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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 2571 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 2571

 To promote energy production and conservation, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             April 6, 2006

  Mr. Conrad introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL

 
 To promote energy production and conservation, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Breaking Our Long-
Term Dependence Energy Act of 2006'' or the ``BOLD Energy Act of 
2006''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
                     TITLE I--VEHICLE FUEL ECONOMY

Sec. 101. National automobile fuel efficiency rebate program.
Sec. 102. Research and development program for lightweight materials.
Sec. 103. Tire efficiency program.
Sec. 104. Idling reduction tax credit.
                  TITLE II--ALTERNATIVE FUEL VEHICLES

Sec. 201. Promotion of advanced technology motor vehicles.
Sec. 202. Research and development program for new vehicle 
                            technologies.
Sec. 203. Consumer incentives to purchase advanced technology vehicles.
Sec. 204. Extension of full credit for qualified electric vehicles.
                      TITLE III--ALTERNATIVE FUELS

Sec. 301. Biofuels.
Sec. 302. Continuation of bioenergy program.
Sec. 303. Renewable fuel standard.
Sec. 304. Minimum quantity of renewable fuel derived from cellulosic 
                            biomass.
Sec. 305. Minimum quantity of renewable fuel derived from sugar.
Sec. 306. Ethanol promotion program.
Sec. 307. Renewable fuel program for the diesel motor pool.
Sec. 308. Extension and modification of income and excise tax credits 
                            for renewable fuels.
Sec. 309. Domestic refinery diversification.
Sec. 310. Transition to a hydrogen-based economy.
Sec. 311. Modification and extension of alternative vehicle refueling 
                            property credit.
Sec. 312. Use of native grasses on conservation reserve land for 
                            biomass harvesting.
Sec. 313. Use of CAFE penalties to build alternative fueling 
                            infrastructure.
          TITLE IV--DOMESTIC PRODUCTION OF OIL AND NATURAL GAS

Sec. 401. Modifications to enhanced oil recovery credit.
Sec. 402. Offshore oil and gas leasing in 181 Area of Gulf of Mexico.
                  TITLE V--ELECTRICITY AND RENEWABLES

Sec. 501. DOE national and North American electricity grid studies.
Sec. 502. Tax-exempt financing of electric transmission facilities not 
                            subject to private business use test.
Sec. 503. Extension of credit for producing electricity from certain 
                            renewable resources.
Sec. 504. Federal renewable portfolio standard.
Sec. 505. Extension and expansion of clean renewable energy bonds.
Sec. 506. Credit for wind energy property installed in residences and 
                            businesses.
Sec. 507. Extension of business solar investment credit.
Sec. 508. Extension of credit residential energy efficient property.
Sec. 509. Clean energy coal bonds.
Sec. 510. Increase in credit limitation for qualifying gasification 
                            projects.
Sec. 511. Modification of qualifying advanced coal project credit.
Sec. 512. Great Plains Synfuels Trust.
                      TITLE VI--ENERGY EFFICIENCY

Sec. 601. Energy credit for combined heat and power system property.
Sec. 602. Extension of new energy efficient home credit.
Sec. 603. Modification and extension of energy efficient commercial 
                            buildings deduction.
Sec. 604. Extension of nonbusiness energy property.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress finds that--
            (1) the dependence of the United States on foreign oil is 
        projected to remain dangerously high over the next few decades 
        unless serious action is taken;
            (2) over \1/3\ of the trade deficit of the United States 
        over the last year is because of imported petroleum products;
            (3) oil prices in the United States have risen more than 95 
        percent over the last 2 years and are projected to remain at, 
        or exceed, historically high levels for the foreseeable future;
            (4) Brazil has drastically decreased oil imports by 
        aggressively promoting biofuels and flexible fuel vehicles;
            (5) using renewable energy, promoting clean coal 
        technology, and offering incentives for energy efficiency will 
        improve air quality and reduce the demand for imported natural 
        gas;
            (6) transmission capacity constraints prevent some regions 
        of the United States from fully developing domestic energy 
        resources;
            (7) the United States has abundant domestic resources to 
        create alternative fuels that will dramatically lessen 
        dependence on foreign oil;
            (8) increasing funding for research, development, and 
        commercialization of new energy technologies will enable the 
        United States to significantly reduce the reliance of the 
        United States on foreign energy suppliers;
            (9) a bold energy plan to make the United States more 
        energy-independent should be implemented immediately; and
            (10) a bold and comprehensive energy plan will help keep 
        energy prices affordable for consumers in the United States.
    (b) Purposes.--The purposes of this Act are--
            (1) to reduce the dependence of the United States on 
        foreign oil;
            (2) to expand the production and use of alternative fuels 
        and alternative fuel vehicles;
            (3) to promote the development of renewable energy sources 
        for electricity production;
            (4) to encourage responsible development of domestic fossil 
        fuel resources; and
            (5) to reward consumers and businesses for conservation and 
        energy efficiency.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Battery.--The term ``battery'' means an energy storage 
        device used in an on-road or nonroad vehicle powered in whole 
        or in part using an off-board or on-board source of 
        electricity.
            (2) Carbon capture capability.--The term ``carbon capture 
        capability'' means a 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, which would otherwise be 
        emitted in the flue gas from a project that uses a nonrenewable 
        fuel.
            (3) CTL.--The term ``CTL'' means the Coal-To-Liquid 
        process, by which any grade of coal is transformed into a 
        liquid transportation fuel.
            (4) CTL refinery.--The term ``CTL refinery'' means a 
        facility at which coal is transformed into liquid 
        transportation fuel through CTL.
            (5) Electric drive transportation technology.--The term 
        ``electric drive transportation technology'' means technology 
        used by vehicles that use an electric motor for all or part of 
        their motive power and that may or may not use off-board 
        electricity, such as battery electric vehicles, fuel cell 
        vehicles, engine dominant hybrid electric vehicles, plug-in 
        hybrid electric vehicles, and plug-in hybrid fuel cell 
        vehicles.
            (6) Engine dominant hybrid electric vehicle.--The term 
        ``engine dominant hybrid electric vehicle'' means an on-road or 
        nonroad vehicle that--
                    (A) is propelled by an internal combustion engine 
                or heat engine using--
                            (i) any combustible fuel; and
                            (ii) an on-board, rechargeable storage 
                        device; and
                    (B) has no means of using an off-board source of 
                electricity.
            (7) Fuel cell vehicle.--The term ``fuel cell vehicle'' 
        means an on-road or nonroad vehicle that uses a fuel cell (as 
        defined in section 803 of the Spark M. Matsunaga Hydrogen Act 
        of 2005 (42 U.S.C. 16152)).
            (8) Military mission line.--The term ``Military Mission 
        Line'' means the north-south line at 8641' W. longitude.
            (9) National transmission grid.--The term ``national 
        transmission grid'' means new overlaying facilities or upgrades 
        to existing interstate transmission facilities in the United 
        States necessary for integrating and operating with the 
        existing transmission grid.
            (10) North american transmission grid.--The term ``North 
        American transmission grid'' means new overlaying facilities or 
        upgrades to existing interstate transmission facilities in 
        North America necessary for integrating and operating with the 
        existing transmission grid.
            (11) Nonroad vehicle.--The term ``nonroad vehicle'' has the 
        meaning given the term in section 216 of the Clean Air Act (42 
        U.S.C. 7550).
            (12) 181 area.--The term ``181 Area'' means the area 
        identified in map 15, page 58, of the Proposed Final Outer 
        Continental Shelf Oil and Gas Leasing Program for 1997-2002 of 
        the Minerals Management Service.
            (13) Plug-in hybrid electric vehicle.--The term ``plug-in 
        hybrid electric vehicle'' means an on-road or nonroad vehicle 
        that is propelled by an internal combustion engine or heat 
        engine that--
                    (A) uses--
                            (i) any combustible fuel; and
                            (ii) an on-board, rechargeable storage 
                        device; and
                    (B) has a means of using an off-board source of 
                electricity.
            (14) Plug-in hybrid fuel cell vehicle.--The term ``plug-in 
        hybrid fuel cell vehicle'' means a fuel cell vehicle with a 
        battery powered by an off-board source of electricity.
            (15) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

                     TITLE I--VEHICLE FUEL ECONOMY

SEC. 101. NATIONAL AUTOMOBILE FUEL EFFICIENCY REBATE PROGRAM.

    (a) In General.--Chapter 329 of title 49, United States Code, is 
amended--
            (1) in section 32901(a)--
                    (A) by redesignating paragraphs (10) through (16) 
                as paragraphs (14) through (20), respectively;
                    (B) by redesignating paragraphs (7) through (9) as 
                paragraphs (10) through (12), respectively;
                    (C) by inserting after paragraph (6) the following:
            ``(7) `baseline fuel consumption level' is calculated by 
        dividing 1 by the baseline fuel economy;
            ``(8) `baseline fuel economy', for a particular class of 
        vehicle in a particular model year, means 110 percent of the 
        combined average fuel economy for such class of vehicle in the 
        previous model year;
            ``(9) `combined average fuel economy' means--
                    ``(A) as applied to automobiles (except passenger 
                automobiles), the weighted average fuel economy of all 
                manufacturers calculated under section 32904(a)(1)(A); 
                and
                    ``(B) as applied to passenger automobiles, the 
                weighted average fuel economy of all manufacturers 
                calculated under section 32904(a)(1)(B),
        except that such calculation shall be determined on a gallons 
        per mile basis, and in the case of dual fueled automobiles, the 
        calculation of average fuel economy shall not be adjusted as 
        set forth under section 32905(b);''; and
                    (D) by inserting after paragraph (12), as 
                redesignated, the following:
            ``(13) `fuel consumption level' is calculated by dividing 1 
        by the fuel economy''; and
            (2) by inserting after section 32903 the following:

``SEC. 32903A. REBATES FOR REDUCING FUEL CONSUMPTION LEVELS.

    ``(a) Eligibility.--A consumer is eligible for a rebate under this 
section if the consumer originally places an automobile into service in 
the United States that attains or exceeds the baseline fuel economy.
    ``(b) Rebate Amount.--An eligible consumer who submits a rebate 
request to the Secretary of the Transportation, in accordance with the 
regulations promulgated pursuant to subsection (c), shall be awarded a 
rebate in an amount equal to--
            ``(1) $500, if the automobile placed in service by the 
        consumer has a fuel consumption level that equals the baseline 
        fuel consumption level or is lower than the baseline fuel 
        consumption level by less than 0.005 gallons per mile;
            ``(2) $1,000, if the automobile placed in service by the 
        consumer has a fuel consumption level that is lower than the 
        baseline fuel consumption level by at least 0.005 gallons per 
        mile and less than 0.010 gallons per mile;
            ``(3) $1,500, if the automobile placed in service by the 
        consumer has a fuel consumption level that is lower than the 
        baseline fuel consumption level by at least 0.010 gallons per 
        mile and less than 0.015 gallons per mile;
            ``(4) $2,000, if the automobile placed in service by the 
        consumer has a fuel consumption level that is lower than the 
        baseline fuel consumption level by at least 0.015 gallons per 
        mile and less than 0.020 gallons per mile; and
            ``(5) $2,500, if the automobile placed in service by the 
        consumer has a fuel consumption level that is lower than the 
        baseline fuel consumption level by at least 0.020 gallons per 
        mile.
For purposes of this subsection, the Secretary shall calculate fuel 
economy based on a gallons per mile standard.
    ``(c) Rulemaking.--
            ``(1) In general.--The Secretary of Transportation shall 
        promulgate regulations to carry out this section.
            ``(2) Rebate notices.--In promulgating regulations pursuant 
        to this subsection, the Secretary of Transportation shall 
        ensure that--
                    ``(A) information about the rebates available under 
                this section is provided to the public, expressed in 
                miles per gallon;
                    ``(B) a notice of the amount of the rebate 
                available under this section is posted on each 
                automobile that qualifies for such rebate; and
                    ``(C) a rebate check in an amount determined under 
                subsection (b) is sent directly to each consumer who 
                demonstrates eligibility under subsection (a).''.
    (b) Coordination With Vehicle Tax Credits.--
            (1) Alternative motor vehicle tax credit.--Section 30B(h) 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new paragraph:
            ``(11) Coordination with rebates.--No credit shall be 
        allowed under this section to any taxpayer with respect to any 
        motor vehicle if such taxpayer receives a rebate under section 
        32903A of title 49, United States Code.''.
            (2) Credit for qualified electric vehicles.--Section 30(d) 
        of the Internal Revenue Code of 1986 is amended by adding at 
        the end the following new paragraph:
            ``(5) Coordination with rebates.--No credit shall be 
        allowed under this section to any taxpayer with respect to any 
        motor vehicle if such taxpayer receives a rebate under section 
        32903A of title 49, United States Code.''.
    (c) Study.--
            (1) In general.--The Secretary of Transportation shall 
        undertake a study to compare and evaluate the effectiveness of 
        the rebates under section 32903A of title 49, United States 
        Code, and the credits under sections 30 and 30B of the Internal 
        Revenue Code of 1986. The study shall include--
                    (A) an evaluation of the rebates under such section 
                32903A and the effectiveness of such rebates in 
                improving the average fuel economy of automobiles 
                purchased in the United States; and
                    (B) an evaluation of the credits under such 
                sections 30 and 30B and the effectiveness of such 
                credits in increasing purchases of electric vehicles, 
                new qualified hybrid vehicles, and advanced lean burn 
                technology vehicles.
            (2) Report.--Not later than December 31, 2009, the 
        Secretary of Transportation shall transmit to the President and 
        to Congress a written report presenting the results of the 
        study conducted pursuant to this subsection. The report shall 
        include--
                    (A) recommendations for changes in the rebate 
                structure under such section 32903A to further improve 
                the average fuel economy of automobiles purchased in 
                the United States;
                    (B) recommendations for changes in the credits 
                under such sections 30 and 30B to further increase the 
                purchases of alternative fuel and lean burn technology 
                vehicles that lessen the United States dependence on 
                imported foreign oil; and
                    (C) recommendations for consolidating such rebates 
                and credits into one unified incentive structure for 
                the purchase of automobiles that will further reduce 
                such dependence.
    (d) Clerical Amendment.--The table of sections in chapter 329 of 
title 49, United States Code, is amended by inserting after the item 
relating to section 32903 the following:

        ``Sec. 32903A. Rebates for reducing fuel consumption levels.''.

SEC. 102. RESEARCH AND DEVELOPMENT PROGRAM FOR LIGHTWEIGHT MATERIALS.

    There are authorized to be appropriated to the Secretary for 
research and development relating to carbon-fiber composites and 
lightweight steel alloys to reduce the weight of automobiles--
            (1) $33,750,000 for fiscal year 2007;
            (2) $40,000,000 for fiscal year 2008;
            (3) $47,250,000 for fiscal year 2009;
            (4) $54,000,000 for fiscal year 2010; and
            (5) $60,000,000 for fiscal year 2011.

SEC. 103. TIRE EFFICIENCY PROGRAM.

    (a) Standards for Tires Manufactured for Interstate Commerce.--
Section 30123 of title 49, United States Code, is amended--
            (1) in subsection (b)--
                    (A) in the first sentence, by striking ``The 
                Secretary'' and inserting the following:
            ``(1) Uniform quality grading system.--The Secretary'';
                    (B) in the second sentence, by striking ``The 
                Secretary'' and inserting the following:
            ``(2) Nomenclature and marketing practices.--The 
        Secretary'';
                    (C) in the third sentence, by striking ``A tire 
                standard'' and inserting the following:
            ``(3) Effect of standards and regulations.--A tire 
        standard''; and
            (2) by adding at the end the following:
    ``(d) National Tire Efficiency Program.--
            ``(1) Definition.--In this subsection, the term `tire 
        efficiency', with respect to a tire, means the extent to which 
        the tire contributes to the fuel economy of the motor vehicle 
        on which the tire is mounted.
            ``(2) Program.--The Secretary shall develop and carry out a 
        national tire efficiency program for tires designed for use on 
        passenger cars and light trucks.
            ``(3) Requirements.--Not later than March 31, 2007, the 
        Secretary shall issue regulations, which establish--
                    ``(A) policies and procedures for testing and 
                labeling tires for fuel economy to enable tire buyers 
                to make informed purchasing decisions about the fuel 
                economy of tires; and
                    ``(B) policies and procedures to promote the 
                purchase of energy efficient replacement tires, 
                including purchase incentives, website listings on the 
                Internet, printed fuel economy guide booklets, and 
                mandatory requirements for tire retailers to provide 
                tire buyers with fuel efficiency information on tires.
            ``(4) Applicability.--The policies, procedures, and 
        standards developed under paragraph (3) shall apply to all tire 
        types and models regulated under the uniform tire quality 
        grading standards in section 575.104 of title 49, Code of 
        Federal Regulations, as in effect on the date of enactment of 
        this Act (or a successor regulation).
            ``(5) No preemption of state law.--Nothing in this section 
        shall be construed to preempt any provision of State law 
        relating to higher fuel economy standards applicable to 
        replacement tires designed for use on passenger cars and light 
        trucks.
            ``(6) Exceptions.--Nothing in this section shall apply to--
                    ``(A) a tire or group of tires with the same stock 
                keeping unit, plant, and year, for which the volume of 
                tires produced or imported is less than 15,000 
                annually;
                    ``(B) a deep tread, winter-type snow tire, space-
                saver tire, or temporary use spare tire;
                    ``(C) a tire with a normal rim diameter of 12 
                inches or less;
                    ``(D) a motorcycle tire; or
                    ``(E) a tire manufactured specifically for use in 
                an off-road motorized recreational vehicle.''.
    (b) Conforming Amendment.--Section 30103(b)(1) of title 49, United 
States Code, is amended by striking ``When'' and inserting ``Except as 
provided in section 30123(d), if''.
    (c) Time for Implementation.--Beginning not later than March 31, 
2007, the Secretary of Transportation shall administer the national 
tire efficiency program established under section 30123(d) of title 49, 
United States Code, in accordance with the policies, procedures, and 
standards developed under section 30123(d)(3) of such title.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated, for each of the fiscal years 2007 through 2011, such sums 
as may be necessary to carry out section 30123(d) of title 49, United 
States Code, as added by subsection (a).

SEC. 104. IDLING REDUCTION TAX CREDIT.

    (a) 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:

``SEC. 45N. IDLING REDUCTION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the idling 
reduction tax credit determined under this section for the taxable year 
is an amount equal to 25 percent of the amount paid or incurred for 
each qualifying idling reduction device placed in service by the 
taxpayer during the taxable year.
    ``(b) Limitation.--The maximum amount allowed as a credit under 
subsection (a) shall not exceed $1,000 per device.
    ``(c) Definitions.--For purposes of subsection (a)--
            ``(1) Qualifying idling reduction device.--The term 
        `qualifying idling reduction device' means any device or system 
        of devices that--
                    ``(A) is installed on a heavy-duty diesel-powered 
                on-highway vehicle,
                    ``(B) is designed to provide to such vehicle those 
                services (such as heat, air conditioning, or 
                electricity) that would otherwise require the operation 
                of the main drive engine while the vehicle is 
                temporarily parked or remains stationary,
                    ``(C) the original use of which commences with the 
                taxpayer,
                    ``(D) is acquired for use by the taxpayer and not 
                for resale, and
                    ``(E) is certified by the Secretary of Energy, in 
                consultation with the Administrator of the 
                Environmental Protection Agency and the Secretary of 
                Transportation, to reduce long-duration idling of such 
                vehicle at a motor vehicle rest stop or other location 
                where such vehicles are temporarily parked or remain 
                stationary.
            ``(2) Heavy-duty diesel-powered on-highway vehicle.--The 
        term `heavy-duty diesel-powered on-highway vehicle' means any 
        vehicle, machine, tractor, trailer, or semi-trailer propelled 
        or drawn by mechanical power and used upon the highways in the 
        transportation of passengers or property, or any combination 
        thereof determined by the Federal Highway Administration.
            ``(3) Long-duration idling.--The term `long-duration 
        idling' means the operation of a main drive engine, for a 
        period greater than 15 consecutive minutes, where the main 
        drive engine is not engaged in gear. Such term does not apply 
        to routine stoppages associated with traffic movement or 
        congestion.
    ``(d) No Double Benefit.--For purposes of this section--
            ``(1) Reduction in basis.--If a credit is determined under 
        this section with respect to any property by reason of 
        expenditures described in subsection (a), the basis of such 
        property shall be reduced by the amount of the credit so 
        determined.
            ``(2) Other deductions and credits.--No deduction or credit 
        shall be allowed under any other provision of this chapter with 
        respect to the amount of the credit determined under this 
        section.
    ``(e) Election Not to Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.''.
    (b) Credit to Be Part of General Business Credit.--Subsection (b) 
of section 38 of the Internal Revenue Code of 1986 (relating to general 
business credit) is amended by striking ``and'' at the end of paragraph 
(29), by striking the period at the end of paragraph (30) and inserting 
``, plus'' , and by adding at the end the following new paragraph:
            ``(31) the idling reduction tax credit determined under 
        section 45N(a).''.
    (c) Conforming Amendments.--
            (1) 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 inserting after the item relating to section 45M 
        the following new item:

``Sec. 45N. Idling reduction credit.''.
            (2) Section 1016(a) of such Code is amended by striking 
        ``and'' at the end of paragraph (36), by striking the period at 
        the end of paragraph (37) and inserting ``, and'', and by 
        adding at the end the following:
            ``(38) in the case of a facility with respect to which a 
        credit was allowed under section 45N, to the extent provided in 
        section 45N(d)(A).''.
            (3) Section 6501(m) of such Code is amended by inserting 
        ``45N(e),'' after ``45D(c)(4),''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.
    (e) Determination of Certification Standards by Secretary of Energy 
for Certifying Idling Reduction Devices.--Not later than 6 months after 
the date of the enactment of this Act and in order to reduce air 
pollution and fuel consumption, the Secretary of Energy, in 
consultation with the Administrator of the Environmental Protection 
Agency and the Secretary of Transportation, shall publish the standards 
under which the Secretary, in consultation with the Administrator of 
the Environmental Protection Agency and the Secretary of 
Transportation, will, for purposes of section 45N of the Internal 
Revenue Code of 1986 (as added by this section), certify the idling 
reduction devices which will reduce long-duration idling of vehicles at 
motor vehicle rest stops or other locations where such vehicles are 
temporarily parked or remain stationary in order to reduce air 
pollution and fuel consumption.

                  TITLE II--ALTERNATIVE FUEL VEHICLES

SEC. 201. PROMOTION OF ADVANCED TECHNOLOGY MOTOR VEHICLES.

    (a) Purposes.--It is the purpose of this section--
            (1) to facilitate the production of advanced technology 
        motor vehicles capable of lessening our dependence on foreign 
        oil, and
            (2) to ensure that domestic and foreign automakers receive 
        adequate incentives in the form of a manufacturing tax credit 
        or equivalent employee healthcare cost relief to meet the 
        vehicle fleet requirements established under subsection (b).
    (b) Production Requirements.--Section 32905 of title 49, United 
States Code, is amended by adding at the end the following:
    ``(h) Alternative Fueled Automobiles.--Each manufacturer that 
manufactures automobiles for sale or use in the United States shall 
ensure that--
            ``(1) beginning in model year 2011, not less than 30 
        percent of such automobiles are advanced technology motor 
        vehicles (as defined in section 30D(c)(1) of the Internal 
        Revenue Code of 1986); and
            ``(2) beginning in model year 2017, all such automobiles 
        are advanced technology motor vehicles (as so defined).''.
    (c) Incentives for Production Requirements.--
            (1) Advanced technology motor vehicles manufacturing 
        credit.--
                    (A) In general.--Subpart B of part IV of subchapter 
                A of chapter 1 of the Internal Revenue Code of 1986 
                (relating to foreign tax credit, etc.) is amended by 
                adding at the end the following new section:

``SEC. 30D. ADVANCED TECHNOLOGY MOTOR VEHICLES MANUFACTURING CREDIT.

    ``(a) Credit Allowed.--
            ``(1) In general.--There shall be allowed as a credit 
        against the tax imposed by this chapter for the taxable year an 
        amount equal to 35 percent of the qualified investment of an 
        eligible taxpayer for such taxable year.
            ``(2) Limitation.--The amount of the credit allowed under 
        paragraph (1) for any taxable year shall not exceed 
        $250,000,000.
    ``(b) Qualified Investment.--For purposes of this section--
            ``(1) In general.--The qualified investment for any taxable 
        year is equal to the incremental costs incurred during such 
        taxable year--
                    ``(A) to re-equip, expand, or establish any 
                manufacturing facility of the eligible taxpayer to 
                produce advanced technology motor vehicles or to 
                produce eligible components,
                    ``(B) for engineering integration of such vehicles 
                and components as described in subsection (d),
                    ``(C) for research and development related to 
                advanced technology motor vehicles and eligible 
                components, and
                    ``(D) for employee retraining with respect to the 
                manufacturing of such vehicles or components 
                (determined without regard to wages or salaries of such 
                retrained employees).
            ``(2) Attribution rules.--In the event a facility of the 
        eligible taxpayer produces both advanced technology motor 
        vehicles and conventional motor vehicles, or eligible and non-
        eligible components, only the qualified investment attributable 
        to production of advanced technology motor vehicles and 
        eligible components shall be taken into account.
    ``(c) Advanced Technology Motor Vehicles and Eligible Components.--
For purposes of this section--
            ``(1) Advanced technology motor vehicle.--The term 
        `advanced technology motor vehicle' means--
                    ``(A) any qualified electric vehicle (as defined in 
                section 30(c)(1)),
                    ``(B) any new qualified fuel cell motor vehicle (as 
                defined in section 30B(b)(3)),
                    ``(C) any new advanced lean burn technology motor 
                vehicle (as defined in section 30B(c)(3)),
                    ``(D) any new qualified hybrid motor vehicle (as 
                defined in section 30B(d)(2)(A) and determined without 
                regard to any gross vehicle weight rating),
                    ``(E) any new qualified alternative fuel motor 
                vehicle (as defined in section 30B(e)(4), including any 
                mixed-fuel vehicle (as defined in section 
                30B(e)(5)(B)), and
                    ``(F) any other motor vehicle using electric drive 
                transportation technology (as defined in section 201(2) 
                of the Breaking Our Long-Term Dependence Energy Act of 
                2006).
            ``(2) Eligible components.--The term `eligible component' 
        means any component inherent to any advanced technology motor 
        vehicle, including--
                    ``(A) with respect to any gasoline or diesel-
                electric new qualified hybrid motor vehicle--
                            ``(i) electric motor or generator,
                            ``(ii) power split device,
                            ``(iii) power control unit,
                            ``(iv) power controls,
                            ``(v) integrated starter generator, or
                            ``(vi) battery,
                    ``(B) with respect to any hydraulic new qualified 
                hybrid motor vehicle--
                            ``(i) hydraulic accumulator vessel,
                            ``(ii) hydraulic pump, or
                            ``(iii) hydraulic pump-motor assembly,
                    ``(C) with respect to any new advanced lean burn 
                technology motor vehicle--
                            ``(i) diesel engine,
                            ``(ii) turbocharger,
                            ``(iii) fuel injection system, or
                            ``(iv) after-treatment system, such as a 
                        particle filter or NOx absorber, and
                    ``(D) with respect to any advanced technology motor 
                vehicle, any other component submitted for approval by 
                the Secretary.
    ``(d) Engineering Integration Costs.--For purposes of subsection 
(b)(1)(B), costs for engineering integration are costs incurred prior 
to the market introduction of advanced technology vehicles for 
engineering tasks related to--
            ``(1) establishing functional, structural, and performance 
        requirements for component and subsystems to meet overall 
        vehicle objectives for a specific application,
            ``(2) designing interfaces for components and subsystems 
        with mating systems within a specific vehicle application,
            ``(3) designing cost effective, efficient, and reliable 
        manufacturing processes to produce components and subsystems 
        for a specific vehicle application, and
            ``(4) validating functionality and performance of 
        components and subsystems for a specific vehicle application.
    ``(e) Eligible Taxpayer.--For purposes of this section, the term 
`eligible taxpayer' means any taxpayer--
            ``(1) for which more than 50 percent of its gross receipts 
        for the taxable year is derived from the manufacture of motor 
        vehicles or any component parts of such vehicles, and
            ``(2) which has not submitted an application for financial 
        assistance under the program established under section 
        201(b)(2) of the Breaking Our Long-Term Dependence Energy Act 
        of 2006.
    ``(f) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for the taxable year shall not exceed the excess of--
            ``(1) the sum of--
                    ``(A) the regular tax liability (as defined in 
                section 26(b)) for such taxable year, plus
                    ``(B) the tax imposed by section 55 for such 
                taxable year and any prior taxable year beginning after 
                1986 and not taken into account under section 53 for 
                any prior taxable year, over
            ``(2) the sum of the credits allowable under subpart A and 
        sections 27, 30, and 30B for the taxable year.
    ``(g) Reduction in Basis.--For purposes of this subtitle, if a 
credit is allowed under this section for any expenditure with respect 
to any property, the increase in the basis of such property which would 
(but for this paragraph) result from such expenditure shall be reduced 
by the amount of the credit so allowed.
    ``(h) No Double Benefit.--
            ``(1) Coordination with other deductions and credits.--
        Except as provided in paragraph (2), the amount of any 
        deduction or other credit allowable under this chapter for any 
        cost taken into account in determining the amount of the credit 
        under subsection (a) shall be reduced by the amount of such 
        credit attributable to such cost.
            ``(2) Research and development costs.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), any amount described in subsection 
                (b)(1)(C) taken into account in determining the amount 
                of the credit under subsection (a) for any taxable year 
                shall not be taken into account for purposes of 
                determining the credit under section 41 for such 
                taxable year.
                    ``(B) Costs taken into account in determining base 
                period research expenses.--Any amounts described in 
                subsection (b)(1)(C) taken into account in determining 
                the amount of the credit under subsection (a) for any 
                taxable year which are qualified research expenses 
                (within the meaning of section 41(b)) shall be taken 
                into account in determining base period research 
                expenses for purposes of applying section 41 to 
                subsequent taxable years.
    ``(i) Business Carryovers Allowed.--If the credit allowable under 
subsection (a) for a taxable year exceeds the limitation under 
subsection (f) for such taxable year, such excess (to the extent of the 
credit allowable with respect to property subject to the allowance for 
depreciation) shall be allowed as a credit carryback and carryforward 
under rules similar to the rules of section 39.
    ``(j) Special Rules.--For purposes of this section, rules similar 
to the rules of paragraphs (4) and (5) of section 179A(e) and 
paragraphs (1) and (2) of section 41(f) shall apply
    ``(k) Election Not to Take Credit.--No credit shall be allowed 
under subsection (a) for any property if the taxpayer elects not to 
have this section apply to such property.
    ``(l) Regulations.--The Secretary shall prescribe such regulations 
as necessary to carry out the provisions of this section.
    ``(m) Termination.--This section shall not apply to any qualified 
investment after December 31, 2015.''.
                    (B) Conforming amendments.--
                            (i) Section 1016(a) of the Internal Revenue 
                        Code of 1986, as amended by this Act, is 
                        amended by striking ``and'' at the end of 
                        paragraph (37), by striking the period at the 
                        end of paragraph (38) and inserting ``, and'', 
                        and by adding at the end the following new 
                        paragraph:
            ``(39) to the extent provided in section 30D(g).''.
                            (ii) Section 6501(m) of such Code, as 
                        amended by this Act, is amended by inserting 
                        ``30D(k),'' after ``30C(e)(5),''.
                            (iii) The table of sections for subpart B 
                        of part IV of subchapter A of chapter 1 of such 
                        Code is amended by inserting after the item 
                        relating to section 30C the following new item:

``Sec. 30D. Advanced technology motor vehicles manufacturing credit.''.
                    (C) Effective date.--The amendments made by this 
                paragraph shall apply to amounts incurred in taxable 
                years beginning after December 31, 2006.
            (2) Advanced technology motor vehicle manufacturer 
        healthcare relief program.--
                    (A) Coordinating task force.--Not later than 6 
                months after the date of enactment of this Act, the 
                Secretary of Energy, the Secretary of Health and Human 
                Services, the Secretary of Transportation, and the 
                Secretary of the Treasury shall establish, and appoint 
                an equal number of representatives to, a task force 
                (referred to in this paragraph as the ``task force'') 
                to administer the program established under this 
                paragraph.
                    (B) Establishment of program.--
                            (i) In general.--Not later than 1 year 
                        after the date of enactment of this Act, the 
                        task force established under subparagraph (A) 
                        shall establish a program to provide financial 
                        assistance to eligible domestic automobile 
                        manufacturers for the costs incurred in 
                        providing health benefits to their retired 
                        employees.
                            (ii) Consultation.--In establishing the 
                        program under clause (i), the task force shall 
                        consult with representatives from the domestic 
                        automobile manufacturers, unions representing 
                        employees of such manufacturers, and consumer 
                        and environmental groups.
                    (C) Eligible domestic automobile manufacturer.--To 
                be eligible to receive financial assistance under the 
                program established under subparagraph (B), a domestic 
                automobile manufacturer shall--
                            (i) submit an application to the task force 
                        at such time, in such manner, and containing 
                        such information as the task force shall 
                        require;
                            (ii) certify that such manufacturer is 
                        providing full health care coverage to all of 
                        its domestic employees;
                            (iii) certify that such manufacturer--
                                    (I) has not elected the credit 
                                allowed under section 30D of the 
                                Internal Revenue Code of 1986, and
                                    (II) but for such nonelection, 
                                would be an eligible taxpayer for 
                                purposes of such credit under section 
                                30D(e)(1) of such Code; and
                            (iv) provide additional assurances and 
                        information as the task force may require, 
                        including information needed by the task force 
                        to audit the manufacturer's compliance with the 
                        requirements of the program.
                    (D) Limitation.--The total amount of financial 
                assistance that may be provided each year under the 
                program under subparagraph (B) with respect to any 
                single domestic automobile manufacturer shall not 
                exceed an amount equal to the lesser of--
                            (i) the lesser of --
                                    (I) 35 percent of the qualified 
                                investment of such manufacturer for 
                                such year (as determined under section 
                                30D(b) of such Code without regard to 
                                the limitation under section 30D(f) of 
                                such Code), or
                                    (II) the aggregate retiree health 
                                care expenditures for such 
                                manufacturer, or
                            (ii) $250,000,000.
                    (E) Application of certain rules.--Rules similar to 
                the rules under subsections (g) and (h) of section 30D 
                of such Code shall apply with respect to any qualified 
                investment used to determine the financial assistance 
                provided under the program under subparagraph (B).
                    (F) Authorization of appropriations.--There are 
                authorized to be appropriated, such sums as may be 
                necessary in each fiscal year to carry out this 
                paragraph.
                    (G) Limitation on backsliding.--To be eligible to 
                receive financial assistance under subparagraph (B), a 
                manufacturer shall provide assurances to the task force 
                that fuel savings achieved with respect its average 
                adjusted fuel economy will not result in decreases with 
                respect to fuel economy elsewhere in the domestic 
                fleet. The task force shall determine compliance with 
                such assurances using accepted measurements of fuel 
                savings.
                    (H) Termination of program.--The program 
                established under subparagraph (B) shall terminate on 
                December 31, 2015.

SEC. 202. RESEARCH AND DEVELOPMENT PROGRAM FOR NEW VEHICLE 
              TECHNOLOGIES.

    (a) Purposes.--The purposes of this section are--
            (1) to enable and promote, in partnership with industry, 
        comprehensive development, demonstration, and commercialization 
        of a wide range of electric drive components, systems, and 
        vehicles using diverse electric drive transportation 
        technologies;
            (2) to make critical public investments to help private 
        industry, institutions of higher education, National 
        Laboratories, and research institutions to expand innovation, 
        industrial growth, and jobs in the United States;
            (3) to expand the availability of the existing electric 
        infrastructure for fueling light-duty transportation vehicles 
        and other on-road and nonroad vehicles that are using petroleum 
        and are mobile sources of emissions, with the goals of--
                    (A) enhancing the energy security of the United 
                States;
                    (B) reducing dependence on imported oil; and
                    (C) reducing emissions through the expansion of 
                grid supported mobility;
            (4) to accelerate the widespread commercialization of 
        electric drive vehicle technology into all sizes and 
        applications of vehicles, including commercialization of plug-
        in hybrid electric vehicles and plug-in hybrid fuel cell 
        vehicles; and
            (5) to improve the energy efficiency of and reduce the 
        petroleum use in transportation.
    (b) Program.--The Secretary shall conduct a program of research, 
development, demonstration, and commercial application for electric 
drive transportation technology, including--
            (1) high capacity, high-efficiency batteries;
            (2) high-efficiency on-board and off-board charging 
        components;
            (3) high-powered drive train systems for passenger and 
        commercial vehicles and for nonroad equipment;
            (4) control system development and power train development 
        and integration for plug-in hybrid electric vehicles, plug-in 
        hybrid fuel cell vehicles, and engine dominant hybrid electric 
        vehicles, including--
                    (A) development of efficient cooling systems;
                    (B) analysis and development of control systems 
                that minimize the emissions profile when clean diesel 
                engines are part of a plug-in hybrid drive system; and
                    (C) development of different control systems that 
                optimize for different goals, including--
                            (i) battery life;
                            (ii) reduction of petroleum consumption; 
                        and
                            (iii) green house gas reduction;
            (5) nanomaterial technology applied to both battery and 
        fuel cell systems;
            (6) large-scale demonstrations, testing, and evaluation of 
        plug-in hybrid electric vehicles in different applications with 
        different batteries and control systems, including--
                    (A) military applications;
                    (B) mass market passenger and light-duty truck 
                applications;
                    (C) private fleet applications; and
                    (D) medium- and heavy-duty applications;
            (7) development, in consultation with the Administrator of 
        the Environmental Protection Agency, of procedures for testing 
        and certification of criteria pollutants, fuel economy, and 
        petroleum use for light-, medium-, and heavy-duty vehicle 
        applications, including consideration of--
                    (A) the vehicle and fuel as a system, not just an 
                engine; and
                    (B) nightly off-board charging; and
            (8) advancement of battery and corded electric 
        transportation technologies in mobile source applications by--
                    (A) improvement in battery, drive train, and 
                control system technologies; and
                    (B) working with industry and the Administrator of 
                the Environmental Protection Agency to--
                            (i) understand and inventory markets; and
                            (ii) identify and implement methods of 
                        removing barriers for existing and emerging 
                        applications.
    (c) Authorization of Appropriations.--There is authorized to be 
appropriated to carry out this section $300,000,000 for each of fiscal 
years 2007 through 2012.

SEC. 203. CONSUMER INCENTIVES TO PURCHASE ADVANCED TECHNOLOGY VEHICLES.

    (a) Elimination of Limitation on Number of New Qualified Hybrid and 
Advanced Lean Burn Technology Vehicles Eligible for Alternative Motor 
Vehicle Credit.--
            (1) In general.--Section 30B of the Internal Revenue Code 
        of 1986 is amended by striking subsection (f) and by 
        redesignating subsections (g) through (j) as subsections (f) 
        through (i), respectively.
            (2) Conforming amendments.--
                    (A) Paragraphs (4) and (6) of section 30B(h) of the 
                Internal Revenue Code of 1986 are each amended by 
                striking ``(determined without regard to subsection 
                (g))'' and inserting ``determined without regard to 
                subsection (f))''.
                    (B) Section 38(b)(25) of such Code is amended by 
                striking ``section 30B(g)(1)'' and inserting ``section 
                30B(f)(1)''.
                    (C) Section 55(c)(2) of such Code is amended by 
                striking ``section 30B(g)(2)'' and inserting ``section 
                30B(f)(2)''.
                    (D) Section 1016(a)(36) of such Code is amended by 
                striking ``section 30B(h)(4)'' and inserting ``section 
                30B(g)(4)''.
                    (E) Section 6501(m) of such Code is amended by 
                striking ``section 30B(h)(9)'' and inserting ``section 
                30B(g)(9)''.
    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2005, in taxable 
years ending after such date.

SEC. 204. EXTENSION OF FULL CREDIT FOR QUALIFIED ELECTRIC VEHICLES.

    (a) In General.--Section 30(e) of the Internal Revenue Code of 1986 
is amended by striking ``2006'' and inserting ``2010''.
    (b) Repeal of Phaseout.--Section 30(b) of the Internal Revenue Code 
of 1986 (relating to limitations) is amended by striking paragraph (2) 
and by redesignating paragraph (3) as paragraph (2).
    (c) Credit Allowable Against Alternative Minimum Tax.--Paragraph 
(2) of section 30(b) of the Internal Revenue Code of 1986, as 
redesignated by subsection (b), is amended to read as follows:
            ``(2) Application with other credits.--The credit allowed 
        by subsection (a) for any taxable year shall not exceed the 
        excess (if any) of--
                    ``(A) the sum of the regular tax for the taxable 
                year plus the tax imposed by section 55, over
                    ``(B) the sum of the credits allowable under 
                subpart A and section 27.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

                      TITLE III--ALTERNATIVE FUELS

SEC. 301. BIOFUELS.

    (a) Authorization of Appropriations.--Section 931(c) of the Energy 
Policy Act of 2005 (42 U.S.C. 16231(c)) is amended--
            (1) in paragraph (1), by striking ``$213,000,000'' and 
        inserting ``$251,000,000'';
            (2) in paragraph (2)--
                    (A) by striking ``$251,000,000'' and inserting 
                ``$270,000,000''; and
                    (B) by striking ``and'';
            (3) in paragraph (3)--
                    (A) by striking ``$274,000,000'' and inserting 
                ``$294,000,000''; and
                    (B) by striking the period at the end and inserting 
                a semicolon; and
            (4) by adding at the end the following:
            ``(4) $318,000,000 for fiscal year 2010; and
            ``(5) $343,000,000 for fiscal year 2011.''.
    (b) Definition of Biomass.--Section 932(a)(1)(A) of the Energy 
Policy Act of 2005 (42 U.S.C. 16232(a)(1)(A)) is amended by adding 
after ``organic material'' the following: ``(including sugarcane, sugar 
beets, sugar components, and cellulose)''.

SEC. 302. CONTINUATION OF BIOENERGY PROGRAM.

    Section 9010(c) of the Farm Security and Rural Investment Act of 
2002 (7 U.S.C. 8108(c)) is amended--
            (1) by striking ``section--'' and all that follows through 
        ``not more than'' and inserting ``section not more than''; and
            (2) by striking ``2006;'' and all that follows and 
        inserting ``2007.''.

SEC. 303. RENEWABLE FUEL STANDARD.

    Section 211(o)(2)(B) of the Clean Air Act (42 U.S.C. 7545(o)(2)(B)) 
is amended--
            (1) by striking clause (i) and inserting the following:
                            ``(i) Calendar years 2006 through 2025.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for any of calendar years 
                        2006 through 2025 shall be determined in 
                        accordance with the following table:

                                                   Applicable volume of
                                                         renewable fuel
``Calendar year:                              (in billions of gallons):
    2006..........................................                 4.0 
    2007..........................................                 4.7 
    2008..........................................                 5.5 
    2009..........................................                 6.2 
    2010..........................................                 6.9 
    2011..........................................                 7.5 
    2012..........................................                 7.6 
    2013..........................................                 9.2 
    2014..........................................                  11 
    2015..........................................                12.7 
    2016..........................................                14.4 
    2017..........................................                16.2 
    2018..........................................                17.9 
    2019..........................................                19.6 
    2020..........................................                21.4 
    2021..........................................                23.1 
    2022..........................................                24.8 
    2023..........................................                26.5 
    2024..........................................                28.3 
    2025..........................................                30.''
        ; and
            (2) in clause (ii)--
                    (A) in the clause heading, by striking ``2013'' and 
                inserting ``2026'';
                    (B) by striking ``2013'' and inserting ``2026''; 
                and
                    (C) by striking ``2012'' and inserting ``2025''.

SEC. 304. MINIMUM QUANTITY OF RENEWABLE FUEL DERIVED FROM CELLULOSIC 
              BIOMASS.

    Section 211(o)(2)(B) of the Clean Air Act (42 U.S.C. 7545(o)(2)(B)) 
is amended by striking clause (iii) and inserting the following:
                            ``(iii) Minimum quantity derived from 
                        cellulosic biomass.--
                                    ``(I) In general.--The applicable 
                                volume referred to in clauses (i) and 
                                (ii) shall contain a minimum of--
                                            ``(aa) for calendar year 
                                        2010, 100,000,000 gallons that 
                                        are derived from cellulosic 
                                        biomass;
                                            ``(bb) for calendar year 
                                        2011, 150,000,000 gallons that 
                                        are derived from cellulosic 
                                        biomass;
                                            ``(cc) for calendar year 
                                        2012, 200,000,000 gallons that 
                                        are derived from cellulosic 
                                        biomass; and
                                            ``(dd) for calendar year 
                                        2013 and each calendar year 
                                        thereafter, 250,000,000 gallons 
                                        that are derived from 
                                        cellulosic biomass.
                                    ``(II) Ratio.--For calendar year 
                                2014 and each calendar year thereafter, 
                                the 2.5-to-1 ratio referred to in 
                                paragraph (4) shall not apply.''.

SEC. 305. MINIMUM QUANTITY OF RENEWABLE FUEL DERIVED FROM SUGAR.

    Section 211(o)(2)(B) of the Clean Air Act (42 U.S.C. 7545(o)(2)(B)) 
is amended by adding at the end the following:
                            ``(v) Minimum quantity derived from 
                        sugar.--
                                    ``(I) Definition of sugar.--In this 
                                clause:
                                            ``(aa) In general.--The 
                                        term `sugar' means sugarcane, 
                                        sugar beets, or sugar 
                                        components that are produced in 
                                        the United States or imported 
                                        subject to tariff rate quota 
                                        allocations.
                                            ``(bb) Exclusions.--The 
                                        term `sugar' does not include 
                                        domestic or imported molasses, 
                                        imported thick beet juice, or 
                                        other imported products not 
                                        subject to tariff-rate quota 
                                        allocations that are used as 
                                        feedstock.
                                    ``(II) Minimum number of gallons.--
                                The applicable volume referred to in 
                                clauses (i) and (ii) shall contain a 
                                minimum of--
                                            ``(aa) for calendar year 
                                        2008, 100,000,000 gallons 
                                        derived from sugar;
                                            ``(bb) for calendar year 
                                        2009, 108,000,000 gallons 
                                        derived from sugar;
                                            ``(cc) for calendar year 
                                        2010, 117,000,000 gallons 
                                        derived from sugar;
                                            ``(dd) for calendar year 
                                        2011, 126,000,000 gallons 
                                        derived from sugar;
                                            ``(ee) for calendar year 
                                        2012, 135,000,000 gallons 
                                        derived from sugar;
                                            ``(ff) for calendar year 
                                        2013, 144,000,000 gallons 
                                        derived from sugar;
                                            ``(gg) for calendar year 
                                        2014, 153,000,000 gallons 
                                        derived from sugar;
                                            ``(hh) for calendar year 
                                        2015, 161,000,000 gallons 
                                        derived from sugar;
                                            ``(ii) for calendar year 
                                        2016, 170,000,000 gallons 
                                        derived from sugar;
                                            ``(jj) for calendar year 
                                        2017, 179,000,000 gallons 
                                        derived from sugar;
                                            ``(kk) for calendar year 
                                        2018, 188,000,000 gallons 
                                        derived from sugar;
                                            ``(ll) for calendar year 
                                        2019, 197,000,000 gallons 
                                        derived from sugar;
                                            ``(mm) for calendar year 
                                        2020, 206,000,000 gallons 
                                        derived from sugar;
                                            ``(nn) for calendar year 
                                        2021, 214,000,000 gallons 
                                        derived from sugar;
                                            ``(oo) for calendar year 
                                        2022, 223,000,000 gallons 
                                        derived from sugar;
                                            ``(pp) for calendar year 
                                        2023, 232,000,000 gallons 
                                        derived from sugar;
                                            ``(qq) for calendar year 
                                        2024, 241,000,000 gallons 
                                        derived from sugar; and
                                            ``(rr) for calendar year 
                                        2025 and each calendar year 
                                        thereafter, 250,000,000 gallons 
                                        derived from sugar.''.

SEC. 306. ETHANOL PROMOTION PROGRAM.

    Section 211(o) of the Clean Air Act (42 U.S.C. 7545(o)) is amended 
by adding at the end the following:
            ``(11) Ethanol promotion program.--
                    ``(A) In general.--The Secretary of Agriculture 
                shall carry out a program to support the development, 
                commercialization, and production of cellulosic ethanol 
                and ethanol produced from sugar under this subsection.
                    ``(B) Administration.--The program--
                            ``(i) may include loan guarantees, loans, 
                        grants, and other forms of assistance; and
                            ``(ii) shall be designed to ensure the 
                        production of ethanol in quantities sufficient 
                        to meet the requirements of this subsection.
                    ``(C) Prevention of sugar loan forfeitures.--
                            ``(i) In general.--The Secretary shall 
                        carry out the program under this paragraph in a 
                        manner that is consistent with, and supports 
                        the continued no-cost implementation of, the 
                        sugar program established under section 156 of 
                        the Federal Agriculture Improvement and Reform 
                        Act of 1996 (7 U.S.C. 7272) in accordance with 
                        section 902 of the Food Security Act of 1985 
                        (Public Law 99-198; 7 U.S.C. 1446g note).
                            ``(ii) Administration.--To carry out clause 
                        (i), in determining the overall allotment 
                        quantity for any crop of domestic sugar, the 
                        Secretary shall--
                                    ``(I) consider projected sugar used 
                                as sucrose ethanol feedstock as an 
                                addition to domestic food use; and
                                    ``(II) count the sales of sugar to 
                                a sucrose ethanol producer against the 
                                annual marketing allocation of domestic 
                                sugar processors.
                    ``(D) Authorization of appropriations.--There are 
                authorized to be appropriated such sums as are 
                necessary to carry out this paragraph.''.

SEC. 307. RENEWABLE FUEL PROGRAM FOR THE DIESEL MOTOR POOL.

    (a) In General.--Section 211 of the Clean Air Act (42 U.S.C. 7545) 
is amended by inserting after subsection (o) the following:
    ``(p) Renewable Fuel Program for the Diesel Motor Pool.--
            ``(1) Definition of renewable fuel.--
                    ``(A) In general.--In this subsection, the term 
                `renewable fuel' has the meaning given the term in 
                subsection (o)(1)(C).
                    ``(B) Inclusions.--The term `renewable fuel' 
                includes a diesel fuel substitute produced from--
                            ``(i) animal fat;
                            ``(ii) vegetable oil;
                            ``(iii) recycled yellow grease;
                            ``(iv) thermal depolymerization;
                            ``(v) thermochemical conversion;
                            ``(vi) the coal-to-liquid process 
                        (including the Fischer-Tropsch process); or
                            ``(vii) a diesel-ethanol blend.
            ``(2) Renewable fuel program.--
                    ``(A) Regulations.--
                            ``(i) In general.--Not later than 1 year 
                        after the date of enactment of this subsection, 
                        the Administrator shall promulgate regulations 
                        to ensure that diesel sold or introduced into 
                        commerce in the United States (except in 
                        noncontiguous States or territories), on an 
                        annual average basis, contains the applicable 
                        volume of renewable fuel determined in 
                        accordance with subparagraph (B).
                            ``(ii) Provisions of regulations.--
                        Regardless of the date of promulgation, the 
                        regulations promulgated under clause (i)--
                                    ``(I) shall contain compliance 
                                provisions applicable to refineries, 
                                blenders, distributors, and importers, 
                                as appropriate, to ensure that the 
                                requirements of this paragraph are met; 
                                but
                                    ``(II) shall not--
                                            ``(aa) restrict geographic 
                                        areas in which renewable fuel 
                                        may be used; or
                                            ``(bb) impose any per-
                                        gallon obligation for the use 
                                        of renewable fuel.
                            ``(iii) Requirement in case of failure to 
                        promulgate regulations.--If the Administrator 
                        fails to promulgate regulations under clause 
                        (i), the percentage of renewable fuel in the 
                        diesel motor pool sold or dispensed to 
                        consumers in the United States, on a volume 
                        basis, shall be .006 percent for calendar year 
                        2008.
                    ``(B) Applicable volume.--
                            ``(i) Calendar years 2008 through 2015.--
                        For the purpose of subparagraph (A), the 
                        applicable volume for any of calendar years 
                        2008 through 2015 shall be determined in 
                        accordance with the following table:

``Applicable volume of renewable
  fuel in diesel motor pool
  (in millions of gallons):                              Calendar year:
    250...........................................                2008 
    500...........................................                2009 
    750...........................................                2010 
    1,000.........................................                2011 
    1,250.........................................                2012 
    1,500.........................................                2013 
    1,750.........................................                2014 
    2,000.........................................                2015.
                            ``(ii) Calendar year 2016 and thereafter.--
                        The applicable volume for calendar year 2016 
                        and each calendar year thereafter shall be 
                        determined by the Administrator, in 
                        coordination with the Secretary of Agriculture 
                        and the Secretary of Energy, based on a review 
                        of the implementation of the program during 
                        calendar years 2008 through 2015, including a 
                        review of--
                                    ``(I) the impact of the use of 
                                renewable fuels on the environment, air 
                                quality, energy security, job creation, 
                                and rural economic development; and
                                    ``(II) the expected annual rate of 
                                future production of renewable fuels to 
                                be used as a blend component or 
                                replacement to the diesel motor pool.
                            ``(iii) Minimum applicable volume.--For the 
                        purpose of subparagraph (A), the applicable 
                        volume for calendar year 2016 and each calendar 
                        year thereafter shall be equal to the product 
                        obtained by multiplying--
                                    ``(I) the number of gallons of 
                                diesel that the Administrator estimates 
                                will be sold or introduced into 
                                commerce during the calendar year; and
                                    ``(II) the ratio that--
                                            ``(aa) 2,000,000,000 
                                        gallons of renewable fuel; 
                                        bears to
                                            ``(bb) the number of 
                                        gallons of diesel sold or 
                                        introduced into commerce during 
                                        calendar year 2015.
            ``(3) Applicable percentages.--
                    ``(A) Provision of estimate of volumes of diesel 
                sales.--Not later than October 31 of each of calendar 
                years 2007 through 2015, the Administrator of the 
                Energy Information Administration shall provide to the 
                Administrator an estimate, with respect to the 
                following calendar year, of the volumes of diesel 
                projected to be sold or introduced into commerce in the 
                United States.
                    ``(B) Determination of applicable percentages.--
                            ``(i) In general.--Not later than November 
                        30 of each of calendar years 2008 through 2015, 
                        based on the estimate provided under 
                        subparagraph (A), the Administrator shall 
                        determine and publish in the Federal Register, 
                        with respect to the following calendar year, 
                        the renewable fuel obligation that ensures that 
                        the requirements of paragraph (2) are met.
                            ``(ii) Required elements.--The renewable 
                        fuel obligation determined for a calendar year 
                        under clause (i) shall--
                                    ``(I) be applicable to refineries, 
                                blenders, and importers, as 
                                appropriate;
                                    ``(II) be expressed in terms of a 
                                volume percentage of diesel sold or 
                                introduced into commerce in the United 
                                States; and
                                    ``(III) subject to subparagraph 
                                (C), consist of a single applicable 
                                percentage that applies to all 
                                categories of persons described in 
                                subclause (I).
                    ``(C) Adjustments.--In determining the applicable 
                percentage for a calendar year, the Administrator shall 
                make adjustments to prevent the imposition of redundant 
                obligations on any person described in subparagraph 
                (B)(ii)(I).
            ``(4) Credit program.--
                    ``(A) In general.--The regulations promulgated 
                pursuant to paragraph (2)(A) shall provide for the 
                generation of an appropriate amount of credits by any 
                person that refines, blends, or imports diesel that 
                contains a quantity of renewable fuel that is greater 
                than the quantity required under paragraph (2).
                    ``(B) Use of credits.--A person that generates a 
                credit under subparagraph (A) may use the credit, or 
                transfer all or a portion of the credit to another 
                person, for the purpose of complying with regulations 
                promulgated pursuant to paragraph (2).
                    ``(C) Duration of credits.--A credit generated 
                under this paragraph shall be valid during the 1-year 
                period beginning on the date on which the credit is 
                generated.
                    ``(D) Inability to generate or purchase sufficient 
                credits.--The regulations promulgated pursuant to 
                paragraph (2)(A) shall include provisions allowing any 
                person that is unable to generate or purchase 
                sufficient credits under subparagraph (A) to meet the 
                requirements of paragraph (2) by carrying forward a 
                credit generated during a previous year on the 
                condition that the person, during the calendar year 
                following the year in which the renewable fuel deficit 
                is created--
                            ``(i) achieves compliance with the 
                        renewable fuel requirement under paragraph (2); 
                        and
                            ``(ii) generates or purchases additional 
                        credits under subparagraph (A) to offset the 
                        deficit of the previous year.
            ``(5) Waivers.--
                    ``(A) In general.--The Administrator, in 
                consultation with the Secretary of Agriculture and the 
                Secretary of Energy, may waive the requirements of 
                paragraph (2) in whole or in part on receipt of a 
                petition of 1 or more States by reducing the national 
                quantity of renewable fuel for the diesel motor pool 
                required under paragraph (2) based on a determination 
                by the Administrator, after public notice and 
                opportunity for comment, that--
                            ``(i) implementation of the requirement 
                        would severely harm the economy or environment 
                        of a State, a region, or the United States; or
                            ``(ii) there is an inadequate domestic 
                        supply of renewable fuel.
                    ``(B) Petitions for waivers.--Not later than 90 
                days after the date on which the Administrator receives 
                a petition under subparagraph (A), the Administrator, 
                in consultation with the Secretary of Agriculture and 
                the Secretary of Energy, shall approve or disapprove 
                the petition.
                    ``(C) Termination of waivers.--
                            ``(i) In general.--Except as provided in 
                        clause (ii), a waiver under subparagraph (A) 
                        shall terminate on the date that is 1 year 
                        after the date on which the waiver is provided.
                            ``(ii) Exception.--The Administrator, in 
                        consultation with the Secretary of Agriculture 
                        and the Secretary of Energy, may extend a 
                        waiver under subparagraph (A), as the 
                        Administrator determines to be appropriate.''.
    (b) Penalties and Enforcement.--Section 211(d) of the Clean Air Act 
(42 U.S.C. 7545(d)) is amended--
            (1) in paragraph (1), by striking ``or (o)'' each place it 
        appears and inserting ``(o), or (p)''; and
            (2) in paragraph (2), by striking ``and (o)'' each place it 
        appears and inserting ``(o), and (p)''.
    (c) Technical Amendments.--Section 211 of the Clean Air Act (42 
U.S.C. 7545) is amended--
            (1) in subsection (c)(4)(C), by redesignating the second 
        clause (v) as clause (vi);
            (2) in subsection (i)(4), by striking ``section 324'' each 
        place it appears and inserting ``section 325'';
            (3) in subsection (k)(10), by indenting subparagraphs (E) 
        and (F) appropriately;
            (4) in subsection (n), by striking ``section 219(2)'' and 
        inserting ``section 216(2)'';
            (5) by redesignating the second subsection (r) and 
        subsection (s) as subsections (s) and (t), respectively; and
            (6) in subsection (t)(1) (as redesignated by paragraph 
        (5)), by striking ``this subtitle'' and inserting ``this 
        part''.

SEC. 308. EXTENSION AND MODIFICATION OF INCOME AND EXCISE TAX CREDITS 
              FOR RENEWABLE FUELS.

    (a) Income Tax Credits.--
            (1) Alcohol used as fuel.--
                    (A) In general.--Paragraph (1) of section 40(e) of 
                the Internal Revenue Code of 1986 is amended--
                            (i) by striking ``2010'' in subparagraph 
                        (A) and inserting ``2013'', and
                            (ii) by striking ``2011'' in subparagraph 
                        (B) and inserting ``2014''.
                    (B) Reduced credit for ethanol blenders.--
                Subsection (h) of section 40 of such Code is amended--
                            (i) by striking ``2010'' in paragraph (1) 
                        and inserting ``2013'', and
                            (ii) by striking ``2010'' in the table in 
                        paragraph (2) and inserting ``2013''.
            (2) Biodiesel and renewable diesel used as fuel.--
        Subsection (g) of section 40A of the Internal Revenue Code of 
        1986 is amended by striking ``2008'' and inserting ``2013''.
            (3) Small ethanol producer credit expanded for producers of 
        sucrose and cellulosic ethanol.--
                    (A) In general.--Subparagraph (C) of section 
                40(b)(4) of such Code (relating to small ethanol 
                producer credit) is amended by inserting ``(30,000,000 
                gallons for any sucrose or cellulosic ethanol 
                producer)'' after ``15,000,000 gallons''.
                    (B) Sucrose or cellulosic ethanol producer.--
                Section 40(b)(4) of such Code is amended by adding at 
                the end the following new subparagraph:
                    ``(E) Sucrose or cellulosic ethanol producer.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `sucrose or cellulosic 
                        ethanol producer' means a producer of ethanol 
                        using sucrose feedstock or cellulosic 
                        feedstock.
                            ``(ii) Sucrose feedstock.--For purposes of 
                        clause (i), the term `sucrose feedstock' means 
                        any raw sugar, refined sugar, or sugar 
                        equivalents (including juice and extract). Such 
                        term does not include any molasses, beet thick 
                        juice, or other similar products as determined 
                        by the Secretary.''.
                    (C) Conforming amendments.--
                            (i) Section 40(g)(2) of such Code is 
                        amended by striking ``15,000,000 gallon 
                        limitation'' and inserting ``15,000,000 and 
                        30,000,000 gallon limitations''.
                            (ii) Section 40(g)(5)(B) of such Code is 
                        amended by striking ``15,000,000 gallons'' and 
                        inserting ``the gallon limitation under 
                        subsection (b)(4)(C)''.
    (b) Excise Tax Credits.--
            (1) Alcohol fuel mixture credit.--Paragraph (5) of section 
        6426(b) of the Internal Revenue Code of 1986 is amended by 
        striking ``2010'' and inserting ``2013''.
            (2) Biodiesel mixture credit.--Paragraph (6) of section 
        6426(c) of the Internal Revenue Code of 1986 is amended by 
        striking ``2010'' and inserting ``2013''.
            (3) Alternative fuel credit.--Paragraph (4) of section 
        6426(d) of the Internal Revenue Code of 1986 is amended by 
        striking ``2009'' and inserting ``2013''.
    (c) Payments for Fuel Used in Trade or Business.--
            (1) Alcohol fuel mixtures.--Section 6427(e)(5)(A) of the 
        Internal Revenue Code of 1986 is amended by striking ``2010'' 
        and inserting ``2013''.
            (2) Biodiesel mixtures.--Section 6427(e)(5)(B) of such Code 
        is amended by striking ``2008'' and inserting ``2013''.
            (3) Alternative fuel and alternative fuel mixtures.--
        Section 6427(e)(5)(C) of such Code is amended by striking 
        ``2009'' and inserting ``2013''.
    (d) Effective Date.--
            (1) Subsection (a).--The amendments made by subsection (a) 
        shall apply to taxable years beginning after the date of the 
        enactment of this Act.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to any sale, use, or removal for any period after 
        the date of enactment of this Act.
            (3) Subsection (c).--The amendments made by subsection (c) 
        shall apply to any sale or use for any period after the date of 
        enactment of this Act.

SEC. 309. DOMESTIC REFINERY DIVERSIFICATION.

    (a) Program.--The Secretary shall award grants for qualifying 
projects to support the commercial deployment of CTL refineries.
    (b) Project Criteria.--A project shall be considered to be a 
qualifying project under this section if the Secretary determines 
that--
            (1) the purpose of the project is the deployment of a CTL 
        refinery in the United States;
            (2) the grant recipient is financially viable without the 
        receipt of additional Federal funding;
            (3) the project site has been identified;
            (4) a preliminary feasibility study has been completed;
            (5) a long-term source of coal has been identified and 
        secured; and
            (6) the refinery will be designed to have--
                    (A) a production capacity of at least 12,000 
                barrels per day; and
                    (B) carbon capture capability.
    (c) Use.--A grant under this section may be used to offset costs 
associated with the deployment of a CTL refinery in the United States, 
such as the costs of preliminary engineering and engineering design 
specifications.
    (d) Maximum Amount.--The amount of a grant made for a qualifying 
project under this section shall not exceed $50,000,000.
    (e) Report.--Not later than 1 year after the date of enactment of 
this Act, and annually thereafter until amounts made available to carry 
out this section are expended, the Secretary shall submit to Congress a 
report describing--
            (1) the status of projects funded under this section; and
            (2) the reasons for the denial of any grant for a project 
        funded under this section.
    (f) Authorization of Appropriations.--There is authorized to be 
appropriated to the Secretary to carry out this section $500,000,000, 
to remain available until expended.

SEC. 310. TRANSITION TO A HYDROGEN-BASED ECONOMY.

    (a) In General.--There are authorized to be appropriated to the 
Secretary the following amounts to carry out projects to promote the 
transition to a hydrogen-based economy:
            (1) For 4 demonstration projects under which hydrogen is 
        produced from 3 or more feedstocks, $200,000,000 for each of 
        fiscal years 2007 through 2011, of which each demonstration 
        project shall receive $50,000,000 for each fiscal year.
            (2) For hydrogen storage for on-road and off-road 
        applications--
                    (A) $38,000,000 for fiscal year 2007;
                    (B) $45,000,000 for fiscal year 2008;
                    (C) $53,000,000 for fiscal year 2009;
                    (D) $60,000,000 for fiscal year 2010; and
                    (E) $70,000,000 for fiscal year 2010.
            (3) For technologies for the production and purification of 
        hydrogen with pressures of 10,000 pounds per square inch or 
        more--
                    (A) $40,000,000 for fiscal year 2007;
                    (B) $48,000,000 for fiscal year 2008;
                    (C) $56,000,000 for fiscal year 2009; and
                    (D) $62,000,000 for fiscal year 2010.
            (4) For the incorporation of carbon sequestration 
        strategies into hydrogen production technologies for carbon 
        sequestered from plants used to produce hydrogen, using as a 
        model the program established under section 963 of the Energy 
        Policy Act of 2005 (42 U.S.C. 16293)--
                    (A) $50,000,000 for fiscal year 2007;
                    (B) $75,000,000 for fiscal year 2008;
                    (C) $100,000,000 for fiscal year 2009; and
                    (D) $110,000,000 for fiscal year 2010.
            (5) For development of a national hydrogen infrastructure 
        plan, such sums as are necessary.
            (6) For the National Center for Hydrogen Technology 
        designated by the Department of Energy--
                    (A) $3,500,000 for fiscal year 2007;
                    (B) $4,000,000 for fiscal year 2008;
                    (C) $4,500,000 for fiscal year 2009; and
                    (D) $5,000,000 for fiscal year 2010.
            (7) For regional centers for hydrogen technology designated 
        by the Department of Energy, $17,000,000 for fiscal year 2007.
            (8) For the Controlled Hydrogen Fleet and Infrastructure 
        Demonstration Validation Program of the Department of Energy--
                    (A) for the controlled hydrogen fleet--
                            (i) $30,000,000 for fiscal year 2007;
                            (ii) $35,000,000 for fiscal year 2008;
                            (iii) $41,000,000 for fiscal year 2009; and
                            (iv) $47,000,000 for fiscal year 2010; and
                    (B) for infrastructure demonstration validation--
                            (i) $18,000,000 for fiscal year 2007;
                            (ii) $22,000,000 for fiscal year 2008;
                            (iii) $26,000,000 for fiscal year 2009; and
                            (iv) $30,000,000 for fiscal year 2010.
            (9) For the hydrogen automotive technologies programs of 
        the Department of Defense--
                    (A) $25,000,000 for fiscal year 2007;
                    (B) $30,000,000 for fiscal year 2008;
                    (C) $35,000,000 for fiscal year 2009; and
                    (D) $40,000,000 for fiscal year 2010.
    (b) Federal and State Procurement of Fuel Cell Vehicles and 
Hydrogen Energy Systems.--Section 782(e) of the Energy Policy Act of 
2005 (42 U.S.C. 16122(e)) is amended by striking paragraphs (2) and (3) 
and inserting the following:
            ``(2) $35,000,000 for fiscal year 2009;
            ``(3) $80,000,000 for fiscal year 2010; and''.
    (c) Federal Procurement of Stationary, Portable, and Micro Fuel 
Cells.--Section 783(d) of the Energy Policy Act of 2005 (42 U.S.C. 
16123(d)) is amended by striking paragraphs (2) through (5) and 
inserting the following:
            ``(2) $75,000,000 for fiscal year 2007;
            ``(3) $100,000,000 for fiscal year 2008;
            ``(4) $125,000,000 for fiscal year 2009;
            ``(5) $150,000,000 for fiscal year 2010; and''.
    (d) Hydrogen Programs.--Section 805 of the Energy Policy Act of 
2005 (42 U.S.C. 16154) is amended--
            (1) in subsection (h), by striking paragraphs (3) through 
        (5) and inserting the following:
            ``(3) $232,000,000 for fiscal year 2008;
            ``(4) $252,500,000 for fiscal year 2009;
            ``(5) $283,000,000 for fiscal year 2010; and''; and
            (2) in subsection (i), by striking paragraphs (2) through 
        (5) and inserting the following:
            ``(2) $180,000,000 for fiscal year 2007;
            ``(3) $200,000,000 for fiscal year 2008;
            ``(4) $220,000,000 for fiscal year 2009;
            ``(5) $240,000,000 for fiscal year 2010; and''.

SEC. 311. MODIFICATION AND EXTENSION OF ALTERNATIVE VEHICLE REFUELING 
              PROPERTY CREDIT.

    (a) Increase in Credit Amount.--Subsection (a) of section 30C of 
the Internal Revenue Code of 1986 is amended by striking ``30 percent'' 
and inserting ``50 percent''.
    (b) Credit Allowable Against Alternative Minimum Tax.--Paragraph 
(2) of section 30C of the Internal Revenue Code of 1986 is amended to 
read as follows:
            ``(2) Personal credit.--The credit allowed under subsection 
        (a) (after the application of paragraph (1)) for any taxable 
        year shall not exceed the excess (if any) of--
                    ``(A) the sum of the regular tax for the taxable 
                year plus the tax imposed by section 55, over
                    ``(B) the sum of the credits allowable under 
                subpart A and sections 27, 30, and 30B.''.
    (c) Extension of Credit.--Paragraph (2) of section 30C(g) of the 
Internal Revenue Code of 1986 is amended by striking ``December 31, 
2009'' and inserting ``December 31, 2013''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 312. USE OF NATIVE GRASSES ON CONSERVATION RESERVE LAND FOR 
              BIOMASS HARVESTING.

    (a) Purpose.--The purpose of this section is to clarify that an 
owner or operator of a farm or ranch that has entered into a 
conservation reserve contract may harvest perennial, permanent cover 
crops on land that is subject to the contract for the production of 
cellulosic ethanol, biogas, biobased hydrogen, other biobased liquid 
fuels, or other biobased products.
    (b) Use of Native Grasses.--Section 1232(a)(7)(A) of the Food 
Security Act of 1985 (16 U.S.C. 3832(a)(7)(A)) is amended--
            (1) in clause (ii), by striking ``and'' after the semicolon 
        at the end; and
            (2) by adding at the end the following:
                            ``(iv) shall permit the use of native 
                        grasses to produce cellulosic ethanol, biogas, 
                        biobased hydrogen, other biobased liquid fuel, 
                        or other biobased products (collectively 
                        referred to in this clause as `biobased 
                        products'), except that--
                                    ``(I) native grasses may not be 
                                used to produce biobased products on 
                                land that is enrolled in the 
                                conservation reserve if the land is 
                                devoted to shallow water for wildlife, 
                                wildlife habitat, diversion or erosion 
                                prevention, wetland restoration, rare 
                                or declining habitat, or upland bird 
                                habitat buffers;
                                    ``(II) native grasses may be used 
                                to produce biobased products under this 
                                subparagraph only during the period 
                                beginning September 31, and ending May 
                                1, of each year; and
                                    ``(III) not more than 50 percent of 
                                any plot that is enrolled in the 
                                conservation reserve may be used to 
                                produce biobased products each year; 
                                and''.

SEC. 313. USE OF CAFE PENALTIES TO BUILD ALTERNATIVE FUELING 
              INFRASTRUCTURE.

    Section 32912 of title 49, United States Code, is amended by adding 
at the end the following
    ``(e) Alternative Fueling Infrastructure Trust Fund.--
            ``(1) Establishment.--There is established in the Treasury 
        of the United States a trust fund, to be known as the 
        Alternative Fueling Infrastructure Trust Fund, consisting of--
                    ``(A) such amounts as are deposited into the Trust 
                Fund under paragraph (2); and
                    ``(B) any interest earned on investment of amounts 
                in the Trust Fund.
            ``(2) Deposits.--The Secretary of Transportation shall 
        remit to the Treasury 90 percent of the amounts collected in 
        civil penalties each year under this section for deposit to the 
        Trust Fund.
            ``(3) Investment of amounts.--
                    ``(A) In general.--The Secretary of the Treasury 
                shall invest such portion of the Trust Fund as is not, 
                in the judgment of the Secretary of the Treasury, 
                required to meet current withdrawals.
                    ``(B) Interest-bearing obligations.--Investments 
                may be made only in interest-bearing obligations of the 
                United States.
                    ``(C) Acquisition of obligations.--For the purpose 
                of investments under subparagraph (A), obligations may 
                be acquired--
                            ``(i) on original issue at the issue price; 
                        or
                            ``(ii) by purchase of outstanding 
                        obligations at the market price.
                    ``(D) Sale of obligations.--Any obligation acquired 
                by the Trust Fund may be sold by the Secretary of the 
                Treasury at the market price.
                    ``(E) Credits to trust fund.--The interest on, and 
                the proceeds from the sale or redemption of, any 
                obligations held in the Trust Fund shall be credited to 
                and form a part of the Trust Fund.
            ``(4) Transfers of amounts.--
                    ``(A) In general.--The amounts required to be 
                transferred to the Trust Fund under this subsection 
                shall be transferred at least quarterly from the 
                general fund of the Treasury to the Trust Fund on the 
                basis of estimates made by the Secretary of the 
                Treasury.
                    ``(B) Adjustments.--Proper adjustment shall be made 
                in amounts subsequently transferred to the extent prior 
                estimates were in excess of or less than the amounts 
                required to be transferred.
            ``(5) Expenditures from the fund.--
                    ``(A) In general.--The Secretary of Energy shall 
                obligate such sums as are available in the Trust Fund 
                to establish a grant program to increase the number of 
                locations at which consumers may purchase alternative 
                fuels.
                    ``(B) Amount and persons eligible.--The Secretary 
                of Energy may award grants under this paragraph in an 
                amount not to exceed $150,000 to persons who have 
                expertise in--
                            ``(i) operating a fueling station; or
                            ``(ii) administering grants for the purpose 
                        of establishing an alternative fueling 
                        infrastructure.
                    ``(C) Other considerations.--
                            ``(i) Number of vehicles to be served.--In 
                        awarding grants under this paragraph, the 
                        Secretary shall consider the number of vehicles 
                        in service capable of using a specific type of 
                        alternative fuel.
                            ``(ii) Matching funds.--A recipient of a 
                        grant under this paragraph shall provide a non-
                        Federal match of not less than $1 for every $3 
                        of grant funds received under this paragraph.
                            ``(iii) Selection of locations.--Each grant 
                        recipient shall select the location for each 
                        alternative fuel station to be constructed with 
                        grant funds received under this paragraph on a 
                        formal, open, and competitive basis.
                    ``(D) Use of funds.--Grants received under this 
                paragraph may be used to--
                            ``(i) construct new facilities to dispense 
                        alternative fuels;
                            ``(ii) purchase equipment to upgrade, 
                        expand, or otherwise improve existing 
                        alternative fuel facilities; or
                            ``(iii) purchase equipment or pay for 
                        specific turnkey fueling services by 
                        alternative fuel providers.
                    ``(E) Requirement for facilities.--Facilities 
                constructed or upgraded with a grant awarded under this 
                paragraph shall--
                            ``(i) provide alternative fuel to the 
                        public for a period of not less than 4 years 
                        from the date on which the facility opens;
                            ``(ii) establish a marketing plan to 
                        advance the sale and use of alternative fuels;
                            ``(iii) prominently display the price of 
                        the alternative fuel being provided on the 
                        station marquee and in the station;
                            ``(iv) provide point of sale materials on 
                        alternative fuel;
                            ``(v) clearly label the dispenser with 
                        consistent materials;
                            ``(vi) price the alternative fuel at a 
                        margin that is not greater than that which is 
                        received for unleaded gasoline; and
                            ``(vii) support and use all available tax 
                        incentives to reduce the cost of the 
                        alternative fuel to the lowest possible retail 
                        price.
                    ``(F) Notification of opening of facility.--Not 
                later than the date on which an alternative fuel 
                station described in this paragraph begins to offer 
                alternative fuel to the public, the person that 
                received the grant to construct or upgrade the station 
                shall notify the Secretary of Energy of such opening. 
                The Secretary of Energy shall add each new alternative 
                fuel station to the alternative fuel station locator on 
                the Department of Energy Website when the Secretary 
                receives notification under this subparagraph.
                    ``(G) Report.--Not later than 6 months after the 
                receipt of a grant award under this paragraph, and 
                every 6 months thereafter, each person receiving a 
                grant under this subsection shall submit a report to 
                the Secretary of Energy that describes--
                            ``(i) the status of each alternative fuel 
                        station constructed with grant funds received 
                        under this paragraph;
                            ``(ii) the amount of alternative fuel 
                        dispensed at each station during the preceding 
                        6-month period; and
                            ``(iii) the average price per gallon of the 
                        alternative fuel sold at each station during 
                        the preceding 6-month period.''.

          TITLE IV--DOMESTIC PRODUCTION OF OIL AND NATURAL GAS

SEC. 401. MODIFICATIONS TO ENHANCED OIL RECOVERY CREDIT.

    (a) Enhanced Credit for Carbon Dioxide Injections.--Section 43 of 
the Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(f) Enhanced Credit for Projects Using Qualified Carbon 
Dioxide.--
            ``(1) In general.--In the case of any qualified enhanced 
        oil recovery project described in paragraph (2), subsection (a) 
        shall be applied by substituting `20 percent' for `15 percent'.
            ``(2) Specified qualified enhanced oil recovery project.--
                    ``(A) In general.--A qualified enhanced oil 
                recovery project is described in this paragraph if--
                            ``(i) the project begins or is 
                        substantially expanded after December 31, 2006, 
                        and
                            ``(ii) the project uses qualified carbon 
                        dioxide in an oil recovery method which 
                        involves flooding or injection.
                    ``(B) Qualified carbon dioxide.--For purposes of 
                this subsection, the term `qualified carbon dioxide' 
                means carbon dioxide that is--
                            ``(i) from an industrial source, or
                            ``(ii) separated from natural gas and 
                        natural gas liquids at a natural gas processing 
                        plant.
            ``(3) Termination.--This subsection shall not apply to 
        costs paid or incurred for any qualified enhanced oil recovery 
        project after December 31, 2010.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years ending after December 
31, 2006.

SEC. 402. OFFSHORE OIL AND GAS LEASING IN 181 AREA OF GULF OF MEXICO.

    (a) Definition of Secretary.--In this section, the term 
``Secretary'' means the Secretary of the Interior, acting through the 
Minerals Management Service.
    (b) Lease Sale.--Except as otherwise provided in this section, the 
Secretary shall offer the 181 Area for oil and gas leasing pursuant to 
the Outer Continental Shelf Lands Act (43 U.S.C. 1331 et seq.) as soon 
as practicable, but not later than 1 year, after the date of enactment 
of this Act.
    (c) Excluded Areas.--In carrying out subsection (b), the Secretary 
shall not offer for oil and gas leasing--
            (1) any area east of the Military Mission Line, unless the 
        Secretary of Defense agrees in writing before the area is 
        offered for lease that the area can be developed in a manner 
        that will not interfere with military activities; or
            (2) any area that is within 100 miles of the coastline of 
        the State of Florida.
    (d) Leasing Program.--The 181 Area shall be offered for lease under 
this section notwithstanding the omission of the 181 Area from any 
outer Continental Shelf leasing program under section 18 of the Outer 
Continental Shelf Lands Act (43 U.S.C. 1344).

                  TITLE V--ELECTRICITY AND RENEWABLES

SEC. 501. DOE NATIONAL AND NORTH AMERICAN ELECTRICITY GRID STUDIES.

    (a) Findings.--Congress finds that--
            (1) the interstate transmission system of North America 
        cannot reliably handle the existing and expected dramatic 
        increase in future electric transactions;
            (2) significant new transmission capacity is urgently 
        needed to maintain reliability and meet the needs of a growing 
        demand for electricity;
            (3) transmission shortages and constraints are contributing 
        to wholesale and retail electric market failures that are 
        harming electric consumers in, and the economy of, the United 
        States;
            (4) existing transmission capacity limits the development 
        of renewable and other energy sources by constraining delivery 
        of those resources into the national power market;
            (5) excessive congestion unnecessarily raises costs for all 
        consumers; and
            (6) an adequate transmission system is critical to national 
        security.
    (b) Studies.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary, in consultation with the 
        Rural Utilities Service, the Federal Power Marketing 
        Administrations, the Federal Energy Regulatory Commission, and 
        other appropriate regional entities, shall carry out--
                    (A) a study, to be known as the ``National 
                Transmission Grid Study'', to determine the feasibility 
                of constructing a national transmission grid with 
                nationwide functionality and benefits similar to those 
                provided by construction of the Interstate Highway 
                System; and
                    (B) a study, to be known as the ``North American 
                Transmission Grid Study'', to determine the feasibility 
                of constructing an integrated North American 
                transmission grid with international functionality and 
                benefits similar to those provided by construction of 
                the Interstate Highway System.
            (2) Study.--In carrying out the studies, the Secretary 
        shall take into consideration--
                    (A) economic viability, including the cost-
                effectiveness of developing a national transmission 
                grid or North American transmission grid, as 
                appropriate;
                    (B) economic growth in the United States, including 
                the extent to which that economic growth is constrained 
                by the lack of adequate or reasonably-priced 
                electricity;
                    (C) limited transmission infrastructure, resulting 
                in the inability or limited ability to transmit 
                available power supply resources;
                    (D) diversification of power supply;
                    (E) requirements and needs relating to the national 
                defense and homeland security of the United States;
                    (F) promotion of national energy security;
                    (G) transmission losses; and
                    (H) reliability.
    (c) Report to Congress.--Not later than 90 days after the date of 
completion of the studies required by subsection (c)(1), the Secretary 
shall submit to Congress a report describing the viability of 
constructing--
            (1) a national transmission grid in accordance with 
        nationwide functionality and benefits similar to those provided 
        by construction of the Interstate System; and
            (2) an integrated North American transmission grid with 
        international functionality and benefits similar to those 
        provided by construction of the Interstate System.
    (d) Authorization of Appropriations.--There are authorized to be 
appropriated such sums as are necessary to carry out this section.

SEC. 502. TAX-EXEMPT FINANCING OF ELECTRIC TRANSMISSION FACILITIES NOT 
              SUBJECT TO PRIVATE BUSINESS USE TEST.

    (a) In General.--Section 141(b)(6) of the Internal Revenue Code of 
1986 (defining private business use) is amended by adding at the end 
the following new subparagraph:
                    ``(C) Exception for electric transmission 
                facilities.--For purposes of the 1st sentence of 
                subparagraph (A), the operation or use of an electric 
                transmission facility by any person which is not a 
                governmental unit shall not be considered a private 
                business use.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

SEC. 503. EXTENSION OF CREDIT FOR PRODUCING ELECTRICITY FROM CERTAIN 
              RENEWABLE RESOURCES.

    (a) In General.--Paragraphs (1) through (7) of section 45(d) of the 
Internal Revenue Code of 1986 are each amended by striking ``January 1, 
2008'' each place it appears and inserting ``January 1, 2013''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 504. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    The Public Utility Regulatory Policies Act of 1978 (16 U.S.C. 2601 
et seq.) is amended by adding at the end of title VI the following:

``SEC. 610. FEDERAL RENEWABLE PORTFOLIO STANDARD.

    ``(a) Definitions.--In this section:
            ``(1) Base amount of electricity.--The term `base amount of 
        electricity' means the total amount of electricity sold by an 
        electric utility to electric consumers in a calendar year, 
        excluding--
                    ``(A) electricity generated by a hydroelectric 
                facility (including a pumped storage facility but 
                excluding incremental hydropower); and
                    ``(B) electricity generated through the 
                incineration of municipal solid waste.
            ``(2) Distributed generation facility.--The term 
        `distributed generation facility' means a facility at a 
        customer site.
            ``(3) Existing renewable energy.--The term `existing 
        renewable energy' means, except as provided in paragraph 
        (7)(B), electric energy generated at a facility (including a 
        distributed generation facility) placed in service prior to the 
        date of enactment of this section from--
                    ``(A) solar, wind, or geothermal energy;
                    ``(B) ocean energy;
                    ``(C) biomass (as defined in section 203(b) of the 
                Energy Policy Act of 2005 (42 U.S.C. 15852(b))); or
                    ``(D) landfill gas.
            ``(4) Geothermal energy.--The term `geothermal energy' 
        means energy derived from a geothermal deposit (within the 
        meaning of section 613(e)(2) of the Internal Revenue Code of 
        1986).
            ``(5) Incremental geothermal production.--
                    ``(A) In general.--The term `incremental geothermal 
                production' means, for any year, the difference 
                between--
                            ``(i) the total kilowatt hours of 
                        electricity produced from a facility (including 
                        a distributed generation facility) using 
                        geothermal energy, and
                            ``(ii) the average annual kilowatt hours 
                        produced at the facility for 5 of the 7 
                        calendar years preceding the date of enactment 
                        of this section after eliminating the highest 
                        and the lowest kilowatt hour production years 
                        in that 7-year period.
                    ``(B) Special rule.--A facility described in 
                subparagraph (A) that was placed in service at least 7 
                years before the date of enactment of this section 
                shall, beginning with the year in which that date of 
                enactment occurs, reduce the amount calculated under 
                subparagraph (A)(ii) each year, on a cumulative basis, 
                by the average percentage decrease in the annual 
                kilowatt hour production for the 7-year period 
                described in subparagraph (A)(ii), the cumulative sum 
                of which shall not exceed 30 percent.
            ``(6) Incremental hydropower.--
                    ``(A) In general.--The term `incremental 
                hydropower' means additional energy generated as a 
                result of efficiency improvements or capacity additions 
                made on or after the date of enactment of this section 
                or the effective date of an existing applicable State 
                renewable portfolio standard program at a hydroelectric 
                facility that was placed in service before that date.
                    ``(B) Exclusions.--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) Measurement of improvements and additions.--
                Efficiency improvements and capacity additions referred 
                to in subparagraph (A) shall be measured on the basis 
                of the same water flow information used to determine a 
                historic average annual generation baseline for the 
                hydroelectric facility and certified by the Secretary 
                or the Federal Energy Regulatory Commission.
            ``(7) New renewable energy.--The term `new renewable 
        energy' means--
                    ``(A) electric energy generated at a facility 
                (including a distributed generation facility) placed in 
                service on or after January 1, 2003, from--
                            ``(i) solar, wind, or geothermal energy or 
                        ocean energy;
                            ``(ii) biomass (as defined in section 
                        203(b) of the Energy Policy Act of 2005 (42 
                        U.S.C. 15852(b)));
                            ``(iii) landfill gas; or
                            ``(iv) incremental hydropower; and
                    ``(B) for electric energy generated at a facility 
                (including a distributed generation facility) placed in 
                service before the date of enactment of this section--
                            ``(i) the additional energy above the 
                        average generation in the 3 years preceding the 
                        date of enactment of this section at the 
                        facility from--
                                    ``(I) solar or wind energy or ocean 
                                energy;
                                    ``(II) biomass (as defined in 
                                section 203(b) of the Energy Policy Act 
                                of 2005 (42 U.S.C. 15852(b)));
                                    ``(III) landfill gas; or
                                    ``(IV) incremental hydropower; and
                            ``(ii) the incremental geothermal 
                        production.
            ``(8) Ocean energy.--The term `ocean energy' includes 
        current, wave, tidal, and thermal energy.
    ``(b) Renewable Energy Requirement.--
            ``(1) Requirement.--
                    ``(A) In general.--Each electric utility that sells 
                electricity to electric consumers shall obtain a 
                percentage of the base amount of electricity the 
                electric utility sells to electric consumers in any 
                calendar year from new renewable energy or existing 
                renewable energy.
                    ``(B) Percentages.--The percentage obtained in a 
                calendar year shall not be less than the amount 
                specified in the following table:

                                                         Minimum annual
``Calendar year:                                            percentage:
    2008 through 2011.............................                2.5  
    2012 through 2015.............................                5.0  
    2016 through 2019.............................                7.5  
    2020 through 2030.............................              10.0.  
            ``(2) Means of compliance.--An electric utility shall meet 
        the requirements of paragraph (1) by--
                    ``(A) generating electric energy using new 
                renewable energy or existing renewable energy;
                    ``(B) purchasing electric energy generated by new 
                renewable energy or existing renewable energy;
                    ``(C) purchasing renewable energy credits issued 
                under subsection (c); or
                    ``(D) a combination of the foregoing.
    ``(c) Renewable Energy Credit Trading Program.--
            ``(1) In general.--Not later than January 1, 2007, the 
        Secretary shall establish a renewable energy credit trading 
        program to permit an electric utility that does not generate or 
        purchase enough electric energy from renewable energy to meet 
        its obligations under subsection (b)(1) to satisfy the 
        requirements by purchasing sufficient renewable energy credits.
            ``(2) Responsibilities of secretary.--As part of the 
        program, the Secretary shall--
                    ``(A) issue renewable energy credits to generators 
                of electric energy from new renewable energy;
                    ``(B) sell renewable energy credits to electric 
                utilities at the rate of 1.5 cents per kilowatt-hour 
                (as adjusted for inflation under subsection (h));
                    ``(C) ensure that a kilowatt hour, including the 
                associated renewable energy credit, shall be used only 
                once for purposes of compliance with this section; and
                    ``(D) allow double credits for generation from 
                facilities on Indian land, and triple credits for 
                generation from small renewable distributed generators 
                (meaning those no larger than 1 megawatt).
            ``(3) Use of credits.--A credit under paragraph (2)(A) may 
        only be used for compliance with this section for the 3-year 
        period beginning on the date of issuance of the credit.
    ``(d) Enforcement.--
            ``(1) Civil penalties.--Any electric utility that fails to 
        meet the renewable energy requirements of subsection (b) shall 
        be subject to a civil penalty.
            ``(2) Amount of penalty.--The amount of the civil penalty 
        shall be determined by multiplying the number of kilowatt-hours 
        of electric energy sold to electric consumers in violation of 
        subsection (b) by the greater of 1.5 cents (adjusted for 
        inflation under subsection (h)) or 200 percent of the average 
        market value of renewable energy credits during the year in 
        which the violation occurred.
            ``(3) Mitigation or waiver.--
                    ``(A) In general.--The Secretary may mitigate or 
                waive a civil penalty under this subsection if the 
                electric utility was unable to comply with subsection 
                (b) for reasons outside of the reasonable control of 
                the utility.
                    ``(B) Reduction of amount.--The Secretary shall 
                reduce the amount of any penalty determined under 
                paragraph (2) by an amount paid by the electric utility 
                to a State for failure to comply with the requirement 
                of a State renewable energy program if the State 
                requirement is greater than the applicable requirement 
                of subsection (b).
            ``(4) Procedure for assessing penalty.--The Secretary shall 
        assess a civil penalty under this subsection in accordance with 
        the procedures prescribed by section 333(d) of the Energy 
        Policy and Conservation Act of 1954 (42 U.S.C. 6303).
    ``(e) State Renewable Energy Account Program.--
            ``(1) In general.--Not later than December 31, 2008, the 
        Secretary shall establish a State renewable energy account 
        program.
            ``(2) Deposit of amounts.--All funds collected by the 
        Secretary from the sale of renewable energy credits and the 
        assessment of civil penalties under this section shall be 
        deposited into the renewable energy account established 
        pursuant to this subsection.
            ``(3) Maintenance of account.--The State renewable energy 
        account shall be held by the Secretary and shall not be 
        transferred to the Treasury Department.
            ``(4) Use of amounts.--Proceeds deposited in the State 
        renewable energy account shall be used by the Secretary, 
        subject to appropriations, for a program to provide grants to 
        the State agency responsible for developing State energy 
        conservation plans under section 362 of the Energy Policy and 
        Conservation Act (42 U.S.C. 6322) for the purposes of promoting 
        renewable energy production, including programs that promote 
        technologies that reduce the use of electricity at customer 
        sites such as solar water heating.
            ``(5) Guidelines and criteria.--The Secretary may issue 
        guidelines and criteria for grants awarded under this 
        subsection.
            ``(6) Maintenance of records and evidence of compliance.--
        State energy offices receiving grants under this section shall 
        maintain such records and evidence of compliance as the 
        Secretary may require.
            ``(7) Allocation of funds.--In allocating funds under this 
        program, the Secretary shall give preference--
                    ``(A) to States in regions that have a 
                disproportionately small share of economically 
                sustainable renewable energy generation capacity; and
                    ``(B) to State programs to stimulate or enhance 
                innovative renewable energy technologies.
    ``(f) Rules.--Not later than 1 year after the date of enactment of 
this section, the Secretary shall issue rules implementing this 
section.
    ``(g) Exemptions.--This section shall not apply in any calendar 
year to an electric utility that--
            ``(1) sold less than 4,000,000 megawatt-hours of electric 
        energy to electric consumers during the preceding calendar 
        year; or
            ``(2) is located in Hawaii.
    ``(h) Inflation Adjustment.--Not later than December 31 of each 
year beginning in 2008, the Secretary shall adjust for inflation the 
price of a renewable energy credit under subsection (c)(2)(B) and the 
amount of the civil penalty per kilowatt-hour under subsection (d)(2).
    ``(i) State Programs.--
            ``(1) In general.--Nothing in this section shall diminish 
        any authority of a State or political subdivision thereof to 
        adopt or enforce any law or regulation respecting renewable 
        energy, but, except as provided in subsection (d)(3), no such 
        law or regulation shall relieve any person of any requirement 
        otherwise applicable under this section.
            ``(2) Federal-state coordination.--The Secretary, in 
        consultation with States having renewable energy programs, 
        shall, to the maximum extent practicable, facilitate 
        coordination between the Federal program and State programs.
    ``(j) Termination of Authority.--This section and the authority 
provided by this section terminate on December 31, 2030.''.

SEC. 505. EXTENSION AND EXPANSION OF CLEAN RENEWABLE ENERGY BONDS.

    (a) Extension.--Section 54(m) of the Internal Revenue Code of 1986 
(relating to termination) is amended by striking ``2007'' and inserting 
``2012''.
    (b) Annual Volume Cap for Bonds Issued During Extension Period.--
Paragraph (1) of section 54(f) of the Internal Revenue Code of 1986 
(relating to limitation on amount of bonds designated) is amended to 
read as follows:
            ``(1) National limitation.--
                    ``(A) Initial national limitation.--With respect to 
                bonds issued after December 31, 2005, and before 
                January 1, 2008, there is a national clean renewable 
                energy bond limitation of $800,000,000.
                    ``(B) Annual national limitation.--With respect to 
                bonds issued after December 31, 2007, and before 
                January 1, 2013, there is a national clean renewable 
                energy bond limitation for each calendar year of 
                $1,000,000,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after the date of the enactment of this Act.

SEC. 506. CREDIT FOR WIND ENERGY PROPERTY INSTALLED IN RESIDENCES AND 
              BUSINESSES.

    (a) In General.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by this Act, is 
amended by inserting after section 30C the following new section:

``SEC. 30E. WIND ENERGY PROPERTY.

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 30 percent of the amount paid or incurred by the taxpayer for 
qualified wind energy property placed in service or installed during 
such taxable year.
    ``(b) Limitations.--
            ``(1) In general.--The credit allowed under subsection (a) 
        (determined without regard to paragraph (2)) for any taxable 
        year shall not exceed $10,000.
            ``(2) Limitation based on amount of tax.--
                    ``(A) In general.--The credit allowed under 
                subsection (a) for any taxable year shall not exceed 
                the excess of--
                            ``(i) the sum of the regular tax liability 
                        (as defined in section 26(b)) plus the tax 
                        imposed by section 55, over
                            ``(ii) the sum of the credits allowable 
                        under this part (other than under this section 
                        and subpart C thereof, relating to refundable 
                        credits) and section 1397E.
                    ``(B) Carryover of unused credit.--If the credit 
                allowable under subsection (a) exceeds the limitation 
                imposed by subparagraph (A) for such taxable year, such 
                excess shall be carried to the succeeding taxable year 
                and added to the credit allowable under subsection (a) 
                for such taxable year.
    ``(c) Qualified Wind Energy Property.--For purposes of this 
section, the term `qualified wind energy property' means a wind turbine 
if--
            ``(1) such turbine is placed in service or installed on or 
        in connection with property located in the United States,
            ``(2) in the case of an individual, the property on or in 
        connection with which such turbine is installed is a dwelling 
        unit which is used as a residence by the taxpayer,
            ``(3) such turbine is used to generate electricity for the 
        property on or in connection with which it is installed, and
            ``(4) the original use of such turbine commences with the 
        taxpayer.
    ``(d) Special Rules.--For purposes of this section--
            ``(1) Tenant-stockholder in cooperative housing 
        corporation.--In the case of an individual who is a tenant-
        stockholder (as defined in section 216(b)(2)) in a cooperative 
        housing corporation (as defined in section 216(b)(1)), such 
        individual shall be treated as having paid his tenant-
        stockholder's proportionate share (as defined in section 
        216(b)(3)) of any expenditures paid or incurred for qualified 
        wind energy property by such corporation, and such credit shall 
        be allocated appropriately to such individual.
            ``(2) Condominiums.--
                    ``(A) In general.--In the case of an individual who 
                is a member of a condominium management association 
                with respect to a condominium which he owns, such 
                individual shall be treated as having paid his 
                proportionate share of expenditures paid or incurred 
                for qualified wind energy property by such association, 
                and such credit shall be allocated appropriately to 
                such individual.
                    ``(B) Condominium management association.--For 
                purposes of this paragraph, the term `condominium 
                management association' means an organization which 
                meets the requirements of section 528(c)(2) with 
                respect to a condominium project of which substantially 
                all of the units are used by individuals as residences.
            ``(3) Labor costs; property subsidized by energy 
        financing.--Rules similar to the rules of paragraphs (1) and 
        (9) of section 25D(e) shall apply for purposes of this section.
    ``(e) Basis Adjustment.--For purposes of this subtitle, if a credit 
is allowed under this section for any expenditure with respect to a 
residence or other property, the basis of such residence or other 
property shall be reduced by the amount of the credit so allowed.
    ``(f) Termination.--The credit allowed under this section shall not 
apply to property placed in service or installed after December 31, 
2011.''.
    (b) Conforming Amendment.--Subsection (a) of section 1016 of the 
Internal Revenue Code of 1986 (relating to general rule for adjustments 
to basis) is amended by striking ``and'' at the end of paragraph (36), 
by striking the period at the end of paragraph (37) and inserting ``, 
and'', and by adding at the end the following new paragraph:
            ``(38) in the case of a residence or other property with 
        respect to which a credit was allowed under section 30E, to the 
        extent provided in section 30E(e).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after the item relating to section 30D the 
following new item:

        ``Sec. 30E. Wind energy property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2006.

SEC. 507. EXTENSION OF BUSINESS SOLAR INVESTMENT CREDIT.

    (a) Energy Percentage.--Subclause (II) of section 48(a)(2)(A)(i) of 
the Internal Revenue Code of 1986 is amended by striking ``January 1, 
2008'' and inserting ``January 1, 2013''.
    (b) Hybrid Solar Lighting Systems.--Clause (ii) of section 
48(a)(3)(A) of the Internal Revenue Code of 1986 is amended by striking 
``January 1, 2008'' and inserting ``January 1, 2013''.
    (c) Solar Investment Credit Allowed for Public Utility Property.--
The second sentence of section 48(a)(3) of the Internal Revenue Code of 
1986 is amended by inserting ``(other than property described in clause 
(i) or (ii) of subparagraph (A))'' before ``shall not''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act, 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. 508. EXTENSION OF CREDIT RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) In General.--Section 25D(g) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2012''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act, in taxable years ending after such date.

SEC. 509. CLEAN ENERGY COAL BONDS.

    (a) In General.--Subpart H 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 section:

``SEC. 54A. CREDIT TO HOLDERS OF CLEAN ENERGY COAL BONDS.

    ``(a) Allowance of Credit.--If a taxpayer holds a clean energy coal 
bond on 1 or more credit allowance dates of the bond occurring during 
any taxable year, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount equal to the sum 
of the credits determined under subsection (b) with respect to such 
dates.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a clean energy coal bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any clean energy coal bond is the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any clean energy coal bond, the Secretary shall 
        determine daily or cause 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 coal bonds with a specified maturity or 
        redemption date without discount and without interest cost to 
        the qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is 
        outstanding.
            ``(5) 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.
    ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this part 
        (other than subpart C thereof (relating to refundable credits) 
        and this section) and section 1397E.
    ``(d) Clean Energy Coal Bond.--For purposes of this section--
            ``(1) In general.--The term `clean energy coal bond' means 
        any bond issued as part of an issue if--
                    ``(A) the bond is issued by a qualified issuer 
                pursuant to an allocation by the Secretary to such 
                issuer of a portion of the national clean energy coal 
                bond limitation under subsection (f)(2),
                    ``(B) 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,
                    ``(C) the qualified issuer designates such bond for 
                purposes of this section and the bond is in registered 
                form, and
                    ``(D) the issue meets the requirements of 
                subsection (h).
            ``(2) Qualified project; special use rules.--
                    ``(A) In general.--The term `qualified project' 
                means a qualifying advanced coal project (as defined in 
                section 48A(c)(1)) placed in service by a qualified 
                borrower.
                    ``(B) Refinancing rules.--For purposes of paragraph 
                (1)(B), a qualified project may be refinanced with 
                proceeds of a clean energy coal 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.
                    ``(C) Reimbursement.--For purposes of paragraph 
                (1)(B), a clean energy coal 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--
                            ``(i) prior to the payment of the original 
                        expenditure, the qualified borrower declared 
                        its intent to reimburse such expenditure with 
                        the proceeds of a clean energy coal bond,
                            ``(ii) not later than 60 days after payment 
                        of the original expenditure, the qualified 
                        issuer adopts an official intent to reimburse 
                        the original expenditure with such proceeds, 
                        and
                            ``(iii) the reimbursement is made not later 
                        than 18 months after the date the original 
                        expenditure is paid.
                    ``(D) 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 coal bond.
    ``(e) Maturity Limitations.--
            ``(1) Duration of term.--A bond shall not be treated as a 
        clean energy coal bond if the maturity of such bond exceeds the 
        maximum term determined by the Secretary under paragraph (2) 
        with respect to such bond.
            ``(2) Maximum term.--During each calendar month, the 
        Secretary shall determine the maximum term permitted under this 
        paragraph for bonds issued during the following calendar month. 
        Such maximum term shall be the term which the Secretary 
        estimates will result in the present value of the obligation to 
        repay the principal on the bond being equal to 50 percent of 
        the face amount of such bond. Such present value shall be 
        determined using as a discount rate the average annual interest 
        rate of tax of tax-exempt obligations having a term of 10 years 
        or more which are issued during the month. If the term as so 
        determined is not a multiple of a whole year, such term shall 
        be rounded to the next highest whole year.
            ``(3) Ratable principal amortization required.--A bond 
        shall not be treated as a clean energy coal 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.
    ``(f) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national clean 
        energy coal bond limitation of $1,000,000,000.
            ``(2) Allocation by secretary.--The Secretary shall 
        allocate the amount described in paragraph (1) among qualified 
        projects in such manner as the Secretary determines 
        appropriate.
    ``(g) 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.
    ``(h) Special Rules Relating to Expenditures.--
            ``(1) 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--
                    ``(A) 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 the date of issuance of the clean energy bond,
                    ``(B) 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
                    ``(C) such projects will be completed with due 
                diligence and the proceeds from the sale of the issue 
                will be spent with due diligence.
            ``(2) 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.
            ``(3) 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 by the close of the 5-year 
        period beginning on the date of issuance (or if an extension 
        has been obtained under paragraph (2), by the close of the 
        extended period), the qualified issuer shall redeem all of the 
        nonqualified bonds within 90 days after the end of such period. 
        For purposes of this paragraph, the amount of the nonqualified 
        bonds required to be redeemed shall be determined in the same 
        manner as under section 142.
    ``(i) Special Rules Relating to Arbitrage.--A bond which is part of 
an issue shall not be treated as a clean energy coal bond unless, with 
respect to the issue of which the bond is a part, the qualified issuer 
satisfies the arbitrage requirements of section 148 with respect to 
proceeds of the issue.
    ``(j) Cooperative Electric Company; Qualified Energy Tax Credit 
Bond Lender; Governmental Body; Qualified Borrower.--For purposes of 
this section--
            ``(1) 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.
            ``(2) 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.
            ``(3) 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.
            ``(4) Qualified issuer.--The term `qualified issuer' 
        means--
                    ``(A) a clean energy bond lender,
                    ``(B) a cooperative electric company,
                    ``(C) a governmental body, or
                    ``(D) the Tennessee Valley Authority.
            ``(5) Qualified borrower.--The term `qualified borrower' 
        means--
                    ``(A) a mutual or cooperative electric company 
                described in section 501(c)(12) or 1381(a)(2)(C),
                    ``(B) a governmental body, or
                    ``(C) the Tennessee Valley Authority.
    ``(k) Special Rules Relating to Pool Bonds.--No portion of a pooled 
financing bond may be allocable to any loan unless the borrower has 
entered into a written loan commitment for such portion prior to the 
issue date of such issue.
    ``(l) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Pooled financing bond.--The term `pooled financing 
        bond' shall have the meaning given such term by section 
        149(f)(4)(A).
            ``(3) Partnership; s corporation; and other pass-thru 
        entities.--
                    ``(A) In general.--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).
                    ``(B) No basis adjustment.--Rules similar to the 
                rules under section 1397E(i)(2) shall apply.
            ``(4) Bonds held by regulated investment companies.--If any 
        clean energy coal 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.
            ``(5) 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 coal 
        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.
            ``(6) Reporting.--Issuers of clean energy coal bonds shall 
        submit reports similar to the reports required under section 
        149(e).
    ``(m) Termination.--This section shall not apply with respect to 
any bond issued after December 31, 2010.''.
    (b) 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:
            ``(9) Reporting of credit on clean energy coal bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54A(g) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 54A(b)(4)).
                    ``(B) 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.
                    ``(C) 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.''.
    (c) Clerical Amendment.--The table of sections for subpart H 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. 54A. Credit to holders of clean energy coal bonds.''.
    (d) Issuance of Regulations.--The Secretary of the Treasury shall 
issues regulations required under section 54A 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.
    (e) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 2006.

SEC. 510. INCREASE IN CREDIT LIMITATION FOR QUALIFYING GASIFICATION 
              PROJECTS.

    (a) In General.--Paragraph (1) of section 48B(d) of the Internal 
Revenue Code of 1986 is amended by striking ``$350,000,000'' and 
inserting ``$4,000,000,000''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 1307 of the Energy Policy Act of 2005.

SEC. 511. MODIFICATION OF QUALIFYING ADVANCED COAL PROJECT CREDIT.

    (a) In General.--Subparagraph (C) of section 48A(e)(1) of the 
Internal Revenue Code of 1986 is amended by inserting ``(300 megawatts 
in the case of projects using subbituminous or lignite as a primary 
feedstock)'' after ``400 megawatts''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in section 1307 of the Energy Policy Act of 2005.

SEC. 512. GREAT PLAINS SYNFUELS TRUST.

    (a) In General.--Not later than 90 days after the date of enactment 
of this Act, the Secretary shall--
            (1) establish a trust to be known as the ``Great Plains 
        Synfuels Trust'' (referred to in this section as the 
        ``Trust''); and
            (2) deposit in the Trust 50 percent of the revenue-sharing 
        payments that would otherwise be received under the asset 
        purchase agreement between the Secretary and the Dakota 
        Gasification Company, dated October 7, 1988, and as in effect 
        on the date of enactment of this Act, as a result of the 
        operation of the Great Plains Synfuels Plant.
    (b) Coal Development Program.--Not later than 180 days after the 
date of enactment of this Act, the Secretary shall--
            (1) establish an advanced clean low-rank coal development 
        program; and
            (2) use funds from the Trust, on such cost-sharing basis as 
        the Secretary shall establish, to carry out the program at the 
        Great Plains Synfuels Plant.

                      TITLE VI--ENERGY EFFICIENCY

SEC. 601. ENERGY CREDIT FOR COMBINED HEAT AND POWER SYSTEM PROPERTY.

    (a) In General.--Section 48(a)(3)(A) of the Internal Revenue Code 
of 1986 (defining energy property) is by striking ``or'' at the end of 
clause (iii), by inserting ``or'' at the end of clause (iv), and by 
adding at the end the following new clause:
                            ``(v) combined heat and power system 
                        property,''.
    (b) Combined Heat and Power System Property.--Section 48 of the 
Internal Revenue Code of 1986 is amended by adding at the end the 
following new subsection:
    ``(d) Combined Heat and Power System Property.--For purposes of 
subsection (a)(3)(A)(v)--
            ``(1) Combined heat and power system property.--The term 
        `combined heat and power system property' means property 
        comprising a system--
                    ``(A) which uses the same energy source for the 
                simultaneous or sequential generation of electrical 
                power, mechanical shaft power, or both, in combination 
                with the generation of steam or other forms of useful 
                thermal energy (including heating and cooling 
                applications),
                    ``(B) which has an electrical capacity of not more 
                than 15 megawatts or a mechanical energy capacity of 
                not more than 2,000 horsepower or an equivalent 
                combination of electrical and mechanical energy 
                capacities,
                    ``(C) which produces--
                            ``(i) at least 20 percent of its total 
                        useful energy in the form of thermal energy 
                        which is not used to produce electrical or 
                        mechanical power (or combination thereof), and
                            ``(ii) at least 20 percent of its total 
                        useful energy in the form of electrical or 
                        mechanical power (or combination thereof),
                    ``(D) the energy efficiency percentage of which 
                exceeds 60 percent, and
                    ``(E) which is placed in service before January 1, 
                2011.
            ``(2) Special rules.--
                    ``(A) Energy efficiency percentage.--For purposes 
                of this subsection, the energy efficiency percentage of 
                a system is the fraction--
                            ``(i) the numerator of which is the total 
                        useful electrical, thermal, and mechanical 
                        power produced by the system at normal 
                        operating rates, and expected to be consumed in 
                        its normal application, and
                            ``(ii) the denominator of which is the 
                        lower heating value of the fuel sources for the 
                        system.
                    ``(B) Determinations made on btu basis.--The energy 
                efficiency percentage and the percentages under 
                paragraph (1)(C) shall be determined on a Btu basis.
                    ``(C) Input and output property not included.--The 
                term `combined heat and power system property' does not 
                include property used to transport the energy source to 
                the facility or to distribute energy produced by the 
                facility.
                    ``(D) Certain exception not to apply.--The first 
                sentence of the matter in subsection (a)(3) which 
                follows subparagraph (D) thereof shall not apply to 
                combined heat and power system property.
            ``(3) Systems using bagasse.--If a system is designed to 
        use bagasse for at least 90 percent of the energy source--
                    ``(A) paragraph (1)(D) shall not apply, but
                    ``(B) the amount of credit determined under 
                subsection (a) with respect to such system shall not 
                exceed the amount which bears the same ratio to such 
                amount of credit (determined without regard to this 
                paragraph) as the energy efficiency percentage of such 
                system bears to 60 percent.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2006, 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. 602. EXTENSION OF NEW ENERGY EFFICIENT HOME CREDIT.

    (a) In General.--Section 45L(g) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to qualified new energy efficient homes acquired after the date of 
enactment of this Act, in taxable years ending after such date.

SEC. 603. MODIFICATION AND EXTENSION OF ENERGY EFFICIENT COMMERCIAL 
              BUILDINGS DEDUCTION.

    (a) Increase in Credit Amount.--
            (1) In general.--Subparagraph (A) of section 179D(b)(1) of 
        the Internal Revenue Code of 1986 is amended by striking 
        ``$1.80'' and inserting ``$2.25''.
            (2) Partial allowance.--Subparagraph (A) of section 179D(1) 
        of such Code is amended--
                    (A) by striking ``$.60'' and inserting ``$.75'', 
                and
                    (B) by striking ``$1.80'' and inserting ``$2.25''.
    (b) Extension.--Section 179D(g) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2010''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2006.

SEC. 604. EXTENSION OF NONBUSINESS ENERGY PROPERTY.

    (a) In General.--Section 25C(g) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2010''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act.
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