For purposes of this
section, a facility shall only be treated as a qualified
facility during the 10-year period beginning on the date the
facility was originally placed in service.
``(C) Expansion of facility; incremental production.--A
qualified facility shall include either of the following in
connection with a facility described in subparagraph (A)(i)
that was previously placed in service, but only to the extent
of the increased amount of electricity produced at the
facility by reason of the following:
``(i) A new unit placed in service after December 31, 2017.
``(ii) Any efficiency improvements or additions of capacity
placed in service after December 31, 2017.
``(D) Coordination with other credits.--The term `qualified
facility' shall not include any facility for which--
``(i) a renewable electricity production credit determined
under section 45 is allowed under section 38 for the taxable
year or any prior taxable year,
``(ii) an energy credit determined under section 48 is
allowed under section 38 for the taxable year or any prior
taxable year, or
``(iii) a clean energy investment credit determined under
section 48E is allowed under section 38 for the taxable year
or any prior taxable year.
``(f) Final Guidance.--Not later than January 1, 2017, the
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall issue final guidance
regarding implementation of this section, including
calculation of greenhouse gas emission rates for qualified
facilities and determination of clean energy production
credits under this section.
``(g) Special Rules.--

[[Page S597]]

``(1) Only production in the united states taken into
account.--Consumption or sales shall be taken into account
under this section only with respect to electricity the
production of which is within--
``(A) the United States (within the meaning of section
638(1)), or
``(B) a possession of the United States (within the meaning
of section 638(2)).
``(2) Combined heat and power system property.--
``(A) In general.--For purposes of subsection (a)(1)(B),
the kilowatt hours of electricity produced by a taxpayer at a
qualified facility shall include any production in the form
of useful thermal energy by any combined heat and power
system property within such facility.
``(B) Combined heat and power system property.--For
purposes of this paragraph, the term `combined heat and power
system property' has the same meaning given such term by
section 48(c)(3) (without regard to subparagraphs (A)(iv),
(B), and (D) thereof).
``(C) Conversion from btu to kwh.--
``(i) In general.--For purposes of subparagraph (A), the
amount of kilowatt hours of electricity produced in the form
of useful thermal energy shall be equal to the quotient of--

``(I) the total useful thermal energy produced by the
combined heat and power system property within the qualified
facility, divided by
``(II) the heat rate for such facility.

``(ii) Heat rate.--For purposes of this subparagraph, the
term `heat rate' means the amount of energy used by the
qualified facility to generate 1 kilowatt hour of
electricity, expressed as British thermal units per net
kilowatt hour generated.
``(3) Production attributable to the taxpayer.--In the case
of a qualified facility in which more than 1 person has an
ownership interest, except to the extent provided in
regulations prescribed by the Secretary, production from the
facility shall be allocated among such persons in proportion
to their respective ownership interests in the gross sales
from such facility.
``(4) Related persons.--Persons shall be treated as related
to each other if such persons would be treated as a single
employer under the regulations prescribed under section
52(b). In the case of a corporation which is a member of an
affiliated group of corporations filing a consolidated
return, such corporation shall be treated as selling
electricity to an unrelated person if such electricity is
sold to such a person by another member of such group.
``(5) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(6) Allocation of credit to patrons of agricultural
cooperative.--
``(A) Election to allocate.--
``(i) In general.--In the case of an eligible cooperative
organization, any portion of the credit determined under
subsection (a) for the taxable year may, at the election of
the organization, be apportioned among patrons of the
organization on the basis of the amount of business done by
the patrons during the taxable year.
``(ii) Form and effect of election.--An election under
clause (i) for any taxable year shall be made on a timely
filed return for such year. Such election, once made, shall
be irrevocable for such taxable year. Such election shall not
take effect unless the organization designates the
apportionment as such in a written notice mailed to its
patrons during the payment period described in section
1382(d).
``(B) Treatment of organizations and patrons.--The amount
of the credit apportioned to any patrons under subparagraph
(A)--
``(i) shall not be included in the amount determined under
subsection (a) with respect to the organization for the
taxable year, and
``(ii) shall be included in the amount determined under
subsection (a) for the first taxable year of each patron
ending on or after the last day of the payment period (as
defined in section 1382(d)) for the taxable year of the
organization or, if earlier, for the taxable year of each
patron ending on or after the date on which the patron
receives notice from the cooperative of the apportionment.
``(C) Special rules for decrease in credits for taxable
year.--If the amount of the credit of a cooperative
organization determined under subsection (a) for a taxable
year is less than the amount of such credit shown on the
return of the cooperative organization for such year, an
amount equal to the excess of--
``(i) such reduction, over
``(ii) the amount not apportioned to such patrons under
subparagraph (A) for the taxable year,

shall be treated as an increase in tax imposed by this
chapter on the organization. Such increase shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter.
``(D) Eligible cooperative defined.--For purposes of this
section, the term `eligible cooperative' means a cooperative
organization described in section 1381(a) which is owned more
than 50 percent by agricultural producers or by entities
owned by agricultural producers. For this purpose an entity
owned by an agricultural producer is one that is more than 50
percent owned by agricultural producers.''.
(b) Conforming Amendments.--
(1) Section 38(b) is amended--
(A) in paragraph (35), by striking ``plus'' at the end,
(B) in paragraph (36), by striking the period at the end
and inserting ``, plus'', and
(C) by adding at the end the following new paragraph:
``(37) the clean energy production credit determined under
section 45S(a).''.
(2) 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. 45S. Clean energy production credit.''.
(c) Effective Date.--The amendments made by this section
shall apply to facilities placed in service after December
31, 2017.

SEC. 6012. CLEAN ENERGY INVESTMENT CREDIT.

(a) Business Credit.--
(1) In general.--Subpart E of part IV of subchapter A of
chapter 1 is amended by inserting after section 48D the
following new section:

``SEC. 48E. CLEAN ENERGY INVESTMENT CREDIT.

``(a) Investment Credit for Qualified Property.--
``(1) In general.--For purposes of section 46, the clean
energy investment credit for any taxable year is an amount
equal to the sum of--
``(A) the clean energy percentage of the qualified
investment for such taxable year with respect to any
qualified facility, plus
``(B) 30 percent of the qualified investment for such
taxable year with respect to qualified carbon capture and
sequestration equipment, plus
``(C) 30 percent of the qualified investment for such
taxable year with respect to energy storage property.
``(2) Clean energy percentage.--
``(A) In general.--
``(i) Maximum percentage.--Except as provided in clause
(ii), the clean energy percentage is 30 percent.
``(ii) Reduction of percentage based on greenhouse gas
emissions rate.--The clean energy percentage shall be reduced
(but not below zero) by an amount which bears the same ratio
to 30 percent as the anticipated greenhouse gas emissions
rate for the qualified facility bears to 372 grams of
CO<inf>2</inf>e per KWh.
``(B) Rounding.--If any amount determined under
subparagraph (A)(ii) is not a multiple of 1 percent, such
amount shall be rounded to the nearest multiple of 1 percent.
``(3) Coordination with rehabilitation credit.--The clean
energy percentage shall not apply to that portion of the
basis of any property which is attributable to qualified
rehabilitation expenditures (as defined in section 47(c)(2)).
``(b) Qualified Investment With Respect to Any Qualified
Facility.--
``(1) In general.--For purposes of subsection (a)(1)(A),
the qualified investment with respect to any qualified
facility for any taxable year is the basis of any qualified
property placed in service by the taxpayer during such
taxable year which is part of a qualified facility.
``(2) Qualified property.--The term `qualified property'
means property--
``(A) which is--
``(i) tangible personal property, or
``(ii) other tangible property (not including a building or
its structural components), but only if such property is used
as an integral part of the qualified facility,
``(B) with respect to which depreciation (or amortization
in lieu of depreciation) is allowable,
``(C) which is constructed, reconstructed, erected, or
acquired by the taxpayer, and
``(D) the original use of which commences with the
taxpayer.
``(3) Qualified facility.--The term `qualified facility'
has the same meaning given such term by section 45S(e)(3)
(without regard to subparagraphs (B) and (D) thereof). Such
term shall not include any facility for which a renewable
electricity production credit under section 45 or an energy
credit determined under section 48 is allowed under section
38 for the taxable year or any prior taxable year.
``(c) Qualified Investment With Respect to Qualified Carbon
Capture and Sequestration Equipment.--
``(1) In general.--For purposes of subsection (a)(1)(B),
the qualified investment with respect to qualified carbon
capture and sequestration equipment for any taxable year is
the basis of any qualified carbon capture and sequestration
equipment placed in service by the taxpayer during such
taxable year.
``(2) Qualified carbon capture and sequestration
equipment.--The term `qualified carbon capture and
sequestration equipment' means property--
``(A) installed in a facility placed in service before
January 1, 2018, which produces electricity,
``(B) which results in at least a 50 percent reduction in
the carbon dioxide emissions rate at the facility, as
compared to such rate before installation of such equipment,
through the capture and disposal of qualified carbon dioxide
(as defined in paragraph (3)(A)),
``(C) with respect to which depreciation is allowable,
``(D) which is constructed, reconstructed, erected, or
acquired by the taxpayer, and
``(E) the original use of which commences with the
taxpayer.
``(3) Qualified carbon dioxide.--

[[Page S598]]

``(A) In general.--The term `qualified carbon dioxide'
means carbon dioxide captured from an industrial source
which--
``(i) would otherwise be released into the atmosphere as
industrial emission of greenhouse gas,
``(ii) is measured at the source of capture and verified at
the point of disposal or injection,
``(iii) is disposed of by the taxpayer in secure geological
storage, and
``(iv) is captured and disposed of within the United States
(within the meaning of section 638(1)) or a possession of the
United States (within the meaning of section 638(2)).
``(B) Secure geological storage.--The term `secure
geological storage' has the same meaning given to such term
under section 45Q(d)(2).
``(d) Qualified Investment With Respect to Energy Storage
Property.--
``(1) In general.--For purposes of subsection (a)(1)(C),
the qualified investment with respect to energy storage
property for any taxable year is the basis of any energy
storage property placed in service by the taxpayer during
such taxable year.
``(2) Energy storage property.--The term `energy storage
property' means property--
``(A) installed at or near a facility which produces
electricity,
``(B) which receives, stores, and delivers electricity or
energy for conversion to electricity which is sold by the
taxpayer to an unrelated person (or, in the case of a
facility which is equipped with a metering device which is
owned and operated by an unrelated person, sold or consumed
by the taxpayer), which may include--
``(i) hydroelectric pumped storage,
``(ii) compressed air energy storage,
``(iii) regenerative fuel cells,
``(iv) batteries,
``(v) superconducting magnetic energy storage,
``(vi) thermal energy storage systems,
``(vii) fuel cells (as defined in section 48(c)(1)),
``(viii) any other relevant technology identified by the
Secretary (in consultation with the Secretary of Energy), and
``(ix) any combination of the properties described in
clauses (i) through (viii),
``(C) with respect to which depreciation is allowable,
``(D) which is constructed, reconstructed, erected, or
acquired by the taxpayer,
``(E) the original use of which commences with the
taxpayer, and
``(F) which is placed in service after December 31, 2017.
``(e) Greenhouse Gas Emissions Rate.--
``(1) In general.--For purposes of this section, the term
`greenhouse gas emissions rate' has the same meaning given
such term under subsection (b) of section 45S.
``(2) Establishment of safe harbor for qualified
property.--
``(A) In general.--The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall,
by regulation, establish safe-harbor greenhouse gas emissions
rates for types or categories of qualified property which are
part of a qualified facility, which a taxpayer may elect to
use for purposes of this section.
``(B) Rounding.--In establishing the safe-harbor greenhouse
gas emissions rates for qualified property, the Secretary may
round such rates to the nearest multiple of 37.2 grams of
CO<inf>2</inf>e per KWh (or, in the case of a greenhouse gas
emissions rate which is less than 18.6 grams of
CO<inf>2</inf>e per KWh, by rounding such rate to zero).
``(f) Certain Progress Expenditure Rules Made Applicable.--
Rules similar to the rules of subsection (c)(4) and (d) of
section 46 (as in effect on the day before the date of the
enactment of the Revenue Reconciliation Act of 1990) shall
apply for purposes of subsection (a).
``(g) Credit Phase-out.--
``(1) In general.--Subject to paragraph (3), if the
Secretary, in consultation with the Secretary of Energy and
the Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States are equal to or
less than 72 percent of the annual greenhouse gas emissions
from electrical production in the United States for calendar
year 2005, the amount of the clean energy investment credit
under subsection (a) for any qualified facility, qualified
carbon capture and sequestration equipment, or energy storage
property placed in service during a calendar year described
in paragraph (2) shall be equal to the product of--
``(A) the amount of the credit determined under subsection
(a) without regard to this subsection, multiplied by
``(B) the phase-out percentage under paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage under
this paragraph is equal to--
``(A) for a facility or property placed in service during
the first calendar year following the calendar year in which
the determination described in paragraph (1) is made, 75
percent,
``(B) for a facility or property placed in service during
the second calendar year following such determination year,
50 percent,
``(C) for a facility or property placed in service during
the third calendar year following such determination year, 25
percent, and
``(D) for a facility or property placed in service during
any calendar year subsequent to the year described in
subparagraph (C), 0 percent.
``(3) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States for each year
before calendar year 2026 are greater than the percentage
specified in paragraph (1), then the determination described
in such paragraph shall be deemed to have been made for
calendar year 2025.
``(h) Definitions.--In this section:
``(1) CO<inf>2</inf>e per kwh.--The term `CO<inf>2</inf>e
per KWh' has the same meaning given such term under section
45S(e)(1).
``(2) Greenhouse gas.--The term `greenhouse gas' has the
same meaning given such term under section 45S(e)(2).
``(i) Recapture of Credit.--For purposes of section 50, if
the Administrator of the Environmental Protection Agency
determines that--
``(1) the greenhouse gas emissions rate for a qualified
facility is significantly higher than the anticipated
greenhouse gas emissions rate claimed by the taxpayer for
purposes of the clean energy investment credit under this
section, or
``(2) with respect to any qualified carbon capture and
sequestration equipment installed in a facility, the carbon
dioxide emissions from such facility cease to be captured or
disposed of in a manner consistent with the requirements of
subsection (c),
the facility or equipment shall cease to be investment credit
property in the taxable year in which the determination is
made.
``(j) Final Guidance.--Not later than January 1, 2017, the
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall issue final guidance
regarding implementation of this section, including
calculation of greenhouse gas emission rates for qualified
facilities and determination of clean energy investment
credits under this section.''.
(2) Conforming amendments.--
(A) Section 46 is amended by inserting a comma at the end
of paragraph (4), by striking ``and'' at the end of paragraph
(5), by striking the period at the end of paragraph (6) and
inserting ``, and'', and by adding at the end the following
new paragraph:
``(7) the clean energy investment credit.''.
(B) Section 49(a)(1)(C) is amended by striking ``and'' at
the end of clause (v), by striking the period at the end of
clause (vi) and inserting a comma, and by adding at the end
the following new clauses:
``(vii) the basis of any qualified property which is part
of a qualified facility under section 48E,
``(viii) the basis of any qualified carbon capture and
sequestration equipment under section 48E, and
``(ix) the basis of any energy storage property under
section 48E.''.
(C) Section 50(a)(2)(E) is amended by inserting ``or
48E(e)'' after ``section 48(b)''.
(D) 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 48D the following new item:

``48E. Clean energy investment credit.''.

(3) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2017, 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).
(b) Individual Credit.--
(1) In general.--Section 25D is amended to read as follows:

``SEC. 25D. CLEAN RESIDENTIAL ENERGY CREDIT.

``(a) Allowance of Credit.--
``(1) 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 sum of--
``(A) the clean energy percentage of the expenditures made
by the taxpayer for qualified property which is--
``(i) installed in a dwelling unit which is located in the
United States and used as a residence by the taxpayer, and
``(ii) placed in service during such taxable year, plus
``(B) 30 percent of the expenditures made by the taxpayer
for energy storage property which is--
``(i) installed in a dwelling unit which is located in the
United States and used as a residence by the taxpayer, and
``(ii) placed in service during such taxable year.
``(2) Clean energy percentage.--
``(A) In general.--
``(i) Maximum percentage.--Except as provided in clause
(ii), the clean energy percentage is 30 percent.
``(ii) Reduction of percentage based on greenhouse gas
emissions rate.--The clean energy percentage shall be reduced
(but not below zero) by an amount which bears the same ratio
to 30 percent as the anticipated greenhouse gas emissions
rate for the qualified property bears to 372 grams of
CO<inf>2</inf>e per KWh.
``(B) Rounding.--If any amount determined under
subparagraph (A)(ii) is not a multiple of 1 percent, such
amount shall be rounded to the nearest multiple of 1 percent.
``(C) Definitions.--For purposes of this section, the terms
`greenhouse gas emissions rate' and `CO<inf>2</inf>e per KWh'
have the same

[[Page S599]]

meanings given such terms under subsections (b) and (e)(1) of
section 45S, respectively.
``(3) Establishment of safe harbor for qualified
property.--
``(A) In general.--The Secretary, in consultation with the
Administrator of the Environmental Protection Agency, shall,
by regulation, establish safe-harbor greenhouse gas emissions
rates for types or categories of qualified property which are
installed in a dwelling unit, which a taxpayer may elect to
use for purposes of this section.
``(B) Rounding.--In establishing the safe-harbor greenhouse
gas emissions rates for qualified property, the Secretary may
round such rates to the nearest multiple of 37.2 grams of
CO<inf>2</inf>e per KWh (or, in the case of a greenhouse gas
emissions rate which is less than 18.6 grams of
CO<inf>2</inf>e per KWh, by rounding such rate to zero).
``(b) Qualified Property.--The term `qualified property'
means property--
``(1) which is tangible personal property,
``(2) which is used for the generation of electricity,
``(3) which is constructed, reconstructed, erected, or
acquired by the taxpayer,
``(4) the original use of which commences with the
taxpayer, and
``(5) which is originally placed in service after December
31, 2017.
``(c) Energy Storage Property.--The term `energy storage
property' means property which receives, stores, and delivers
electricity or energy for conversion to electricity which is
consumed by the taxpayer, which may include--
``(1) batteries,
``(2) thermal energy storage systems,
``(3) fuel cells,
``(4) any other relevant technology identified by the
Secretary (in consultation with the Secretary of Energy), and
``(5) any combination of the properties described in
paragraphs (1) through (4).
``(d) Carryforward of Unused Credit.--If the credit
allowable under subsection (a) exceeds the limitation imposed
by section 26(a) for such taxable year reduced by the sum of
the credits allowable under this subpart (other than this
section), such excess shall be carried to the succeeding
taxable year and added to the credit allowable under
subsection (a) for such succeeding taxable year.
``(e) Credit Phase-out.--
``(1) In general.--Subject to paragraph (3), if the
Secretary determines that the annual greenhouse gas emissions
from electrical production in the United States are equal to
or less than the percentage specified in section 48E(g), the
amount of the credit allowable under subsection (a) for any
qualified property or energy storage property placed in
service during a calendar year described in paragraph (2)
shall be equal to the product of--
``(A) the amount of the credit determined under subsection
(a) without regard to this subsection, multiplied by
``(B) the phase-out percentage under paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage under
this paragraph is equal to--
``(A) for property placed in service during the first
calendar year following the calendar year in which the
determination described in paragraph (1) is made, 75 percent,
``(B) for property placed in service during the second
calendar year following such determination year, 50 percent,
``(C) for property placed in service during the third
calendar year following such determination year, 25 percent,
and
``(D) for property placed in service during any calendar
year subsequent to the year described in subparagraph (C), 0
percent.
``(3) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States for each year
before calendar year 2026 are greater than the percentage
specified in section 48E(g), then the determination described
in paragraph (1) shall be deemed to have been made for
calendar year 2025.
``(f) Special Rules.--For purposes of this section:
``(1) Labor costs.--Expenditures for labor costs properly
allocable to the onsite preparation, assembly, or original
installation of the qualified property or energy storage
property and for piping or wiring to interconnect such
property to the dwelling unit shall be taken into account for
purposes of this section.
``(2) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures of such corporation.
``(3) Condominiums.--
``(A) In general.--In the case of an individual who is a
member of a condominium management association with respect
to a condominium which the individual owns, such individual
shall be treated as having made the individual's
proportionate share of any expenditures of such association.
``(B) Condominium management association.--For purposes of
this paragraph, the term `condominium management association'
means an organization which meets the requirements of
paragraph (1) of section 528(c) (other than subparagraph (E)
thereof) with respect to a condominium project substantially
all of the units of which are used as residences.
``(4) Allocation in certain cases.--If less than 80 percent
of the use of a property is for nonbusiness purposes, only
that portion of the expenditures for such property which is
properly allocable to use for nonbusiness purposes shall be
taken into account.
``(g) Basis Adjustment.--For purposes of this subtitle, if
a credit is allowed under this section for any expenditures
with respect to any property, the increase in the basis of
such property which would (but for this subsection) result
from such expenditures shall be reduced by the amount of the
credit so allowed.
``(h) Final Guidance.--Not later than January 1, 2017, the
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall issue final guidance
regarding implementation of this section, including
calculation of greenhouse gas emission rates for qualified
property and determination of residential clean energy
property credits under this section.''.
(2) Conforming amendments.--
(A) Paragraph (1) of section 45(d) is amended by striking
``Such term'' and all that follows through the period and
inserting the following: ``Such term shall not include any
facility with respect to which any expenditures for qualified
property (as defined in subsection (b) of section 25D) which
uses wind to produce electricity is taken into account in
determining the credit under such section.''.
(B) Paragraph (34) of section 1016(a) is amended by
striking ``section 25D(f)'' and inserting ``section 25D(h)''.
(C) The item relating to section 25D in the table of
contents for subpart A of part IV of subchapter A of chapter
1 is amended to read as follows:

``Sec. 25D. Clean residential energy credit.''.
(3) Effective date.--The amendments made by this section
shall apply to property placed in service after December 31,
2017.

SEC. 6013. EXTENSIONS AND MODIFICATIONS OF VARIOUS ENERGY
PROVISIONS.

(a) Nonbusiness Energy Property.--
(1) In general.--Paragraph (2) of section 25C(g) is amended
by striking ``December 31, 2016'' and inserting ``December
31, 2017''.
(2) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2016.
(b) Residential Energy Efficient Property.--
(1) In general.--Subsection (g) of section 25D is amended
by striking ``December 31, 2016'' and inserting ``December
31, 2017''.
(2) Elimination of phaseout.--Division P of the
Consolidated Appropriations Act, 2016 (Pub. L. 114-113) is
amended by striking section 304.
(c) Alternative Fuel Vehicle Refueling Property Credit.--
(1) In general.--Paragraph (1) of section 30C(g) is amended
by striking ``December 31, 2016'' and inserting ``December
31, 2017''.
(2) Effective date.--The amendments made by this subsection
shall apply to property placed in service after December 31,
2016.
(d) 2- and 3-wheeled Plug-in Electric Vehicles.--
(1) In general.--Clause (ii) of section 30D(g)(E) is
amended to read as follows:
``(ii) after December 31, 2016, and before January 1,
2018.''.
(2) Effective date.--The amendments made by this subsection
shall apply to vehicles acquired after December 31, 2016.
(e) Electricity Produced From Certain Renewable
Resources.--
(1) In general.--The following provisions of section 45(d)
are each amended by striking ``January 1, 2017'' each place
it appears and inserting ``January 1, 2018'':
(A) Paragraph (2)(A).
(B) Paragraph (3)(A).
(C) Paragraph (4)(B).
(D) Paragraph (6).
(E) Paragraph (7).
(F) Paragraph (9).
(G) Paragraph (11)(B).
(2) Effective date.--The amendments made by this subsection
shall take effect on January 1, 2017.
(f) Credit for Production From Advanced Nuclear Power
Facilities.--Section 45J(d)(1)(B) is amended by striking
``2021'' and inserting ``2018''.
(g) New Energy Efficient Home Credit.--
(1) In general.--Subsection (g) of section 45L is amended
by striking ``December 31, 2016'' and inserting ``December
31, 2017''.
(2) Effective date.--The amendments made by this subsection
shall apply to any qualified new energy efficient home
acquired after December 31, 2016.
(h) Repeal of Energy Efficient Appliance Credit.--
(1) In general.--Subpart D of part IV of subchapter A of
chapter 1 of subtitle A is amended by striking section 45M.
(2) Conforming amendments.--
(A) Section 38(b) is amended by striking paragraph (24).
(B) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of subtitle A is amended by
striking the item relating to section 45M.
(3) Effective date.--The amendments made by this subsection
shall take effect on the date of the enactment of this Act.
(i) Credit for Carbon Dioxide Sequestration.--Section
45Q(c) is amended--

[[Page S600]]

(1) in paragraph (2), by striking ``and'' at the end,
(2) in paragraph (3), by striking the period at the end and
inserting ``, and'', and
(3) by adding at the end the following new paragraph:
``(4) which is placed in service before January 1, 2018.''.
(j) Elimination of Phaseout of Credits for Wind Facilities
and Solar Energy Property.--
(1) Wind facilities.--
(A) In general.--Paragraph (1) of section 45(d) is amended
by striking ``January 1, 2020'' and inserting ``January 1,
2018''.
(B) Phaseout.--Subsection (b) of section 45 is amended by
striking paragraph (5).
(C) Qualified investment credit facility.--
(i) In general.--Section 48(a)(5)(C)(ii) is amended by
striking ``January 1, 2017'' and all that follows through
``section 45(d))'' and inserting ``January 1, 2018''.
(ii) Phaseout.--Paragraph (5) of section 48(a) is amended
by striking subparagraph (E).
(D) Effective date.--The amendments made by this paragraph
shall take effect on January 1, 2017.
(2) Solar energy property.--
(A) In general.--Subclause (II) of section 48(a)(2)(A)(i)
is amended by striking ``property the construction of which
begins before January 1, 2022'' and inserting ``periods
ending before January 1, 2018''.
(B) Phaseout.--Subsection (a) of section 48 is amended by
striking paragraph (6).
(C) Conforming amendment.--Subparagraph (A) of section
48(a)(2) is amended by striking ``Except as provided in
paragraph (6), the energy percentage'' and inserting ``The
energy percentage''.
(D) Effective date.--The amendments made by this paragraph
shall take effect on January 1, 2017.
(k) Energy Credit.--
(1) Solar energy property.--Section 48(a)(3)(A) is
amended--
(A) in clause (i), by inserting ``but only with respect to
periods ending before January 1, 2018'' after ``swimming
pool,'', and
(B) in clause (ii), by striking ``January 1, 2017'' and
inserting ``January 1, 2018''.
(2) Geothermal energy property.--Section 48(a)(3)(A)(iii)
is amended by inserting ``with respect to periods ending
before January 1, 2018, and'' after ``but only''.
(3) Thermal energy property.--Section 48(a)(3)(A)(vii) is
amended by striking ``January 1, 2017'' and inserting
``January 1, 2018''.
(4) Qualified fuel cell property.--Section 48(c)(1)(D) is
amended by striking ``December 31, 2016'' and inserting
``December 31, 2017''.
(5) Qualified microturbine property.--Section 48(c)(2)(D)
is amended by striking ``December 31, 2016'' and inserting
``December 31, 2017''.
(6) Combined heat and power system property.--Section
48(c)(3)(A)(iv) is amended by striking ``January 1, 2017''
and inserting ``January 1, 2018''.
(7) Qualified small wind energy property.--Section
48(c)(4)(C) is amended by striking ``December 31, 2016'' and
inserting ``December 31, 2017''.
(l) Qualifying Advanced Energy Project Credit.--
(1) In general.--Section 48C is amended--
(A) by redesignating subsection (e) as subsection (f), and
(B) by inserting after subsection (d) the following new
subsection:
``(e) Additional Qualifying Advanced Energy Program.--
``(1) Establishment.--
``(A) In general.--Not later than 180 days after the date
of enactment of this subsection, the Secretary, in
consultation with the Secretary of Energy, shall establish an
additional qualifying advanced energy project program to
consider and award certifications for qualified investments
eligible for credits under this section to qualifying
advanced energy project sponsors.
``(B) Limitation.--The total amount of credits that may be
allocated under the program described in subparagraph (A)
shall not exceed $5,000,000,000.
``(2) Certification.--
``(A) Application period.--Each applicant for certification
under this paragraph shall submit an application containing
such information as the Secretary may require during the 2-
year period beginning on the date the Secretary establishes
the program under paragraph (1).
``(B) Time to meet criteria for certification.--Each
applicant for certification shall have 1 year from the date
of acceptance by the Secretary of the application during
which to provide to the Secretary evidence that the
requirements of the certification have been met.
``(C) Period of issuance.--An applicant which receives a
certification shall have 3 years from the date of issuance of
the certification in order to place the project in service
and if such project is not placed in service by that time
period, then the certification shall no longer be valid.
``(3) Selection criteria.--In determining which qualifying
advanced energy projects to certify under this section, the
Secretary shall consider the same criteria described in
subsection (d)(3).
``(4) Review and redistribution.--
``(A) Review.--Not later than 4 years after the date of
enactment of this subsection, the Secretary shall review the
credits allocated pursuant to this subsection as of such
date.
``(B) Redistribution.--The Secretary may reallocate credits
awarded under this section if the Secretary determines that--
``(i) there is an insufficient quantity of qualifying
applications for certification pending at the time of the
review, or
``(ii) any certification made pursuant to paragraph (2) has
been revoked pursuant to paragraph (2)(B) because the project
subject to the certification has been delayed as a result of
third party opposition or litigation to the proposed project.
``(C) Reallocation.--If the Secretary determines that
credits under this section are available for reallocation
pursuant to the requirements set forth in paragraph (2), the
Secretary is authorized to conduct an additional program for
applications for certification.
``(5) Disclosure of allocations.--The Secretary shall, upon
making a certification under this subsection, publicly
disclose the identity of the applicant and the amount of the
credit with respect to such applicant.''.
(2) Effective date.--The amendments made by this subsection
shall apply to periods after the date of the enactment of
this Act, 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).
(m) Energy Efficient Commercial Buildings Deduction.--
(1) In general.--Subsection (h) of section 179D is amended
by striking ``December 31, 2016'' and inserting ``December
31, 2017''.
(2) Effective date.--The amendments made by this section
shall apply to property placed in service after December 31,
2016.

Subtitle B--Clean Fuel Tax Credits

SEC. 6021. CLEAN FUEL PRODUCTION CREDIT.

(a) In General.--Subpart D of part IV of subchapter A of
chapter 1, as amended by section _01, is amended by adding at
the end the following new section:

``SEC. 45T. CLEAN FUEL PRODUCTION CREDIT.

``(a) Amount of Credit.--
``(1) In general.--For purposes of section 38, the clean
fuel production credit for any taxable year is an amount
equal to the product of--
``(A) $1.00 per energy equivalent of a gallon of gasoline
with respect to any transportation fuel which is--
``(i) produced by the taxpayer at a qualified facility, and
``(ii) sold or used by the taxpayer in a manner described
in paragraph (2), and
``(B) the emissions factor for such fuel (as determined
under subsection (b)(2)).
``(2) Sale or use.--For purposes of paragraph (1)(A)(ii),
the transportation fuel is sold or used in a manner described
in this paragraph if such fuel is--
``(A) sold by the taxpayer to an unrelated person--
``(i) for use by such person in the production of a fuel
mixture that will be used as a transportation fuel,
``(ii) for use by such person as a transportation fuel in a
trade or business, or
``(iii) who sells such fuel at retail to another person and
places such fuel in the fuel tank of such other person, or
``(B) used or sold by the taxpayer for any purpose
described in subparagraph (A).
``(3) Rounding.--If any amount determined under paragraph
(1) is not a multiple of 0.1 cent, such amount shall be
rounded to the nearest multiple of 0.1 cent.
``(b) Emissions Factors.--
``(1) Emissions factor.--
``(A) In general.--The emissions factor of a transportation
fuel shall be an amount equal to the quotient of--
``(i) an amount (not less than zero) equal to--

``(I) 77.23, minus
``(II) the emissions rate for such fuel, divided by

``(ii) 77.23.
``(B) Establishment of safe harbor emissions rate.--The
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall establish the safe
harbor emissions rate for similar types and categories of
transportation fuels based on the amount of lifecycle
greenhouse gas emissions (as described in section
211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)),
as in effect on the date of the enactment of this section)
for such fuels, expressed as kilograms of CO<inf>2</inf>e per
mmBTU, which a taxpayer may elect to use for purposes of this
section.
``(C) Rounding of safe harbor emissions rate.--The
Secretary may round the safe harbor emissions rates under
subparagraph (B) to the nearest multiple of 7.723 kilograms
of CO<inf>2</inf>e per mmBTU, except that, in the case of an
emissions rate that is less than 3.862 kilograms of
CO<inf>2</inf>e per mmBTU, the Secretary may round such rate
to zero.
``(D) Provisional safe harbor emissions rate.--
``(i) In general.--In the case of any transportation fuel
for which a safe harbor emissions rate has not been
established by the Secretary, a taxpayer producing such fuel
may file a petition with the Secretary for determination of
the safe harbor emissions rate with respect to such fuel.
``(ii) Establishment of provisional and final safe harbor
emissions rate.--In the case of a transportation fuel for
which a petition described in clause (i) has been filed, the
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall--

``(I) not later than 12 months after the date on which the
petition was filed, provide a

[[Page S601]]

provisional safe harbor emissions rate for such fuel which a
taxpayer may use for purposes of this section, and
``(II) not later than 24 months after the date on which the
petition was filed, establish the safe harbor emissions rate
for such fuel.

``(E) Rounding.--If any amount determined under
subparagraph (A) is not a multiple of 0.1, such amount shall
be rounded to the nearest multiple of 0.1.
``(2) Publishing safe harbor emissions rate.--The
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall publish a table that
sets forth the safe harbor emissions rate (as established
pursuant to paragraph (1)) for similar types and categories
of transportation fuels.
``(c) Inflation Adjustment.--
``(1) In general.--In the case of calendar years beginning
after 2018, the $1.00 amount in subsection (a)(1)(A) shall be
adjusted by multiplying such amount by the inflation
adjustment factor for the calendar year in which the sale or
use of the transportation fuel occurs. If any amount as
increased under the preceding sentence is not a multiple of 1
cent, such amount shall be rounded to the nearest multiple of
1 cent.
``(2) Inflation adjustment factor.--For purposes of
paragraph (1), the inflation adjustment factor shall be the
inflation adjustment factor determined and published by the
Secretary pursuant to section 45S(c), determined by
substituting `calendar year 2017' for `calendar year 1992' in
paragraph (3) thereof.
``(d) Credit Phase-out.--
``(1) In general.--Subject to paragraph (3), if the
Secretary, in consultation with the Secretary of Energy and
the Administrator of the Environmental Protection Agency,
determines that the greenhouse gas emissions from
transportation fuel produced and sold at retail annually in
the United States are equal to or less than 72 percent of the
greenhouse gas emissions from transportation fuel produced
and sold at retail in the United States during calendar year
2005, the amount of the clean fuel production credit under
this section for any qualified facility placed in service
during a calendar year described in paragraph (2) shall be
equal to the product of--
``(A) the amount of the credit determined under subsection
(a) without regard to this subsection, multiplied by
``(B) the phase-out percentage under paragraph (2).
``(2) Phase-out percentage.--The phase-out percentage under
this paragraph is equal to--
``(A) for a facility placed in service during the first
calendar year following the calendar year in which the
determination described in paragraph (1) is made, 75 percent,
``(B) for a facility placed in service during the second
calendar year following such determination year, 50 percent,
``(C) for a facility placed in service during the third
calendar year following such determination year, 25 percent,
and
``(D) for a facility placed in service during any calendar
year subsequent to the year described in subparagraph (C), 0
percent.
``(3) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the greenhouse gas emissions from
transportation fuel produced and sold at retail annually in
the United States are, for each year before calendar year
2026, greater than the percentage specified in paragraph (1),
then the determination described in such paragraph shall be
deemed to have been made for calendar year 2025.
``(e) Definitions.--In this section:
``(1) mmBTU.--The term `mmBTU' means 1,000,000 British
thermal units.
``(2) CO<inf>2</inf>e.--The term `CO<inf>2</inf>e' means,
with respect to any greenhouse gas, the equivalent carbon
dioxide.
``(3) Greenhouse gas.--The term `greenhouse gas' has the
same meaning given that term under section 211(o)(1)(G) of
the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on
the date of the enactment of this section.
``(4) Qualified facility.--
``(A) In general.--Subject to subparagraphs (B) and (C),
the term `qualified facility' means a facility used for the
production of transportation fuels.
``(B) 10-year production credit.--For purposes of this
section, a facility shall only qualify as a qualified
facility--
``(i) in the case of a facility that is originally placed
in service after December 31, 2017, for the 10-year period
beginning on the date such facility is placed in service, or
``(ii) in the case of a facility that is originally placed
in service before January 1, 2018, for the 10-year period
beginning on January 1, 2018.
``(5) Transportation fuel.--The term `transportation fuel'
means a fuel which is suitable for use as a fuel in a highway
vehicle or aircraft.
``(f) Final Guidance.--Not later than January 1, 2017, the
Secretary, in consultation with the Administrator of the
Environmental Protection Agency, shall issue final guidance
regarding implementation of this section, including
calculation of emissions factors for transportation fuel, the
table described in subsection (b)(2), and the determination
of clean fuel production credits under this section.
``(g) Special Rules.--
``(1) Only registered production in the united states taken
into account.--
``(A) In general.--No clean fuel production credit shall be
determined under subsection (a) with respect to any
transportation fuel unless--
``(i) the taxpayer is registered as a producer of clean
fuel under section 4101 at the time of production, and
``(ii) such fuel is produced in the United States.
``(B) United states.--For purposes of this paragraph, the
term `United States' includes any possession of the United
States.
``(2) Production attributable to the taxpayer.--In the case
of a facility in which more than 1 person has an ownership
interest, except to the extent provided in regulations
prescribed by the Secretary, production from the facility
shall be allocated among such persons in proportion to their
respective ownership interests in the gross sales from such
facility.
``(3) Related persons.--Persons shall be treated as related
to each other if such persons would be treated as a single
employer under the regulations prescribed under section
52(b). In the case of a corporation which is a member of an
affiliated group of corporations filing a consolidated
return, such corporation shall be treated as selling fuel to
an unrelated person if such fuel is sold to such a person by
another member of such group.
``(4) Pass-thru in the case of estates and trusts.--Under
regulations prescribed by the Secretary, rules similar to the
rules of subsection (d) of section 52 shall apply.
``(5) Allocation of credit to patrons of agricultural
cooperative.--
``(A) Election to allocate.--
``(i) In general.--In the case of an eligible cooperative
organization, any portion of the credit determined under
subsection (a) for the taxable year may, at the election of
the organization, be apportioned among patrons of the
organization on the basis of the amount of business done by
the patrons during the taxable year.
``(ii) Form and effect of election.--An election under
clause (i) for any taxable year shall be made on a timely
filed return for such year. Such election, once made, shall
be irrevocable for such taxable year. Such election shall not
take effect unless the organization designates the
apportionment as such in a written notice mailed to its
patrons during the payment period described in section
1382(d).
``(B) Treatment of organizations and patrons.--The amount
of the credit apportioned to any patrons under subparagraph
(A)--
``(i) shall not be included in the amount determined under
subsection (a) with respect to the organization for the
taxable year, and
``(ii) shall be included in the amount determined under
subsection (a) for the first taxable year of each patron
ending on or after the last day of the payment period (as
defined in section 1382(d)) for the taxable year of the
organization or, if earlier, for the taxable year of each
patron ending on or after the date on which the patron
receives notice from the cooperative of the apportionment.
``(C) Special rules for decrease in credits for taxable
year.--If the amount of the credit of a cooperative
organization determined under subsection (a) for a taxable
year is less than the amount of such credit shown on the
return of the cooperative organization for such year, an
amount equal to the excess of--
``(i) such reduction, over
``(ii) the amount not apportioned to such patrons under
subparagraph (A) for the taxable year,

shall be treated as an increase in tax imposed by this
chapter on the organization. Such increase shall not be
treated as tax imposed by this chapter for purposes of
determining the amount of any credit under this chapter.
``(D) Eligible cooperative defined.--For purposes of this
section the term `eligible cooperative' means a cooperative
organization described in section 1381(a) which is owned more
than 50 percent by agricultural producers or by entities
owned by agricultural producers. For this purpose an entity
owned by an agricultural producer is one that is more than 50
percent owned by agricultural producers.''.
(b) Conforming Amendments.--
(1) Section 38(b), as amended by section _01, is amended--
(A) in paragraph (36), by striking ``plus'' at the end,
(B) in paragraph (37), by striking the period at the end
and inserting ``, plus'', and
(C) by adding at the end the following new paragraph:
``(38) the clean fuel production credit determined under
section 45T(a).''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1, as amended by section _01, is
amended by adding at the end the following new item:

``Sec. 45T. Clean fuel production credit.''.
(3) Section 4101(a)(1) is amended by inserting ``every
person producing a fuel eligible for the clean fuel
production credit (pursuant to section 45T),'' after
``section 6426(b)(4)(A)),''.
(c) Effective Date.--The amendments made by this section
shall apply to transportation fuel produced after December
31, 2017.

SEC. 6022. TEMPORARY EXTENSION OF EXISTING FUEL INCENTIVES.

(a) Second Generation Biofuel Producer Credit.--
(1) In general.--Section 40(b)(6) is amended--

[[Page S602]]

(A) in subparagraph (E)(i)--
(i) in subclause (I), by striking ``and'' at the end,
(ii) in subclause (II), by striking the period at the end
and inserting ``, and'', and
(iii) by inserting at the end the following new subclause:

``(III) qualifies as a transportation fuel (as defined in
section 45T(e)(5)).'', and

(B) in subparagraph (J)(i), by striking ``2017'' and
inserting ``2018''.
(2) Effective date.--The amendments made by this subsection
shall apply to qualified second generation biofuel production
after December 31, 2016.
(b) Biodiesel and Renewable Diesel Used as Fuel.--
(1) In general.--Section 40A is amended--
(A) in subsection (f)(3)(B), by striking ``or D396'', and
(B) in subsection (g), by striking ``2016'' and inserting
``2017''.
(2) Effective date.--The amendments made by this subsection
shall apply to fuel sold or used after December 31, 2016.
(c) Credit for Biodiesel and Alternative Fuel Mixtures.--
(1) In general.--Section 6426 is amended--
(A) in subsection (c)(6), by striking ``2016'' and
inserting ``2017'',
(B) in subsection (d)--
(i) in paragraph (1), by striking ``motor vehicle'' and
inserting ``highway vehicle'',
(ii) in paragraph (2)(D), by striking ``liquefied'', and
(iii) in paragraph (5), by striking ``2016'' and inserting
``2017'', and
(C) in subsection (e), by amending paragraph (3) to read as
follows:
``(3) Termination.--This subsection shall not apply to any
sale or use for any period after--
``(A) in the case of any alternative fuel mixture sold or
used by the taxpayer for the purposes described in subsection
(d)(1), December 31, 2017,
``(B) in the case of any sale or use involving hydrogen
that is not for the purposes described in subsection (d)(1),
December 31, 2017, and
``(C) in the case of any sale or use not described in
subparagraph (A) or (B), December 31, 2016.''.
(2) Effective date.--The amendments made by this subsection
shall apply to fuel sold or used after December 31, 2016.
(d) Biodiesel, Biodiesel Mixtures, and Alternative Fuels.--
(1) In general.--Section 6427(e)(6) is amended--
(A) in subparagraph (B), by striking ``2016'' and inserting
``2017'', and
(B) in subparagraph (C), by striking ``2016'' and inserting
``2017''.
(2) Effective date.--The amendments made by this subsection
shall apply to fuel sold or used after December 31, 2016.

Subtitle C--Energy Efficiency Incentives

SEC. 6031. CREDIT FOR NEW ENERGY EFFICIENT RESIDENTIAL
BUILDINGS.

(a) In General.--Section 45L is amended to read as follows:

``SEC. 45L. NEW ENERGY EFFICIENT HOME CREDIT.

``(a) Allowance of Credit.--For purposes of section 38, in
the case of an eligible contractor, the new energy efficient
home credit for the taxable year is the applicable amount for
each qualified residence which is--
``(1) constructed by the eligible contractor, and
``(2) acquired by a person from such eligible contractor
for use as a residence during the taxable year.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a), the
applicable amount shall be an amount equal to $1,500
increased (but not above $3,000) by $100 for every 5
percentage points by which the efficiency ratio for the
qualified residence is certified to be greater than 25
percent.
``(2) Efficiency ratio.--For purposes of this section, the
efficiency ratio of a qualified residence shall be equal to
the quotient, expressed as a percentage, obtained by
dividing--
``(A) an amount equal to the difference between--
``(i) the annual level of energy consumption of the
qualified residence, and
``(ii) the annual level of energy consumption of the
baseline residence, by
``(B) the annual level of energy consumption of the
baseline residence.
``(3) Baseline residence.--For purposes of this section,
the baseline residence shall be a residence which is--
``(A) comparable to the qualified residence, and
``(B) constructed in accordance with the standards of the
2015 International Energy Conservation Code, as such Code
(including supplements) is in effect on the date of the
enactment of the American Energy Innovation Act.
``(c) Definitions.--For purposes of this section:
``(1) Eligible contractor.--The term `eligible contractor'
means--
``(A) the person who constructed the qualified residence,
or
``(B) in the case of a qualified residence which is a
manufactured home, the manufactured home producer of such
residence.
``(2) Qualified residence.--The term `qualified residence'
means a dwelling unit--
``(A) located in the United States,
``(B) the construction of which is substantially completed
after the date of the enactment of this section, and
``(C) which is certified to have an annual level of energy
consumption that is less than the baseline residence and an
efficiency ratio of not less than 25 percent.
``(3) Construction.--The term `construction' does not
include substantial reconstruction or rehabilitation.
``(d) Certification.--
``(1) In general.--A certification described in this
section shall be made--
``(A) in accordance with guidance prescribed by, and
``(B) by a third-party that is accredited by a
certification program approved by,
the Secretary, in consultation with the Secretary of Energy.
Such guidance shall specify procedures and methods for
calculating annual energy consumption levels, and shall
include requirements to ensure the safe operation of energy
efficiency improvements and that all improvements are
installed according to the applicable standards of such
certification program.
``(2) Computer software.--
``(A) In general.--Any calculation under paragraph (1)
shall be prepared by qualified computer software.
``(B) Qualified computer software.--For purposes of this
paragraph, the term `qualified computer software' means
software--
``(i) for which the software designer has certified that
the software meets all procedures and detailed methods for
calculating energy consumption levels as required by the
Secretary, and
``(ii) which provides such forms as required to be filed by
the Secretary in connection with energy consumption levels
and the credit allowed under this section.
``(e) Basis Adjustment.--For purposes of this subtitle, if
a credit is allowed under this section in connection with any
expenditure for any property (other than a qualified low-
income building, as described in section 42(c)(2)), 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 determined.
``(f) Coordination With Investment Credits.--For purposes
of this section, expenditures taken into account under
section 25D or 47 shall not be taken into account under this
section.''.
(b) Effective Date.--The amendment made by this section
shall apply to any qualified residence acquired after
December 31, 2017.

SEC. 6032. ENERGY EFFICIENCY CREDIT FOR EXISTING RESIDENTIAL
BUILDINGS.

(a) In General.--Section 25C is amended to read as follows:

``SEC. 25C. CREDIT FOR ENERGY EFFICIENCY IMPROVEMENTS TO
RESIDENTIAL BUILDINGS.

``(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
lesser of--
``(1) the applicable amount for the qualified residence
based on energy efficiency improvements made by the taxpayer
and placed in service during such taxable year, or
``(2) 30 percent of the amount paid or incurred by the
taxpayer for energy efficiency improvements made to the
qualified residence that were placed in service during such
taxable year.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a)(1), the
applicable amount shall be an amount equal to $1,750
increased (but not above $6,500) by $300 for every 5
percentage points by which the efficiency ratio for the
qualified residence is certified to be greater than 20
percent.
``(2) Efficiency ratio.--For purposes of this section, the
efficiency ratio of a qualified residence shall be equal to
the quotient, expressed as a percentage, obtained by
dividing--
``(A) an amount equal to the difference between--
``(i) the projected annual level of energy consumption of
the qualified residence after the energy efficiency
improvements have been placed in service, and
``(ii) the annual level of energy consumption of such
qualified residence prior to the energy efficiency
improvements being placed in service, by
``(B) the annual level of energy consumption described in
subparagraph (A)(ii).
``(3) Coordination with credit for residential energy
efficient property.--For purposes of paragraph (2)(A), the
determination of the difference in annual levels of energy
consumption of the qualified residence shall not include any
reduction in net energy consumption related to qualified
property or energy storage property for which a credit was
allowed under section 25D.
``(c) Definitions.--For purposes of this section:
``(1) Qualified residence.--The term `qualified residence'
means a dwelling unit--
``(A) located in the United States,
``(B) owned and used by the taxpayer as the taxpayer's
principal residence (within the meaning of section 121), and
``(C) which is certified to have--
``(i) a projected annual level of energy consumption after
the energy efficiency improvements have been placed in
service that is less than the annual level of energy
consumption prior to the energy efficiency improvements being
placed in service, and
``(ii) an efficiency ratio of not less than 20 percent.
``(2) Energy efficiency improvements.--
``(A) In general.--The term `energy efficiency
improvements' means any property

[[Page S603]]

installed on or in a dwelling unit which has been certified
to reduce the level of energy consumption for such unit or to
provide for onsite generation of electricity or useful
thermal energy, provided that--
``(i) the original use of such property commences with the
taxpayer, and
``(ii) such property reasonably can be expected to remain
in use for at least 5 years.
``(B) Amounts paid or incurred for energy efficiency
improvements.--For purposes of subsection (a)(2), the amount
paid or incurred by the taxpayer--
``(i) shall include expenditures for design and for labor
costs properly allocable to the onsite preparation, assembly,
or original installation of the property, and
``(ii) shall not include any expenditures related to
expansion of the building envelope.
``(d) Special Rules.--For purposes of this section:
``(1) Tenant-stockholder in cooperative housing
corporation.--In the case of an individual who is a tenant-
stockholder (as defined in section 216) in a cooperative
housing corporation (as defined in such section), such
individual shall be treated as having made his tenant-
stockholder's proportionate share (as defined in section
216(b)(3)) of any expenditures for energy efficiency
improvements of such corporation.
``(2) Condominiums.--
``(A) In general.--In the case of an individual who is a
member of a condominium management association with respect
to a condominium which the individual owns, such individual
shall be treated as having made the individual's
proportionate share of any expenditures for energy efficiency
improvements of such association.
``(B) Condominium management association.--For purposes of
this paragraph, the term `condominium management association'
means an organization which meets the requirements of
paragraph (1) of section 528(c) (other than subparagraph (E)
thereof) with respect to a condominium project substantially
all of the units of which are used as residences.
``(3) Allocation in certain cases.--If less than 80 percent
of the use of a property is for nonbusiness purposes, only
that portion of the expenditures for energy efficiency
improvements for such property which is properly allocable to
use for nonbusiness purposes shall be taken into account.
``(e) Certification.--
``(1) In general.--A certification described in this
section shall be made--
``(A) in accordance with guidance prescribed by, and
``(B) by a third-party that is accredited by a
certification program approved by,
the Secretary, in consultation with the Secretary of Energy.
Such guidance shall specify procedures and methods for
calculating annual energy consumption levels, with such
calculations to take into account onsite generation of
electricity or useful thermal energy, and shall include
requirements to ensure the safe operation of energy
efficiency improvements and that all improvements are
installed according to the applicable standards of such
certification program.
``(2) Computer software.--
``(A) In general.--Any calculation under paragraph (1)
shall be prepared by qualified computer software.
``(B) Qualified computer software.--For purposes of this
paragraph, the term `qualified computer software' has the
same meaning given such term under section 45L(d)(2).
``(f) Basis Adjustment.--For purposes of this subtitle, if
a credit is allowed under this section for any expenditures
with respect to any energy efficiency improvements, the
increase in the basis of such property which would (but for
this subsection) result from such expenditures shall be
reduced by the amount of the credit so allowed.
``(g) Coordination With Investment Credits.--For purposes
of this section, expenditures taken into account under
section 25D or 47 shall not be taken into account under this
section.''.
(b) Conforming Amendment.--The table of sections for
subpart A of part IV of subchapter A of chapter 1 is amended
by striking the item relating to section 25C and inserting
after the item relating to section 25B the following item:

``Sec. 25C. Credit for energy efficiency improvements to residential
buildings.''.

(c) Effective Date.--The amendments made by this section
shall apply to any energy efficiency improvements placed in
service after December 31, 2017.

SEC. 6033. DEDUCTION FOR NEW ENERGY EFFICIENT COMMERCIAL
BUILDINGS.

(a) In General.--Section 179D is amended to read as
follows:

``SEC. 179D. ENERGY EFFICIENT COMMERCIAL BUILDING DEDUCTION.

``(a) In General.--There shall be allowed as a deduction an
amount equal to the applicable amount for each qualified
building placed in service by the taxpayer during the taxable
year.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a), the
applicable amount shall be an amount equal to the product
of--
``(A) the applicable dollar value, and
``(B) the square footage of the qualified building.
``(2) Applicable dollar value.--For purposes of paragraph
(1)(A), the applicable dollar value shall be an amount equal
to $1.00 increased (but not above $4.75) by $0.25 for every 5
percentage points by which the efficiency ratio for the
qualified building is certified to be greater than 25
percent.
``(3) Efficiency ratio.--For purposes of this section, the
efficiency ratio of a qualified building shall be equal to
the quotient, expressed as a percentage, obtained by
dividing--
``(A) an amount equal to the difference between--
``(i) the annual level of energy consumption of the
qualified building, and
``(ii) the annual level of energy consumption of the
baseline building, by
``(B) the annual level of energy consumption of the
baseline building.
``(4) Baseline building.--For purposes of this section, the
baseline building shall be a building which--
``(A) is comparable to the qualified building, and
``(B) meets the minimum requirements of Standard 90.1-2013
of the American Society of Heating, Refrigerating, and Air
Conditioning Engineers and the Illuminating Engineering
Society of North America (as in effect on December 31, 2014).
``(c) Qualified Building.--The term `qualified building'
means a building--
``(1) located in the United States,
``(2) which is owned by the taxpayer, and
``(3) which is certified to have an annual level of energy
consumption that is less than the baseline building and an
efficiency ratio of not less than 25 percent.
``(d) Allocation of Deduction.--
``(1) In general.--In the case of a qualified building
owned by an eligible entity, the Secretary shall promulgate
regulations to allow the allocation of the deduction to the
person primarily responsible for designing the property in
lieu of the owner of such property, with such person to be
treated as the taxpayer for purposes of this section.
``(2) Eligible entity.--For purposes of this subsection,
the term `eligible entity' means--
``(A) a Federal, State, or local government or a political
subdivision thereof,
``(B) an Indian tribe (as defined in section 45A(c)(6)), or
``(C) an organization described in section 501(c) and
exempt from tax under section 501(a).
``(e) Basis Adjustment.--For purposes of this subtitle, if
a deduction is allowed under this section with respect to any
qualified building, the basis of such property shall be
reduced by the amount of the deduction so allowed.
``(f) Certification.--
``(1) In general.--A certification described in this
section shall be made--
``(A) in accordance with guidance prescribed by, and
``(B) by a third-party that is accredited by a
certification program approved by,
the Secretary, in consultation with the Secretary of Energy.
Such guidance shall specify procedures and methods for
calculating annual energy consumption levels, and shall
include requirements to ensure the safe operation of energy
efficiency improvements and that all improvements are
installed according to the applicable standards of such
certification program.
``(2) Computer software.--
``(A) In general.--Any calculation under paragraph (1)
shall be prepared by qualified computer software.
``(B) Qualified computer software.--For purposes of this
paragraph, the term `qualified computer software' means
software--
``(i) for which the software designer has certified that
the software meets all procedures and detailed methods for
calculating energy consumption levels as required by the
Secretary, and
``(ii) which provides such forms as required to be filed by
the Secretary in connection with energy consumption levels
and the deduction allowed under this section.''.
(b) Conforming Amendment.--The table of sections for part
VI of subchapter B of chapter 1 is amended by striking the
item relating to section 179D and inserting after the item
relating to section 179C the following item:

``Sec. 179D. Energy efficient commercial building deduction.''.

(c) Effective Date.--The amendments made by this section
shall apply to any qualified building placed in service after
December 31, 2017.

SEC. 6034. ENERGY EFFICIENCY DEDUCTION FOR EXISTING
COMMERCIAL BUILDINGS.

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

``SEC. 179F. DEDUCTION FOR ENERGY EFFICIENCY IMPROVEMENTS TO
COMMERCIAL BUILDINGS.

``(a) In General.--There shall be allowed as a deduction an
amount equal to the lesser of--
``(1) the applicable amount for the qualified building
based on energy efficiency improvements made by the taxpayer
and placed in service during the taxable year, or
``(2) 30 percent of the amount paid or incurred by the
taxpayer for energy efficiency improvements made to the
qualified building which were placed in service during the
taxable year.
``(b) Applicable Amount.--
``(1) In general.--For purposes of subsection (a), the
applicable amount shall be an amount equal to the product
of--
``(A) the applicable dollar value, and
``(B) the square footage of the qualified building.

[[Page S604]]

``(2) Applicable dollar value.--For purposes of paragraph
(1), the applicable dollar value shall be an amount equal to
$1.25 increased (but not above $9.25) by $0.50 for every 5
percentage points by which the efficiency ratio for the
qualified building is certified to be greater than 20
percent.
``(3) Efficiency ratio.--For purposes of this section, the
efficiency ratio of a qualified building shall be equal to
the quotient, expressed as a percentage, obtained by
dividing--
``(A) an amount equal to the difference between--
``(i) the projected annual level of energy consumption of
the qualified building after the energy efficiency
improvements have been placed in service, and
``(ii) the annual level of energy consumption of such
qualified building prior to the energy efficiency
improvements being placed in service, by
``(B) the annual level of energy consumption described in
subparagraph (A)(ii).
``(4) Coordination with clean energy investment credit.--
For purposes of paragraph (3)(A), the determination of the
difference in annual levels of energy consumption of the
qualified building shall not include any reduction in net
energy consumption related to qualified property or energy
storage property for which a credit was allowed under section
48E.
``(c) Definitions.--
``(1) Qualified building.--The term `qualified building'
means a building--
``(A) located in the United States,
``(B) which is owned by the taxpayer, and
``(C) which is certified to have--
``(i) a projected annual level of energy consumption after
the energy efficiency improvements have been placed in
service that is less than the annual level of energy
consumption prior to the energy efficiency improvements being
placed in service, and
``(ii) an efficiency ratio of not less than 20 percent.
``(2) Energy efficiency improvements.--
``(A) In general.--The term `energy efficiency
improvements' means any property installed on or in a
qualified building which has been certified to reduce the
level of energy consumption for such building or to increase
onsite generation of electricity, provided that depreciation
(or amortization in lieu of depreciation) is allowable with
respect to such property.
``(B) Amounts paid or incurred for energy efficiency
improvements.--For purposes of subsection (a)(2), the amount
paid or incurred by the taxpayer--
``(i) shall include expenditures for design and for labor
costs properly allocable to the onsite preparation, assembly,
or original installation of the property, and
``(ii) shall not include any expenditures related to
expansion of the building envelope.
``(d) Certification.--
``(1) In general.--A certification described in this
section shall be made--
``(A) in accordance with guidance prescribed by, and
``(B) by a third-party that is accredited by a
certification program approved by,
the Secretary, in consultation with the Secretary of Energy.
Such guidance shall specify procedures and methods for
calculating annual energy consumption levels, with such
calculations to take into account onsite generation of
electricity or useful thermal energy, and shall include
requirements to ensure the safe operation of energy
efficiency improvements and that all improvements are
installed according to the applicable standards of such
certification program.
``(2) Computer software.--
``(A) In general.--Any calculation under paragraph (1)
shall be prepared by qualified computer software.
``(B) Qualified computer software.--For purposes of this
paragraph, the term `qualified computer software' has the
same meaning given such term under section 179D(f)(2).
``(e) Allocation of Deduction.--
``(1) In general.--In the case of a qualified building
owned by an eligible entity, the Secretary shall promulgate
regulations to allow the allocation of the deduction to the
person primarily responsible for designing the energy
efficiency improvements in lieu of the owner of such
property, with such person to be treated as the taxpayer for
purposes of this section.
``(2) Eligible entity.--For purposes of this subsection,
the term `eligible entity' has the same meaning given such
term under section 179D(d)(2).
``(f) Basis Reduction.--For purposes of this subtitle, if a
deduction is allowed under this section with respect to any
energy efficiency improvements, the basis of such property
shall be reduced by the amount of the deduction so allowed.
``(g) Coordination With Other Credits.--For purposes of
this section, expenditures taken into account under section
47 or 48E shall not be taken into account under this
section.''.
(b) Conforming Amendment.--
(1) Section 263(a) is amended--
(A) in subparagraph (K), by striking ``or'' at the end,
(B) in subparagraph (L), by striking the period and
inserting ``, or'', and
(C) by inserting at the end the following new subparagraph:
``(M) expenditures for which a deduction is allowed under
section 179F.''.
(2) Section 312(k)(3)(B) is amended--
(A) in the heading, by striking ``or 179e'' and inserting
``179e, or 179f'', and
(B) by striking ``or 179E'' and inserting ``179E, or
179F''.
(3) Section 1016(a) is amended--
(A) in paragraph (36), by striking ``and'' at the end,
(B) in paragraph (37), by striking the period at the end
and inserting ``, and'', and
(C) by inserting at the end the following new paragraph:
``(38) to the extent provided in section 179D(f).''.
(4) Section 1245(a) is amended--
(A) in paragraph (2)(C), by inserting ``179F,'' after
``179E,'', and
(B) in paragraph (3)(C), by inserting ``179F,'' after
``179E,''.
(5) The table of sections for part VI of subchapter B of
chapter 1 is amended by inserting after the item relating to
section 179E the following new item:

``Sec. 179F. Deduction for energy efficiency improvements to commercial
buildings.''.

(c) Effective Date.--The amendments made by this section
shall apply to any energy efficiency improvements placed in
service after December 31, 2017.

Subtitle D--Clean Electricity and Fuel Bonds

SEC. 6041. CLEAN ENERGY BONDS.

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

``SEC. 54BB. CLEAN ENERGY BONDS.

``(a) In General.--If a taxpayer holds a clean energy bond
on one or more interest payment dates of the bond during any
taxable year, there shall be allowed as a credit against the
tax imposed by this chapter for the taxable year an amount
equal to the sum of the credits determined under subsection
(b) with respect to such dates.
``(b) Amount of Credit.--The amount of the credit
determined under this subsection with respect to any interest
payment date for a clean energy bond is 28 percent of the
amount of interest payable by the issuer with respect to such
date.
``(c) Limitation Based on Amount of Tax.--
``(1) In general.--The credit allowed under subsection (a)
for any taxable year shall not exceed the excess of--
``(A) the sum of the regular tax liability (as defined in
section 26(b)) plus the tax imposed by section 55, over
``(B) the sum of the credits allowable under this part
(other than subpart C and this subpart).
``(2) Carryover of unused credit.--If the credit allowable
under subsection (a) exceeds the limitation imposed by
paragraph (1) for such taxable year, such excess shall be
carried to the succeeding taxable year and added to the
credit allowable under subsection (a) for such taxable year
(determined before the application of paragraph (1) for such
succeeding taxable year).
``(d) Clean Energy Bond.--
``(1) In general.--For purposes of this section, the term
`clean energy bond' means any bond issued as part of an issue
if--
``(A) 100 percent of the excess of the available project
proceeds (as defined in section 54A(e)(4)) of such issue over
the amounts in a reasonably required reserve (within the
meaning of section 150(a)(3)) with respect to such issue are
to be used for capital expenditures incurred by an entity
described in subparagraph (B) for 1 or more qualified
facilities,
``(B) the bond is issued by--
``(i) a governmental body (as defined in paragraph (3) of
section 54C(d)),
``(ii) a public power provider (as defined in paragraph (2)
of such section), or
``(iii) a cooperative electric company (as defined in
paragraph (4) of such section), and
``(C) the issuer makes an irrevocable election to have this
section apply.
``(2) Applicable rules.--For purposes of applying paragraph
(1)--
``(A) for purposes of section 149(b), a clean energy bond
shall not be treated as federally guaranteed by reason of the
credit allowed under subsection (a) or section 6433,
``(B) for purposes of section 148, the yield on a clean
energy bond shall be determined without regard to the credit
allowed under subsection (a), and
``(C) a bond shall not be treated as a clean energy bond if
the issue price has more than a de minimis amount (determined
under rules similar to the rules of section 1273(a)(3)) of
premium over the stated principal amount of the bond.
``(3) Qualified facility.--The term `qualified facility'
means a facility--
``(A) which is described in subsection (e)(3) of section
45S and has a greenhouse gas emissions rate of less than 186
grams of CO<inf>2</inf>e per KWh (as such terms are defined
in subsections (b)(1) and (e)(1) of such section), or
``(B) which is described in subsection (e)(4) of section
45T and only produces transportation fuel which has an
emissions rate of less than 38.62 kilograms of
CO<inf>2</inf>e per mmBTU (as such terms are defined in
subsections (b) and (e) of such section).
``(e) Interest Payment Date.--For purposes of this section,
the term `interest payment date' means any date on which the
holder of record of the clean energy bond is entitled to a
payment of interest under such bond.
``(f) Credit Phase Out.--
``(1) Electrical production.--
``(A) In general.--Subject to subparagraph (B), in the case
of a clean energy bond for

[[Page S605]]

which the proceeds are used for capital expenditures incurred
by an entity for a qualified facility described in subsection
(d)(3)(A), if the Secretary, in consultation with the
Secretary of Energy and the Administrator of the
Environmental Protection Agency, determines that the annual
greenhouse gas emissions from electrical production in the
United States are equal to or less than the percentage
specified in section 45S(d)(1), the amount of the credit
determined under subsection (b) with respect to any clean
energy bond issued during a calendar year described in
paragraph (3) shall be equal to the product of--
``(i) the amount determined under subsection (b) without
regard to this subsection, multiplied by
``(ii) the phase-out percentage under paragraph (3).
``(B) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
electrical production in the United States for each year
before calendar year 2026 are greater than the percentage
specified in section 45S(d)(1), then the determination
described in subparagraph (A) shall be deemed to have been
made for calendar year 2025.
``(2) Fuel production.--
``(A) In general.--Subject to subparagraph (B), in the case
of a clean energy bond for which the proceeds are used for
capital expenditures incurred by an entity for a qualified
facility described in subsection (d)(3)(B), if the Secretary,
in consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
transportation fuel produced and sold at retail annually in
the United States are equal to or less than the percentage
specified in section 45T(d)(1), the amount of the credit
determined under subsection (b) with respect to any clean
energy bond issued during a calendar year described in
paragraph (3) shall be equal to the product of--
``(i) the amount determined under subsection (b) without
regard to this subsection, multiplied by
``(ii) the phase-out percentage under paragraph (3).
``(B) Deadline to begin phase-out.--If the Secretary, in
consultation with the Secretary of Energy and the
Administrator of the Environmental Protection Agency,
determines that the annual greenhouse gas emissions from
transportation fuel produced and sold at retail annually in
the United States for each year before calendar year 2026 are
greater than the percentage specified in section 45T(d)(1),
then the determination described in subparagraph (A) shall be
deemed to have been made for calendar year 2025.
``(3) Phase-out percentage.--The phase-out percentage under
this paragraph is equal to--
``(A) for any bond issued during the first calendar year
following the calendar year in which the determination
described in paragraph (1)(A) or (2)(A) is made, 75 percent,
``(B) for any bond issued during the second calendar year
following such determination year, 50 percent,
``(C) for any bond issued during the third calendar year
following such determination year, 25 percent, and
``(D) for any bond issued during any calendar year
subsequent to the year described in subparagraph (C), 0
percent.
``(g) Special Rules.--
``(1) Interest on clean energy bonds includible in gross
income for federal income tax purposes.--For purposes of this
title, interest on any clean energy bond shall be includible
in gross income.
``(2) Application of certain rules.--Rules similar to the
rules of subsections (f), (g), (h), and (i) of section 54A
shall apply for purposes of the credit allowed under
subsection (a).
``(h) Regulations.--The Secretary may prescribe such
regulations and other guidance as may be necessary or
appropriate to carry out this section and section 6433.''.
(b) Credit for Qualified Clean Energy Bonds Allowed to
Issuer.--Subchapter B of chapter 65 of subtitle F is amended
by adding at the end the following new section:

``SEC. 6433. CREDIT FOR QUALIFIED CLEAN ENERGY BONDS ALLOWED
TO ISSUER.

``(a) In General.--The issuer of a qualified clean energy
bond shall be allowed a credit with respect to each interest
payment under such bond which shall be payable by the
Secretary as provided in subsection (b).
``(b) Payment of Credit.--
``(1) In general.--The Secretary shall pay
(contemporaneously with each interest payment date under such
bond) to the issuer of such bond (or to any person who makes
such interest payments on behalf of the issuer) 28 percent of
the interest payable under such bond on such date.
``(2) Interest payment date.--For purposes of this
subsection, the term `interest payment date' means each date
on which interest is payable by the issuer under the terms of
the bond.
``(c) Application of Arbitrage Rules.--For purposes of
section 148, the yield on a qualified clean energy bond shall
be reduced by the credit allowed under this section.
``(d) Qualified Clean Energy Bond.--For purposes of this
section, the term `qualified clean energy bond' means a clean
energy bond (as defined in section 54BB(d)) issued as part of
an issue if the issuer, in lieu of any credit allowed under
section 54BB(a) with respect to such bond, makes an
irrevocable election to have this section apply.''.
(c) Conforming Amendments.--
(1) The table of sections for subpart J of part IV of
subchapter A of chapter 1 is amended by adding at the end the
following new item:

``Sec. 54BB. Clean energy bonds.''.

(2) The heading of such subpart (and the item relating to
such subpart in the table of subparts for part IV of
subchapter A of chapter 1) are each amended by striking
``Build America Bonds''and inserting ``Build America Bonds
and Clean Energy Bonds''.
(3) The table of sections for subchapter B of chapter 65 of
subtitle F is amended by adding at the end the following new
item:

``Sec. 6433. Credit for qualified clean energy bonds allowed to
issuer.''.

(4) Subparagraph (A) of section 6211(b)(4) is amended by
striking ``and 6431'' and inserting ``6431, and 6433''.
(d) Effective Date.--The amendments made by this section
shall apply to obligations issued after the date of the
enactment of this Act.
______