H.R. 5805

Thermal Renewable Energy and Efficiency Act of 2010

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Contents

I

111th CONGRESS

2d Session

H. R. 5805

IN THE HOUSE OF REPRESENTATIVES

July 21, 2010

Ms. McCollum (for herself, Mr. Inslee, and Mr. Tonko) introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on Ways and Means and Oversight and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To encourage the implementation of thermal energy infrastructure, and for other purposes.

1.

Short title; table of contents

(a)

Short title

This Act may be cited as the Thermal Renewable Energy and Efficiency Act of 2010.

(b)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; table of contents.

Sec. 2. Findings.

Sec. 3. Purpose.

Sec. 4. Statement of policy.

TITLE I—Modification of credit for electricity produced from certain renewable sources

Sec. 101. Extension of renewable electricity credit to thermal energy.

Sec. 102. Federal purchase requirement amendments.

TITLE II—Exempt facility bonds

Sec. 201. Exempt facility bonds.

TITLE III—Energy sustainability and efficiency grants for institutions

Sec. 301. Definition of institutional entity.

Sec. 302. Availability of grants.

Sec. 303. Authorization of appropriations for grants.

2.

Findings

Congress finds that—

(1)

approximately 30 percent of the total quantity of energy consumed in the United States is used to provide thermal energy for heating and cooling building space, domestic hot water, and industrial processes;

(2)

thermal energy is an essential, but often overlooked, segment of the national energy mix;

(3)

district energy systems use 1 or more central plants to provide thermal energy to multiple buildings that range in size from campus applications to systems heating entire towns or cities;

(4)

district energy systems provide sustainable thermal energy infrastructure by producing and distributing thermal energy from combined heat power, sources of industrial or municipal surplus heat, and from renewable sources such as biomass, geothermal, and solar energy;

(5)

as of 2009, the United States had approximately 2,500 operating district energy systems;

(6)

district energy systems provide advantages that support secure, affordable, renewable, and sustainable energy for the United States, including—

(A)

use of local fuels or waste heat sources that keep jobs and energy dollars in local economies;

(B)

stable, predictable energy costs for businesses and industry;

(C)

reduction in reliance on fossil fuels;

(D)

reduction in emissions of greenhouse gases; and

(E)

flexibility to modify fuel sources in response to future changes in fuel availability and prices and development of new technologies;

(7)

district energy helps cut peak power demand and reduce power transmission and distribution system constraints by—

(A)

meeting air conditioning demand through delivery of chilled water produced with heat from combined heat and power or other energy sources; and

(B)

shifting power demand through thermal storage and, with combined heat and power, generating power near load centers;

(8)

combined heat and power systems increase energy efficiency of power plants by capturing thermal energy and using the thermal energy to provide heating and cooling, more than doubling the efficiency of conventional power plants;

(9)

according to the Oak Ridge National Laboratory, if the United States was able to increase combined heat and power from approximately 9 percent of total electric generation capacity to 20 percent by 2030, the increase would—

(A)

save as much energy as half of all household energy consumption;

(B)

create approximately 1,000,000 new jobs;

(C)

avoid more than 800,000,000 metric tons of carbon dioxide emissions annually, which is equivalent to taking half of all United States passenger vehicles off the road; and

(D)

save hundreds of millions of barrels of oil equivalent; and

(10)

constraints to significant expansion of district energy and combined heat and power include—

(A)

the lack of economic value in the energy marketplace for the environmental, grid support, energy security, and local economic development benefits of district energy systems;

(B)

relatively high project development costs due to the variety of institutional, legal, and technical issues that must be addressed; and

(C)

the high costs of debt service, particularly in the early years of systems development before a broad base of customers has connected.

3.

Purpose

The purpose of this Act is to encourage the implementation of thermal energy infrastructure order to—

(1)

increase energy efficiency;

(2)

increase use of renewable energy resources;

(3)

revitalize the infrastructure of the cities and institutions of the United States;

(4)

reduce local and regional air pollution;

(5)

reduce emissions of greenhouse gases;

(6)

reduce emissions of ozone-depleting refrigerants; and

(7)

enhance power grid reliability and overall energy supply reliability and energy security.

4.

Statement of policy

It is the policy of the United States that, in energy policy development and program implementation, the following factors should be considered:

(1)

Thermal energy represents a significant part of the energy requirements of the United States, providing building heating and cooling, domestic hot water, and industrial process energy.

(2)

There are many opportunities for meeting thermal energy requirements directly through renewable energy sources or recycled energy (such as recovered waste heat), without generation of electricity.

(3)

Policies and incentives for encouraging renewable energy and energy efficiency should address thermal energy as well as electricity.

(4)

District energy systems provide an important means of delivering sustainable thermal energy to consumers, and provide energy security benefits, by—

(A)

cutting peak power demand;

(B)

reducing power transmission and distribution system constraints; and

(C)

providing flexibility to modify fuel sources in response to future changes in fuel availabilities and prices and development of new technologies.

I

Modification of credit for electricity produced from certain renewable sources

101.

Extension of renewable electricity credit to thermal energy

(a)

Credit To include production of thermal energy

Section 45 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(f)

Credit for production of thermal energy

(1)

In general

In the case of a taxpayer who—

(A)

produces thermal energy from a qualified energy resource described in subparagraph (B), (C), (D), (G), (I), or (J) of subsection (c)(1) at a qualified facility described in paragraph (2), (3), (4), (6), (7), (11), or (12) of subsection (d), and

(B)

makes an election under this subsection with respect to such facility,

subsection (a) shall be applied by substituting each 3,412 Btus of thermal energy (or fraction thereof) for the kilowatt hours of electricity in paragraph (2) thereof.
(2)

Thermal energy

For purposes of this section, the term thermal energy means heat (in the form of hot water or steam) or cooling (in the form of chilled water or ice).

(3)

Additional qualifications

(A)

Combined heat and power facility

In the case of a facility producing both electricity and thermal energy, such facility shall not be treated as a qualified facility unless such facility—

(i)

meets the requirements of section 48(c)(3)(A) (without regard to clause (iv) thereof); and

(ii)

was originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.

(B)

Thermal facility

In the case of a facility producing only thermal energy, such facility shall not be treated as a qualified facility unless such facility—

(i)

has an energy efficiency percentage (as determined under section 48(c)(3)(C)) in excess of 60 percent; and

(ii)

was originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.

(4)

Denial of double benefit

If an election under this subsection is in effect with respect to any facility, no credit shall be allowed under subsection (a) with respect to the production of electricity at such facility.

(5)

Election

(A)

In general

An election under this subsection shall specify the facility to which the election applies and shall be in such manner as the Secretary may by regulations prescribe.

(B)

Election irrevocable

Any election made under this subsection may not be revoked except with the consent of the Secretary.

.

(b)

Naturally occurring cold water sources treated as qualified energy resource

Paragraph (1) of section 45(c) of the Internal Revenue Code of 1986 is amended—

(1)

by striking and at the end of subparagraph (H),

(2)

by striking the period at the end of subparagraph (I) and inserting , and, and

(3)

by adding at the end the following new subparagraph:

(J)

naturally occurring cold water sources which are used to provide thermal energy for air conditioning.

.

(c)

Qualified facilities

Section 45(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

(12)

Natural air conditioning system facility

In the case of a facility providing thermal energy for air conditioning from naturally occurring cold water sources, the term qualified facility means any facility owned by the taxpayer which is originally placed in service after the date of the enactment of the Thermal Renewable Energy and Efficiency Act of 2010, and before the date which is 5 years after such date.

.

(d)

Conforming amendments

(1)

Section 45(b)(4)(A) of the Internal Revenue Code of 1986 is amended by inserting or thermal energy after electricity.

(2)

Section 45(c)(2) of such Code is amended by inserting or thermal energy after electricity.

(3)

Section 45(d) of such Code is amended by inserting or thermal energy after electricity each place it appears in paragraphs (2), (3), (4), (6), (7), and (11).

(4)

Section 45(e) of such Code is amended by inserting or thermal energy after electricity each place it appears in paragraphs (1), (4), and (9).

(5)

The heading of section 45 of such Code is amended by inserting and thermal energy after Electricity.

(6)

The item relating to section 45 in the table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by inserting and thermal energy after Electricity.

(e)

Modification of definition of open-Loop biomass

(1)

In general

Paragraph (3) of section 45(c) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

(C)

Special rule for thermal facilities

In the case of a qualified facility which produces thermal energy with respect to which the taxpayer makes an election under subsection (f), the term open-loop biomass has the meaning given the term in section 203(b) of the Energy Policy Act of 2005, as amended.

.

(2)

Conforming amendment

Subparagraph (A) of section 45(c)(3) of such Code is amended by striking The and inserting Except as provided in subparagraph (C), the.

(f)

Effective date

The amendments made by this section shall apply to energy produced and sold after the date of the enactment of this Act.

102.

Federal purchase requirement amendments

Section 203 of the Energy Policy Act of 2005 (42 U.S.C. 15852) is amended by striking subsection (b) and inserting the following:

(b)

Definitions

In this section:

(1)

Biomass

The term biomass means the following types of nonhazardous organic materials:

(A)

Residues and byproducts from milled logs.

(B)

Wood, paper products that are not commonly recyclable, and vegetation (including trees and trimmings, yard waste, pallets, railroad ties, crates, and solid-wood manufacturing and construction debris), if diverted from or separated from other waste out of a municipal waste stream.

(C)

Hazard trees, trimmings, and brush that are necessary to remove in order to maintain a utility right-of-way or a public road (not including any unpaved road on Federal land).

(D)

Trees, trimmings, and brush harvested from the immediate vicinity of any building, campground, or other structure in wildfire prone areas to reduce the risk to the structure or campground or to human life from wildfires.

(E)

Invasive species (as defined in Executive Order 13112 (42 U.S.C. 4321 note; relating to invasive species)) removed to control or eradicate the invasive species.

(F)

Animal waste and animal byproducts (including biogas and any solid produced by micro-organisms).

(G)

Food waste.

(H)

Algae.

(I)

Slash, brush, trees, and other vegetation that is harvested from non-Federal land or Indian land—

(i)

that is, at the time of harvest—

(I)

naturally regenerated forest land;

(II)

forest land that was planted for the purpose of restoring land to a naturally regenerated forest; or

(III)

if harvested in quantities and through practices that maintain or contribute toward the restoration of the species, ecological systems, and ecological communities for which the conservation forest land was identified, conservation forest land; or

(ii)

that is—

(I)

at the time of harvest, planted forest land; and

(II)

on the date of enactment of the Thermal Renewable Energy and Efficiency Act of 2010, cropland (including fallow land), pastureland, or planted forest land.

(J)

Crops, crop byproducts, and crop residues from non-Federal land or Indian land that is—

(i)

at the time of harvest, not forest land; and

(ii)

on the date of enactment of the Thermal Renewable Energy and Efficiency Act of 2010—

(I)

cropland (including fallow land and not including planted forest land); or

(II)

pastureland.

(K)

If harvested from Federal land in accordance with applicable law and land management plans and in quantities and through practices that maintain or contribute toward the restoration of ecological sustainability—

(i)

slash; and

(ii)

brush and trees that are byproducts of ecological restoration, disease or insect infestation control, or hazardous fuels reduction treatments and—

(I)

are from stands that—

(aa)

were killed by an insect or disease epidemic or a natural disaster; and

(bb)

do not meet the utilization standards for sawtimber; or

(II)

do not exceed the minimum size standards for sawtimber.

(2)

Conservation forest land

(A)

In general

The term conservation forest land means forest land that contains a species, or includes all or part of an ecological system or community, that is at risk of extinction or elimination within a State or globally.

(B)

Identification

Conservation forest land shall be identified based on the best available science and data by any of—

(i)

the State in which the land is located, unless the land is under the jurisdiction of an Indian tribe;

(ii)

an Indian tribe with jurisdiction over the land; or

(iii)

in consultation with the State in which the land is located or the Indian tribe with jurisdiction over the land—

(I)

the Secretary of Agriculture; or

(II)

the Secretary of the Interior.

(C)

Exceptions

A tract of conservation forest land may not be removed from conservation forest land status under this section as a result of land management practices on the tract that—

(i)

occurred on or after the Thermal Renewable Energy and Efficiency Act of 2010; and

(ii)

contributed toward the elimination of the species, or all or part of an ecological system or ecological community for which the land was identified as conservation forest land.

(3)

Federal land

(A)

In general

The term Federal land means—

(i)

National Forest System land; and

(ii)

public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)).

(B)

Exclusions

(i)

In general

The term Federal land does not include—

(I)

any area designated by Congress to be administered for conservation purposes; or

(II)

a National Monument proclaimed by the President.

(ii)

Old growth or late successional forest stands

The term Federal land does not include an old growth or late successional forest stand unless biomass from the stand does not exceed the minimum size standards for sawtimber and is a byproduct of an ecological restoration treatment that fully maintains, or contributes toward the restoration of, the structure and composition of an old growth forest stand in accordance with the old growth conditions characteristic of the forest type and retains the large trees contributing to old growth structure.

(4)

Indian land

The term Indian land has the meaning given the term Indian country in section 1151 of title 18, United States Code.

(5)

Indian tribe

The term Indian tribe has the meaning given the term in section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b).

(6)

Non-Federal land

The term non- Federal land means land that is not owned by the Federal Government.

(7)

Renewable energy

The term renewable energy means energy generated from solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste, or new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project.

(8)

Secretary concerned

The term Secretary concerned means—

(A)

the Secretary of Agriculture, with regard to—

(i)

National Forest System land; and

(ii)

except as provided by subparagraph (B), non-Federal land; and

(B)

the Secretary of the Interior, with regard to—

(i)

public lands (as defined in section 103 of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702)); and

(ii)

Indian land.

.

II

Exempt facility bonds

201.

Exempt facility bonds

(a)

Definition of local district heating and cooling facilities

Subparagraph (A) of section 142(g)(2) of the Internal Revenue Code of 1986 is amended by striking a pipeline or network (which may be connected to a heating or cooling source) providing hot water, chilled water, or steam and inserting equipment for producing thermal energy in the form of hot water, chilled water or steam, distributing that thermal energy in pipelines and transferring the thermal energy.

(b)

Public use requirement

The Secretary shall promulgate regulations establishing that a local district heating or cooling facility will be treated in all events as serving a general public use for purposes of the Internal Revenue Code of 1986.

III

Energy sustainability and efficiency grants for institutions

301.

Definition of institutional entity

Section 399A(a)(5) of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1(a)(5)) is amended by inserting a not-for-profit district energy system, after utility,.

302.

Availability of grants

Section 399A(f) of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1(f)) is amended—

(1)

in paragraph (2)—

(A)

in subparagraph (A)(i), by striking $50,000 and inserting $90,000;

(B)

in subparagraph (B)(i), by striking $90,000 and inserting $150,000; and

(C)

in subparagraph (C)(i), by striking $250,000 and inserting $600,000; and

(2)

in paragraph (3)—

(A)

in subparagraph (A), by striking $1,000,000 and inserting $20,000,000; and

(B)

in subparagraph (B), by striking 60 percent and inserting 30 percent.

303.

Authorization of appropriations for grants

Section 399A(i)(1) of the Energy Policy and Conservation Act (42 U.S.C. 6371h–1(i)(1)) is amended by striking $250,000,000 for each of fiscal years 2009 through 2013 and inserting $500,000,000 for each of fiscal years 2011 through 2015.