To provide incentives to reduce dependence on foreign oil.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``New Options Petroleum Energy 
Conservation Act of 2007''.

SEC. 2. CLIMATE NEUTRAL COMBUSTION CREDIT.

    (a) In General.--Section 46 of the Internal Revenue Code of 1986 
(relating to amount of credit) is amended by striking ``and'' at the 
end of paragraph (3), by striking the period at the end of paragraph 
(4) and inserting ``, and'', and by adding at the end the following new 
paragraph:
            ``(5) the climate neutral combustion credit.''.
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 of such Code (relating to rules for computing investment 
credit) is amended by inserting after section 48B the following new 
section:

``SEC. 48C. CLIMATE NEUTRAL COMBUSTION CREDIT.

    ``(a) In General.--For purposes of section 46, the climate neutral 
combustion credit for any taxable year is an amount equal to 20 percent 
of the qualified investment for such taxable year.
    ``(b) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the 
        qualified investment for any taxable year is the basis of any 
        property placed in service by the taxpayer during such taxable 
        year which is part of a climate neutral combustion facility--
                    ``(A)(i) the construction, reconstruction, or 
                erection of which is completed by the taxpayer, or
                    ``(ii) which is acquired by the taxpayer if the 
                original use of such property commences with the 
                taxpayer, and
                    ``(B) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
            ``(2) Special rule for certain subsidized property.--Rules 
        similar to section 48(a)(4) shall apply for purposes of this 
        section.
            ``(3) Certain qualified progress expenditures rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
    ``(c) Climate Neutral Combustion Facility.--For purposes of this 
section, the term `climate neutral combustion facility' means any 
facility which--
            ``(1) burns matter to produce electricity,
            ``(2) captures the carbon dioxide released during 
        combustion and uses such carbon dioxide to recover hydrocarbon 
        fuel from below ground, and
            ``(3) produces no atmospheric emissions of mercury or 
        greenhouse gasses and no emissions that form fine particulate, 
        smog, or acid rain.
    ``(d) Denial of Double Benefit.--A credit shall not be allowed 
under this section for any qualified investment for which a credit is 
allowed under section 48A or 48B.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C) of such Code is amended by striking 
        ``and'' at the end of clause (iii), by striking the period at 
        the end of clause (iv) and inserting ``, and'', and by adding 
        at the end the following new clause:
                            ``(v) the basis of any property which is 
                        part of a qualifying climate neutral combustion 
                        facility.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48B the following new item:

``Sec. 48C. Climate neutral combustion credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

SEC. 3. EXTENSION OF ENERGY CREDIT FOR SOLAR ENERGY PROPERTY.

    (a) In General.--Paragraph (2)(A)(i)(II) and paragraph (3)(A)(ii) 
of section 48(a) of the Internal Revenue Code of 1986 (relating to 
energy credit) are each amended by striking ``2009'' and inserting 
``2013''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2008, in taxable years ending after 
such date, under rules similar to the rules of section 48(m) of the 
Internal Revenue Code of 1986 (as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990).

SEC. 4. EXTENSION OF CREDIT FOR RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) In General.--Subsection (g) of section 25D of the Internal 
Revenue Code of 1986 is amended by striking ``2008'' and inserting 
``2012''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2008.

SEC. 5. PRIZE PROGRAM.

    The Secretary of Energy shall establish a program to award a prize 
in the amount of $1,000,000,000 to the first automobile manufacturer 
incorporated in the United States to manufacture and sell in the United 
States 60,000 midsized sedan automobiles which operate on gasoline and 
can travel 100 miles per gallon.

SEC. 6. LITHIUM ION BATTERY TECHNOLOGY.

    There are authorized to be appropriated to the Secretary of Energy 
$30,000,000 for fiscal year 2007 for the development of advanced 
lithium ion battery technology.

SEC. 7. EXPENSING OF PROPERTY USED IN THE REFINING OF ETHANOL, 
              METHANOL, AND BIODIESEL.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to itemized deductions for 
individuals and corporations) is amended by inserting after section 
179E the following new section:

``SEC. 179F. ELECTION TO EXPENSE CERTAIN PROPERTY USED IN REFINING 
              ETHANOL, METHANOL, AND BIODIESEL.

    ``(a) In General.--A taxpayer may elect to treat the cost of any 
qualified biofuel property as an expense which is not chargeable to 
capital account. Any cost so treated shall be allowed as a deduction 
for the taxable year in which the property is placed in service.
    ``(b) Election.--An election under this section for any taxable 
year shall be made on the taxpayer's return of the tax imposed by this 
chapter for the taxable year. Such election shall be made in such 
manner as the Secretary may by regulations prescribe. Any election made 
under this section may not be revoked except with the consent of the 
Secretary.
    ``(c) Qualified Biofuel Property.--For purposes of this section--
            ``(1) In general.--The term `qualified biofuel property' 
        means any property--
                    ``(A) used for the refining of any biofuel, and
                    ``(B) the original use of which commences with the 
                taxpayer.
            ``(2) Biofuel.--The term `biofuel' means qualified methanol 
        or ethanol fuel (as defined in section 4041(b)(2)(B)) and 
        biodiesel (as defined in section 40A(d)).
    ``(d) Dual Use Property.--In the case of any property which is used 
for the refining of any biofuel and for any other use, the cost of such 
property taken into account under subsection (a) shall be reduced by an 
amount which bears the same ratio to the cost of such property as such 
other uses bears to all uses of such property.
    ``(e) Coordination With 50 Percent Expensing of Refineries.--
Section 179C shall not apply to any property taken into account under 
subsection (a).
    ``(f) Recapture.--Rules similar to the rules of section 179(d)(10) 
shall apply with respect to any property which ceases to be qualified 
biofuel property.''.
    (b) Conforming Amendments.--
            (1) Section 1245(a) of such Code is amended by inserting 
        ``179F,'' after ``179E,'' both places it appears in paragraphs 
        (2)(C) and (3)(C).
            (2) Section 263(a)(1) of such Code is amended by striking 
        ``or'' at the end of subparagraph (K), by striking the period 
        at the end of subparagraph (L) and inserting ``, or'', and by 
        inserting after subparagraph (L) the following new 
        subparagraph:
                    ``(M) expenditures for which a deduction is allowed 
                under section 179F.''.
            (3) Section 312(k)(3)(B) of such Code is amended by 
        striking ``or 179E'' each place it appears in the heading and 
        text and inserting ``179E, or 179F''.
            (4) The table of sections for part VI of subchapter B of 
        chapter 1 of such Code is amended by inserting after the item 
        relating to section 179E the following new item:

``Sec. 179F. Election to expense certain property used in refining 
                            ethanol, methanol, and biodiesel.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

Summary: New Options Petroleum Energy Conservation Act of 2007 - Amends the Internal Revenue Code to allow a tax credit for investment in a climate neutral combustion facility. Defines climate neutral combustion facility as any facility which: (1) burns matter to produce electricity. (2) captures and uses carbon dioxide released during combustion to recover hydrocarbon fuel. And (3) produces no emissions of mercury or greenhouse gasses and no emissions that form fine particulate, smog, or acid rain. Extends through 2012 the tax credits for investment in solar energy property and for residential energy efficient property expenditures. Directs the Secretary of Energy to establish a program to award $1 billion to the first US automobile manufacturer who manufactures and sells in the United States 60,000 midsized sedans which operate on gasoline and can travel at 100 miles per gallon. Authorizes appropriations for the development of advanced lithium ion battery technology. Allows a taxpayer election to expense biofuel refining property.