II 

110TH CONGRESS 

2D SESSION S. 3345 

To promote the capture and sequestration of carbon dioxide, to promote 

the use of energy produced from coal, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 26, 2008 

Mr. ROCKEFELLER introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To promote the capture and sequestration of carbon dioxide, 

to promote the use of energy produced from coal, and 

for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Future Fuels Act of 

5 2008’’. 

6 SEC. 2. FUTURE FUELS CORPORATION. 

7 Subtitle A of title XVI of the Energy Policy Act of 

8 2005 (Public Law 109–58; 119 Stat. 1109) is amended 

9 by adding at the end the following: 


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1 ‘‘SEC. 1602. FUTURE FUELS CORPORATION. 

2 ‘‘(a) ESTABLISHMENT.— 

3 ‘‘(1) IN GENERAL.—The Future Fuels Corpora4 tion (referred to in this section as the ‘Corporation’) 

5 is established as a government corporation. 

6 ‘‘(2) ADMINISTRATION.—The Corporation shall 

7 be subject to— 

8 ‘‘(A) this section; and 

9 ‘‘(B) chapter 91 of title 31, United States 

10 Code. 

11 ‘‘(3) BOARD OF DIRECTORS.— 

12 ‘‘(A) IN GENERAL.—The Corporation shall 

13 be managed by a board of directors composed 

14 of 7 individuals who are citizens of the United 

15 States, appointed by the President, by and with 

16 the advice and consent of the Senate. 

17 ‘‘(B) CHAIRPERSON.—The board of direc18 tors shall annually elect a Chairperson from 

19 among the members of the board of directors. 

20 ‘‘(C) TERM.—The term of a member of the 

21 board of directors shall be 4 years. 

22 ‘‘(4) TRANSFERS.—The Secretary shall transfer 

23 to the Corporation, from amounts appropriated and 

24 allocated to it, such sums as may be necessary to 

25 meet the requirements of this section. 


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1 ‘‘(b) USE OF FUNDS.—Beginning in fiscal year 2009, 

2 funds transferred by the Secretary to the Corporation 

3 under subsection (a)(4) shall be expended by the Corpora4 tion to— 

5 ‘‘(1) promote and deploy coal and coal cofired 

6 polygeneration technologies; 

7 ‘‘(2) reduce— 

8 ‘‘(A) the carbon footprint of coal consump9 tion; and 

10 ‘‘(B) the production of coal-based byprod11 ucts; and 

12 ‘‘(3) conduct widespread carbon sequestration 

13 research, development, and deployment activities.’’. 

14 SEC. 3. CARBON CAPTURE AND STORAGE RESEARCH, DE15 VELOPMENT, AND DEMONSTRATION PRO16 GRAM. 

17 Section 963 of the Energy Policy Act of 2005 (42 

18 U.S.C. 16293) is amended— 

19 (1) in the section heading, by striking ‘‘AND

20 SEQUESTRATION’’ and inserting ‘‘AND STOR21 AGE’’; 

22 (2) in subsection (a), by striking ‘‘and seques23 tration’’ and inserting ‘‘and storage’’; and 

24 (3) by striking subsections (c) and (d) and in25 serting the following: 


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1 ‘‘(c) PROGRAMMATIC ACTIVITIES.— 

2 ‘‘(1) GOAL.—The Secretary shall establish a 

3 program under which the Secretary shall conduct ac4 tivities necessary to achieve the goal of annually se5 questering at least 1,000,000 tons of carbon dioxide 

6 by January 1, 2015. 

7 ‘‘(2) REVIEW OF EXISTING DATA.—Not later 

8 than 180 days after the date of enactment of the 

9 Future Fuels Act of 2008, the Secretary shall— 

10 ‘‘(A) verify and analyze the results of any 

11 assessment conducted by any other Federal 

12 agency or a State relating to geological storage 

13 capacity and the potential for carbon injection 

14 rates, including a risk analysis of any potential 

15 geologic storage areas assessed; and 

16 ‘‘(B) submit to the appropriate committees 

17 of Congress a report that describes the results 

18 of the verification and analyses under subpara19 graph (A). 

20 ‘‘(3) RECOMMENDATIONS.—As soon as prac21 ticable after the date of enactment of the Future 

22 Fuels Act of 2008, the Secretary shall submit to the 

23 appropriate committees of Congress recommenda24 tions on appropriate regulatory and advisory mecha25 nisms for— 


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1 ‘‘(A) the determination of best tech2 nologies; 

3 ‘‘(B) the identification and evaluation of 

4 state-of-the-art research, development, and de5 ployment strategies for carbon capture and 

6 storage technologies; 

7 ‘‘(C) the selection and operation of carbon 

8 dioxide sequestration sites; and 

9 ‘‘(D) the transfer of liability for the sites 

10 to the United States. 

11 ‘‘(4) INTERSTATE COMPACTS.—As soon as 

12 practicable after the date of enactment of this Act, 

13 the Secretary shall develop model interstate com14 pacts to govern the transportation, injection, and 

15 storage of carbon dioxide. 

16 ‘‘(5) DEMONSTRATION PROJECT.—The Sec17 retary shall conduct geological sequestration dem18 onstration projects involving carbon dioxide seques19 tration operations in a variety of candidate geologi20 cal settings, including— 

21 ‘‘(A) oil and gas reservoirs; 

22 ‘‘(B) unmineable coal seams; 

23 ‘‘(C) deep saline aquifers; 

24 ‘‘(D) basalt and shale formations; and 


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1 ‘‘(E) terrestrial sequestration, including 

2 restoration project sites provided assistance by 

3 the Abandoned Mine Reclamation Fund estab4 lished by section 401 of the Surface Mining 

5 Control and Reclamation Act of 1977 (30 

6 U.S.C. 1231). 

7 ‘‘(d) AUTHORIZATION OF APPROPRIATIONS.— 

8 ‘‘(1) IN GENERAL.—There are authorized to be 

9 appropriated to carry out this section— 

10 ‘‘(A) $100,000,000 for each of fiscal years 

11 2009 and 2010; 

12 ‘‘(B) $105,000,000 for fiscal year 2011; 

13 ‘‘(C) $110,000,000 for fiscal year 2012; 

14 ‘‘(D) $115,000,000 for fiscal year 2013; 

15 and 

16 ‘‘(E) $120,000,000 for fiscal year 2014. 

17 ‘‘(2) AVAILABILITY OF FUNDS.—Funds made 

18 available for a fiscal year under paragraph (1)— 

19 ‘‘(A) shall remain available until expended, 

20 but not later than September 30, 2014; and 

21 ‘‘(B) may be reprogrammed, at the discre22 tion of the Secretary, for expenditure for other 

23 demonstration projects under this title only 

24 after— 

25 ‘‘(i) September 30, 2010; and 


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1 ‘‘(ii) the Secretary provides notice of 

2 the proposed reprogramming to the appro3 priate committees of Congress.’’. 

4 SEC. 4. STANDBY LOANS FOR QUALIFYING COAL-TO-LIQUID 

5 PROJECTS. 

6 Section 1702 of the Energy Policy Act of 2005 (42 

7 U.S.C. 16512) is amended by adding at the end the fol8 lowing: 

9 ‘‘(k) STANDBY LOANS FOR QUALIFYING COAL-TO10 LIQUID PROJECTS.— 

11 ‘‘(1) DEFINITIONS.—In this subsection: 

12 ‘‘(A) CAP PRICE.—The term ‘cap price’ 

13 means the market price specified in a standby 

14 loan agreement above which the qualifying CTL 

15 project is required to make payments to the 

16 United States. 

17 ‘‘(B) CONVENTIONAL BASELINE EMIS18 SIONS.—The term ‘conventional baseline emis19 sions’ means— 

20 ‘‘(i) the lifecycle greenhouse gas emis21 sions of a facility that produces combus22 tible end products, using petroleum as a 

23 feedstock, that are equivalent to combus24 tible end products produced by a facility of 


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1 comparable size through a qualifying CTL 

2 project; 

3 ‘‘(ii) in the case of noncombustible 

4 products produced through a qualifying 

5 CTL project, the average lifecycle green6 house gas emissions emitted by projects 

7 that— 

8 ‘‘(I) are of comparable size; and 

9 ‘‘(II) produce equivalent products 

10 using conventional feedstocks; and 

11 ‘‘(iii) in the case of synthesized gas 

12 intended for use as a combustible fuel in 

13 lieu of natural gas produced by a quali14 fying CTL project, the lifecycle greenhouse 

15 gas emissions that would result from 

16 equivalent use of natural gas. 

17 ‘‘(C) DIRECT LOAN.—The term ‘direct 

18 loan’ has the meaning given the term in section 

19 502 of the Federal Credit Reform Act of 1990 

20 (2 U.S.C. 661a). 

21 ‘‘(D) ELIGIBLE ENTITY.—The term ‘eligi22 ble entity’ means an entity that conducts a 

23 qualifying CTL project. 


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1 ‘‘(E) FACILITY.—The term ‘facility’ means 

2 a facility at which the conversion of feedstocks 

3 to end products takes place. 

4 ‘‘(F) FULL TERM.—The term ‘full term’ 

5 means the full term of a standby loan agree6 ment, as specified in the standby loan agree7 ment under paragraph (2)(A)(ii)(III), which 

8 shall not be more than the lesser of— 

9 ‘‘(i) 30 years; or 

10 ‘‘(ii) 90 percent of the projected use11 ful life of the qualifying CTL project, as 

12 determined by the Secretary. 

13 ‘‘(G) LIFECYCLE GREENHOUSE GAS EMIS14 SIONS.—The term ‘lifecycle greenhouse gas 

15 emissions’ means the difference between— 

16 ‘‘(i) the aggregate quantity of green17 house gases attributable to the production 

18 and transportation of end products at a fa19 cility, including the production, extraction, 

20 cultivation, distribution, marketing, and 

21 transportation of feedstocks, and the sub22 sequent distribution and use of any com23 bustible end products; and 

24 ‘‘(ii)(I) any greenhouse gases captured 

25 at the facility and sequestered; 


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1 ‘‘(II) the carbon content, expressed in 

2 units of carbon dioxide equivalent, of any 

3 feedstock that is a renewable biomass; and 

4 ‘‘(III) the carbon content, expressed 

5 in units of carbon dioxide equivalent, of 

6 any end products that do not result in the 

7 release of carbon dioxide to the atmos8 phere. 

9 ‘‘(H) LONG-TERM STORAGE.—The term 

10 ‘long-term storage’ means sequestration with an 

11 expected maximum rate of carbon dioxide leak12 age over a specified period of time that is con13 sistent with the objective of reducing atmos14 pheric concentrations of carbon dioxide, subject 

15 to a permit issued under any law in effect as 

16 of the date of the sequestration. 

17 ‘‘(I) MARKET PRICE.—The term ‘market 

18 price’ means the average quarterly price of a 

19 petroleum price index specified in the standby 

20 loan agreement. 

21 ‘‘(J) MINIMUM PRICE.—The term ‘min22 imum price’ means a market price specified in 

23 the standby loan agreement below which the 

24 United States is obligated to make disburse25 ments to the qualifying CTL project. 


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1 ‘‘(K) OUTPUT.—The term ‘output’ means 

2 all or a portion of the liquid or gaseous trans3 portation fuels produced from the qualifying 

4 CTL project, as specified in the standby loan 

5 agreement. 

6 ‘‘(L) PRIMARY TERM.—The term ‘primary 

7 term’ means the initial term of a standby loan 

8 agreement, as specified in the agreement under 

9 paragraph (2)(A)(ii)(II), which shall not be 

10 more than the lesser of— 

11 ‘‘(i) 20 years; or 

12 ‘‘(ii) 75 percent of the projected use13 ful life of the qualifying CTL project, as 

14 determined by the Secretary. 

15 ‘‘(M) QUALIFYING CTL PROJECT.—The 

16 term ‘qualifying CTL project’ means a commer17 cial-scale project that converts coal to industrial 

18 feedstocks or 1 or more liquid or gaseous fuels 

19 for transportation or other uses or a project 

20 conducted at a facility that converts petroleum 

21 refinery waste products (including petroleum 

22 coke) into 1 or more liquid or gaseous transpor23 tation fuels— 

24 ‘‘(i) that demonstrates the capture, 

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1 bon dioxide produced in the conversion 

2 process; and 

3 ‘‘(ii) for which— 

4 ‘‘(I) the annual lifecycle green5 house gas emissions of the project are 

6 at least 20 percent lower than conven7 tional baseline emissions; 

8 ‘‘(II) at least 75 percent of the 

9 carbon dioxide that would otherwise 

10 be released to the atmosphere at the 

11 facility in the production of end prod12 ucts of the project is captured for 

13 long-term storage; and 

14 ‘‘(III) the eligible entity has en15 tered into an enforceable agreement 

16 with the Secretary to implement car17 bon capture at the percentage that, by 

18 the end of the 5-year period after 

19 commencement of commercial oper20 ation of the eligible qualifying CTL 

21 project— 

22 ‘‘(aa) represents the best 

23 available technology; and 


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1 ‘‘(bb) achieves a reduction in 

2 carbon emissions that is not less 

3 than 75 percent. 

4 ‘‘(N) STANDBY LOAN AGREEMENT.—The 

5 term ‘standby loan agreement’ means a loan 

6 agreement entered into under paragraph 

7 (2)(A)(i). 

8 ‘‘(2) AGREEMENTS.— 

9 ‘‘(A) STANDBY LOAN AGREEMENT.— 

10 ‘‘(i) IN GENERAL.—The Secretary 

11 may enter into standby loan agreements 

12 for the conduct of not more than 10 quali13 fying CTL projects, at least 1 of which 

14 may be a qualifying CTL project primarily 

15 designed to produce pipeline-quality nat16 ural gas from domestic coal. 

17 ‘‘(ii) REQUIREMENTS.—A standby 

18 loan agreement entered into under clause 

19 (i) shall— 

20 ‘‘(I) provide for a direct loan 

21 from the Secretary to the eligible enti22 ty for the qualifying CTL project; 

23 ‘‘(II) specify the primary term of 

24 the standby loan agreement; 


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1 ‘‘(III) specify the full term of the 

2 standby loan agreement; and 

3 ‘‘(IV) establish a cap price and a 

4 minimum price for the primary term 

5 of the standby loan agreement. 

6 ‘‘(B) PROFIT-SHARING AGREEMENT.— 

7 ‘‘(i) IN GENERAL.—Simultaneously 

8 with entering into a standby loan agree9 ment under subparagraph (A), the Sec10 retary may enter into a profit-sharing 

11 agreement with the eligible entity. 

12 ‘‘(ii) REQUIREMENTS.—Under a prof13 it-sharing agreement, if the market price 

14 exceeds the cap price in a calendar quar15 ter, a profit-sharing payment shall be 

16 made for the calendar quarter, in an 

17 amount equal to the difference between— 

18 ‘‘(I) the amount that is equal to 

19 the product obtained by multiplying— 

20 ‘‘(aa) the amount that is 

21 equal to the difference between— 

22 ‘‘(AA) the market price; 

23 and 

24 ‘‘(BB) the cap price; 

25 and 


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1 ‘‘(bb) the output of the 

2 qualifying CTL project; and 

3 ‘‘(II) the total amount of any 

4 loan repayments made for the cal5 endar quarter. 

6 ‘‘(3) LOAN DISBURSEMENTS.— 

7 ‘‘(A) DISBURSEMENT.—A loan subject to a 

8 standby loan agreement shall be disbursed dur9 ing the primary term of the standby loan agree10 ment during any period in which the market 

11 price falls below the minimum price. 

12 ‘‘(B) AMOUNT.— 

13 ‘‘(i) IN GENERAL.—Subject to sub14 paragraph (B), the total amount of dis15 bursements in any calendar quarter under 

16 subparagraph (A) shall be equal to the 

17 product obtained by multiplying— 

18 ‘‘(I) the difference between— 

19 ‘‘(aa) the minimum price; 

20 and 

21 ‘‘(bb) the market price; and 

22 ‘‘(II) the output of the qualifying 

23 CTL project. 

24 ‘‘(ii) LIMITATION.—Notwithstanding 

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1 ments in any calendar quarter shall be not 

2 more than the total amount of disburse3 ments specified in the applicable standby 

4 loan agreement. 

5 ‘‘(4) LOAN REPAYMENTS.— 

6 ‘‘(A) IN GENERAL.—Subject to subpara7 graph (B), the Secretary shall establish terms 

8 and conditions, including interest rates and am9 ortization schedules, for the repayment of a 

10 loan under this subsection within the full term 

11 of the standby loan agreement. 

12 ‘‘(B) LIMITATIONS.—In establishing the 

13 terms and conditions under subparagraph (A), 

14 the Secretary shall provide that— 

15 ‘‘(i) if, in any calendar quarter during 

16 the primary term of the standby loan 

17 agreement, the market price is less than 

18 the cap price— 

19 ‘‘(I) the qualifying CTL project 

20 may elect to defer some or all of the 

21 repayment obligations due during the 

22 applicable calendar quarter; and 

23 ‘‘(II) if an election is made under 

24 subclause (I), any unpaid obligations 


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1 will continue to accrue interest during 

2 the deferral period; 

3 ‘‘(ii)(I) if, in any calendar quarter 

4 during the primary term of the agreement, 

5 the market price is greater than the cap 

6 price, the qualifying CTL project shall 

7 meet the scheduled repayment obligation 

8 and any deferred repayment obligations, 

9 but shall not be required to pay in the ap10 plicable calendar quarter an amount that 

11 is more than the product obtained by mul12 tiplying— 

13 ‘‘(aa) the amount that is equal to 

14 the difference between— 

15 ‘‘(AA) the market price; and 

16 ‘‘(BB) the cap price; and 

17 ‘‘(bb) the output of the qualifying 

18 CTL project; and 

19 ‘‘(II) the qualifying CTL project may 

20 elect to defer any repayment obligation in 

21 excess of the amount determined under 

22 subclause (I); and 

23 ‘‘(C) at the end of the primary term of the 

24 standby loan agreement, the cumulative amount 

25 of any deferred repayment obligations and any 


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1 accrued interest shall be amortized (with inter2 est) over the remainder of the full term of the 

3 standby loan agreement. 

4 ‘‘(5) COMPLIANCE WITH FEDERAL CREDIT RE5 FORM ACT.— 

6 ‘‘(A) UPFRONT PAYMENT OF COST OF

7 LOAN.—No standby loan agreement may be en8 tered into under this subsection unless the eligi9 ble entity, on execution of the standby loan 

10 agreement, makes an upfront payment to the 

11 United States that the Director of the Office of 

12 Management and Budget determines is equal to 

13 the cost of the loan, as determined under 

14 502(5)(B) of the Federal Credit Reform Act of 

15 1990 (2 U.S.C. 661a(5)(B)). 

16 ‘‘(B) MINIMIZATION OF RISK TO THE GOV17 ERNMENT.—In making the determination of the 

18 cost of the loan for purposes of establishing the 

19 upfront payment under subparagraph (A), the 

20 Secretary and the Director of the Office of 

21 Management and Budget shall take into consid22 eration the extent to which the minimum price 

23 and the cap price reflect historical patterns of 

24 volatility in actual oil prices relative to projec25 tions of future oil prices, based on— 


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1 ‘‘(i) publicly available data from the 

2 Energy Information Administration; and 

3 ‘‘(ii) statistical methods and analyses 

4 that are appropriate for the analysis of vol5 atility in energy prices. 

6 ‘‘(C) TREATMENT OF PAYMENTS.— 

7 ‘‘(i) IN GENERAL.—The value to the 

8 United States of an upfront payment 

9 under subparagraph (A) and any profit10 sharing payments under paragraph (2)(B) 

11 shall be taken into account for purposes of 

12 section 502(5)(B)(iii) of the Federal Credit 

13 Reform Act of 1990 (2 U.S.C. 

14 661a(5)(B)(iii)) in determining the cost to 

15 the Federal Government of a loan under 

16 this subsection. 

17 ‘‘(ii) NO COST.—If a loan under this 

18 subsection has no cost to the Federal Gov19 ernment, the requirements of section 

20 504(b) of the Federal Credit Reform Act 

21 of 1990 (2 U.S.C. 661c(b)) shall be consid22 ered to be satisfied. 

23 ‘‘(6) APPLICABLE LAW.— 

24 ‘‘(A) NO DOUBLE BENEFIT.—A qualifying 

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1 section may not, during the primary term of the 

2 standby loan agreement, receive a Federal loan 

3 guarantee under— 

4 ‘‘(i) subsection (a); or 

5 ‘‘(ii) any other law. 

6 ‘‘(B) SUBROGATION, FEES, AND FULL

7 FAITH AND CREDIT.—Subsections (g)(2), (h), 

8 and (j) shall apply to standby loans under this 

9 subsection to the same extent the provisions 

10 apply to loan guarantees.’’. 

11 SEC. 5. CREDIT FOR MULTI-PRODUCT PIPELINE CON12 STRUCTION. 

13 (a) IN GENERAL.—Subpart D of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of 

15 1986 is amended by adding at the end the following new 

16 section: 

17 ‘‘SEC. 45Q. COAL-BASED TRANSPORTATION FUEL PIPELINE 

18 CREDIT. 

19 ‘‘(a) IN GENERAL.—For purposes of section 38, in 

20 the case of an eligible taxpayer, the coal-based transpor21 tation fuel pipeline credit for any taxable year is an 

22 amount equal to the applicable amount for each gallon of 

23 qualified average daily throughput with respect to an eligi24 ble pipeline during the taxable year. 


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1 ‘‘(b) APPLICABLE AMOUNT.—For purposes of sub2 section (a), the applicable amount is an amount equal to— 

3 ‘‘(1) $0.02 per gallon for the first 1,000,000 

4 gallons of qualified average daily throughput, and 

5 ‘‘(2) $0.01 per gallon for the number of gallons 

6 of qualified average daily throughput in excess of 

7 1,000,000 gallons. 

8 ‘‘(c) QUALIFIED AVERAGE DAILY THROUGHPUT.— 

9 For purposes of this section— 

10 ‘‘(1) IN GENERAL.—The term ‘qualified average 

11 daily throughput’ means the average of the amount 

12 of qualified fuel which enters the eligible pipeline on 

13 each day during the taxable year. 

14 ‘‘(2) TERMINATION.— 

15 ‘‘(A) IN GENERAL.—No amount of quali16 fied fuel entering an eligible pipeline shall be 

17 taken into account for any day after December 

18 31, 2015. 

19 ‘‘(B) SPECIAL RULE.—In the case of any 

20 taxable year which includes December 31, 2015, 

21 any day in such taxable year following such 

22 date shall not be taken into account in deter23 mining the qualified average daily throughput 

24 for such year. 


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1 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

2 section— 

3 ‘‘(1) ELIGIBLE TAXPAYER.—The term ‘eligible 

4 taxpayer’ means any taxpayer who owns an eligible 

5 pipeline. 

6 ‘‘(2) ELIGIBLE PIPELINE.—The term ‘eligible 

7 pipeline’ means a pipeline— 

8 ‘‘(A) the original use of which commences 

9 with the taxpayer, 

10 ‘‘(B) which is placed in service by the tax11 payer after the date of the enactment of this 

12 Act and before December 31, 2012, 

13 ‘‘(C) no written binding contract for the 

14 construction of which was in effect on or before 

15 December 31, 2007, and 

16 ‘‘(D) which is used for the transportation 

17 of fuels derived from coal. 

18 Rules similar to the rules of section 179C(c)(2) shall 

19 apply for purposes of this paragraph. 

20 ‘‘(3) QUALIFIED FUEL.—The term ‘qualified 

21 fuel’ means any liquid fuel derived from coal, or coal 

22 and biomass (as defined in section 45K(c)(3)) 

23 through the Fischer-Tropsch processor another proc24 ess converting coal into liquid fuel.’’. 


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1 (b) CONFORMING AMENDMENT.—Section 38(b) of 

2 such the Internal Revenue Code of 1986 (relating to gen3 eral business credit) is amended by striking ‘‘plus’’ at the 

4 end of paragraph (32), by striking the period at the end 

5 of paragraph (33) and inserting ‘‘, plus’’, and by adding 

6 at the end of following new paragraph: 

7 ‘‘(34) the coal-based transportation fuel pipeline 

8 credit under section 45Q(a).’’. 

9 (c) CLERICAL AMENDMENT.—The table of sections 

10 for subpart B of part IV of subchapter A of chapter 1 

11 of such Code (relating to other credits) is amended by add12 ing at the end the following new section: 

‘‘Sec. 45Q. Coal-based transportation fuel pipeline credit.’’. 

13 (d) EFFECTIVE DATE.—The amendments made by 

14 this subsection shall apply to property placed in service 

15 after the date of the enactment of this Act. 

16 SEC. 6. INCENTIVES TO CAPTURE COALMINE METHANE. 

17 (a) IN GENERAL.—Section 45K of the Internal Rev18 enue Code of 1986 (relating to credit for producing fuel 

19 from a nonconventional source) is amended by adding at 

20 the end the following new subsection: 

21 ‘‘(h) APPLICATION TO COALMINE METHANE GAS.— 

22 ‘‘(1) IN GENERAL.—This section shall apply to 

23 coalmine methane gas— 

24 ‘‘(A) captured or extracted by the taxpayer 

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1 section and before the date that is 5 years after 

2 the date of the enactment of this subsection, 

3 and 

4 ‘‘(B) utilized as a fuel source or sold by or 

5 on behalf of the taxpayer to an unrelated per6 son after the date of the enactment of this sub7 section and before the date that is 5 years after 

8 the date of the enactment of this subsection. 

9 ‘‘(2) COALMINE METHANE GAS.—For purposes 

10 of this paragraph, the term ‘coalmine methane gas’ 

11 means any methane gas which is— 

12 ‘‘(A) liberated during qualified coal mining 

13 operations, or 

14 ‘‘(B) extracted up to 5 years in advance of 

15 qualified coal mining operations as part of a 

16 specific plan to mine a coal deposit. 

17 ‘‘(3) SPECIAL RULE FOR ADVANCED EXTRAC18 TION.—In the case of coalmine methane gas which 

19 is captured in advance of qualified coal mining oper20 ations, the credit under subsection (a) shall be al21 lowed only after the date the coal extraction occurs 

22 in the immediate area where the coalmine methane 

23 gas was removed. 

24 ‘‘(4) NONCOMPLIANCE WITH POLLUTION

25 LAWS.—For purposes of subparagraphs (B) and (C), 


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1 coal mining operations which are not in compliance 

2 with the applicable State and Federal pollution pre3 vention, control, and permit requirements for any 

4 period of time shall not be considered to be qualified 

5 coal mining operations during such period.’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 this section shall take effect on the date of the enactment 

8 of this Act. 

9 SEC. 7. EXPANDED CLEAN COAL TECHNOLOGY INCEN10 TIVES. 

11 (a) EXPANSION AND MODIFICATION OF ADVANCED

12 COAL PROJECT INVESTMENT CREDIT.— 

13 (1) CREDIT RATE PARITY AMONG PROJECTS.— 

14 Section 48A(a) of the Internal Revenue Code of 

15 1986 (relating to qualifying advanced coal project 

16 credit) is amended by striking ‘‘equal to’’ and all 

17 that follows and inserting ‘‘equal to 30 percent of 

18 the qualified investment for such taxable year.’’. 

19 (2) EXPANSION OF AGGREGATE CREDITS.—Sec20 tion 48A(d)(3)(A) of such Code (relating to aggre21 gate credits) is amended by striking 

22 ‘‘$1,300,000,000’’ and inserting ‘‘$8,300,000,000’’. 

23 (3) AUTHORIZATION OF ADDITIONAL

24 PROJECTS.— 


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1 (A) IN GENERAL.—Subparagraph (B) of 

2 section 48A(d)(3) of such Code (relating to ag3 gregate credits) is amended to read as follows: 

4 ‘‘(B) PARTICULAR PROJECTS.—Of the dol5 lar amount in subparagraph (A), the Secretary 

6 is authorized to certify— 

7 ‘‘(i) $800,000,000 for integrated gas8 ification combined cycle projects the appli9 cation for which is submitted during the 

10 period described in paragraph (2)(A)(i), 

11 ‘‘(ii) $500,000,000 for projects which 

12 use other advanced coal-based generation 

13 technologies the application for which is 

14 submitted during the period described in 

15 paragraph (2)(A)(i), 

16 ‘‘(iii) $4,200,000,000 for integrated 

17 gasification combined cycle projects the ap18 plication for which is submitted during the 

19 period described in paragraph (2)(A)(ii), 

20 and 

21 ‘‘(iv) $2,800,000,000 for other ad22 vanced coal-based generation technology 

23 projects the application for which is sub24 mitted during the period described in para25 graph (2)(A)(ii).’’. 


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1 (B) APPLICATION PERIOD FOR ADDI2 TIONAL PROJECTS.—Subparagraph (A) of sec3 tion 48A(d)(2) of such Code (relating to certifi4 cation) is amended to read as follows: 

5 ‘‘(A) APPLICATION PERIOD.—Each appli6 cant for certification under this paragraph shall 

7 submit an application meeting the requirements 

8 of subparagraph (B). An applicant may only 

9 submit an application— 

10 ‘‘(i) for an allocation from the dollar 

11 amount specified in clause (i) or (ii) of 

12 paragraph (3)(A) during the 3-year period 

13 beginning on the date the Secretary estab14 lishes the program under paragraph (1), 

15 and 

16 ‘‘(ii) for an allocation from the dollar 

17 amount specified in clause (iii) or (iv) of 

18 paragraph (3)(A) during the 3-year period 

19 beginning at the earlier of the termination 

20 of the period described in clause (i) or the 

21 date prescribed by the Secretary.’’. 

22 (C) CAPTURE AND SEQUESTRATION OF

23 CARBON DIOXIDE EMISSIONS REQUIREMENT.— 

24 Section 48A(e)(1) of such Code (relating to re25 quirements) is amended by striking ‘‘and’’ at 


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1 the end of subparagraph (E), by striking the 

2 period at the end of subparagraph (F) and in3 serting ‘‘, and’’, and by adding at the end the 

4 following new subparagraph: 

5 ‘‘(G) in the case of any project the applica6 tion for which is submitted during the period 

7 described in paragraph (2)(A)(ii), the project 

8 includes equipment to separate and sequester 

9 65 percent of such project’s total carbon dioxide 

10 emissions.’’. 

11 (4) NAMEPLATE CAPACITY.—Paragraph (1) of 

12 section 48A(e) of such Code is amended by adding 

13 at the end the following new flush sentence: 

14 ‘‘For purposes of subparagraph (C), in determining 

15 total nameplate generating capacity, the Secretary 

16 shall use the electric output that is guaranteed by 

17 the provider or supplier of the advanced coal-based 

18 generation technology based upon a certified heat 

19 and material heat balance.’’. 

20 (5) EFFECTIVE DATE.—The amendments made 

21 by this subsection shall take effect on the date of the 

22 enactment of this Act. 

23 (b) CLEAN COAL ENERGY BONDS.— 

24 (1) IN GENERAL.—Subpart I of part IV of sub25 chapter A of chapter 1 of the Internal Revenue Code 


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1 of 1986 is amended by adding at the end the fol2 lowing new section: 

3 ‘‘SEC. 54C. CLEAN COAL ENERGY BONDS. 

4 ‘‘(a) CLEAN COAL ENERGY BOND.—For purposes of 

5 this subchapter, the term ‘clean coal energy bond’ means 

6 any bond issued as part of an issue if— 

7 ‘‘(1) the bond is issued by a qualified issuer 

8 pursuant to an allocation by the Secretary to such 

9 issuer of a portion of the national clean coal energy 

10 bond limitation under subsection (c)(2), 

11 ‘‘(2) 100 percent or more of the available 

12 project proceeds from the sale of such issue are to 

13 be used for capital expenditures incurred by quali14 fied borrowers for 1 or more qualified projects, and 

15 ‘‘(3) the qualified issuer designates such bond 

16 for purposes of this section and the bond is in reg17 istered form. 

18 ‘‘(b) QUALIFIED PROJECT; SPECIAL USE RULES.— 

19 ‘‘(1) IN GENERAL.—The term ‘qualified project’ 

20 means a qualifying advanced coal project (as defined 

21 in section 48A(c)(1)) placed in service by a qualified 

22 borrower. 

23 ‘‘(2) REFINANCING RULES.—For purposes of 

24 subsection (a)(2), a qualified project may be refi25 nanced with proceeds of a clean coal energy bond 


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1 only if the indebtedness being refinanced (including 

2 any obligation directly or indirectly refinanced by 

3 such indebtedness) was originally incurred by a 

4 qualified borrower after the date of the enactment of 

5 this section. 

6 ‘‘(3) REIMBURSEMENT.—For purposes of sub7 section (a)(2), a clean coal energy bond may be 

8 issued to reimburse a qualified borrower for amounts 

9 paid after the date of the enactment of this section 

10 with respect to a qualified project, but only if— 

11 ‘‘(A) prior to the payment of the original 

12 expenditure, the qualified borrower declared its 

13 intent to reimburse such expenditure with the 

14 proceeds of a clean coal energy bond, 

15 ‘‘(B) not later than 60 days after payment 

16 of the original expenditure, the qualified issuer 

17 adopts an official intent to reimburse the origi18 nal expenditure with such proceeds, and 

19 ‘‘(C) the reimbursement is made not later 

20 than 18 months after the date the original ex21 penditure is paid. 

22 ‘‘(4) TREATMENT OF CHANGES IN USE.—For 

23 purposes of subsection (a)(2), the proceeds of an 

24 issue shall not be treated as used for a qualified 

25 project to the extent that a qualified borrower takes 


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1 any action within its control which causes such pro2 ceeds not to be used for a qualified project. The Sec3 retary shall prescribe regulations specifying remedial 

4 actions that may be taken (including conditions to 

5 taking such remedial actions) to prevent an action 

6 described in the preceding sentence from causing a 

7 bond to fail to be a clean coal energy bond. 

8 ‘‘(c) LIMITATION ON AMOUNT OF BONDS DES9 IGNATED.— 

10 ‘‘(1) NATIONAL LIMITATION.—There is a na11 tional clean coal energy bond limitation of 

12 $2,000,000,000. 

13 ‘‘(2) ALLOCATION BY SECRETARY.—The Sec14 retary shall allocate the amount described in para15 graph (1) among qualified projects in such manner 

16 as the Secretary determines appropriate, except that 

17 the Secretary may not allocate more than 

18 $1,250,000,000 of the national clean coal energy 

19 bond limitation to finance qualified projects of quali20 fied borrowers which are governmental bodies. 

21 ‘‘(d) QUALIFIED ISSUER; QUALIFIED BORROWER.— 

22 For purposes of this section— 

23 ‘‘(1) QUALIFIED ISSUER.—The term ‘qualified 

24 issuer’ means— 

25 ‘‘(A) a clean coal energy bond lender, 


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1 ‘‘(B) a cooperative electric company, or 

2 ‘‘(C) a governmental body. 

3 ‘‘(2) QUALIFIED BORROWER.—The term ‘quali4 fied borrower’ means— 

5 ‘‘(A) a mutual or cooperative electric com6 pany described in section 501(c)(12) or 

7 1381(a)(2)(C), or 

8 ‘‘(B) a governmental body. 

9 ‘‘(3) COOPERATIVE ELECTRIC COMPANY.—The 

10 term ‘cooperative electric company’ means a mutual 

11 or cooperative electric company described in section 

12 501(c)(12) or section 1381(a)(2)(C), or a not-for13 profit electric utility which has received a loan or 

14 loan guarantee under the Rural Electrification Act. 

15 ‘‘(4) CLEAN COAL ENERGY BOND LENDER.— 

16 The term ‘clean coal energy bond lender’ means a 

17 lender which is a cooperative which is owned by, or 

18 has outstanding loans to, 100 or more cooperative 

19 electric companies and is in existence on February 

20 1, 2002, and shall include any affiliated entity which 

21 is controlled by such lender. 

22 ‘‘(5) GOVERNMENTAL BODY.—The term ‘gov23 ernmental body’ means any State, territory, posses24 sion of the United States, the District of Columbia, 


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1 Indian tribal government, and any political subdivi2 sion thereof. 

3 ‘‘(e) SPECIAL RULES RELATING TO POOL BONDS.— 

4 No portion of a clean coal energy bond which is a pooled 

5 financing bond may be allocable to any loan unless the 

6 borrower has entered into a written loan commitment for 

7 such portion prior to the issue date of such issue. 

8 ‘‘(f) OTHER DEFINITIONS AND SPECIAL RULES.— 

9 For purposes of this section— 

10 ‘‘(1) POOLED FINANCING BOND.—The term 

11 ‘pooled financing bond’ shall have the meaning given 

12 such term by section 149(f)(4)(A). 

13 ‘‘(2) RATABLE PRINCIPAL AMORTIZATION RE14 QUIRED.—A bond shall not be treated as a clean 

15 coal energy bond unless it is part of an issue which 

16 provides for an equal amount principal to be paid by 

17 the qualified issuer during each 12-month period 

18 that the issue is outstanding (other than the first 

19 12-month period). 

20 ‘‘(g) TERMINATION.—A bond shall not be treated as 

21 a clean coal energy bond if such bond is issued after De22 cember 31, 2012.’’. 

23 (2) CONFORMING AMENDMENTS.— 

24 (A) Paragraph (1) of section 54A(d) is 

25 amended to read as follows: 


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1 ‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 

2 ‘qualified tax credit bond’ means— 

3 ‘‘(A) a qualified forestry conservation 

4 bond, or 

5 ‘‘(B) a clean coal energy bond, 

6 which is part of an issue that meets requirements of 

7 paragraphs (2), (3), (4), (5), and (6).’’. 

8 (B) Subparagraph (C) of section 

9 54A(d)(2), as added by section 106, is amended 

10 to read as follows: 

11 ‘‘(C) QUALIFIED PURPOSE.—For purposes 

12 of this paragraph, the term ‘qualified purpose’ 

13 means— 

14 ‘‘(i) in the case of a qualified forestry 

15 conservation bond, a purpose specified in 

16 section 54B(e), and 

17 ‘‘(ii) in the case of a clean coal energy 

18 bond, a qualified project specified in sec19 tion 54C(b).’’. 

20 (C) The table of sections for subpart I of 

21 part IV of subchapter A of chapter 1 is amend22 ed by adding at the end the following new item: 

‘‘Sec. 54C. Clean coal energy bonds.’’. 

23 (3) ISSUANCE OF REGULATIONS.—The Sec24 retary of the Treasury shall issues regulations re25 quired under section 54C of the Internal Revenue 


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1 Code of 1986 (as added by this section) not later 

2 than 120 days after the date of the enactment of 

3 this Act. 

4 (4) EFFECTIVE DATE.—The amendments made 

5 by this subsection shall apply to bonds issued after 

6 December 31, 2007. 

7 (c) TAX CREDIT FOR CARBON DIOXIDE SEQUESTRA8 TION.— 

9 (1) IN GENERAL.—Subpart D of part IV of 

10 subchapter A of chapter 1 of the Internal Revenue 

11 Code of 1986 (relating to business credits), as 

12 amended by this Act, is amended by adding at the 

13 end the following new section: 

14 ‘‘SEC. 45R. CREDIT FOR CARBON DIOXIDE SEQUESTRATION. 

15 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

16 the carbon dioxide sequestration credit for any taxable 

17 year is an amount equal to the sum of— 

18 ‘‘(1) $20 per metric ton of qualified carbon di19 oxide which is— 

20 ‘‘(A) captured by the taxpayer at a quali21 fied facility, and 

22 ‘‘(B) disposed of by the taxpayer in secure 

23 geological storage, and 

24 ‘‘(2) $10 per metric ton of qualified carbon di25 oxide which is— 


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1 ‘‘(A) captured by the taxpayer at a quali2 fied facility, and 

3 ‘‘(B) used by the taxpayer as a tertiary 

4 injectant in a qualified enhanced oil or natural 

5 gas recovery project. 

6 ‘‘(b) QUALIFIED CARBON DIOXIDE.—For purposes of 

7 this section— 

8 ‘‘(1) IN GENERAL.—The term ‘qualified carbon 

9 dioxide’ means carbon dioxide captured from an in10 dustrial source which— 

11 ‘‘(A) would otherwise be released into the 

12 atmosphere as industrial emission of green13 house gas, and 

14 ‘‘(B) is measured at the source of capture 

15 and verified at the point of disposal or injec16 tion. 

17 ‘‘(2) RECYCLED CARBON DIOXIDE.—The term 

18 ‘qualified carbon dioxide’ includes the initial deposit 

19 of captured carbon dioxide used as a tertiary 

20 injectant. Such term does not include carbon dioxide 

21 that is re-captured, recycled, and re-injected as part 

22 of the enhanced oil and natural gas recovery process. 

23 ‘‘(c) QUALIFIED FACILITY.—For purposes of this 

24 section, the term ‘qualified facility’ means any industrial 

25 facility— 


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1 ‘‘(1) which is owned by the taxpayer, 

2 ‘‘(2) at which carbon capture equipment is 

3 placed in service, and 

4 ‘‘(3) which captures not less than 500,000 met5 ric tons of carbon dioxide during the taxable year. 

6 ‘‘(d) SPECIAL RULES AND OTHER DEFINITIONS.— 

7 For purposes of this section— 

8 ‘‘(1) ONLY CARBON DIOXIDE CAPTURED WITH9 IN THE UNITED STATES TAKEN INTO ACCOUNT.— 

10 The credit under this section shall apply only with 

11 respect to qualified carbon dioxide the capture of 

12 which is within— 

13 ‘‘(A) the United States (within the mean14 ing of section 638(1)), or 

15 ‘‘(B) a possession of the United States 

16 (within the meaning of section 638(2)). 

17 ‘‘(2) SECURE GEOLOGICAL STORAGE.—The Sec18 retary, in consultation with the Administrator of the 

19 Environmental Protection Agency, shall establish 

20 regulations for determining adequate security meas21 ures for the geological storage of carbon dioxide 

22 under subsection (a)(1)(B) such that the carbon di23 oxide does not escape into the atmosphere. Such 

24 term shall include storage at deep saline formations 


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1 and unminable coal seems under such conditions as 

2 the Secretary may determine under such regulations. 

3 ‘‘(3) TERTIARY INJECTANT.—The term ‘ter4 tiary injectant’ has the same meaning as when used 

5 within section 193(b)(1). 

6 ‘‘(4) QUALIFIED ENHANCED OIL OR NATURAL

7 GAS RECOVERY PROJECT.—The term ‘qualified en8 hanced oil or natural gas recovery project’ has the 

9 meaning given the term ‘qualified enhanced oil re10 covery project’ by section 43(c)(2), by substituting 

11 ‘crude oil or natural gas’ for ‘crude oil’ in subpara12 graph (A)(i) thereof. 

13 ‘‘(5) CREDIT ATTRIBUTABLE TO TAXPAYER.— 

14 Any credit under this section shall be attributable to 

15 the person that captures and physically or contrac16 tually ensures the disposal of or the use as a tertiary 

17 injectant of the qualified carbon dioxide, except to 

18 the extent provided in regulations prescribed by the 

19 Secretary. 

20 ‘‘(6) RECAPTURE.—The Secretary shall, by reg21 ulations, provide for recapturing the benefit of any 

22 credit allowable under subsection (a) with respect to 

23 any qualified carbon dioxide which ceases to be cap24 tured, disposed of, or used as a tertiary injectant in 


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1 a manner consistent with the requirements of this 

2 section. 

3 ‘‘(7) INFLATION ADJUSTMENT.—In the case of 

4 any taxable year beginning in a calendar year after 

5 2008, there shall be substituted for each dollar 

6 amount contained in subsection (a) an amount equal 

7 to the product of— 

8 ‘‘(A) such dollar amount, multiplied by 

9 ‘‘(B) the inflation adjustment factor for 

10 such calendar year determined under section 

11 43(b)(3)(B) for such calendar year, determined 

12 by substituting ‘2007’ for ‘1990’. 

13 ‘‘(e) TERMINATION.—This section shall not apply to 

14 qualified carbon dioxide after the date that is 5 years after 

15 the date of the enactment of this Act.’’. 

16 (2) CONFORMING AMENDMENT.—Section 38(b) 

17 of such Code (relating to general business credit), as 

18 amended by this Act, is amended by striking ‘‘plus’’ 

19 at the end of paragraph (33), by striking the period 

20 at the end of paragraph (34) and inserting ‘‘, plus’’, 

21 and by adding at the end of following new para22 graph: 

23 ‘‘(35) the carbon dioxide sequestration credit 

24 determined under section 45R(a).’’. 


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1 (3) CLERICAL AMENDMENT.—The table of sec2 tions for subpart B of part IV of subchapter A of 

3 chapter 1 of such Code (relating to other credits), as 

4 amended by this Act, is amended by adding at the 

5 end the following new section: 

‘‘Sec. 45R. Credit for carbon dioxide sequestration.’’. 

6 (4) EFFECTIVE DATE.—The amendments made 

7 by this subsection shall apply carbon dioxide cap8 tured after the date of the enactment of this Act. 

Æ 


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