I 

110TH CONGRESS 

2D SESSION S. 3208 

To amend the Internal Revenue Code of 1986 to provide tax incentives 

for clean coal technology, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 26, 2008 

Mr. CONRAD (for himself and Mr. HATCH) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

tax incentives for clean coal technology, 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; FINDINGS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Carbon Reduction Technology Bridge Act of 2008’’. 

6 (b) FINDINGS.—The Congress finds the following: 

7 (1) Significantly reducing greenhouse gas emis8 sions from U.S. coal plants must be part of a strat9 egy to address climate change. 


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1 (2) Carbon capture and sequestration is the key 

2 to continued enjoyment of the energy security and 

3 economic benefits associated with the use of the Na4 tion’s abundant domestic coal resources for power 

5 generation. 

6 (3) Multiple technology demonstrations that in7 crease the efficiency of power plants and thereby re8 duce carbon dioxide emissions and that demonstrate 

9 carbon dioxide capture and sequestration are needed 

10 in the near-term as a bridge to a reliable and afford11 able power system that can achieve future green12 house gas reduction goals. 

13 SEC. 2. SEVEN-YEAR AMORTIZATION FOR CERTAIN SYS14 TEMS INSTALLED ON COAL-FIRED ELECTRIC 

15 GENERATION UNITS AFTER 2007. 

16 (a) IN GENERAL.—Subsection (d) of section 169 of 

17 the Internal Revenue Code of 1986 (relating to amortiza18 tion of pollution control facilities) is amended by adding 

19 at the end the following new paragraph: 

20 ‘‘(6) SPECIAL RULE FOR SYSTEMS INSTALLED

21 ON COAL-FIRED ELECTRIC GENERATION UNITS

22 AFTER 2007.— 

23 ‘‘(A) IN GENERAL.—Any mechanical or 

24 electronic system— 


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1 ‘‘(i) which is installed on a coal-fired 

2 electric generation unit after December 31, 

3 2007, and 

4 ‘‘(ii) which reduces carbon dioxide 

5 emissions per net megawatt hour of elec6 tricity generation by 1 or more of the 

7 means described in subparagraph (B) or 

8 any other means, 

9 shall be treated for purposes of this section as 

10 an identifiable treatment facility which abates 

11 or controls atmospheric pollution or contamina12 tion by removing, altering, disposing, storing, or 

13 preventing the creation or emission of pollut14 ants, contaminants, wastes, or heat. Paragraph 

15 (1)(C) of this subsection, and subsection (e), 

16 shall not apply to any system which is so treat17 ed. 

18 ‘‘(B) MEANS FOR REDUCING EMISSIONS.— 

19 The means described in this subparagraph 

20 are— 

21 ‘‘(i) optimizing combustion, 

22 ‘‘(ii) optimizing sootblowing and heat 

23 transfer, 

24 ‘‘(iii) upgrading steam temperature 

25 control capabilities, 


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1 ‘‘(iv) reducing exit gas temperatures 

2 (air heater modifications), 

3 ‘‘(v) predrying low rank coals using 

4 power plant waste heat, 

5 ‘‘(vi) modifying steam turbines or 

6 change the steam path/blading, 

7 ‘‘(vii) replacing single speed motors 

8 with variable speed drives for fans and 

9 pumps, and 

10 ‘‘(viii) improving operational controls, 

11 including neural networks. 

12 ‘‘(C) SPECIAL RULE FOR MINIMUM TAX.— 

13 Section 56(a)(5) shall not apply to property to 

14 which this paragraph applies.’’. 

15 (b) EFFECTIVE DATE.—The amendment made by 

16 this section shall apply to property placed in service after 

17 December 31, 2007. 

18 SEC. 3. CREDIT FOR CLOSED–LOOP BIOMASS CO-FIRED 

19 WITH COAL. 

20 (a) IN GENERAL.—Subparagraph (A) of section 

21 45(d)(2) of the Internal Revenue Code of 1986 (relating 

22 to closed-loop biomass facility) is amended by striking the 

23 period at the end of clause (ii) and inserting ‘‘, or’’ and 

24 by adding after clause (ii) the following new clause: 


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1 ‘‘(iii) owned by the taxpayer which be2 fore January 1, 2014, is originally placed 

3 in service as— 

4 ‘‘(I) a facility to use closed-loop 

5 biomass to co-fire (or, in the case of 

6 an integrated gasification combined 

7 cycle facility, co-process) with coal, or 

8 ‘‘(II) a coal-fired facility which is 

9 modified to use closed-loop biomass to 

10 co-fire (or, in the case of an inte11 grated gasification combined cycle fa12 cility, co-process) with coal.’’. 

13 (b) CONFORMING AMENDMENT.—Subparagraph (B) 

14 of section 45(d)(2) of such Code is amended by striking 

15 ‘‘subparagraph (A)(ii)’’ and inserting ‘‘clause (ii) or (iii) 

16 of subparagraph (A)’’. 

17 (c) EFFECTIVE DATE.—The amendments made by 

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

19 of this Act. 

20 SEC. 4. CREDIT FOR INVESTMENT IN QUALIFIED NEW 

21 CLEAN COAL ELECTRIC GENERATION UNITS. 

22 (a) IN GENERAL.—Subpart E of part IV of sub23 chapter A of chapter 1 of the Internal Revenue Code of 

24 1986 (relating to rules for computing investment credit) 


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1 is amended by inserting after section 48B the following 

2 new section: 

3 ‘‘SEC. 48C. QUALIFYING NEW CLEAN COAL ELECTRIC GEN4 ERATION UNIT CREDIT. 

5 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

6 the qualifying new clean coal electric generation credit for 

7 any taxable year is an amount equal to the applicable per8 centage of the qualified investment for such taxable year. 

9 ‘‘(b) APPLICABLE PERCENTAGE.—For purposes of 

10 subsection (a)— 

11 ‘‘(1) IN GENERAL.—Except as provided in para12 graph (2), the applicable percentage is the percent13 age determined under the following table using the 

14 design net heat rate of the qualified clean coal elec15 tric generation unit. 

‘‘Design Net Heat Rate in Btus/kilowatt hour Percentage 

More than 8,322 but not more than 8,530 (40%) ... 10 

More than 8,120 but not more than 8,322 (41%) ... 10 

More than 7,940 but not more than 8,120 (42%) ... 20 

More than 7,760 but not more than 7,940 (43%) ... 26 

More than 7,580 but not more than 7,760 (44%) ... 28 

Not more than 7,580 (45%) ..................................... 30 

16 ‘‘(2) ELECTION TO USE ALTERNATIVE METHOD

17 FOR DETERMINING PERCENTAGE.—In the case of a 

18 qualified clean coal electric generation unit which is 

19 designed to emit carbon dioxide at an average an20 nual rate of not more than 800 pounds per net 

21 megawatt hour of electricity generation, in lieu of 


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1 applying paragraph (1), the taxpayer may elect an 

2 applicable percentage of 30 percent. 

3 ‘‘(c) QUALIFIED INVESTMENT.— 

4 ‘‘(1) IN GENERAL.—For purposes of subsection 

5 (a), the qualified investment for any taxable year is 

6 the basis of property placed in service by the tax7 payer during such taxable year as part of, or in con8 nection with, a qualified clean coal electric genera9 tion unit— 

10 ‘‘(A)(i) the construction, reconstruction, or 

11 erection of which is completed by the taxpayer, 

12 or 

13 ‘‘(ii) which is acquired by the taxpayer if 

14 the original use of such property commences 

15 with the taxpayer, and 

16 ‘‘(B) with respect to which depreciation (or 

17 amortization in lieu of depreciation) is allow18 able. 

19 ‘‘(2) SPECIAL RULE FOR CERTAIN SUBSIDIZED

20 PROPERTY.—Rules similar to section 48(a)(4) shall 

21 apply for purposes of this section. 

22 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI23 TURES RULES MADE APPLICABLE.—Rules similar to 

24 the rules of subsections (c)(4) and (d) of section 46 

25 (as in effect on the day before the enactment of the 


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1 Revenue Reconciliation Act of 1990) shall apply for 

2 purposes of this section. 

3 ‘‘(d) AGGREGATE CREDITS.— 

4 ‘‘(1) IN GENERAL.—No credit shall be allowed 

5 under this section with respect to any qualified clean 

6 coal electric generation unit unless such unit is cer7 tified by the Secretary under subsection (f). 

8 ‘‘(2) LIMITATION ON UNITS CERTIFIED.—The 

9 Secretary may certify under subsection (f) in the ag10 gregate no more than 6,000 megawatts of electric 

11 generation units. 

12 ‘‘(e) DEFINITIONS.—For purposes of this section— 

13 ‘‘(1) QUALIFIED CLEAN COAL ELECTRIC GEN14 ERATION UNIT.—The term ‘qualified clean coal elec15 tric generation unit’ means a coal-based electric gen16 eration unit if— 

17 ‘‘(A) the unit achieves a design net heat 

18 rate of not more than 8,530 Btu/Kw-hr, 

19 ‘‘(B) the unit is designed to meet the per20 formance requirements specified in the table 

21 contained in section 48A(f)(1)(B), 

22 ‘‘(C) the unit includes— 

23 ‘‘(i) carbon dioxide capture, transport, 

24 and storage property (as defined in section 


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1 48D(c)) for carbon dioxide produced by 

2 such unit, and 

3 ‘‘(ii) 1 or more sites for the storage of 

4 such carbon dioxide, 

5 ‘‘(D) the unit is designed to capture, and 

6 store, at least— 

7 ‘‘(i) 500,000 metric tons per year of 

8 carbon dioxide if such unit is among the 

9 first 1,000 megawatts of electric genera10 tion units certified by the Secretary under 

11 subsection (f), and 

12 ‘‘(ii) 1,000,000 metric tons per year 

13 of carbon dioxide if such unit is among the 

14 next 3,000 megawatts of electric genera15 tion units certified by the Secretary under 

16 subsection (f), and 

17 ‘‘(iii) 2,000,000 metric tons per year 

18 of carbon dioxide for any other unit, 

19 ‘‘(E) the fuel input for the unit, when com20 pleted, is at least 75 percent coal, and 

21 ‘‘(F) the unit is located in the United 

22 States. 

23 ‘‘(2) DESIGN NET HEAT RATE.—Design net 

24 heat rate shall be determined as provided in section 


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1 48A(f)(2) and before any energy loss resulting from 

2 the operation of the carbon dioxide capture process. 

3 ‘‘(3) COAL.—The term ‘coal’ means bituminous 

4 coal, subbituminous coal, and lignite. 

5 ‘‘(4) ELECTRIC GENERATION UNIT.—The term 

6 ‘electric generation unit’ means any unit at least 50 

7 percent of the total annual net output of which is 

8 electrical power, including an otherwise eligible unit 

9 which is used in an industrial application. 

10 ‘‘(f) CERTIFICATION.— 

11 ‘‘(1) CERTIFICATION PROCESS.—The Secretary, 

12 in consultation with the Secretary of Energy and the 

13 Administrator of the Environmental Protection 

14 Agency, shall establish a certification process to de15 termine if a coal-based electric generation unit meets 

16 all criteria and other requirements to be recognized 

17 as a qualified clean coal electric generation unit. The 

18 certification process shall also be designed to deter19 mine the efficiency (and, in the case of an election 

20 under subsection (b)(2), the carbon dioxide emission 

21 rate) of such unit to establish the amount of the 

22 credit under subsection (a). 

23 ‘‘(2) PRIORITY FOR UNITS EXCEEDING CAP24 TURE AND STORAGE REQUIREMENTS.—In deter25 mining which qualified clean coal generation units to 


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1 certify under subsection (f), the Secretary shall give 

2 high priority to those units which exceed the carbon 

3 dioxide and storage requirements provided in sub4 section (e)(1)(D). 

5 ‘‘(3) FEEDSTOCK REQUIREMENTS.—After the 

6 date of publication by the Secretary of the final cer7 tification process referred to in subsection (d), the 

8 Secretary shall allocate the limitation in subsection 

9 (d)(2) in equal amounts among— 

10 ‘‘(A) units using bituminous coal as a pri11 mary feedstock, 

12 ‘‘(B) units using subbituminous coal as a 

13 primary feedstock, and 

14 ‘‘(C) units using lignite as a primary feed15 stock. 

16 ‘‘(4) REDISTRIBUTION.—The Secretary may re17 allocate credits if the Secretary determines that 

18 there is an insufficient quantity of qualifying appli19 cations for certification, pending at the time of re20 view, to comply with the feedstock requirements of 

21 paragraph (3). The Secretary may conduct an addi22 tional program for applications for certification and 

23 reallocate available credits without regard to the 

24 feedstock requirement which was not satisfied as a 

25 result of insufficient applications for certification. 


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1 ‘‘(5) REQUIREMENTS FOR APPLICATIONS FOR

2 CERTIFICATION.—An application for certification 

3 shall contain such information as the Secretary may 

4 require in order to make a determination to accept 

5 or reject the application and establish applicable 

6 credit entitlement. Any information contained in the 

7 application shall be protected as provided in section 

8 552(b)(4) of title 5, United States Code. 

9 ‘‘(g) DENIAL OF DOUBLE BENEFIT.—No credit shall 

10 be allowed under this section for any property for which 

11 credit is allowed under sections 48A, 48B, or 48D.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 46 of such Code (relating to amount 

14 of credit) is amended by striking ‘‘and’’ at the end 

15 of paragraph (3), by striking the period at the end 

16 of paragraph (4) and inserting ‘‘, and’’, and by add17 ing at the end the following new paragraph: 

18 ‘‘(5) the qualifying new clean coal electric gen19 eration credit.’’. 

20 (2) Subparagraph (C) of section 49(a)(1) of 

21 such Code is amended by striking ‘‘and’’ at the end 

22 of clause (iii), by striking the period at the end of 

23 clause (iv) and inserting ‘‘, and’’, and by adding 

24 after clause (iv) the following new clause: 


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1 ‘‘(v) the basis of any property which 

2 is part of a qualifying clean coal electric 

3 generation unit under section 48C.’’. 

4 (3) The table of sections for subpart E of part 

5 IV of subchapter A of chapter 1 of such Code is 

6 amended by inserting after the item relating to sec7 tion 48B the following new item: 

‘‘Sec. 48C. Qualifying new clean coal electric generation unit credit.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to periods after the date of the 

10 enactment of this Act under rules similar to the rules of 

11 section 48(m) of the Internal Revenue Code of 1986 (as 

12 in effect on the day before the date of the enactment of 

13 the Revenue Reconciliation Act of 1990). 

14 SEC. 5. TAX CREDIT FOR INSTALLATION OF CARBON DIOX15 IDE CAPTURE, TRANSPORT, AND STORAGE 

16 EQUIPMENT. 

17 (a) IN GENERAL.—Subpart E of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 (relating to rules for computing investment credit) 

20 is amended by inserting after section 48C the following 

21 new section: 


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1 ‘‘SEC. 48D. QUALIFYING CARBON DIOXIDE CAPTURE, 

2 TRANSPORT, AND STORAGE EQUIPMENT 

3 CREDIT. 

4 ‘‘(a) GENERAL RULE.—For purposes of section 46, 

5 the qualifying carbon dioxide equipment credit for any tax6 able year is an amount equal to 30 percent of the qualified 

7 investment for such taxable year. 

8 ‘‘(b) QUALIFIED INVESTMENT.— 

9 ‘‘(1) IN GENERAL.—For purposes of subsection 

10 (a), the qualified investment for any taxable year is 

11 the basis eligible property which is placed in service 

12 by the taxpayer during such taxable year. 

13 ‘‘(2) SPECIAL RULE FOR CERTAIN SUBSIDIZED

14 PROPERTY.—Rules similar to section 48(a)(4) shall 

15 apply for purposes of this section. 

16 ‘‘(3) CERTAIN QUALIFIED PROGRESS EXPENDI17 TURES RULES MADE APPLICABLE.—Rules similar to 

18 the rules of subsections (c)(4) and (d) of section 46 

19 (as in effect on the day before the enactment of the 

20 Revenue Reconciliation Act of 1990) shall apply for 

21 purposes of this section. 

22 ‘‘(c) DEFINITIONS.—For purposes of this section— 

23 ‘‘(1) ELIGIBLE PROPERTY.—The term ‘eligible 

24 property’ means carbon dioxide capture, transport, 

25 and storage property— 


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1 ‘‘(A) which is part of (or used in connec2 tion with) a qualified coal-fired electric genera3 tion unit of the taxpayer, 

4 ‘‘(B)(i) the construction, reconstruction, or 

5 erection of which is completed by the taxpayer, 

6 or 

7 ‘‘(ii) which is acquired by the taxpayer if 

8 the original use of such property commences 

9 with the taxpayer, and 

10 ‘‘(C) with respect to which depreciation (or 

11 amortization in lieu of depreciation) is allow12 able. 

13 ‘‘(2) CARBON DIOXIDE CAPTURE, TRANSPORT, 

14 AND STORAGE PROPERTY.—The term ‘carbon diox15 ide capture, transport, and storage property’ means 

16 equipment to capture, transport, or store carbon di17 oxide produced at such unit, including— 

18 ‘‘(A) equipment to separate and pressurize 

19 carbon dioxide for transport (including equip20 ment to operate such equipment), and 

21 ‘‘(B) equipment to transport, inject, and 

22 monitor such carbon dioxide. 

23 ‘‘(3) QUALIFIED COAL-FIRED ELECTRIC GEN24 ERATION UNIT.—The term ‘qualified coal-fired elecVerDate Aug 31 2005 23:43 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00015 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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1 tric generation unit’ means any coal-fired electric 

2 generation unit— 

3 ‘‘(A) which, after installation of eligible 

4 property, is designed— 

5 ‘‘(i) to emit carbon dioxide at an aver6 age annual rate of less than 1,100 pounds 

7 of carbon dioxide per net megawatt hour of 

8 electricity generation, or 

9 ‘‘(ii) to capture and store in a secure 

10 geologic formation at least 500,000 metric 

11 tons of carbon dioxide per year, 

12 ‘‘(B) the fuel input for which is at least 75 

13 percent coal, and 

14 ‘‘(C) which is located in the United States. 

15 ‘‘(4) COAL.—The term ‘coal’ means bituminous 

16 coal, subbituminous coal, and lignite. 

17 ‘‘(d) AGGREGATE CREDITS.— 

18 ‘‘(1) IN GENERAL.—No credit shall be allowed 

19 under this section for property which is part of (or 

20 used in connection with) a qualified coal-fired elec21 tric generation unit unless such unit is certified by 

22 the Secretary under subsection (e). 

23 ‘‘(2) LIMITATION ON UNITS CERTIFIED.—The 

24 Secretary may certify under subsection (e) in the agVerDate Aug 31 2005 23:43 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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1 gregate no more than 9,000 megawatts of electric 

2 generation units. 

3 ‘‘(e) CERTIFICATION.— 

4 ‘‘(1) CERTIFICATION PROCESS.—The Secretary 

5 shall establish a certification process for purposes of 

6 this section. 

7 ‘‘(2) FEEDSTOCK REQUIREMENTS.—During the 

8 first 24 months after the date of publication by the 

9 Secretary of the final certification process referred 

10 to in paragraph (1), the Secretary shall allocate the 

11 limitation in subsection (d)(2) in equal amounts 

12 among— 

13 ‘‘(A) units using bituminous coal as a pri14 mary feedstock, 

15 ‘‘(B) units using subbituminous coal as a 

16 primary feedstock, and 

17 ‘‘(C) units using lignite as a primary feed18 stock. 

19 ‘‘(3) REDISTRIBUTION.—The Secretary may re20 allocate credits if the Secretary determines that 

21 there is an insufficient quantity of qualifying appli22 cations for certification, pending at the time of re23 view, to comply with the feedstock requirements of 

24 paragraph (2). The Secretary may conduct an addi25 tional program for applications for certification and 


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1 reallocate available credits without regard to the 

2 feedstock requirement which was not satisfied as a 

3 result of insufficient applications for certification. 

4 ‘‘(4) REQUIREMENTS FOR APPLICATIONS FOR

5 CERTIFICATION.—An application for certification 

6 shall contain such information as the Secretary may 

7 require in order to establish credit entitlement. Any 

8 information contained in an application shall be pro9 tected as provided in section 552(b)(4) of title 5, 

10 United States Code.’’. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) Section 46 of such Code (relating to amount 

13 of credit), as amended by this Act, is amended by 

14 striking ‘‘and’’ at the end of paragraph (4), by strik15 ing the period at the end of paragraph (5) and in16 serting ‘‘, and’’, and by adding at the end the fol17 lowing new paragraph: 

18 ‘‘(6) the qualifying carbon dioxide equipment 

19 credit.’’. 

20 (2) Subparagraph (C) of section 49(a)(1) of 

21 such Code, as amended by this Act, is amended by 

22 striking ‘‘and’’ at the end of clause (iv), by striking 

23 the period at the end of clause (v) and inserting ‘‘, 

24 and’’, and by adding after clause (v) the following 

25 new clause: 


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1 ‘‘(vi) the basis of any eligible property 

2 (as defined in section 48D(c)(1)).’’. 

3 (3) The table of sections for such subpart E is 

4 amended by inserting after the item relating to sec5 tion 48C the following new item: 

‘‘Sec. 48D. Qualifying carbon dioxide capture, transport, and storage equipment credit.’’. 

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

7 this section shall apply to periods after the date of the 

8 enactment of this Act under rules similar to the rules of 

9 section 48(m) of the Internal Revenue Code of 1986 (as 

10 in effect on the day before the date of the enactment of 

11 the Revenue Reconciliation Act of 1990). 

12 SEC. 6. TAX CREDIT FOR CARBON DIOXIDE SEQUESTRA13 TION. 

14 (a) IN GENERAL.—Subpart D of part IV of sub15 chapter A of chapter 1 of the Internal Revenue Code of 

16 1986 (relating to business related credits) is amended by 

17 adding at the end the following new section: 

18 ‘‘SEC. 45Q. CREDIT FOR CARBON DIOXIDE SEQUESTRATION. 

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

20 the carbon dioxide sequestration credit for any taxable 

21 year is an amount equal to the sum of— 

22 ‘‘(1) $30 per metric ton of qualified carbon di23 oxide which is stored by the taxpayer in secure geo24 logical storage, 


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1 ‘‘(2) $20 per metric ton of qualified carbon di2 oxide which is compressed, and transferred, by the 

3 taxpayer to the United States at a facility under 

4 such rules and conditions as the Federal Govern5 ment shall prescribe not later than 18 months prior 

6 to any transfer, and 

7 ‘‘(3) $15 per metric ton of qualified carbon di8 oxide which is used by the taxpayer as a tertiary 

9 injectant in a qualified enhanced oil or natural gas 

10 recovery project. 

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

12 this section, the term ‘qualified carbon dioxide’ means car13 bon dioxide— 

14 ‘‘(1) which is captured from a qualified electric 

15 generation unit during the 10-year period beginning 

16 on the date that carbon dioxide capture equipment 

17 was originally placed in service at such unit, 

18 ‘‘(2) which would otherwise be released into the 

19 atmosphere, and 

20 ‘‘(3) which is measured at the source of capture 

21 and verified at the point of disposal or injection. 

22 ‘‘(c) QUALIFIED ELECTRIC GENERATION UNIT.— 

23 For purposes of this section, the term ‘qualified electric 

24 generation unit’ means any electric generation unit (as de25 fined in section 48A(c)(6))— 


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

2 ‘‘(2) at which the fuel input is at least 75 per3 cent coal, 

4 ‘‘(3) at which carbon dioxide capture equipment 

5 is placed in service, 

6 ‘‘(4) which— 

7 ‘‘(A) captures not less than 500,000 metric 

8 tons of carbon dioxide during the taxable year, 

9 or 

10 ‘‘(B) is designed to emit carbon dioxide at 

11 an average annual rate of less than 1,100 

12 pounds of carbon dioxide per net megawatt 

13 hour of electricity generated during the taxable 

14 year, and 

15 ‘‘(5) which is located in— 

16 ‘‘(A) the United States (within the mean17 ing of section 638(1)), or 

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

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

20 ‘‘(d) AGGREGATE CREDITS.— 

21 ‘‘(1) IN GENERAL.—No credit shall be allowed 

22 under this section for carbon dioxide captured from 

23 a qualified facility unless such facility is certified by 

24 the Secretary for purposes of this section. The owner 

25 of a qualified facility may request to be certified for 


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1 purposes of this section by submitted a request to 

2 the Secretary containing such information as the 

3 Secretary may require. 

4 ‘‘(2) LIMITATION ON UNITS CERTIFIED.—The 

5 Secretary may certify in the aggregate no more than 

6 9,000 megawatts of electric generation units. 

7 ‘‘(e) CERTIFICATION.— 

8 ‘‘(1) CERTIFICATION PROCESS.—The Secretary 

9 shall establish a certification process for purposes of 

10 this section. 

11 ‘‘(2) FEEDSTOCK REQUIREMENTS.—During the 

12 first 24 months after the date of publication by the 

13 Secretary of the final certification process referred 

14 to in paragraph (1), the Secretary shall allocate the 

15 limitation in subsection (d)(2) in equal amounts 

16 among— 

17 ‘‘(A) units using bituminous coal as a pri18 mary feedstock, 

19 ‘‘(B) units using subbituminous coal as a 

20 primary feedstock, and 

21 ‘‘(C) units using lignite as a primary feed22 stock. 

23 ‘‘(3) REDISTRIBUTION.—The Secretary may re24 allocate credits if the Secretary determines that 

25 there is an insufficient quantity of qualifying appliVerDate Aug 31 2005 23:43 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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1 cations for certification, pending at the time of re2 view, to comply with the feedstock requirements of 

3 paragraph (2). The Secretary may conduct an addi4 tional program for applications for certification and 

5 reallocate available credits without regard to the 

6 feedstock requirement which was not satisfied as a 

7 result of insufficient applications for certification. 

8 ‘‘(4) REQUIREMENTS FOR APPLICATIONS FOR

9 CERTIFICATION.—An application for certification 

10 shall contain such information as the Secretary may 

11 require in order to make a determination to accept 

12 or reject the application and establish applicable 

13 credit entitlement. Any information contained in the 

14 application shall be protected as provided in section 

15 552(b)(4) of title 5, United States Code. 

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

17 For purposes of this section— 

18 ‘‘(1) SECURE GEOLOGICAL STORAGE.—The Sec19 retary, in consultation with the Administrator of the 

20 Environmental Protection Agency, shall establish 

21 regulations for determining adequate security meas22 ures for the geological storage of carbon dioxide 

23 under subsection (a)(1)(B). Such regulation shall in24 clude storage within deep saline formations and 


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1 umninable coal seams under such conditions as the 

2 Secretary may determine under such regulations. 

3 ‘‘(2) RULES RELATING TO USE AS TERTIARY

4 INJECTANT.— 

5 ‘‘(A) TERTIARY INJECTANT.—The term 

6 ‘tertiary injectant’ has the same meaning as 

7 when used within section 193(b)(1). 

8 ‘‘(B) QUALIFIED ENHANCED OIL OR NAT9 URAL GAS RECOVERY PROJECT.—The term 

10 ‘qualified enhanced oil or natural gas recovery 

11 project’ has the meaning given the term ‘quali12 fied enhanced oil recovery project’ by section 

13 43(c)(2), determined by substituting ‘crude oil 

14 or natural gas’ for ‘crude oil’ in subparagraph 

15 (A)(i) thereof. 

16 ‘‘(C) RECYCLED CARBON DIOXIDE.—No 

17 credit shall be allowed under this section for 

18 carbon dioxide that is recaptured, recycled, and 

19 reinjected as part of the enhanced oil and nat20 ural gas recovery process. 

21 ‘‘(3) CREDIT ATTRIBUTABLE TO TAXPAYER.— 

22 Any credit under this section shall be attributable to 

23 the person that captures and physically or contrac24 tually ensures the disposal of or the use as a tertiary 

25 injectant of the qualified carbon dioxide, except to 


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1 the extent provided in regulations prescribed by the 

2 Secretary. 

3 ‘‘(4) RECAPTURE.—The Secretary shall, by reg4 ulations, provide for recapturing the benefit of any 

5 credit allowable under subsection (a) with respect to 

6 any qualified carbon dioxide which ceases to be cap7 tured, disposed of, or used as a tertiary injectant in 

8 a manner consistent with the requirements of this 

9 section. 

10 ‘‘(5) INFLATION ADJUSTMENT.—In the case of 

11 any taxable year beginning in a calendar year after 

12 2008, there shall be substituted for each dollar 

13 amount contained in subsection (a) an amount equal 

14 to the product of— 

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

16 ‘‘(B) the inflation adjustment factor for 

17 such calendar year determined under section 

18 43(b)(3)(B) for such calendar year, determined 

19 by substituting ‘2008’ for ‘1990’. 

20 ‘‘(6) COAL.—The term ‘coal’ means bituminous 

21 coal, subbituminous coal, and lignite.’’. 

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

23 such Code is amended by striking ‘‘plus’’ at the end of 

24 paragraph (32), by striking the period at the end of paraVerDate Aug 31 2005 23:43 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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1 graph (33) and inserting ‘‘, plus’’, and by adding at the 

2 end of following new paragraph: 

3 ‘‘(34) the carbon dioxide sequestration credit 

4 determined under section 45Q(a).’’. 

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

6 for subpart D of part IV of subchapter A of chapter 1 

7 of such Code is amended by adding at the end the fol8 lowing new item: 

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

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

10 this section shall apply carbon dioxide captured after the 

11 date of the enactment of this Act. 

12 SEC. 7. CLEAN ENERGY COAL BONDS. 

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

15 1986 (relating to qualified tax credit bonds) is amended 

16 by adding at the end the following new section: 

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

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

19 this subchapter— 

20 ‘‘(1) IN GENERAL.—The term ‘clean energy 

21 coal bond’ means any bond issued as part of an 

22 issue if— 

23 ‘‘(A) the bond is issued by a qualified 

24 issuer pursuant to an allocation by the Sec25 retary to such issuer of a portion of the naVerDate Aug 31 2005 23:43 Jun 30, 2008 Jkt 069200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\S3208.IS S3208

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1 tional clean energy coal bond limitation under 

2 subsection (b)(2); 

3 ‘‘(B) 100 percent of the available project 

4 proceeds from the sale of such issue are to be 

5 used for capital expenditures incurred by quali6 fied borrowers for 1 or more qualified projects; 

7 ‘‘(C) the qualified issuer designates such 

8 bond for purposes of this section and the bond 

9 is in registered form; and 

10 ‘‘(D) in lieu of the requirements of section 

11 54A(d)(2), the issue meets the requirements of 

12 subsection (c). 

13 ‘‘(2) QUALIFIED PROJECT; SPECIAL USE

14 RULES.— 

15 ‘‘(A) IN GENERAL.—The term ‘qualified 

16 project’ means a qualified clean coal project (as 

17 defined in subsection (f)(1)) placed in service by 

18 a qualified borrower. 

19 ‘‘(B) REFINANCING RULES.—For purposes 

20 of paragraph (1)(B), a qualified project may be 

21 refinanced with proceeds of a clean energy coal 

22 bond only if the indebtedness being refinanced 

23 (including any obligation directly or indirectly 

24 refinanced by such indebtedness) was originally 


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1 incurred by a qualified borrower after the date 

2 of the enactment of this section. 

3 ‘‘(C) REIMBURSEMENT.—For purposes of 

4 paragraph (1)(B), a clean energy coal bond 

5 may be issued to reimburse a qualified borrower 

6 for amounts paid after the date of the enact7 ment of this section with respect to a qualified 

8 project, but only if— 

9 ‘‘(i) prior to the payment of the origi10 nal expenditure, the qualified borrower de11 clared its intent to reimburse such expendi12 ture with the proceeds of a clean energy 

13 coal bond; 

14 ‘‘(ii) not later than 60 days after pay15 ment of the original expenditure, the quali16 fied issuer adopts an official intent to re17 imburse the original expenditure with such 

18 proceeds; and 

19 ‘‘(iii) reimbursement is not made later 

20 than 18 months after the date the original 

21 expenditure is paid or the date the project 

22 is placed in service or abandoned, but in 

23 no event more than 3 years after the origi24 nal expenditure is paid. 


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1 ‘‘(D) TREATMENT OF CHANGES IN USE.— 

2 For purposes of paragraph (1)(B), the proceeds 

3 of an issue shall not be treated as used for a 

4 qualified project to the extent that a qualified 

5 borrower takes any action within its control 

6 which causes such proceeds not to be used for 

7 a qualified project. The Secretary shall pre8 scribe regulations specifying remedial actions 

9 that may be taken (including conditions to tak10 ing such remedial actions) to prevent an action 

11 described in the preceding sentence from caus12 ing a bond to fail to be a clean energy coal 

13 bond. 

14 ‘‘(b) LIMITATION ON AMOUNT OF BONDS DES15 IGNATED.— 

16 ‘‘(1) NATIONAL LIMITATION.—There is a na17 tional clean energy coal bond limitation of 

18 $5,000,000,000. 

19 ‘‘(2) ALLOCATION BY SECRETARY.—The Sec20 retary shall allocate the amount described in para21 graph (1) among qualified projects in such manner 

22 as the Secretary determines appropriate. 

23 ‘‘(c) SPECIAL RULES RELATING TO EXPENDI24 TURES.— 


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1 ‘‘(1) IN GENERAL.—An issue shall be treated as 

2 meeting the requirements of this subsection if, as of 

3 the date of issuance, the qualified issuer reasonably 

4 expects— 

5 ‘‘(A) 100 percent or more of the available 

6 project proceeds from the sale of the issue are 

7 to be spent for 1 or more qualified projects 

8 within the 5-year period beginning on the date 

9 of issuance of the clean energy bond; 

10 ‘‘(B) a binding commitment with a third 

11 party to spend at least 10 percent of such avail12 able project proceeds from the sale of the issue 

13 will be incurred within the 6-month period be14 ginning on the date of issuance of the clean en15 ergy bond or, in the case of a clean energy bond 

16 the available project proceeds of which are to be 

17 loaned to 2 or more qualified borrowers, such 

18 binding commitment will be incurred within the 

19 6-month period beginning on the date of the 

20 loan of such proceeds to a qualified borrower; 

21 and 

22 ‘‘(C) such projects will be completed with 

23 due diligence and the available project proceeds 

24 from the sale of the issue will be spent with due 

25 diligence. 


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1 ‘‘(2) EXTENSION OF PERIOD.—Upon submis2 sion of a request prior to the expiration of the period 

3 described in paragraph (1)(A), the Secretary may 

4 extend such period if the qualified issuer establishes 

5 that the failure to satisfy the 5-year requirement is 

6 due to reasonable cause and the related projects will 

7 continue to proceed with due diligence. 

8 ‘‘(3) FAILURE TO SPEND REQUIRED AMOUNT

9 OF BOND PROCEEDS WITHIN 5 YEARS.—To the ex10 tent that less than 100 percent of the available 

11 project proceeds of such issue are expended by the 

12 close of the 5-year period beginning on the date of 

13 issuance (or if an extension has been obtained under 

14 paragraph (2), by the close of the extended period), 

15 the qualified issuer shall redeem all of the non16 qualified bonds within 90 days after the end of such 

17 period. For purposes of this paragraph, the amount 

18 of the nonqualified bonds required to be redeemed 

19 shall be determined in the same manner as under 

20 section 142. 

21 ‘‘(d) COOPERATIVE ELECTRIC COMPANY; QUALIFIED

22 ENERGY TAX CREDIT BOND LENDER; GOVERNMENTAL

23 BODY; QUALIFIED BORROWER.—For purposes of this sec24 tion— 


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1 ‘‘(1) COOPERATIVE ELECTRIC COMPANY.—The 

2 term ‘cooperative electric company’ means a mutual 

3 or cooperative electric company described in section 

4 501(c)(12) or section 1381(a)(2)(C), or a not-for5 profit electric utility which has received a loan or 

6 loan guarantee under the Rural Electrification Act. 

7 ‘‘(2) CLEAN ENERGY BOND LENDER.—The 

8 term ‘clean energy bond lender’ means a lender 

9 which is a cooperative which is owned by, or has out10 standing loans to, 100 or more cooperative electric 

11 companies and is in existence on February 1, 2002, 

12 and shall include any affiliated entity which is con13 trolled by such lender. 

14 ‘‘(3) PUBLIC POWER ENTITY.—The term ‘public 

15 power entity’ means a State utility with a service ob16 ligation, as such terms are defined in section 217 of 

17 the Federal Power Act (as in effect on the date of 

18 enactment of this paragraph). 

19 ‘‘(4) QUALIFIED ISSUER.—The term ‘qualified 

20 issuer’ means— 

21 ‘‘(A) a clean energy bond lender; 

22 ‘‘(B) a cooperative electric company; or 

23 ‘‘(C) a public power entity. 

24 ‘‘(5) QUALIFIED BORROWER.—The term ‘quali25 fied borrower’ means— 


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1 ‘‘(A) a mutual or cooperative electric com2 pany described in section 501(c)(12) or 

3 1381(a)(2)(C); or 

4 ‘‘(B) a public power entity. 

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

6 No portion of a pooled financing bond may be allocable 

7 to any loan unless the borrower has entered into a written 

8 loan commitment for such portion prior to the issue date 

9 of such issue. 

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

11 For purposes of this section— 

12 ‘‘(1) QUALIFIED CLEAN COAL PROJECT.—For 

13 purposes of this section, the term ‘qualified clean 

14 coal project’ means— 

15 ‘‘(A) an atmospheric pollution control facil16 ity (within the meaning of section 169(d)(6)); 

17 ‘‘(B) a closed-loop biomass facility (within 

18 the meaning of section 45(d)(2)); 

19 ‘‘(C) a qualified new clean coal electric 

20 generation unit (within the meaning of section 

21 48C(d)(1)); 

22 ‘‘(D) qualifying carbon dioxide equipment 

23 described in section 48D(c)(1); or 

24 ‘‘(E) a qualified facility (within the mean25 ing of section 45Q(c)). 


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

2 ‘pooled financing bond’ shall have the meaning given 

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

4 ‘‘(g) TERMINATION.—This section shall not apply 

5 with respect to any bond issued after December 31, 

6 2018.’’. 

7 (b) CONFORMING AMENDMENTS.— 

8 (1) Paragraph (1) of section 54A(d) of the In9 ternal Revenue Code of 1986 is amended to read as 

10 follows: 

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

12 ‘qualified tax credit bond’ means— 

13 ‘‘(A) a qualified forestry conservation 

14 bond, or 

15 ‘‘(B) a clean energy coal bond, 

16 which is part of an issue that meets requirements of 

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

18 (2) Subparagraph (C) of section 54A(d)(2) of 

19 such Code is amended to read as follows: 

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

21 of this paragraph, the term ‘qualified purpose’ 

22 means— 

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

24 conservation bond, a purpose specified in 

25 section 54B(e), and 


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

2 bond, a purpose specified in section 

3 54C(f)(1).’’. 

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

5 for subpart I of part IV of subchapter A of chapter 1 of 

6 the Internal Revenue Code of 1986 is amended by adding 

7 at the end the following new item: 

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

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

9 this section shall apply to bonds issued after December 

10 31, 2008. 

11 SEC. 8. CERTAIN INCOME AND GAINS RELATING TO INDUS12 TRIAL SOURCE CARBON DIOXIDE TREATED 

13 AS QUALIFYING INCOME FOR PUBLICLY 

14 TRADED PARTNERSHIPS. 

15 (a) IN GENERAL.—Subparagraph (E) of section 

16 7704(d)(1) of the Internal Revenue Code of 1986 (defin17 ing qualifying income) is amended— 

18 (1) by striking ‘‘or the marketing’’ and insert19 ing ‘‘the marketing’’, and 

20 (2) by inserting ‘‘or industrial source carbon di21 oxide’’ after ‘‘timber)’’. 

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

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

24 of this Act, in taxable years ending after such date. 

Æ 


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