II
109th CONGRESS
1st Session
S. 1133
IN THE SENATE OF THE UNITED STATES
May 26, 2005
Mr. Byrd (for himself, Mr. Rockefeller, and Mr. Specter) introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources
A BILL
To authorize the Secretary of Energy to develop and implement an accelerated research, development, and demonstration program for advanced clean coal technologies for use in coal-based generation facilities and to provide financial incentives to encourage the early commercial deployment of advanced clean coal technologies through the retrofitting, repowering, replacement, and new construction of coal-based electricity generating facilities and industrial gasification facilities.
Short title; table of contents
Short title
This Act may be cited
as the Clean Coal Research,
Development, Demonstration, and Deployment Act of
2005
.
Table of contents
The table of contents of this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
TITLE I—Clean Coal Initiative
Subtitle A—Clean Coal Research, Development, and Demonstration Program
Sec. 101. Clean coal power initiative.
Sec. 102. Research and development programs.
Sec. 103. Authorization of appropriations.
Subtitle B—Coal-Based Electric Generation Deployment Program
Sec. 111. Purpose.
Sec. 112. Definitions.
Sec. 113. Deployment incentive program.
Sec. 114. Election of Federal financial incentives.
Sec. 115. Qualifying advanced coal projects.
Sec. 116. Advanced coal-based generation technology.
Sec. 117. Federal project coordinator.
Sec. 118. Applicability.
Sec. 119. Investment tax credit and shortened recovery period.
Sec. 120. Credit to holders of clean energy bonds.
TITLE II—Industrial Gasification Initiative
Sec. 201. Findings and purpose.
Sec. 202. Definitions.
Subtitle A—Industrial Gasification Research, Development, and Demonstration Program
Sec. 211. Establishment.
Sec. 212. Cost and performance goals.
Sec. 213. Study.
Sec. 214. Authorization of appropriations.
Subtitle B—Industrial Gasification Deployment Program
Sec. 221. Establishment of certification program.
Sec. 222. Credit for production from certified industrial gasification projects.
Definitions
In this Act:
Department
The term Department means the Department of Energy.
Secretary
The term Secretary means the Secretary of Energy.
Clean Coal Initiative
Clean Coal Research, Development, and Demonstration Program
Clean coal power initiative
In general
Establishment
The Secretary shall establish a clean coal power initiative under which the Secretary shall provide assistance under this subtitle for projects described in paragraph (2).
Projects
To be eligible to receive assistance under this subtitle, a project shall—
significantly advance efficiency, reliability, environmental performance, and cost competitiveness or develop alternative technology pathways beyond the levels of technologies that—
are in commercial service as of the date of enactment of this Act; or
have been demonstrated at scales sufficient to demonstrate that commercial service is viable, as determined by the Secretary; and
be operated in the United States using United States coal.
Technical criteria
Gasification projects
Allocation of funds
In allocating the funds made available under section 103(a), the Secretary shall ensure that at least 65 percent of the funds are used to fund projects using coal-based gasification technologies, including—
gasification combined cycle;
gasification fuel cells and turbine combined cycle;
gasification coproduction; and
hybrid gasification and combustion.
Technical milestones
Periodic determination
In general
The Secretary shall periodically establish technical milestones specifying the emission and thermal efficiency levels to which power and coproduction projects under this subtitle shall be designed, and reasonably expected, to achieve.
Prescriptive milestones
The technical milestones shall become more prescriptive during the period of the clean coal power initiative.
2020 goals
The Secretary shall establish periodic milestones so as to achieve, by the year 2020, coal gasification projects able—
to remove at least 99 percent of the sulfur compounds;
to emit not more than .05 lbs of NOx per million Btu;
to achieve 95 percent reductions in mercury emissions; and
to achieve thermal to electrical conversion
efficiencies (also known as higher heating value
) of at
least—
50 percent for coal of more than 9,000 Btu;
48 percent for coal of 7,000 to 9,000 Btu; and
46 percent for coal of less than 7,000 Btu.
Other projects
Allocation of funds
The Secretary shall ensure that not more than 35 percent of the funds made available under section 103(a) are used to fund projects other than those described in paragraph (1)(A).
Technical milestones
Periodic determination
In general
The Secretary shall periodically establish technical milestones specifying the emission and thermal efficiency levels that projects other than those described in paragraph (1)(A) shall be designed, and reasonably expected, to achieve.
Prescriptive milestones
The technical milestones shall become more prescriptive during the period of the clean coal power initiative.
2020 goals
The Secretary shall establish the periodic milestones so as to achieve, by the year 2020, projects able—
to remove at least 97 percent of sulfur dioxide;
to emit not more than .08 lbs of NOx per million Btu;
to achieve 90 percent reductions in mercury emissions; and
to achieve thermal to electrical conversion
efficiencies (also known as higher heating value
) of at
least—
43 percent for coal of more than 9,000 Btu;
41 percent for coal of 7,000 to 9,000 Btu; and
39 percent for coal of less than 7,000 Btu.
Existing units
In the case of projects at units in existence on the date of enactment of this Act, in lieu of the thermal efficiency requirements described in paragraphs (1)(B)(ii) and (2)(B)(ii), the milestones shall be designed to achieve an overall thermal design efficiency improvement, compared to the efficiency of the unit as operated, of not less than—
7 percentage points for coal of more than 9,000 Btu;
6 percentage points for coal of 7,000 to 9,000 Btu; or
4 percentage points for coal of less than 7,000 Btu.
Project selection
In general
In evaluating project proposals, the Secretary shall select those demonstration projects that are expected to demonstrate progress toward achieving the milestones described in paragraphs (1) and (2) of subsection (b).
Site elevation and rank of coal
In evaluating project proposals to achieve the milestones described in paragraphs (1)(B)(i), (2)(B)(i), and (3) of subsection (b), and in determining progress toward achieving the milestones described in paragraph (4) and paragraphs (1)(B)(ii) and (2)(B)(ii) of subsection (b), the Secretary shall take into account and make adjustments for the Btu value of various coals and the elevation of the site at which a project is proposed to be constructed.
Consultation
Before establishing the technical milestones under paragraphs (1)(B)(i)(I) and (2)(B)(i)(I) of subsection (b), the Secretary shall consult with—
the Administrator of the Environmental Protection Agency; and
interested persons, including—
coal producers;
industries using coal;
organizations that promote coal or advanced coal technologies;
environmental organizations;
organizations representing workers; and
organizations representing consumers.
Permitted uses
In carrying out this subtitle, the Secretary shall give high priority to projects that include, as part of the project—
the separation or capture of carbon dioxide; or
the reduction of the demand for natural gas if deployed.
Financial criteria
The Secretary shall not provide assistance under this subtitle for a project unless the recipient documents to the satisfaction of the Secretary that—
the recipient organization is financially responsible;
the recipient shall provide sufficient information to the Secretary to ensure the Secretary that the federally-awarded funds will be spent efficiently and effectively; and
a market exists for the technology being demonstrated or applied, as evidenced by statements of interest in writing from potential purchasers of the technology.
Financial assistance
The Secretary shall provide assistance to projects that, as determined by the Secretary—
meet the requirements of subsections (a), (b), and (c); and
are likely—
to achieve overall cost reductions in the use of coal to generate useful forms of energy or chemical feedstocks; and
to improve the competitiveness of coal among various forms of energy in order to maintain a diversity of fuel choices in the United States to meet electricity generation or chemical feedstock requirements.
Federal share
The Federal share of the cost of a coal or related technology project carried out using funds made available under this subtitle shall not exceed 50 percent, as determined by the Secretary.
Scheduled completion of selected projects
In general
In selecting a project for financial assistance under this section, the Secretary shall establish a reasonable period of time during which the owner or operator of the project shall complete the construction or demonstration phase of the project, as the Secretary determines to be appropriate.
Condition of financial assistance
The Secretary shall require as a condition of receipt of any financial assistance under this subtitle that the recipient of the assistance enter into an agreement with the Secretary not to request an extension of the time period established for the project by the Secretary under paragraph (1).
Extension of time period
In general
Subject to subparagraph (B), the Secretary may extend the time period established under paragraph (1) if the Secretary determines, in the sole discretion of the Secretary, that the owner or operator of the project cannot complete the construction or demonstration phase of the project within the time period due to circumstances beyond the control of the owner or operator.
Limitation
The Secretary shall not extend a time period under subparagraph (A) by more than 4 years.
Repayment of Federal Share
Notwithstanding any other provision of law, the Secretary shall not condition an award of financial assistance to a Clean Coal Power Initiative project under this subtitle on repayment of the Federal share of the cost of the project.
Applicability
No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction by the demonstration of any technology or performance level by 1 or more facilities receiving assistance under this subtitle, shall be considered to indicate that the technology or performance level is—
adequately demonstrated for purposes of section 111 of the Clean Air Act (42 U.S. C. 7411);
achievable for purposes of section 169 of that Act (42 U.S. C. 7479); or
achievable in practice for purposes of section 171 of that Act (42 U.S. C. 7501).
Report
Not later than 1 year after the date of enactment of this Act, and once every 2 years thereafter through 2013, the Secretary, in consultation with other appropriate Federal agencies, shall submit to Congress a report describing—
the technical milestones described in this section; and
how those milestones ensure progress toward meeting the requirements of paragraphs (1)(B)(ii) and (2)(B)(ii) of subsection (b);
how the technologies being demonstrated under the clean coal power initiative demonstrate methods and equipment that can be used in broader commercial applications in addition to electric power generation; and
the status of projects that receive assistance under this subtitle.
Fee title
The Secretary may vest fee title or other property interests acquired under cost-share Clean Coal Power Initiative agreements in any entity, including the United States.
Data protection
For a period not exceeding 5 years after completion of the operations phase of a cooperative agreement, the Secretary may provide appropriate protections, including exemptions from subchapter II of chapter 5 of title 5, United States Code, against the dissemination of information that results from demonstration activities carried out under the Clean Coal Power Initiative Program and that would be a trade secret or commercial or financial information that is privileged or confidential if the information had been obtained from and first produced by a non-Federal party participating in a Clean Coal Power Initiative project.
Research and development programs
Objectives
The Secretary shall conduct a program of technology research, development, demonstration, and commercial application for coal and power systems, including programs to facilitate production and generation of coal-based energy through—
innovations for existing plants;
gasification systems;
advanced combustion systems;
turbines for synthesis gas derived from coal;
carbon capture and sequestration research and development;
coal-derived chemicals and liquid transportation fuels;
solid fuels and feedstocks;
advanced coal-related research;
advanced separation technologies;
fuel cells for operation on synthesis gas derived from coal; and
projects for permeability enhancement in coals for natural gas production and carbon dioxide sequestration.
Carbon capture research and development program
In general
In addition to the research and development activities authorized under subsection (a)(5), the Secretary shall carry out a 10-year carbon capture research and development program to develop carbon dioxide capture technologies for use—
in new coal utilization facilities; and
on the existing fleet of coal-based units.
Objectives
The program objectives shall be—
to develop carbon dioxide capture technologies, including adsorption and absorption techniques and chemical processes, to remove the carbon dioxide from gas streams containing carbon dioxide potentially amenable to sequestration;
to develop technologies that would directly produce concentrated streams of carbon dioxide potentially amenable to sequestration;
to increase the efficiency of the overall system to reduce the quantity of carbon dioxide emissions released from the system per megawatt generated; and
in conjunction with the carbon dioxide capture program, to promote a robust carbon sequestration program and continue the work of the Department in conjunction with the private sector, through regional carbon sequestration partnerships.
Cost and performance goals
In general
In carrying out programs under this section, in each of fiscal years 2008 and 2016 and in each year following fiscal year 2021, the Secretary shall identify cost and performance goals for coal-based technologies that would permit the continued cost-competitive use of coal for the production of electricity, chemical feedstocks, and liquid transportation fuels.
Establishing goals
In identifying cost and performance goals under paragraph (1), the Secretary shall—
consider activities and studies undertaken as of the date of enactment of this Act by industry in cooperation with the Department in support of the goals;
consult with interested persons, including—
coal producers;
industries using coal;
organizations that promote coal and advanced coal technologies;
environmental organizations;
organizations representing workers; and
organizations representing consumers;
not later than 120 days after the date of enactment of this Act, publish in the Federal Register proposed draft cost and performance goals for public comment; and
not later than 180 days after the date of enactment of this Act and every 4 years thereafter, submit to Congress a report that—
describes final cost and performance goals for technologies described in paragraph (1);
includes a list of technical milestones; and
explains how programs authorized in this section will not duplicate activities carried out under section 101.
Authorization of appropriations
Clean coal power initiative
In general
There is authorized to be appropriated to the Secretary to carry out section 101 $200,000,000 for each of fiscal years 2006 through 2012, to remain available until expended.
Report
Not later than March 31, 2006, the Secretary shall submit to Congress a report that includes a 10-year plan that includes—
a detailed assessment of whether the aggregate assistance levels provided under paragraph (1) are the appropriate assistance levels for the clean coal power initiative;
a detailed description of how proposals for assistance under the clean coal power initiative will be solicited and evaluated, including a list of all activities expected to be undertaken;
a detailed list of technical milestones for each coal and related technology that will be pursued; and
a detailed description of how the clean coal initiative will avoid problems enumerated in Government Accountability Office reports on the Clean Coal Technology Program of the Department, including problems that have resulted in unspent funds and projects that failed either financially or scientifically.
Research and development programs
In general
There are authorized to be appropriated to the Secretary to carry out clean coal technology research, development, demonstration, and commercial application activities, including activities described in section 102(a)—
$324,000,000 for fiscal year 2005;
$337,000,000 for fiscal year 2006;
$364,000,000 for fiscal year 2007;
$394,000,000 for fiscal year 2008; and
$427,000,000 for fiscal year 2009.
Carbon capture research and development program
In addition to the funds authorized to be appropriated to carry out section 102(a)(5), there are authorized to be appropriated to the Secretary to carry out section 102(b)—
$20,000,000 for fiscal year 2006;
$25,000,000 for fiscal year 2007;
$30,000,000 for fiscal year 2008;
$35,000,000 for fiscal year 2009; and
$40,000,000 for fiscal year 2010.
Coal-Based Electric Generation Deployment Program
Purpose
The purpose of this subtitle is to provide Federal financial assistance for projects that will use integrated gasification combined cycle or other advanced coal-based generation technologies—
in new electric generating units;
to repower existing electric generation units; or
to retrofit existing natural gas combined cycle units to operate on coal instead of natural gas.
Definitions
In this subtitle:
Advanced coal-based generation technology
The term advanced coal-based generation technology means a technology that meets the requirements of section 116.
Carbon capture capability
The term carbon capture capability means an integrated gasification combined cycle technology facility capable of adding components that can capture, separate on a long-term basis, isolate, remove, and sequester greenhouse gases that result from the generation of electricity.
Electric generation unit
The term electric generation unit means any facility at least 50 percent of the total annual net output of which is electrical power, including an otherwise eligible facility that is used in an industrial application.
Integrated gasification combined cycle
The term integrated gasification combined cycle means an electric generation unit that produces electricity by converting coal to synthesis gas that is used to fuel a combined-cycle plant that produces electricity from both a combustion turbine (including a combustion turbine/fuel cell hybrid) and a steam turbine.
Qualifying advanced coal project
The term qualifying advanced coal project means a project that meets the requirements of section 115.
Deployment incentive program
Establishment
Not later than 180 days after the date of enactment of this Act, the Secretary shall begin carrying out a program to provide Federal financial incentives for deployment of advanced coal-based generation technologies.
Certification
In general
The Secretary may certify a qualifying advanced coal project as eligible to receive 1 of the Federal financial incentives provided under section 114.
Period of issuance
A certificate of eligibility under this subsection may be issued only during the 10 fiscal year period beginning on October 1, 2005.
Aggregate generating capacity
In general
The aggregate generating capacity of projects certified by the Secretary under paragraph (1) may not exceed 10,000 megawatts.
Particular projects
Of the total megawatts of capacity that the Secretary is authorized to certify—
6,000 megawatts shall be available only for use for integrated gasification combined cycle projects; and
4,000 megawatts shall be available only for use for projects that use other advanced coal-based generation technologies.
Determination of capacity
In determining capacity under this paragraph in the case of a retrofitted or repowered plant, capacity shall be determined based on total design capacity after the retrofit or repowering of the existing facility is accomplished.
Applications
The Secretary shall act on applications for certification as the applications are received.
Determination
In determining whether to certify a qualifying advanced coal project, the Secretary shall take into account any written statement from the Governor of the State in which the project is to be sited that the construction and operation of the project is consistent with State environmental and energy policy and requirements.
Application requirement
An application for certification shall specify which of the incentives under section 114 the project sponsor will elect.
Review and redistribution
Review
Not later than 6 years after the date of enactment of this Act, the Secretary shall review the projects certified and megawatts allocated under this section as of the date that is 6 years after the date of enactment of this Act.
Redistribution
The Secretary may reallocate the megawatts available under clauses (i) and (ii) of subsection (b)(3)(B) if the Secretary determines that—
capacity cannot be used because there is an insufficient quantity of qualifying applications for certification pending for any available capacity at the time of the review; or
any certification commitment made pursuant to section 115(d)(2) has not been revoked pursuant to section 115(d)(2)(B)(ii) because the project subject to the certification commitment has been delayed as a result of third party opposition or litigation to the proposed project.
Election of Federal financial incentives
In general
The project sponsor of a qualifying advanced coal project certified under section 113(b) may elect to receive the Federal financial incentives described in either section 119 or 120.
Limitation
A project sponsor may not elect more than 1 section described in subsection (a).
Qualifying advanced coal projects
Requirements
For the purpose of section 113(b), a project shall be considered a qualifying advanced coal project that the Secretary may certify under section 113(b) if the Secretary determines that, at a minimum—
the project uses an advanced coal-based generation technology—
to power a new electric generation or polygeneration unit; or
to retrofit or repower an existing electric generation unit (including an existing natural gas-fired combined cycle unit);
the fuel input for the project, when completed, is at least 75 percent coal;
the applicant provides an assurance satisfactory to the Secretary that—
the project is technologically feasible; and
the project is not financially feasible without the Federal financial incentives, after taking into account—
regulatory approvals or power purchase contracts referred to in paragraph (4);
arrangements for the supply of fuel to the project;
contracts or other arrangements for construction of the project facilities;
any performance guarantees to be provided by contractors and equipment vendors; and
evidence of the availability of funds to develop and construct the project;
the applicant demonstrates that the applicant has obtained—
approval by the appropriate regulatory commission of the recovery of the cost of the project; or
a power purchase agreement (or letter of intent, subject to subsection (c)) that has been approved by the board of directors of, and executed by, a creditworthy purchasing party;
except as provided in subsection (d), the applicant demonstrates that the applicant has, or will, obtain all project agreements and approvals; and
the project will be operated in the United States using United States coal.
Priority for integrated gasification combines cycle projects
In determining which qualifying advanced coal projects to certify under section 113(b)(3)(B)(i), the Secretary shall give high priority to projects that include, as determined by the Secretary—
carbon capture capability;
increased by-product utilization; and
other benefits.
Letter of intent
A letter of intent described in subsection (a)(4)(B) shall be replaced by a binding contract before a certificate may be issued.
Project agreements and approvals
Definition of project agreements and approvals
In this section, the term project agreements and approvals means—
all necessary power purchase agreements, and all other contracts, that the Secretary determines are necessary to construct, finance, and operate a project; and
all authorizations by Federal, State, and local agencies that are required to construct, operate, and recover the cost of the project.
Certification commitment
In general
If the applicant has not obtained all agreements and approvals prior to application, the Secretary may issue a certification commitment.
Requirements
In general
An applicant that receives a certification commitment shall obtain any remaining project agreements and approvals not later than 4 years after the issuance of the certification commitment.
Revocation
If all project agreements and approvals are not obtained during the 4-year period described in clause (i), the certification commitment is terminated without any other action by the Secretary.
Final certificate
No certificate may be issued until all project agreements and approvals are obtained.
Advanced coal-based generation technology
In general
For the purpose of this subtitle, an electric generation unit uses advanced coal-based generation technology if—
the unit—
uses integrated gasification combined cycle technology; or
has a design net heat rate of 8530 Btu/kWh (40 percent efficiency); and
the vendor warrants that the unit is designed to meet the performance requirements in the following table:
| Performance characteristic: | Design level for project: |
| SO2 (percent removal) | 99 percent |
| NOx (emissions) | 0.07 lbs/MMBTU |
| PM* (emissions) | 0.015 lbs/MMBTU |
| Hg (percent removal) | 90 percent |
Design net heat rate
For purposes of this section, design net heat rate with respect to an electric generation unit shall—
be measured in Btu per kilowatt hour (higher heating value);
be based on the design annual heat input to the unit and the rated net electrical power, fuels, and chemicals output of the unit (determined without regard to the cogeneration of steam by the unit);
be adjusted for the heat content of the design coal to be used by the unit—
if the heat content is less than 13,500 Btu per pound, but greater than 7,000 Btu per pound, according to the following formula: design net heat rate = unit net heat rate x [1–{((13,500-design coal heat content, Btu per pound)/1,000)* 0.013}]; and
if the heat content is less than or equal to 7,000 Btu per pound, according to the following formula: design net heat rate = unit net heat rate x [1–{((13,500-design coal heat content, Btu per pound)/1,000)* 0.018}]; and
be corrected for the site reference conditions of—
elevation above sea level of 500 feet;
air pressure of 14.4 pounds per square inch absolute;
temperature, dry bulb of 63ºF;
temperature, wet bulb of 54ºF; and
relative humidity of 55 percent.
Federal project coordinator
The Secretary shall designate a Federal project coordinator to facilitate any Federal agency approvals of eligible advanced coal-generation projects.
Applicability
No technology, or level of emission reduction, solely by reason of the use of the technology, or the achievement of the emission reduction by the demonstration of any technology or performance level by 1 or more facilities receiving assistance under this subtitle, shall be considered to indicate that the technology or performance level is—
adequately demonstrated for purposes of section 111 of the Clean Air Act (42 U.S. C. 7411);
achievable for purposes of section 169 of that Act (42 U.S. C. 7479); or
achievable in practice for purposes of section 171 of that Act (42 U.S. C. 7501).
Investment tax credit and shortened recovery period
In general
Section 48(a)(3)(A) of the Internal Revenue Code of 1986 (relating to energy property) is amended—
by striking or
at the end of
clause (i),
by inserting or
at the end
of clause (ii), and
by adding at the end the following new clause:
certified coal property,
.
Credit rate
Section 48(a)(2)(A) of
such Code (relating to energy percentage) is amended by striking 10
percent
and inserting 10 percent for energy property other than
certified coal property, and 20 percent for certified coal
property
.
Definition
Section 48 of such Code (relating to energy credit) is amended by adding at the end the following new subsection:
Certified coal property
For purposes of this section, the term certified coal property means any property that is part of a qualifying advanced coal project that the Secretary of Energy has certified under section 113(b) of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005, if the project sponsor has elected the application of this section for such project under section 114(a) of such Act.
.
Credit to holders of clean energy bonds
In general
Part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to credits against tax) is amended by adding at the end the following new subpart:
Nonrefundable credit to holders of clean energy bonds
Sec. 54. Credit to holders of clean energy bonds.
Credit to holders of clean energy bonds
Allowance of credit
In the case of a taxpayer who holds a clean energy bond on a credit allowance date of such bond, which occurs during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to credit allowance dates during such year on which the taxpayer holds such bond.
Amount of credit
In general
The amount of the credit determined under this subsection with respect to any credit allowance date for a clean energy bond is 25 percent of the annual credit determined with respect to such bond.
Annual credit
The annual credit determined with respect to any clean energy bond is the product of—
the credit rate determined by the Secretary under paragraph (3) for the day on which such bond was sold, multiplied by
the outstanding face amount of the bond.
Determination
For purposes of paragraph (2), with respect to any clean energy bond, the Secretary shall determine daily or caused to be determined daily a credit rate which shall apply to the first day on which there is a binding, written contract for the sale or exchange of the bond. The credit rate for any day is the credit rate which the Secretary or the Secretary's designee estimates will permit the issuance of clean energy bonds with a specified maturity or redemption date without discount and without interest cost to the qualified issuer.
Credit allowance date
For purposes of this section, the term credit allowance date means—
March 15,
June 15,
September 15, and
December 15.
Special rule for issuance and redemption
In the case of a bond which is issued during the 3-month period ending on a credit allowance date, the amount of the credit determined under this subsection with respect to such credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during which the bond is outstanding. A similar rule shall apply when the bond is redeemed or matures.
Limitation based on amount of tax
In general
The credit allowed under subsection (a) for any taxable year shall not exceed the excess of—
the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over
the sum of the credits allowable under this part (other than subpart C thereof, relating to refundable credits).
Carryover of unused credit
If the credit allowable under subsection (a) exceeds the limitation imposed by paragraph (1) for such taxable year, the difference shall be carried to the succeeding taxable year and added to the credit allowable under subsection (a) for such taxable year.
Clean energy bond
For purposes of this section—
In general
The term clean energy bond means any bond issued as part of an issue if—
the bond is issued by a qualified issuer,
95 percent or more of the proceeds from the sale of such issue are to be used for capital expenditures incurred by qualified borrowers for 1 or more qualified projects,
the qualified issuer designates such bond for purposes of this section and the bond is in registered form, and
the issue meets the requirements of subsections (e), (g), and (h).
Qualified project; special use rules
In general
The term qualified project means a certified coal property (as defined in section 48(c)(1)) placed in service by a qualified borrower.
Refinancing rules
For purposes of paragraph (1)(B), a qualified project may be refinanced with proceeds of a clean energy bond only if the indebtedness being refinanced (including any obligation directly or indirectly refinanced by such indebtedness) was originally incurred by a qualified borrower after the date of the enactment of this section.
Reimbursement
For purposes of paragraph (1)(B), a clean energy bond may be issued to reimburse a qualified borrower for amounts paid after the date of the enactment of this section with respect to a qualified project, but only if prior to the payment of such expenditure, the qualified borrower declared its intent to reimburse such expenditure with the proceeds of a clean energy bond.
Treatment of changes in use
For purposes of paragraph (1)(B), the proceeds of an issue shall not be treated as used for a qualified project to the extent that a qualified borrower takes any action within its control which causes such proceeds not to be used for a qualified project. The Secretary shall prescribe regulations specifying remedial actions that may be taken (including conditions to taking such remedial actions) to prevent an action described in the preceding sentence from causing a bond to fail to be a clean energy bond.
Maturity limitations
Duration of term
A bond shall not be treated as a clean energy bond if such bond is issued as part of an issue and—
the average maturity of bonds issued as a part of such issue, exceeds
120 percent of the average reasonable expected economic life of the facilities being financed with the proceeds from the sale of such issue.
Determination of averages
For purposes of paragraph (1), the determination of averages of an issue and economic life of any facility shall be determined in accordance with section 147(b).
Ratable principal amortization required
A bond shall not be treated as a clean energy bond unless it is part of an issue which provides for an equal amount of principal to be paid by the qualified issuer during each calendar year that the issue is outstanding.
Credit included in gross income
Gross income includes the amount of the credit allowed to the taxpayer under this section (determined without regard to subsection (c)) and the amount so included shall be treated as interest income.
Special rules relating to expenditures
In general
An issue shall be treated as meeting the requirements of this subsection if, as of the date of issuance, the qualified issuer reasonably expects—
at least 95 percent of the proceeds from the sale of the issue are to be spent for 1 or more qualified projects within the 5-year period beginning on such date,
a binding commitment with a third party to spend at least 10 percent of the proceeds from the sale of the issue will be incurred within the 6-month period beginning on the date of issuance of the clean energy bond or, in the case of a clean energy bond, the proceeds of which are to be loaned to 2 or more qualified borrowers, such binding commitment will be incurred within the 6-month period beginning on the date of the loan of such proceeds to a qualified borrower, and
such projects will be completed with due diligence and the proceeds from the sale of the issue will be spent with due diligence.
Extension of period
Upon submission of a request prior to the expiration of the period described in paragraph (1)(A), the Secretary may extend such period if the qualified issuer establishes that the failure to satisfy the 5-year requirement is due to reasonable cause and the related projects will continue to proceed with due diligence.
Failure to spend required amount of bond proceeds within 5 years
To the extent that less than 95 percent of the proceeds of such issue are expended within such 5-year period (and no extension has been obtained under paragraph (2)), the qualified issuer shall redeem all of the nonqualified bonds on the earliest call date subsequent to the expiration of the 5-year period. If such earliest call date is more than 90 days subsequent to the expiration of the 5-year period, the qualified issuer shall establish a yield-restricted defeasance escrow within such 90 days to retire such nonqualified bonds on the earlier of the date which is 10 years after the issue date or the first call date. For purposes of this paragraph, the term nonqualified bonds means the portion of the outstanding bonds in an amount that, if the remaining bonds were issued on the fifth anniversary of the date of the issuance of the issue, at least 95 percent of the proceeds of the remaining bonds would be used to provide qualified projects.
Special rules relating to arbitrage
In general
A bond which is part of an issue shall not be treated as a clean energy bond unless, with respect to the issue of which the bond is a part, the issuer satisfies the arbitrage rebate requirements of section 148 with respect to gross proceeds of the issue (other than any amounts applied in accordance with subsection (g)). For purposes of such requirements, yield over the term of an issue shall be determined under the principles of section 148 based on the qualified issuer's payments of principal, interest (if any), and fees for guarantees on such issue.
Exception
Amounts on deposit in a bona fide debt service fund with regard to any clean energy bond are not subject to the arbitrage rebate requirements of section 148.
Cooperative electric company; clean energy bond lender; governmental body; qualified borrower
For purposes of this section—
Cooperative electric company
The term cooperative electric company means a mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or a not-for-profit electric utility which has received a loan or loan guarantee under the Rural Electrification Act.
Clean energy bond lender
The term clean energy bond lender means a lender which is a cooperative which is owned by, or has outstanding loans to, 100 or more cooperative electric companies and is in existence on February 1, 2002, and shall include any affiliated entity which is controlled by such lender.
Governmental body
The term governmental body means any State, territory, possession of the United States, the District of Columbia, Indian tribal government, and any political subdivision thereof.
Qualified issuer
The term qualified issuer means—
a clean energy bond lender,
a cooperative electric company,
a governmental body, or
the Tennessee Valley Authority.
Qualified borrower
The term qualified borrower means—
a cooperative electric company,
a governmental body, or
the Tennessee Valley Authority.
Pool bonds
The portion of a clean energy bond issue allocable to each loan, if any, shall be deemed to be (and treated as) a separate issue of clean energy bonds and the failure of any such deemed separate clean energy bond issue to satisfy the requirements set forth under this section shall not affect the qualification of any other deemed separate clean energy bond issue.
Other definitions and special rules
For purposes of this section—
Bond
The term bond includes any obligation.
Partnership; S corporation; and other pass-thru entities
Under regulations prescribed by the Secretary, in the case of a partnership, trust, S corporation, or other pass-thru entity, rules similar to the rules of section 41(g) shall apply with respect to the credit allowable under subsection (a).
Bonds held by regulated investment companies
If any clean energy bond is held by a regulated investment company, the credit determined under subsection (a) shall be allowed to shareholders of such company under procedures prescribed by the Secretary.
Treatment for estimated tax purposes
Solely for purposes of sections 6654 and 6655, the credit allowed by this section to a taxpayer by reason of holding a clean energy bond on a credit allowance date shall be treated as if it were a payment of estimated tax made by the taxpayer on such date.
Reporting
Issuers of clean energy bonds shall submit reports similar to the reports required under section 149(e).
Termination
This section shall not apply with respect to any bond issued after December 31, 2008.
.
Reporting
Subsection (d) of section 6049 of the Internal Revenue Code of 1986 (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph:
Reporting of credit on clean energy bonds
In general
For purposes of subsection (a), the term interest includes amounts includible in gross income under section 54(f) and such amounts shall be treated as paid on the credit allowance date (as defined in section 54(b)(4)).
Reporting to corporations, etc
Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A), subsection (b)(4) shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i) of such subsection.
Regulatory authority
The Secretary may prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.
.
Clerical amendments
The table of subparts for part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Subpart H. Nonrefundable credit to holders of clean energy bonds.
.
Section 6401(b)(1) of such Code is amended
by striking and G
and inserting G, and H
.
Issuance of regulations
The Secretary of Treasury shall issue regulations required under section 54 of the Internal Revenue Code of 1986 (as added by this section) not later than 120 days after the date of the enactment of this Act.
Industrial Gasification Initiative
Findings and purpose
Findings
Congress finds that widespread domestic use of gasification technologies can make significant contributions to the economy, environmental beneficiation, and the general welfare of the citizens of the United States.
Purpose
The purpose of the industrial gasification research, development, and demonstration program shall be to support a significant acceleration of gasification technology deployment in industrial applications to—
reduce the demand pressure on domestic natural gas prices and supply for all consumers by promoting the use of synthesis gas derived from domestic coal, biomass, petroleum residues, and other domestic fuel sources for industrial use;
promote the use of those fuel sources in an environmentally benign manner;
preserve domestic jobs;
reduce the deficit of the United States as of the date of enactment of this Act;
reduce imports of energy from foreign sources;
avoid dependence on remote foreign sources for chemicals, ammonia-based fertilizers, and other strategic products for which natural gas has traditionally been a significant component in the manufacturing process;
promote the position of the United States as a global leader in advanced gasification technology development and sales of related products;
promote the potential for future use or sequestration of industrial carbon emissions in an efficient manner;
provide coordination within the Department for research, development, and demonstration of industrial gasification technologies using a diverse fuel mix; and
support the deployment of industrial gasification technologies that will produce or displace, by 2020, the equivalent of 1.5 trillion cubic feet of natural gas annually.
Definitions
In this title:
Biomass
In general
The term biomass means—
any agricultural or plant waste;
byproduct of wood or paper mill operations, including lignin in spent pulping liquors; and
other products of forestry maintenance.
Exclusion
The term biomass does not include paper that is commonly recycled.
Carbon capture capability
The term carbon capture capability means an industrial gasification plant design that is determined by the Secretary to reflect reasonable consideration for, and be capable of, accommodating the equipment likely to be necessary to capture carbon dioxide from the gaseous stream, for later use or sequestration, that would otherwise be emitted in the flue gas from a project that uses a nonrenewable fuel.
Coal
The term coal means any carbonized or semicarbonized matter, including peat.
Coproduced power
The term coproduced power means heat, steam, or electricity derived from a plant or plant product.
Eligible entity
The term eligible entity means any person whose application for Federal assistance under subtitle A, or whose application for certification under subtitle B, is principally intended for use in a domestic project that employs domestic gasification applications related to—
chemicals;
fertilizers;
glass;
steel;
petroleum residues;
forest products; and
agriculture, including feedlots and dairy operations.
Gasification technology
The term gasification technology means any process that converts a solid or liquid product from coal, petroleum residue, biomass, or other materials that are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon monoxide and hydrogen for direct use or subsequent chemical or physical conversion.
Industrial gasification project
The term industrial gasification project means any project that—
employs gasification technology; and
will be carried out by an eligible entity.
Petroleum residue
The term petroleum residue means the carbonized product of high-boiling hydrocarbon fractions obtained in petroleum processing.
Total plant investment
The term total plant investment means the total project cost for engineering, design, procurement, construction, project development and financing, and reasonable contingency reserves as agreed upon by the Secretary and the project sponsor.
Industrial Gasification Research, Development, and Demonstration Program
Establishment
In general
The Secretary shall establish an industrial gasification technology research, development, and demonstration program to facilitate production of synthesis gas, chemical feedstocks, ammonia-based fertilizers, or liquid transportation fuels and generation of coproduced power, through methods and equipment under—
this subtitle;
the Federal Nonnuclear Energy Research and Development Act of 1974 (42 U.S.C. 5901 et seq.);
the Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.); and
title XVI of the Energy Policy Act of 1992 (42 U.S.C. 13381 et seq.).
Conditions
The program described in subsection (a) shall be designed to achieve the cost and performance goals established under section 212.
Office of industrial gasification coordination
The Secretary shall establish an Office of Industrial Gasification Coordination that shall—
report directly to the Secretary;
analyze the strategic and economic consequences of natural gas dependency in the industrial and agricultural sectors;
prepare biannual plans for the development and deployment of industrial gasification technologies that may be capable of reducing this dependence in a manner that is cost-effective for the United States as a whole;
not later than 180 days after the date of enactment of this Act and thereafter not later than the first day of March every 2 years through 2016, in coordination with the study under section 213, submit the biannual plan to—
the Committee on Energy and Commerce of the House of Representatives;
the Committee on Energy and Natural Resources of the Senate; and
the Committees on Appropriations; and
make recommendations to the Secretary to coordinate gasification research and associated expenditures among the several relevant programs of the Department.
Cost and performance goals
In general
The Secretary shall perform an assessment that identifies cost and performance goals of industrial gasification technologies the deployment of which would permit the continued cost-competitive gasification of the fuels identified in section 202(6) to—
produce chemical feedstocks or ammonia-based fertilizers;
produce liquid transportation fuels; and
coproduce power.
Consultation
In establishing the cost and performance goals, the Secretary shall—
consider activities and studies undertaken to date by industry in cooperation with the Department in support of the assessment described in subsection (a);
consult with interested entities, including—
coal producers;
industries using the fuels identified in section 202(6);
organizations that promote fuels identified in section 202(6) and advanced gasification technologies that use those fuels;
environmental organizations;
organizations representing workers;
organizations representing consumers; and
consult with the Administrator of the Environmental Protection Agency and the Secretary of Agriculture.
Timing
The Secretary shall—
not later than 120 days after the date of enactment of this Act, issue a set of draft cost and performance goals for public comment; and
not later than 180 days after the date of enactment of this Act, after taking into consideration any public comments received, submit to Congress a description of the final cost and performance goals.
Study
In general
Not later than 1 year after the date of enactment of this Act, and once every 2 years thereafter through 2016, the Secretary, in cooperation with other appropriate Federal agencies, shall conduct a study to—
identify industrial gasification technologies that, alone or in combination with other technologies, may be capable of achieving the cost and performance goals;
assess the costs that would be incurred by, and the period of time that would be required for, the development and demonstration of industrial gasification technologies that, alone or in combination with other technologies, contribute to the achievement of the cost and performance goals;
develop recommendations for industrial gasification technology development programs that the Department could carry out in cooperation with industry, to develop, demonstrate, and deploy technologies that, alone or in combination with other technologies, achieve the cost and performance goals; and
develop recommendations for additional authorities required to achieve the industrial gasification cost and performance goals, and review and recommend changes, if any, to those cost and performance goals if the Secretary determines that the changes are necessary as a result of ongoing research, development, demonstration, and deployment of technologies.
Cooperation
In carrying out this section, the Secretary shall give due weight to the expert advice of representatives of the entities described in section 212(b)(2).
Authorization of appropriations
Authorization
In general
There are authorized to be appropriated to the Secretary to carry out activities described in paragraph (2), to remain available until expended—
$80,000,000 for fiscal year 2006;
$100,000,000 for fiscal year 2007;
$150,000,000 for fiscal year 2008;
$160,000,000 for fiscal year 2009; and
$120,000,000 for fiscal year 2010.
Activities
Activities covered by paragraph (1) are industrial gasification and related technologies research, development, and demonstration programs, including—
innovations for existing plants;
industrial-scale turbines (less than 50MW) for synthesis gas derived from the fuels identified in section 202(6);
synthesis gas, chemicals feedstocks, ammonia-based fertilizers, and transportation liquid fuels derived from the fuels identified in section 202(6); and
collection and gasification of biomass.
Limit on use of funds
In general
Before the use of funds authorized by subsection (a), the Secretary shall submit to Congress a report that—
describes the proposed use of funds; and
contains a plan that includes—
a detailed description of how any proposals will be solicited and evaluated, including a list of all activities expected to be undertaken;
a detailed list of technical milestones for each fuel application and related technology that will be pursued; and
a description of how the programs authorized by this section will be carried out so as to complement and not duplicate activities authorized under—
the Industries of the Future Program;
the Biomass Program;
the Clean Coal Power Initiative; and
other programs and authorities being carried out by the Secretary.
Waiting period
The Secretary may not use any funds authorized by subsection (a) before the date that is 30 days after the date of receipt by Congress of the report required by paragraph (1).
Industrial Gasification Deployment Program
Establishment of certification program
In general
The Secretary shall establish a competitive program to consider and award certifications for investment and production tax credits to industrial gasification project sponsors.
Competitive awards
In general
Not later than 270 days after the date of enactment of this Act, and every 2 years thereafter through 2016, the Secretary, in consultation with the Secretary of the Treasury and the Secretary of Agriculture, shall carry out a competitive solicitation for the award of certifications that entitle the recipients to specific investment and production tax credits associated with the year of certification as described in section 45J of the Internal Revenue Code of 1986 (as added by section 222(a)).
Competitive certification process
Notwithstanding the limitations imposed in section 45J of the Internal Revenue Code of 1986 (as added by section 222(a)), the Secretary may during a biannual competitive certification process deem that a certification award be considered as having been awarded up to 4 years earlier than the actual date of certification for not more than 2 projects that the Secretary determines use a technology that has not previously been deployed.
Applications limited to eligible entities
A project sponsor shall be eligible to compete for the tax credit certifications awarded competitively by the Secretary under subsection (a) only if—
the project sponsor is an eligible entity; and
the project of the project sponsor advances the purposes described in section 201.
Selection criteria
The Secretary shall not make a competitive certification award for production tax credit eligibility unless the recipient has documented to the satisfaction of the Secretary that—
the award recipient is financially viable without the receipt of additional Federal funding associated with the proposed project;
the recipient will provide sufficient information to the Secretary for the Secretary to ensure that the award funds are spent efficiently and effectively;
a market exists for the products of the proposed deployment project as evidenced by contracts or written statements of intent from potential customers;
the fuels identified in section 202(6) will comprise at least 90 percent of the fuels required by the project for the production of chemical feedstocks, liquid transportation fuels, or coproduction of electricity;
the award recipient's project team is competent in the construction and operation of the gasification technology proposed, with preference given to those recipients with experience that demonstrates successful and reliable operations of the technology on domestic fuels identified in section 202(6); and
the award recipient has met other criteria established and published by the Secretary.
Combined limit for the use of more than one Federal credit, loan or loan guarantee
The allowable combined value of all credits, loans or loan guarantees claimed in association with any single certified industrial gasification property is limited to the project total credit limit associated with the project’s year of certification or deemed year of certification as determined under section 221 of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005.
Credit for production from certified industrial gasification projects
In general
Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 (relating to business related credits) is amended by adding at the end the following new section:
Credit for production from certified industrial gasification projects
In general
For purposes of section 38, the synthesis gas production tax credit for any taxable year is determined by the year in which the taxpayer's industrial gasification project is certified or deemed certified in accordance with the provisions of section 221 of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005.
Determination of credit amount
In general
In general
With respect to each industrial gasification project sponsor, the synthesis gas production tax credit for all taxable years shall not exceed the credit value per-million-Btu's and project total credit limitation associated with the project’s year of certification or deemed year of certification as specified in the following table:
| Year of certification | Number of project certifications | Credit value per million Btu's | Project total credit limit |
| 2006 | 3 | $.62 | $174,000,000 |
| 2008 | 3 | $.496 | $116,725,000 |
| 2010 | 4 | $.397 | $77,855,575 |
| 2012 | 7 | $.317 | $51,929.669 |
| 2014 | 10 | $.254 | $34,637,089 |
| 2016 | 14 | $.203 | $23,102,938 |
Inflation adjustment
In general
For calendar years after 2006, each amount in the third and fourth columns of the table contained in subparagraph (A) shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the amount is applied. If any amount in such third column as increased under the preceding sentence is not a multiple of 0.01 cent, such amount shall be rounded to the nearest multiple of 0.01 cent. If any amount in such fourth column is increased under the preceding sentence is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50.
Inflation adjustment factor
For purposes of clause (i)—
In general
The term inflation adjustment factor means, with respect to a calendar year, a fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 2005.
GDP implicit price deflator
The term GDP implicit price deflator means, for any calendar year, the most recent revision of the implicit price deflator for the gross domestic product as of June 30 of such calendar year as computed by the Department of Commerce before October 1 of such calendar year.
Limitations
Credit limited by project investment
The credit amount for any industrial gasification project otherwise determined under this section shall not exceed an amount equal to 20 percent of the total plant investment made in such project.
Credit limited by btu's consumed in production of electricity
Not more than 60 percent of the credit amount for any industrial gasification project otherwise determined under this section for any taxable year may be attributable to Btu's consumed in the production of electricity.
Additional credit amount
The credit amount and project total credit limit for any industrial gasification project otherwise determined under this section (determined without regard to paragraph (2)) shall be increased by 30 percent for any synthises gas produced and used for purposes other than coproduced power (as defined in section 202(4) of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005.
Exception for deployment of new technologies
Notwithstanding subsection (b), the Secretary may during a competitive certification process assign credit values and total project credit value limitations associated with certification periods not to exceed 4 years prior to the current year of awards to not more than 2 industrial gasification projects which the Secretary determines are particularly consistent with the program purposes in section 201(b) of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005 and which utilize a technology that has not previously been deployed.
Treatment of person not able to use entire credit
Allowance of credits
In general
Any credit allowable under this section or section 46(2) by reason of section 48(a)(3)(A)(iv) with respect to a facility owned by a person described in subparagraph (B) may be transferred or used as provided in this subsection, and the determination as to whether the credit is allowable shall be made without regard to the tax-exempt status of the person.
Persons described
A person is described in this subparagraph if the person is—
an organization described in section 501(c)(12)(C) and exempt from tax under section 501(a),
an organization described in section 1381(a)(2)(C),
a public utility (as defined in section 136(c)(2)(B)),
any State or political subdivision thereof, the District of Columbia, or any agency or instrumentality of any of the foregoing,
any Indian tribal government (within the meaning of section 7871) or any agency or instrumentality thereof, or
the Tennessee Valley Authority.
Transfer of credit
In general
A person described in clause (i), (ii), (iii), (iv), or (v) of paragraph (1)(B) may transfer any credit to which paragraph (1)(A) applies through an assignment to any other person not described in paragraph (1)(B). Such transfer may be revoked only with the consent of the Secretary.
Regulations
The Secretary shall prescribe such regulations as necessary to ensure that any credit described in subparagraph (A) is claimed once and not reassigned by such other person.
Transfer proceeds treated as arising from essential Government function
Any proceeds derived by a person described in clause (iii), (iv), or (v) of paragraph (1)(B) from the transfer of any credit under subparagraph (A) shall be treated as arising from the exercise of an essential government function.
Credit not income
Any transfer under subparagraph (A) of any credit to which paragraph (1)(A) applies shall not be treated as income for purposes of section 501(c)(12).
Use by tva
In general
Notwithstanding any other provision of law, in the case of a person described in paragraph (1)(B)(vi), any credit to which paragraph (1)(A) applies may be applied as a credit against the payments required to be made in any fiscal year under section 15d(e) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n–4(e)) as an annual return on the appropriations investment and an annual repayment sum.
Treatment of credits
The aggregate amount of credits described in paragraph (1)(A) with respect to such person shall be treated in the same manner and to the same extent as if such credits were a payment in cash and shall be applied first against the annual return on the appropriations investment.
Credit carryover
With respect to any fiscal year, if the aggregate amount of credits described paragraph (1)(A) with respect to such person exceeds the aggregate amount of payment obligations described in subparagraph (A), the excess amount shall remain available for application as credits against the amounts of such payment obligations in succeeding fiscal years in the same manner as described in this paragraph.
Treatment of unrelated persons
For purposes of this subsection, transfers among and between persons described in clauses (i), (ii), (iii), (iv), and (v) of paragraph (1)(B) shall be treated as transfers between unrelated parties.
Applicable rules
For purposes of this section, the rules of paragraphs (3), (4), and (5) of section 45(e) shall apply.
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Credit treated as business credit
Section
38(b) of the Internal Revenue Code of 1986 (relating to current year business
credit) is amended by striking plus
at the end of paragraph
(18), by striking the period at the end of paragraph (19) and inserting
, plus
, and by adding at the end the following new
paragraph:
the synthesis gas production tax credit determined under section 45J(a).
.
Denial of double benefit
Section 29(d) of the Internal Revenue Code of 1986 (relating to other definitions and special rules) is amended by adding at the end the following new paragraph:
Denial of double benefit
This section shall not apply with respect to any qualified fuel the production of which may be taken into account for purposes of determining the credit under section 45J.
.
Clerical amendment
The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 45J. Credit for production from certified industrial gasification projects.
.
Effective date
The amendments made by this section shall apply to production after the date of the enactment of this Act, in taxable years ending after such date.
Investment tax credit for certified industrial gasification projects
In general
Section 48 (a)(3)(A) of the Internal Revenue Code of 1986 (relating to energy property), as amended by this Act, is amended—
by striking or
at the end of
clause (ii),
by inserting or
at the end
of clause (iii), and
by adding at the end the following new clause:
certified industrial gasification property,
.
Credit rate
Section 48(a)(2)(A) of
the Internal Revenue Code of 1986 (relating to energy percentage), as amended
by this Act, is amended by inserting or a certified industrial
gasification property
after certified coal property
both
places it appears.
Definitions
Section 48 of the Internal Revenue Code of 1986 (relating to energy credit), as amended by this Act, is amended by adding the following new subsection:
Certified industrial gasification property
For purposes of this section—
In general
The term
certified industrial gasification property
means any property
that is part of an industrial gasification project as defined in section 202(7)
of the Clean Coal Research, Development, Demonstration, and Deployment Act of
2005 and that has been certified by the Secretary of Energy under section 221
of that Act.
Limit on use of credits
Any credit claimed by a taxpayer under section 46(2) by reason of subsection (a)(3)(A)(iv) shall be limited to the project total credit limit associated with the project’s year of certification or deemed year of certification as determined under section 221 of the Clean Coal Research, Development, Demonstration, and Deployment Act of 2005.
.