To amend the Internal Revenue Code of 1986 to provide for the treatment of bonds issued to finance renewable energy resource facilities, conservation and efficiency facilities, and other specified greenhouse gas emission technologies.

Summary: Amends the Internal Revenue Code to allow a tax exemption of the interest on bonds issued to finance renewable energy resource facilities, conservation and efficiency facilities and projects, and zero emission vehicles and related facilities or projects.

SECTION 1. TREATMENT OF BONDS ISSUED TO FINANCE RENEWABLE ENERGY 
              RESOURCE FACILITIES AND CONSERVATION AND EFFICIENCY 
              FACILITIES AND OTHER SPECIFIED GREENHOUSE GAS EMISSION 
              TECHNOLOGIES.

    (a) In General.--Section 142(a) of the Internal Revenue Code of 
1986 is amended by striking ``or'' at the end of paragraph (14), by 
striking the period at the end of paragraph (15) and inserting a comma, 
and by inserting after paragraph (15) the following new paragraphs:
            ``(16) renewable energy resource facilities,
            ``(17) conservation and efficiency facilities and projects, 
        or
            ``(18) zero emission vehicles and related facilities or 
        projects.''.
    (b) Renewable Energy Resource Facility.--Section 142 of such Code 
is further amended by adding at the end the following new subsection:
    ``(n) Renewable Energy Resource Facilities.--For purposes of 
subsection (a)(16)--
            ``(1) In general.--The term `renewable energy resource 
        facility' means--
                    ``(A) any facility used to produce electric or 
                thermal energy (including a distributed generation 
                facility) from--
                            ``(i) solar, wind, or geothermal energy,
                            ``(ii) marine and hydrokinetic renewable 
                        energy,
                            ``(iii) incremental hydropower,
                            ``(iv) biomass (as defined in section 
                        203(b) of the Energy Policy Act of 2005 (42 
                        U.S.C. 15852(b))), or
                            ``(v) landfill gas, or
                    ``(B) any facility or project used for the 
                manufacture of facilities referred to in subparagraph 
                (A).
            ``(2) Definitions.--For purposes of paragraph (1)--
                    ``(A) Geothermal energy.--The term `geothermal 
                energy' means energy derived from a geothermal deposit 
                (within the meaning of section 613(e)(2)) or from 
                geothermal heat pumps.
                    ``(B) Marine and hydrokinetic renewable energy.--
                The term `marine and hydrokinetic renewable energy' has 
                the meaning given such term in section 45(c)(10).
                    ``(C) Incremental hydropower.--The term 
                `incremental hydropower' means additional energy 
                generated as a result of efficiency improvements or 
                capacity additions to existing hydropower facilities 
                made on or after the date of enactment of this 
                subsection. The term `incremental hydropower' does not 
                include additional energy generated as a result of 
                operational changes not directly associated with 
                efficiency improvements or capacity additions.''.
    (c) Conservation and Efficiency.--Section 142 of such Code is 
amended by adding at the end the following new subsection:
    ``(o) Conservation and Efficiency Facilities and Projects.--For 
purposes of subsection (a)(17), the term `conservation and efficiency 
facility and project' means--
            ``(1) any facility used for the conservation or the 
        efficient use of energy, including energy efficient 
        retrofitting of existing buildings, or for the efficient 
        storage, transmission, or distribution of energy, including any 
        facility or project designed to implement smart grid 
        technologies (as described in title XIII of the Energy 
        Independence and Security Act of 2007, or individual components 
        of such technologies as listed in section 1301 of such Act),
            ``(2) any facility used for the conservation of or the 
        efficient use of water, including--
                    ``(A) any facility or project designed to--
                            ``(i) reduce the demand for water,
                            ``(ii) improve efficiency in use and reduce 
                        losses and waste of water, and
                            ``(iii) improve land management practices 
                        to conserve water, or
                    ``(B) any individual component of a facility or 
                project referred to in subparagraph (A), or
            ``(3) any facility or project used for the manufacture of 
        facilities referred to in paragraphs (1) and (2).
For purposes of paragraph (2)(A), facilities and projects does not 
include facilities or projects that store water.''.
    (d) Zero Emission Vehicles and Related Facilities or Projects.--
Section 142 of such Code is amended by adding at the end the following 
new subsection:
    ``(p) Zero Emission Vehicles and Related Facilities or Projects.--
            ``(1) Zero emission vehicles.--The term `zero emission 
        vehicles' means vehicles that have no tailpipe emissions, 
        evaporative emissions, or onboard emission-control systems that 
        can deteriorate over time.
            ``(2) Facilities related to zero emission vehicles.--A 
        facility or project is related to a zero emission vehicle if 
        the facility is any real or personal property to be used in the 
        design, technology transfer, manufacture, production, assembly, 
        distribution, or service of zero emission vehicles.''.
    (e) Coordination With Section 45.--Paragraph (3) of section 45(b) 
of such Code is amended by adding at the end the following new 
sentence: ``Clause (ii) of subparagraph (A) shall not apply with 
respect to (I) any qualified facility that is a renewable energy 
resource facility described in section 142(a)(16), (II) any qualified 
facility that is a conservation and efficiency facility described in 
section 142(a)(17), or (III) any qualified facility that is a zero 
emission vehicle and related facility or project described in section 
142(a)(18).''.
    (f) Coordination With Section 45K.--Subparagraph (A) of section 
45K(b)(3) of such Code is amended by adding at the end the following 
flush sentence: ``Clause (i)(II) shall not apply with respect to (aa) 
any qualified facility that is a renewable energy resource facility 
described in section 142(a)(16), (bb) any qualified facility that is a 
conservation and efficiency facility described section 142(a)(17), or 
(cc) any qualified facility that is a zero emission vehicle and related 
facility or project described in section 142(a)(18).''.
    (g) Coordination With Section 146(g)(3).--Section 146(g)(3) is 
amended by striking ``or (15)'' and all that follows through the end of 
the paragraph and inserting ``(15), (16), (17), or (18)''.
    (h) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.