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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3345 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Future Fuels Act of 2008''.

SEC. 2. FUTURE FUELS CORPORATION.

    Subtitle A of title XVI of the Energy Policy Act of 2005 (Public 
Law 109-58; 119 Stat. 1109) is amended by adding at the end the 
following:

``SEC. 1602. FUTURE FUELS CORPORATION.

    ``(a) Establishment.--
            ``(1) In general.--The Future Fuels Corporation (referred 
        to in this section as the `Corporation') is established as a 
        government corporation.
            ``(2) Administration.--The Corporation shall be subject 
        to--
                    ``(A) this section; and
                    ``(B) chapter 91 of title 31, United States Code.
            ``(3) Board of directors.--
                    ``(A) In general.--The Corporation shall be managed 
                by a board of directors composed of 7 individuals who 
                are citizens of the United States, appointed by the 
                President, by and with the advice and consent of the 
                Senate.
                    ``(B) Chairperson.--The board of directors shall 
                annually elect a Chairperson from among the members of 
                the board of directors.
                    ``(C) Term.--The term of a member of the board of 
                directors shall be 4 years.
            ``(4) Transfers.--The Secretary shall transfer to the 
        Corporation, from amounts appropriated and allocated to it, 
        such sums as may be necessary to meet the requirements of this 
        section.
    ``(b) Use of Funds.--Beginning in fiscal year 2009, funds 
transferred by the Secretary to the Corporation under subsection (a)(4) 
shall be expended by the Corporation to--
            ``(1) promote and deploy coal and coal cofired 
        polygeneration technologies;
            ``(2) reduce--
                    ``(A) the carbon footprint of coal consumption; and
                    ``(B) the production of coal-based byproducts; and
            ``(3) conduct widespread carbon sequestration research, 
        development, and deployment activities.''.

SEC. 3. CARBON CAPTURE AND STORAGE RESEARCH, DEVELOPMENT, AND 
              DEMONSTRATION PROGRAM.

    Section 963 of the Energy Policy Act of 2005 (42 U.S.C. 16293) is 
amended--
            (1) in the section heading, by striking ``and 
        sequestration'' and inserting ``and storage'';
            (2) in subsection (a), by striking ``and sequestration'' 
        and inserting ``and storage''; and
            (3) by striking subsections (c) and (d) and inserting the 
        following:
    ``(c) Programmatic Activities.--
            ``(1) Goal.--The Secretary shall establish a program under 
        which the Secretary shall conduct activities necessary to 
        achieve the goal of annually sequestering at least 1,000,000 
        tons of carbon dioxide by January 1, 2015.
            ``(2) Review of existing data.--Not later than 180 days 
        after the date of enactment of the Future Fuels Act of 2008, 
        the Secretary shall--
                    ``(A) verify and analyze the results of any 
                assessment conducted by any other Federal agency or a 
                State relating to geological storage capacity and the 
                potential for carbon injection rates, including a risk 
                analysis of any potential geologic storage areas 
                assessed; and
                    ``(B) submit to the appropriate committees of 
                Congress a report that describes the results of the 
                verification and analyses under subparagraph (A).
            ``(3) Recommendations.--As soon as practicable after the 
        date of enactment of the Future Fuels Act of 2008, the 
        Secretary shall submit to the appropriate committees of 
        Congress recommendations on appropriate regulatory and advisory 
        mechanisms for--
                    ``(A) the determination of best technologies;
                    ``(B) the identification and evaluation of state-
                of-the-art research, development, and deployment 
                strategies for carbon capture and storage technologies;
                    ``(C) the selection and operation of carbon dioxide 
                sequestration sites; and
                    ``(D) the transfer of liability for the sites to 
                the United States.
            ``(4) Interstate compacts.--As soon as practicable after 
        the date of enactment of this Act, the Secretary shall develop 
        model interstate compacts to govern the transportation, 
        injection, and storage of carbon dioxide.
            ``(5) Demonstration project.--The Secretary shall conduct 
        geological sequestration demonstration projects involving 
        carbon dioxide sequestration operations in a variety of 
        candidate geological settings, including--
                    ``(A) oil and gas reservoirs;
                    ``(B) unmineable coal seams;
                    ``(C) deep saline aquifers;
                    ``(D) basalt and shale formations; and
                    ``(E) terrestrial sequestration, including 
                restoration project sites provided assistance by the 
                Abandoned Mine Reclamation Fund established by section 
                401 of the Surface Mining Control and Reclamation Act 
                of 1977 (30 U.S.C. 1231).
    ``(d) Authorization of Appropriations.--
            ``(1) In general.--There are authorized to be appropriated 
        to carry out this section--
                    ``(A) $100,000,000 for each of fiscal years 2009 
                and 2010;
                    ``(B) $105,000,000 for fiscal year 2011;
                    ``(C) $110,000,000 for fiscal year 2012;
                    ``(D) $115,000,000 for fiscal year 2013; and
                    ``(E) $120,000,000 for fiscal year 2014.
            ``(2) Availability of funds.--Funds made available for a 
        fiscal year under paragraph (1)--
                    ``(A) shall remain available until expended, but 
                not later than September 30, 2014; and
                    ``(B) may be reprogrammed, at the discretion of the 
                Secretary, for expenditure for other demonstration 
                projects under this title only after--
                            ``(i) September 30, 2010; and
                            ``(ii) the Secretary provides notice of the 
                        proposed reprogramming to the appropriate 
                        committees of Congress.''.

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

    Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 16512) is 
amended by adding at the end the following:
    ``(k) Standby Loans for Qualifying Coal-to-Liquid Projects.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Cap price.--The term `cap price' means the 
                market price specified in a standby loan agreement 
                above which the qualifying CTL project is required to 
                make payments to the United States.
                    ``(B) Conventional baseline emissions.--The term 
                `conventional baseline emissions' means--
                            ``(i) the lifecycle greenhouse gas 
                        emissions of a facility that produces 
                        combustible end products, using petroleum as a 
                        feedstock, that are equivalent to combustible 
                        end products produced by a facility of 
                        comparable size through a qualifying CTL 
                        project;
                            ``(ii) in the case of noncombustible 
                        products produced through a qualifying CTL 
                        project, the average lifecycle greenhouse gas 
                        emissions emitted by projects that--
                                    ``(I) are of comparable size; and
                                    ``(II) produce equivalent products 
                                using conventional feedstocks; and
                            ``(iii) in the case of synthesized gas 
                        intended for use as a combustible fuel in lieu 
                        of natural gas produced by a qualifying CTL 
                        project, the lifecycle greenhouse gas emissions 
                        that would result from equivalent use of 
                        natural gas.
                    ``(C) Direct loan.--The term `direct loan' has the 
                meaning given the term in section 502 of the Federal 
                Credit Reform Act of 1990 (2 U.S.C. 661a).
                    ``(D) Eligible entity.--The term `eligible entity' 
                means an entity that conducts a qualifying CTL project.
                    ``(E) Facility.--The term `facility' means a 
                facility at which the conversion of feedstocks to end 
                products takes place.
                    ``(F) Full term.--The term `full term' means the 
                full term of a standby loan agreement, as specified in 
                the standby loan agreement under paragraph 
                (2)(A)(ii)(III), which shall not be more than the 
                lesser of--
                            ``(i) 30 years; or
                            ``(ii) 90 percent of the projected useful 
                        life of the qualifying CTL project, as 
                        determined by the Secretary.
                    ``(G) Lifecycle greenhouse gas emissions.--The term 
                `lifecycle greenhouse gas emissions' means the 
                difference between--
                            ``(i) the aggregate quantity of greenhouse 
                        gases attributable to the production and 
                        transportation of end products at a facility, 
                        including the production, extraction, 
                        cultivation, distribution, marketing, and 
                        transportation of feedstocks, and the 
                        subsequent distribution and use of any 
                        combustible end products; and
                            ``(ii)(I) any greenhouse gases captured at 
                        the facility and sequestered;
                            ``(II) the carbon content, expressed in 
                        units of carbon dioxide equivalent, of any 
                        feedstock that is a renewable biomass; and
                            ``(III) the carbon content, expressed in 
                        units of carbon dioxide equivalent, of any end 
                        products that do not result in the release of 
                        carbon dioxide to the atmosphere.
                    ``(H) Long-term storage.--The term `long-term 
                storage' means sequestration with an expected maximum 
                rate of carbon dioxide leakage over a specified period 
                of time that is consistent with the objective of 
                reducing atmospheric concentrations of carbon dioxide, 
                subject to a permit issued under any law in effect as 
                of the date of the sequestration.
                    ``(I) Market price.--The term `market price' means 
                the average quarterly price of a petroleum price index 
                specified in the standby loan agreement.
                    ``(J) Minimum price.--The term `minimum price' 
                means a market price specified in the standby loan 
                agreement below which the United States is obligated to 
                make disbursements to the qualifying CTL project.
                    ``(K) Output.--The term `output' means all or a 
                portion of the liquid or gaseous transportation fuels 
                produced from the qualifying CTL project, as specified 
                in the standby loan agreement.
                    ``(L) Primary term.--The term `primary term' means 
                the initial term of a standby loan agreement, as 
                specified in the agreement under paragraph 
                (2)(A)(ii)(II), which shall not be more than the lesser 
                of--
                            ``(i) 20 years; or
                            ``(ii) 75 percent of the projected useful 
                        life of the qualifying CTL project, as 
                        determined by the Secretary.
                    ``(M) Qualifying ctl project.--The term `qualifying 
                CTL project' means a commercial-scale project that 
                converts coal to industrial feedstocks or 1 or more 
                liquid or gaseous fuels for transportation or other 
                uses or a project conducted at a facility that converts 
                petroleum refinery waste products (including petroleum 
                coke) into 1 or more liquid or gaseous transportation 
                fuels--
                            ``(i) that demonstrates the capture, 
                        sequestration, disposal, or use of the carbon 
                        dioxide produced in the conversion process; and
                            ``(ii) for which--
                                    ``(I) the annual lifecycle 
                                greenhouse gas emissions of the project 
                                are at least 20 percent lower than 
                                conventional baseline emissions;
                                    ``(II) at least 75 percent of the 
                                carbon dioxide that would otherwise be 
                                released to the atmosphere at the 
                                facility in the production of end 
                                products of the project is captured for 
                                long-term storage; and
                                    ``(III) the eligible entity has 
                                entered into an enforceable agreement 
                                with the Secretary to implement carbon 
                                capture at the percentage that, by the 
                                end of the 5-year period after 
                                commencement of commercial operation of 
                                the eligible qualifying CTL project--
                                            ``(aa) represents the best 
                                        available technology; and
                                            ``(bb) achieves a reduction 
                                        in carbon emissions that is not 
                                        less than 75 percent.
                    ``(N) Standby loan agreement.--The term `standby 
                loan agreement' means a loan agreement entered into 
                under paragraph (2)(A)(i).
            ``(2) Agreements.--
                    ``(A) Standby loan agreement.--
                            ``(i) In general.--The Secretary may enter 
                        into standby loan agreements for the conduct of 
                        not more than 10 qualifying CTL projects, at 
                        least 1 of which may be a qualifying CTL 
                        project primarily designed to produce pipeline-
                        quality natural gas from domestic coal.
                            ``(ii) Requirements.--A standby loan 
                        agreement entered into under clause (i) shall--
                                    ``(I) provide for a direct loan 
                                from the Secretary to the eligible 
                                entity for the qualifying CTL project;
                                    ``(II) specify the primary term of 
                                the standby loan agreement;
                                    ``(III) specify the full term of 
                                the standby loan agreement; and
                                    ``(IV) establish a cap price and a 
                                minimum price for the primary term of 
                                the standby loan agreement.
                    ``(B) Profit-sharing agreement.--
                            ``(i) In general.--Simultaneously with 
                        entering into a standby loan agreement under 
                        subparagraph (A), the Secretary may enter into 
                        a profit-sharing agreement with the eligible 
                        entity.
                            ``(ii) Requirements.--Under a profit-
                        sharing agreement, if the market price exceeds 
                        the cap price in a calendar quarter, a profit-
                        sharing payment shall be made for the calendar 
                        quarter, in an amount equal to the difference 
                        between--
                                    ``(I) the amount that is equal to 
                                the product obtained by multiplying--
                                            ``(aa) the amount that is 
                                        equal to the difference 
                                        between--

                                                    ``(AA) the market 
                                                price; and

                                                    ``(BB) the cap 
                                                price; and

                                            ``(bb) the output of the 
                                        qualifying CTL project; and
                                    ``(II) the total amount of any loan 
                                repayments made for the calendar 
                                quarter.
            ``(3) Loan disbursements.--
                    ``(A) Disbursement.--A loan subject to a standby 
                loan agreement shall be disbursed during the primary 
                term of the standby loan agreement during any period in 
                which the market price falls below the minimum price.
                    ``(B) Amount.--
                            ``(i) In general.--Subject to subparagraph 
                        (B), the total amount of disbursements in any 
                        calendar quarter under subparagraph (A) shall 
                        be equal to the product obtained by 
                        multiplying--
                                    ``(I) the difference between--
                                            ``(aa) the minimum price; 
                                        and
                                            ``(bb) the market price; 
                                        and
                                    ``(II) the output of the qualifying 
                                CTL project.
                            ``(ii) Limitation.--Notwithstanding clause 
                        (i), the total amount of disbursements in any 
                        calendar quarter shall be not more than the 
                        total amount of disbursements specified in the 
                        applicable standby loan agreement.
            ``(4) Loan repayments.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                Secretary shall establish terms and conditions, 
                including interest rates and amortization schedules, 
                for the repayment of a loan under this subsection 
                within the full term of the standby loan agreement.
                    ``(B) Limitations.--In establishing the terms and 
                conditions under subparagraph (A), the Secretary shall 
                provide that--
                            ``(i) if, in any calendar quarter during 
                        the primary term of the standby loan agreement, 
                        the market price is less than the cap price--
                                    ``(I) the qualifying CTL project 
                                may elect to defer some or all of the 
                                repayment obligations due during the 
                                applicable calendar quarter; and
                                    ``(II) if an election is made under 
                                subclause (I), any unpaid obligations 
                                will continue to accrue interest during 
                                the deferral period;
                            ``(ii)(I) if, in any calendar quarter 
                        during the primary term of the agreement, the 
                        market price is greater than the cap price, the 
                        qualifying CTL project shall meet the scheduled 
                        repayment obligation and any deferred repayment 
                        obligations, but shall not be required to pay 
                        in the applicable calendar quarter an amount 
                        that is more than the product obtained by 
                        multiplying--
                                    ``(aa) the amount that is equal to 
                                the difference between--
                                            ``(AA) the market price; 
                                        and
                                            ``(BB) the cap price; and
                                    ``(bb) the output of the qualifying 
                                CTL project; and
                            ``(II) the qualifying CTL project may elect 
                        to defer any repayment obligation in excess of 
                        the amount determined under subclause (I); and
                    ``(C) at the end of the primary term of the standby 
                loan agreement, the cumulative amount of any deferred 
                repayment obligations and any accrued interest shall be 
                amortized (with interest) over the remainder of the 
                full term of the standby loan agreement.
            ``(5) Compliance with federal credit reform act.--
                    ``(A) Upfront payment of cost of loan.--No standby 
                loan agreement may be entered into under this 
                subsection unless the eligible entity, on execution of 
                the standby loan agreement, makes an upfront payment to 
                the United States that the Director of the Office of 
                Management and Budget determines is equal to the cost 
                of the loan, as determined under 502(5)(B) of the 
                Federal Credit Reform Act of 1990 (2 U.S.C. 
                661a(5)(B)).
                    ``(B) Minimization of risk to the government.--In 
                making the determination of the cost of the loan for 
                purposes of establishing the upfront payment under 
                subparagraph (A), the Secretary and the Director of the 
                Office of Management and Budget shall take into 
                consideration the extent to which the minimum price and 
                the cap price reflect historical patterns of volatility 
                in actual oil prices relative to projections of future 
                oil prices, based on--
                            ``(i) publicly available data from the 
                        Energy Information Administration; and
                            ``(ii) statistical methods and analyses 
                        that are appropriate for the analysis of 
                        volatility in energy prices.
                    ``(C) Treatment of payments.--
                            ``(i) In general.--The value to the United 
                        States of an upfront payment under subparagraph 
                        (A) and any profit-sharing payments under 
                        paragraph (2)(B) shall be taken into account 
                        for purposes of section 502(5)(B)(iii) of the 
                        Federal Credit Reform Act of 1990 (2 U.S.C. 
                        661a(5)(B)(iii)) in determining the cost to the 
                        Federal Government of a loan under this 
                        subsection.
                            ``(ii) No cost.--If a loan under this 
                        subsection has no cost to the Federal 
                        Government, the requirements of section 504(b) 
                        of the Federal Credit Reform Act of 1990 (2 
                        U.S.C. 661c(b)) shall be considered to be 
                        satisfied.
            ``(6) Applicable law.--
                    ``(A) No double benefit.--A qualifying CTL project 
                receiving a loan under this subsection may not, during 
                the primary term of the standby loan agreement, receive 
                a Federal loan guarantee under--
                            ``(i) subsection (a); or
                            ``(ii) any other law.
                    ``(B) Subrogation, fees, and full faith and 
                credit.--Subsections (g)(2), (h), and (j) shall apply 
                to standby loans under this subsection to the same 
                extent the provisions apply to loan guarantees.''.

SEC. 5. CREDIT FOR MULTI-PRODUCT PIPELINE CONSTRUCTION.

    (a) In General.--Subpart D 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. 45Q. COAL-BASED TRANSPORTATION FUEL PIPELINE CREDIT.

    ``(a) In General.--For purposes of section 38, in the case of an 
eligible taxpayer, the coal-based transportation fuel pipeline credit 
for any taxable year is an amount equal to the applicable amount for 
each gallon of qualified average daily throughput with respect to an 
eligible pipeline during the taxable year.
    ``(b) Applicable Amount.--For purposes of subsection (a), the 
applicable amount is an amount equal to--
            ``(1) $0.02 per gallon for the first 1,000,000 gallons of 
        qualified average daily throughput, and
            ``(2) $0.01 per gallon for the number of gallons of 
        qualified average daily throughput in excess of 1,000,000 
        gallons.
    ``(c) Qualified Average Daily Throughput.--For purposes of this 
section--
            ``(1) In general.--The term `qualified average daily 
        throughput' means the average of the amount of qualified fuel 
        which enters the eligible pipeline on each day during the 
        taxable year.
            ``(2) Termination.--
                    ``(A) In general.--No amount of qualified fuel 
                entering an eligible pipeline shall be taken into 
                account for any day after December 31, 2015.
                    ``(B) Special rule.--In the case of any taxable 
                year which includes December 31, 2015, any day in such 
                taxable year following such date shall not be taken 
                into account in determining the qualified average daily 
                throughput for such year.
    ``(d) Other Definitions.--For purposes of this section--
            ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
        means any taxpayer who owns an eligible pipeline.
            ``(2) Eligible pipeline.--The term `eligible pipeline' 
        means a pipeline--
                    ``(A) the original use of which commences with the 
                taxpayer,
                    ``(B) which is placed in service by the taxpayer 
                after the date of the enactment of this Act and before 
                December 31, 2012,
                    ``(C) no written binding contract for the 
                construction of which was in effect on or before 
                December 31, 2007, and
                    ``(D) which is used for the transportation of fuels 
                derived from coal.
        Rules similar to the rules of section 179C(c)(2) shall apply 
        for purposes of this paragraph.
            ``(3) Qualified fuel.--The term `qualified fuel' means any 
        liquid fuel derived from coal, or coal and biomass (as defined 
        in section 45K(c)(3)) through the Fischer-Tropsch processor 
        another process converting coal into liquid fuel.''.
    (b) Conforming Amendment.--Section 38(b) of such the Internal 
Revenue Code of 1986 (relating to general business credit) is amended 
by striking ``plus'' at the end of paragraph (32), by striking the 
period at the end of paragraph (33) and inserting ``, plus'', and by 
adding at the end of following new paragraph:
            ``(34) the coal-based transportation fuel pipeline credit 
        under section 45Q(a).''.
    (c) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code (relating to other 
credits) is amended by adding at the end the following new section:

``Sec. 45Q. Coal-based transportation fuel pipeline credit.''.
    (d) Effective Date.--The amendments made by this subsection shall 
apply to property placed in service after the date of the enactment of 
this Act.

SEC. 6. INCENTIVES TO CAPTURE COALMINE METHANE.

    (a) In General.--Section 45K of the Internal Revenue Code of 1986 
(relating to credit for producing fuel from a nonconventional source) 
is amended by adding at the end the following new subsection:
    ``(h) Application to Coalmine Methane Gas.--
            ``(1) In general.--This section shall apply to coalmine 
        methane gas--
                    ``(A) captured or extracted by the taxpayer after 
                the date of the enactment of this subsection and before 
                the date that is 5 years after the date of the 
                enactment of this subsection, and
                    ``(B) utilized as a fuel source or sold by or on 
                behalf of the taxpayer to an unrelated person after the 
                date of the enactment of this subsection and before the 
                date that is 5 years after the date of the enactment of 
                this subsection.
            ``(2) Coalmine methane gas.--For purposes of this 
        paragraph, the term `coalmine methane gas' means any methane 
        gas which is--
                    ``(A) liberated during qualified coal mining 
                operations, or
                    ``(B) extracted up to 5 years in advance of 
                qualified coal mining operations as part of a specific 
                plan to mine a coal deposit.
            ``(3) Special rule for advanced extraction.--In the case of 
        coalmine methane gas which is captured in advance of qualified 
        coal mining operations, the credit under subsection (a) shall 
        be allowed only after the date the coal extraction occurs in 
        the immediate area where the coalmine methane gas was removed.
            ``(4) Noncompliance with pollution laws.--For purposes of 
        subparagraphs (B) and (C), coal mining operations which are not 
        in compliance with the applicable State and Federal pollution 
        prevention, control, and permit requirements for any period of 
        time shall not be considered to be qualified coal mining 
        operations during such period.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 7. EXPANDED CLEAN COAL TECHNOLOGY INCENTIVES.

    (a) Expansion and Modification of Advanced Coal Project Investment 
Credit.--
            (1) Credit rate parity among projects.--Section 48A(a) of 
        the Internal Revenue Code of 1986 (relating to qualifying 
        advanced coal project credit) is amended by striking ``equal 
        to'' and all that follows and inserting ``equal to 30 percent 
        of the qualified investment for such taxable year.''.
            (2) Expansion of aggregate credits.--Section 48A(d)(3)(A) 
        of such Code (relating to aggregate credits) is amended by 
        striking ``$1,300,000,000'' and inserting ``$8,300,000,000''.
            (3) Authorization of additional projects.--
                    (A) In general.--Subparagraph (B) of section 
                48A(d)(3) of such Code (relating to aggregate credits) 
                is amended to read as follows:
                    ``(B) Particular projects.--Of the dollar amount in 
                subparagraph (A), the Secretary is authorized to 
                certify--
                            ``(i) $800,000,000 for integrated 
                        gasification combined cycle projects the 
                        application for which is submitted during the 
                        period described in paragraph (2)(A)(i),
                            ``(ii) $500,000,000 for projects which use 
                        other advanced coal-based generation 
                        technologies the application for which is 
                        submitted during the period described in 
                        paragraph (2)(A)(i),
                            ``(iii) $4,200,000,000 for integrated 
                        gasification combined cycle projects the 
                        application for which is submitted during the 
                        period described in paragraph (2)(A)(ii), and
                            ``(iv) $2,800,000,000 for other advanced 
                        coal-based generation technology projects the 
                        application for which is submitted during the 
                        period described in paragraph (2)(A)(ii).''.
                    (B) Application period for additional projects.--
                Subparagraph (A) of section 48A(d)(2) of such Code 
                (relating to certification) is amended to read as 
                follows:
                    ``(A) Application period.--Each applicant for 
                certification under this paragraph shall submit an 
                application meeting the requirements of subparagraph 
                (B). An applicant may only submit an application--
                            ``(i) for an allocation from the dollar 
                        amount specified in clause (i) or (ii) of 
                        paragraph (3)(A) during the 3-year period 
                        beginning on the date the Secretary establishes 
                        the program under paragraph (1), and
                            ``(ii) for an allocation from the dollar 
                        amount specified in clause (iii) or (iv) of 
                        paragraph (3)(A) during the 3-year period 
                        beginning at the earlier of the termination of 
                        the period described in clause (i) or the date 
                        prescribed by the Secretary.''.
                    (C) Capture and sequestration of carbon dioxide 
                emissions requirement.--Section 48A(e)(1) of such Code 
                (relating to requirements) is amended by striking 
                ``and'' at the end of subparagraph (E), by striking the 
                period at the end of subparagraph (F) and inserting ``, 
                and'', and by adding at the end the following new 
                subparagraph:
                    ``(G) in the case of any project the application 
                for which is submitted during the period described in 
                paragraph (2)(A)(ii), the project includes equipment to 
                separate and sequester 65 percent of such project's 
                total carbon dioxide emissions.''.
            (4) Nameplate capacity.--Paragraph (1) of section 48A(e) of 
        such Code is amended by adding at the end the following new 
        flush sentence:
        ``For purposes of subparagraph (C), in determining total 
        nameplate generating capacity, the Secretary shall use the 
        electric output that is guaranteed by the provider or supplier 
        of the advanced coal-based generation technology based upon a 
        certified heat and material heat balance.''.
            (5) Effective date.--The amendments made by this subsection 
        shall take effect on the date of the enactment of this Act.
    (b) Clean Coal Energy Bonds.--
            (1) In general.--Subpart I 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. 54C. CLEAN COAL ENERGY BONDS.

    ``(a) Clean Coal Energy Bond.--For purposes of this subchapter, the 
term `clean coal energy bond' means any bond issued as part of an issue 
if--
            ``(1) 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 coal energy bond limitation under subsection 
        (c)(2),
            ``(2) 100 percent or more of the available project proceeds 
        from the sale of such issue are to be used for capital 
        expenditures incurred by qualified borrowers for 1 or more 
        qualified projects, and
            ``(3) the qualified issuer designates such bond for 
        purposes of this section and the bond is in registered form.
    ``(b) Qualified Project; Special Use Rules.--
            ``(1) 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.
            ``(2) Refinancing rules.--For purposes of subsection 
        (a)(2), a qualified project may be refinanced with proceeds of 
        a clean coal energy 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.
            ``(3) Reimbursement.--For purposes of subsection (a)(2), a 
        clean coal energy 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--
                    ``(A) prior to the payment of the original 
                expenditure, the qualified borrower declared its intent 
                to reimburse such expenditure with the proceeds of a 
                clean coal energy bond,
                    ``(B) 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
                    ``(C) the reimbursement is made not later than 18 
                months after the date the original expenditure is paid.
            ``(4) Treatment of changes in use.--For purposes of 
        subsection (a)(2), 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 
        coal energy bond.
    ``(c) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national clean coal 
        energy bond limitation of $2,000,000,000.
            ``(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, except that the Secretary may not allocate more 
        than $1,250,000,000 of the national clean coal energy bond 
        limitation to finance qualified projects of qualified borrowers 
        which are governmental bodies.
    ``(d) Qualified Issuer; Qualified Borrower.--For purposes of this 
section--
            ``(1) Qualified issuer.--The term `qualified issuer' 
        means--
                    ``(A) a clean coal energy bond lender,
                    ``(B) a cooperative electric company, or
                    ``(C) a governmental body.
            ``(2) 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), or
                    ``(B) a governmental body.
            ``(3) 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.
            ``(4) Clean coal energy bond lender.--The term `clean coal 
        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.
            ``(5) 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.
    ``(e) Special Rules Relating to Pool Bonds.--No portion of a clean 
coal energy bond which is 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.
    ``(f) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Pooled financing bond.--The term `pooled financing 
        bond' shall have the meaning given such term by section 
        149(f)(4)(A).
            ``(2) Ratable principal amortization required.--A bond 
        shall not be treated as a clean coal energy bond unless it is 
        part of an issue which provides for an equal amount principal 
        to be paid by the qualified issuer during each 12-month period 
        that the issue is outstanding (other than the first 12-month 
        period).
    ``(g) Termination.--A bond shall not be treated as a clean coal 
energy bond if such bond is issued after December 31, 2012.''.
            (2) Conforming amendments.--
                    (A) Paragraph (1) of section 54A(d) is amended to 
                read as follows:
            ``(1) Qualified tax credit bond.--The term `qualified tax 
        credit bond' means--
                    ``(A) a qualified forestry conservation bond, or
                    ``(B) a clean coal energy bond,
        which is part of an issue that meets requirements of paragraphs 
        (2), (3), (4), (5), and (6).''.
                    (B) Subparagraph (C) of section 54A(d)(2), as added 
                by section 106, is amended to read as follows:
                    ``(C) Qualified purpose.--For purposes of this 
                paragraph, the term `qualified purpose' means--
                            ``(i) in the case of a qualified forestry 
                        conservation bond, a purpose specified in 
                        section 54B(e), and
                            ``(ii) in the case of a clean coal energy 
                        bond, a qualified project specified in section 
                        54C(b).''.
                    (C) The table of sections for subpart I of part IV 
                of subchapter A of chapter 1 is amended by adding at 
                the end the following new item:

``Sec. 54C. Clean coal energy bonds.''.
            (3) Issuance of regulations.--The Secretary of the Treasury 
        shall issues regulations required under section 54C 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.
            (4) Effective date.--The amendments made by this subsection 
        shall apply to bonds issued after December 31, 2007.
    (c) Tax Credit for Carbon Dioxide Sequestration.--
            (1) In general.--Subpart D of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 (relating to 
        business credits), as amended by this Act, is amended by adding 
        at the end the following new section:

``SEC. 45R. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

    ``(a) General Rule.--For purposes of section 38, the carbon dioxide 
sequestration credit for any taxable year is an amount equal to the sum 
of--
            ``(1) $20 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer at a qualified 
                facility, and
                    ``(B) disposed of by the taxpayer in secure 
                geological storage, and
            ``(2) $10 per metric ton of qualified carbon dioxide which 
        is--
                    ``(A) captured by the taxpayer at a qualified 
                facility, and
                    ``(B) used by the taxpayer as a tertiary injectant 
                in a qualified enhanced oil or natural gas recovery 
                project.
    ``(b) Qualified Carbon Dioxide.--For purposes of this section--
            ``(1) In general.--The term `qualified carbon dioxide' 
        means carbon dioxide captured from an industrial source which--
                    ``(A) would otherwise be released into the 
                atmosphere as industrial emission of greenhouse gas, 
                and
                    ``(B) is measured at the source of capture and 
                verified at the point of disposal or injection.
            ``(2) Recycled carbon dioxide.--The term `qualified carbon 
        dioxide' includes the initial deposit of captured carbon 
        dioxide used as a tertiary injectant. Such term does not 
        include carbon dioxide that is re-captured, recycled, and re-
        injected as part of the enhanced oil and natural gas recovery 
        process.
    ``(c) Qualified Facility.--For purposes of this section, the term 
`qualified facility' means any industrial facility--
            ``(1) which is owned by the taxpayer,
            ``(2) at which carbon capture equipment is placed in 
        service, and
            ``(3) which captures not less than 500,000 metric tons of 
        carbon dioxide during the taxable year.
    ``(d) Special Rules and Other Definitions.--For purposes of this 
section--
            ``(1) Only carbon dioxide captured within the united states 
        taken into account.--The credit under this section shall apply 
        only with respect to qualified carbon dioxide the capture of 
        which is within--
                    ``(A) the United States (within the meaning of 
                section 638(1)), or
                    ``(B) a possession of the United States (within the 
                meaning of section 638(2)).
            ``(2) Secure geological storage.--The Secretary, in 
        consultation with the Administrator of the Environmental 
        Protection Agency, shall establish regulations for determining 
        adequate security measures for the geological storage of carbon 
        dioxide under subsection (a)(1)(B) such that the carbon dioxide 
        does not escape into the atmosphere. Such term shall include 
        storage at deep saline formations and unminable coal seems 
        under such conditions as the Secretary may determine under such 
        regulations.
            ``(3) Tertiary injectant.--The term `tertiary injectant' 
        has the same meaning as when used within section 193(b)(1).
            ``(4) Qualified enhanced oil or natural gas recovery 
        project.--The term `qualified enhanced oil or natural gas 
        recovery project' has the meaning given the term `qualified 
        enhanced oil recovery project' by section 43(c)(2), by 
        substituting `crude oil or natural gas' for `crude oil' in 
        subparagraph (A)(i) thereof.
            ``(5) Credit attributable to taxpayer.--Any credit under 
        this section shall be attributable to the person that captures 
        and physically or contractually ensures the disposal of or the 
        use as a tertiary injectant of the qualified carbon dioxide, 
        except to the extent provided in regulations prescribed by the 
        Secretary.
            ``(6) Recapture.--The Secretary shall, by regulations, 
        provide for recapturing the benefit of any credit allowable 
        under subsection (a) with respect to any qualified carbon 
        dioxide which ceases to be captured, disposed of, or used as a 
        tertiary injectant in a manner consistent with the requirements 
        of this section.
            ``(7) Inflation adjustment.--In the case of any taxable 
        year beginning in a calendar year after 2008, there shall be 
        substituted for each dollar amount contained in subsection (a) 
        an amount equal to the product of--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the inflation adjustment factor for such 
                calendar year determined under section 43(b)(3)(B) for 
                such calendar year, determined by substituting `2007' 
                for `1990'.
    ``(e) Termination.--This section shall not apply to qualified 
carbon dioxide after the date that is 5 years after the date of the 
enactment of this Act.''.
            (2) Conforming amendment.--Section 38(b) of such Code 
        (relating to general business credit), as amended by this Act, 
        is amended by striking ``plus'' at the end of paragraph (33), 
        by striking the period at the end of paragraph (34) and 
        inserting ``, plus'', and by adding at the end of following new 
        paragraph:
            ``(35) the carbon dioxide sequestration credit determined 
        under section 45R(a).''.
            (3) Clerical amendment.--The table of sections for subpart 
        B of part IV of subchapter A of chapter 1 of such Code 
        (relating to other credits), as amended by this Act, is amended 
        by adding at the end the following new section:

``Sec. 45R. Credit for carbon dioxide sequestration.''.
            (4) Effective date.--The amendments made by this subsection 
        shall apply carbon dioxide captured after the date of the 
        enactment of this Act.
                                 <all>
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