II 

109TH CONGRESS 

1ST SESSION S. 387 

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

for the investment in greenhouse gas intensity reduction projects, and 

for other purposes. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 15, 2005 

Mr. HAGEL (for himself, Mr. ALEXANDER, Mr. CRAIG, and Mrs. DOLE) 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 the investment in greenhouse gas intensity reduction projects, 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; AMENDMENT OF CODE. 

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

5 ‘‘Climate Change Technology Tax Incentives Act of 

6 2005’’. 

7 (b) AMENDMENT OF CODE.—Except as otherwise ex8 pressly provided, whenever in this Act an amendment or 

9 repeal is expressed in terms of an amendment to, or repeal 
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1 of, a section or other provision, the reference shall be con2 sidered to be made to a section or other provision of the 

3 Internal Revenue Code of 1986. 

4 TITLE I—GREENHOUSE GAS IN5 TENSITY REDUCTION TAX IN6 CENTIVES 

7 SEC. 101. GREENHOUSE GAS INTENSITY REDUCTION IN8 VESTMENT TAX CREDIT. 

9 (a) IN GENERAL.—Subpart D of part IV of sub10 chapter A of chapter 1 (relating to business-related cred11 its) is amended by adding at the end the following new 

12 section: 

13 ‘‘SEC. 45J. GREENHOUSE GAS INTENSITY REDUCTION IN14 VESTMENT CREDIT. 

15 ‘‘(a) ALLOWANCE OF CREDIT.— 

16 ‘‘(1) IN GENERAL.—For purposes of section 38, 

17 in the case of a taxpayer’s investment in a green18 house gas intensity reduction project approved by 

19 the accreditation panel, the greenhouse gas intensity 

20 reduction investment credit determined under this 

21 section for the taxable year is an amount equal to— 

22 ‘‘(A) percentage reduction in greenhouse 

23 gas intensity certified for such project for such 

24 year by the accreditation panel, multiplied by 
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1 ‘‘(B) the investment in such project during 

2 such year which is attributable, directly or indi3 rectly, to the taxpayer, as determined by the ac4 creditation panel. 

5 ‘‘(2) AGGREGATE DOLLAR LIMITATION.—The 

6 credit determined under paragraph (1) for any tax7 able year, when added to any credit allowed to the 

8 taxpayer with respect to the such project in any pre9 ceding taxable year, shall not exceed 50 percent of 

10 the investment attributable to the taxpayer with re11 spect to such project through such taxable year. 

12 ‘‘(b) LIMITATION ON AGGREGATE CREDIT ALLOW13 ABLE.— 

14 ‘‘(1) IN GENERAL.—The amount of the green15 house gas intensity reduction investment credit de16 termined under subsection (a) for any project, when 

17 added to all such credits allowed to all taxpayers 

18 with respect to the such project shall not exceed the 

19 credit dollar amount allocated to such project under 

20 this subsection by the accreditation panel from the 

21 greenhouse gas intensity reduction investment credit 

22 limitation for the calendar year in which such alloca23 tion is made. 

24 ‘‘(2) TIME FOR MAKING ALLOCATION.—An allo25 cation shall be taken into account under paragraph 
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1 (1) only if it is made not later than the close of the 

2 calendar year in which the greenhouse gas intensity 

3 reduction project proposal with respect to such 

4 project is approved by the accreditation panel. 

5 ‘‘(3) OVERALL LIMITATION ON AGGREGATE

6 CREDIT ALLOWABLE.—The accreditation panel may 

7 allocate the aggregate credit dollar amount to any 

8 such project for a period not to exceed a 10-year pe9 riod beginning with the calendar year described in 

10 paragraph (2). 

11 ‘‘(c) LIMITATION ON AMOUNT OF CREDITS ALLO12 CATED.— 

13 ‘‘(1) IN GENERAL.—There is a greenhouse gas 

14 intensity reduction investment credit limitation 

15 amount for each calendar year. Such limitation 

16 amount is— 

17 ‘‘(A) $245,000,000 for 2006, 

18 ‘‘(B) $224,000,000 for 2007, 

19 ‘‘(C) $216,000,000 for 2008, 

20 ‘‘(D) $103,000,000 for 2009, 

21 ‘‘(E) $27,000,000 for 2010, and 

22 ‘‘(F) except as provided in paragraph (2), 

23 zero thereafter. 

24 ‘‘(2) CARRYOVER OF UNUSED ISSUANCE LIMI25 TATION.—If for any calendar year the limitation 
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1 amount imposed by paragraph (1) exceeds the 

2 amount of greenhouse gas intensity reduction invest3 ment credits allocated during such year, such excess 

4 shall be carried forward to the succeeding calendar 

5 year as an addition to the limitation imposed by 

6 paragraph (1). 

7 ‘‘(d) GREENHOUSE GAS INTENSITY REDUCTION

8 PROJECT; GREENHOUSE GAS INTENSITY; ACCREDITA9 TION PANEL.—For purposes of this section— 

10 ‘‘(1) GREENHOUSE GAS INTENSITY REDUCTION

11 PROJECT.—The term ‘greenhouse gas intensity re12 duction project’ means any project approved under 

13 this section by the accreditation panel. Such ap14 proval shall be based on the following criteria: 

15 ‘‘(A) The extent of the reduction in green16 house gas intensity proposed for the project. 

17 ‘‘(B) Improvements in system efficiency. 

18 ‘‘(C) In the case of projects located outside 

19 the United States, the extent of technology 

20 transfer. 

21 ‘‘(D) The existence and nature of agree22 ments for sharing project benefits and liability 

23 between the taxpayer and any host government. 

24 ‘‘(2) GREENHOUSE GAS INTENSITY.—The 

25 greenhouse gas intensity for any period is equal to 
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1 the volume of emissions divided by the economic ac2 tivity associated with a project. 

3 ‘‘(3) ACCREDITATION PANEL.—The term ‘ac4 creditation panel’ means a panel certified by the 

5 Secretary of Commerce. 

6 ‘‘(e) RECAPTURE OF CREDIT IN CERTAIN CASES.— 

7 ‘‘(1) IN GENERAL.—If, at any time during the 

8 20-year period of a greenhouse gas intensity reduc9 tion project, there is a recapture event with respect 

10 to such project, then the tax imposed by this chapter 

11 for the taxable year in which such event occurs shall 

12 be increased by the credit recapture amount. 

13 ‘‘(2) CREDIT RECAPTURE AMOUNT.—For pur14 poses of paragraph (1)— 

15 ‘‘(A) IN GENERAL.—The credit recapture 

16 amount is an amount equal to the recapture 

17 percentage of all greenhouse gas intensity re18 duction investment credits previously allowable 

19 to a taxpayer with respect to any investment in 

20 such project that is attributable to such tax21 payer. 

22 ‘‘(B) RECAPTURE PERCENTAGE.—The re23 capture percentage shall be 100 percent if the 

24 recapture event occurs during the first 5 years 

25 of the project, 75 percent if the recapture event 
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1 occurs during the second 5 years of the project, 

2 50 percent if the recapture event occurs during 

3 the third 5 years of the project, 25 percent if 

4 the recapture event occurs during the fourth 5 

5 years of the project, and 0 percent if the recap6 ture event occurs at any time after the 20th 

7 year of the project. 

8 ‘‘(3) RECAPTURE EVENT.—For purposes of 

9 paragraph (1), there is a recapture event with re10 spect to a greenhouse gas intensity reduction project 

11 if— 

12 ‘‘(A) the taxpayer violates a term or condi13 tion of the approval of the project by the ac14 creditation panel at any time, 

15 ‘‘(B) the taxpayer adopts a practice which 

16 the accreditation panel has specified in its ap17 proval of the project as a practice which would 

18 tend to defeat the purposes of the program, or 

19 ‘‘(C) the taxpayer disposes of any owner20 ship interest arising out of its investment that 

21 the accreditation panel has determined is attrib22 utable to the project, unless the accreditation 

23 panel determines that such disposition will not 

24 have any adverse effect on the greenhouse gas 

25 intensity reduction project. 
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1 If an event which otherwise would be a recapture 

2 event is outside the control of the taxpayer, as deter3 mined by the accreditation panel, such event shall 

4 not be treated as a recapture event with respect to 

5 such taxpayer. 

6 ‘‘(4) SPECIAL RULES.— 

7 ‘‘(A) TAX BENEFIT RULE.—The tax for 

8 the taxable year shall be increased under para9 graph (1) only with respect to credits allowed 

10 by reason of this section which were used to re11 duce tax liability. In the case of credits not so 

12 used to reduce tax liability, the carryforwards 

13 and carrybacks under section 39 shall be appro14 priately adjusted. 

15 ‘‘(B) NO CREDITS AGAINST TAX.—Any in16 crease in tax under this subsection shall not be 

17 treated as a tax imposed by this chapter for 

18 purposes of determining the amount of any 

19 credit under this chapter or for purposes of sec20 tion 55. 

21 ‘‘(f) DISALLOWANCE OF DOUBLE BENEFIT.— 

22 ‘‘(1) BASIS REDUCTION.—The basis of any in23 vestment in a greenhouse gas intensity reduction 

24 project shall be reduced by the amount of any credit 
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1 determined under this section with respect to such 

2 investment. 

3 ‘‘(2) CHARITABLE DEDUCTION DISALLOWED.—

4 No deduction shall be allowed to a taxpayer under 

5 section 170 with respect to any contribution which 

6 the accreditation panel certifies to the Secretary con7 stitutes an investment in a greenhouse gas intensity 

8 reduction project that is attributable to such tax9 payer. 

10 ‘‘(g) CERTIFICATION TO SECRETARY.—The accredi11 tation panel shall certify to the Secretary before January 

12 31 of each year with respect to each taxpayer which has 

13 made an investment in a greenhouse gas intensity reduc14 tion project— 

15 ‘‘(1) the amount of the greenhouse gas intensity 

16 reduction investment credit allowable to such tax17 payer for the preceding calendar year, 

18 ‘‘(2) whether a recapture event occurred with 

19 respect to such taxpayer during the preceding cal20 endar year, and 

21 ‘‘(3) the credit recapture amount, if any, with 

22 respect to such taxpayer for the preceding calendar 

23 year. 
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1 ‘‘(h) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be appropriate to carry out this 

3 section, including regulations— 

4 ‘‘(1) which limit the credit for investments 

5 which are directly or indirectly subsidized by other 

6 Federal benefits, 

7 ‘‘(2) which prevent the abuse of the provisions 

8 of this section through the use of related parties, 

9 and 

10 ‘‘(3) which impose appropriate reporting re11 quirements.’’. 

12 (b) CREDIT MADE PART OF GENERAL BUSINESS

13 CREDIT.—Subsection (b) of section 38 is amended by 

14 striking ‘‘plus’’ at the end of paragraph (18), by striking 

15 the period at the end of paragraph (19) and inserting ‘‘, 

16 plus’’, and by adding at the end the following new para17 graph: 

18 ‘‘(20) the greenhouse gas intensity reduction in19 vestment credit determined under section 45J(a).’’. 

20 (c) DEDUCTION FOR UNUSED CREDIT.—Subsection 

21 (c) of section 196 is amended by striking ‘‘and’’ at the 

22 end of paragraph (11), by striking the period at the end 

23 of paragraph (12) and inserting ‘‘, and’’, and by adding 

24 at the end the following new paragraph: 
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1 ‘‘(13) the greenhouse gas intensity reduction in2 vestment credit determined under section 45J(a).’’. 

3 (d) CLERICAL AMENDMENT.—The table of sections 

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

5 is amended by adding at the end the following new item:

‘‘Sec. 45J. Greenhouse gas intensity reduction investment credit.’’.

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

7 this section shall apply to investments made after Decem8 ber 31, 2005. 

9 TITLE II—ENERGY EFFICIENCY 

10 PROVISIONS 

11 Subtitle A—Renewable Energy 

12 SEC. 201. SENSE OF THE SENATE REGARDING EXTENSION 

13 OF RENEWABLE ENERGY CREDIT. 

14 It is the sense of the Senate that the income tax cred15 it for electricity produced from certain renewable re16 sources under section 45 of the Internal Revenue Code 

17 of 1986 should be extended through 2010. 
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1 Subtitle B—Clean Coal Incentives 

2 PART I—CREDIT FOR EMISSION REDUCTIONS 

3 AND EFFICIENCY IMPROVEMENTS IN EXIST4 ING COAL-BASED ELECTRICITY GENERATION 

5 FACILITIES 

6 SEC. 211. CREDIT FOR PRODUCTION FROM A QUALIFYING 

7 CLEAN COAL TECHNOLOGY UNIT. 

8 (a) CREDIT FOR PRODUCTION FROM A QUALIFYING

9 CLEAN COAL TECHNOLOGY UNIT.—Subpart D of part IV 

10 of subchapter A of chapter 1 (relating to business related 

11 credits), as amended by this Act, is amended by adding 

12 at the end the following new section: 

13 ‘‘SEC. 45K. CREDIT FOR PRODUCTION FROM A QUALIFYING 

14 CLEAN COAL TECHNOLOGY UNIT. 

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

16 the qualifying clean coal technology production credit of 

17 any taxpayer for any taxable year is equal to— 

18 ‘‘(1) the applicable amount of clean coal tech19 nology production credit, multiplied by 

20 ‘‘(2) the applicable percentage of the sum of— 

21 ‘‘(A) the kilowatt hours of electricity, plus 

22 ‘‘(B) each 3,413 Btu of fuels or chemicals, 

23 produced by the taxpayer during such taxable 

24 year at a qualifying clean coal technology unit, 

25 but only if such production occurs during the 
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1 10-year period beginning on the date the unit 

2 was returned to service after becoming a quali3 fying clean coal technology unit. 

4 ‘‘(b) APPLICABLE AMOUNT.— 

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, the applicable amount of clean coal technology 

7 production credit is equal to $0.0034. 

8 ‘‘(2) INFLATION ADJUSTMENT.—For calendar 

9 years after 2005, the applicable amount of clean coal 

10 technology production credit shall be adjusted by 

11 multiplying such amount by the inflation adjustment 

12 factor for the calendar year in which the amount is 

13 applied. If any amount as increased under the pre14 ceding sentence is not a multiple of 0.01 cent, such 

15 amount shall be rounded to the nearest multiple of 

16 0.01 cent. 

17 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 

18 this section, with respect to any qualifying clean coal tech19 nology unit, the applicable percentage is the percentage 

20 equal to the ratio which the portion of the national mega21 watt capacity limitation allocated to the taxpayer with re22 spect to such unit under subsection (e) bears to the total 

23 megawatt capacity of such unit. 

24 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur25 poses of this section— 
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1 ‘‘(1) QUALIFYING CLEAN COAL TECHNOLOGY

2 UNIT.—The term ‘qualifying clean coal technology 

3 unit’ means a clean coal technology unit of the tax4 payer which— 

5 ‘‘(A) on January 1, 2005— 

6 ‘‘(i) was a coal-based electricity gener7 ating steam generator-turbine unit which 

8 was not a clean coal technology unit, and 

9 ‘‘(ii) had a nameplate capacity rating 

10 of not more than 300 megawatts, 

11 ‘‘(B) becomes a clean coal technology unit 

12 as the result of the retrofitting, repowering, or 

13 replacement of the unit with clean coal tech14 nology during the 10-year period beginning on 

15 January 1, 2005, 

16 ‘‘(C) is not receiving nor is scheduled to 

17 receive funding under the Clean Coal Tech18 nology Program, the Power Plant Improvement 

19 Initiative, or the Clean Coal Power Initiative 

20 administered by the Secretary of Energy, and 

21 ‘‘(D) receives an allocation of a portion of 

22 the national megawatt capacity limitation under 

23 subsection (e). 
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1 ‘‘(2) CLEAN COAL TECHNOLOGY UNIT.—The 

2 term ‘clean coal technology unit’ means a unit 

3 which— 

4 ‘‘(A) uses clean coal technology, including 

5 advanced pulverized coal or atmospheric fluid6 ized bed combustion, pressurized fluidized bed 

7 combustion, integrated gasification combined 

8 cycle, or any other technology, for the produc9 tion of electricity, 

10 ‘‘(B) uses an input of at least 75 percent 

11 coal to produce at least 50 percent of its ther12 mal output as electricity, 

13 ‘‘(C) has a design net heat rate of at least 

14 500 less than that of such unit as described in 

15 paragraph (1)(A), 

16 ‘‘(D) has a maximum design net heat rate 

17 of not more than 9,500, and 

18 ‘‘(E) meets the pollution control require19 ments of paragraph (3). 

20 ‘‘(3) POLLUTION CONTROL REQUIREMENTS.— 

21 ‘‘(A) IN GENERAL.—A unit meets the re22 quirements of this paragraph if— 

23 ‘‘(i) its emissions of sulfur dioxide, ni24 trogen oxide, or particulates meet the 
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1 lower of the emission levels for each such 

2 emission specified in— 

3 ‘‘(I) subparagraph (B), or 

4 ‘‘(II) the new source performance 

5 standards of the Clean Air Act (42 

6 U.S.C. 7411) which are in effect for 

7 the category of source at the time of 

8 the retrofitting, repowering, or re9 placement of the unit, and 

10 ‘‘(ii) its emissions do not exceed any 

11 relevant emission level specified by regula12 tion pursuant to the hazardous air pollut13 ant requirements of the Clean Air Act (42 

14 U.S.C. 7412) in effect at the time of the 

15 retrofitting, repowering, or replacement. 

16 ‘‘(B) SPECIFIC LEVELS.—The levels speci17 fied in this subparagraph are— 

18 ‘‘(i) in the case of sulfur dioxide emis19 sions, 50 percent of the sulfur dioxide 

20 emission levels specified in the new source 

21 performance standards of the Clean Air 

22 Act (42 U.S.C. 7411) in effect on the date 

23 of the enactment of this section for the 

24 category of source, 
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1 ‘‘(ii) in the case of nitrogen oxide 

2 emissions— 

3 ‘‘(I) 0.1 pound per million Btu of 

4 heat input if the unit is not a cyclone5 fired boiler, and 

6 ‘‘(II) if the unit is a cyclone-fired 

7 boiler, 15 percent of the uncontrolled 

8 nitrogen oxide emissions from such 

9 boilers, and 

10 ‘‘(iii) in the case of particulate emis11 sions, 0.02 pound per million Btu of heat 

12 input. 

13 ‘‘(4) DESIGN NET HEAT RATE.—The design net 

14 heat rate with respect to any unit, measured in Btu 

15 per kilowatt hour (HHV)— 

16 ‘‘(A) shall be based on the design annual 

17 heat input to and the design annual net elec18 trical power, fuels, and chemicals output from 

19 such unit (determined without regard to such 

20 unit’s co-generation of steam), 

21 ‘‘(B) shall be adjusted for the heat content 

22 of the design coal to be used by the unit if it 

23 is less than 12,000 Btu per pound according to 

24 the following formula: 
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1 Design net heat rate = Unit net heat rate [l¥

2 {((12,000-design coal heat content, Btu per pound)/

3 1,000) 0.013}], 

4 ‘‘(C) shall be corrected for the site ref5 erence conditions of— 

6 ‘‘(i) elevation above sea level of 500 

7 feet, 

8 ‘‘(ii) air pressure of 14.4 pounds per 

9 square inch absolute (psia), 

10 ‘‘(iii) temperature, dry bulb of 63°F, 

11 ‘‘(iv) temperature, wet bulb of 54°F, 

12 and 

13 ‘‘(v) relative humidity of 55 percent, 

14 and 

15 ‘‘(D) if carbon capture controls have been 

16 installed with respect to any qualifying unit and 

17 such controls remove at least 50 percent of the 

18 unit’s carbon dioxide emissions, shall be ad19 justed up to the design heat rate level which 

20 would have resulted without the installation of 

21 such controls. 

22 ‘‘(5) HHV.—The term ‘HHV’ means higher 

23 heating value. 
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1 ‘‘(6) APPLICATION OF CERTAIN RULES.—The 

2 rules of paragraphs (3), (4), and (5) of section 45(e) 

3 shall apply. 

4 ‘‘(7) INFLATION ADJUSTMENT FACTOR.— 

5 ‘‘(A) IN GENERAL.—The term ‘inflation 

6 adjustment factor’ means, with respect to a cal7 endar year, a fraction the numerator of which 

8 is the GDP implicit price deflator for the pre9 ceding calendar year and the denominator of 

10 which is the GDP implicit price deflator for the 

11 calendar year 2003. 

12 ‘‘(B) GDP IMPLICIT PRICE DEFLATOR.—

13 The term ‘GDP implicit price deflator’ means, 

14 for any calendar year, the most recent revision 

15 of the implicit price deflator for the gross do16 mestic product as of June 30 of such calendar 

17 year as computed by the Department of Com18 merce before October 1 of such calendar year. 

19 ‘‘(8) NONCOMPLIANCE WITH POLLUTION

20 LAWS.—For purposes of this section, a unit which is 

21 not in compliance with the applicable State and Fed22 eral pollution prevention, control, and permit re23 quirements for any period of time shall not be con24 sidered to be a qualifying clean coal technology unit 

25 during such period. 
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1 ‘‘(e) NATIONAL LIMITATION ON THE AGGREGATE CA2 PACITY OF QUALIFYING CLEAN COAL TECHNOLOGY

3 UNITS.— 

4 ‘‘(1) IN GENERAL.—For purposes of this sec5 tion, the national megawatt capacity limitation for 

6 qualifying clean coal technology units is 4,000 

7 megawatts. 

8 ‘‘(2) ALLOCATION OF LIMITATION.—The Sec9 retary shall allocate the national megawatt capacity 

10 limitation for qualifying clean coal technology units 

11 in such manner as the Secretary may prescribe 

12 under the regulations under paragraph (3). 

13 ‘‘(3) REGULATIONS.—Not later than 6 months 

14 after the date of the enactment of this section, the 

15 Secretary shall prescribe such regulations as may be 

16 necessary or appropriate— 

17 ‘‘(A) to carry out the purposes of this sub18 section, 

19 ‘‘(B) to limit the capacity of any qualifying 

20 clean coal technology unit to which this section 

21 applies so that the megawatt capacity allocated 

22 to any unit under this subsection does not ex23 ceed 300 megawatts and the combined mega24 watt capacity allocated to all such units when 

25 all such units are placed in service during the 
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1 10-year period described in subsection 

2 (d)(1)(B), does not exceed 4,000 megawatts, 

3 ‘‘(C) to provide a certification process 

4 under which the Secretary, in consultation with 

5 the Secretary of Energy, shall approve and allo6 cate the national megawatt capacity limita7 tion— 

8 ‘‘(i) to encourage that units with the 

9 highest thermal efficiencies, when adjusted 

10 for the heat content of the design coal and 

11 site reference conditions described in sub12 section (d)(4)(C), and environmental per13 formance, be placed in service as soon as 

14 possible, and 

15 ‘‘(ii) to allocate capacity to taxpayers 

16 which have a definite and credible plan for 

17 placing into commercial operation a quali18 fying clean coal technology unit, includ19 ing— 

20 ‘‘(I) a site, 

21 ‘‘(II) contractual commitments 

22 for procurement and construction or, 

23 in the case of regulated utilities, the 

24 agreement of the State utility commis25 sion, 
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1 ‘‘(III) filings for all necessary 

2 preconstruction approvals, 

3 ‘‘(IV) a demonstrated record of 

4 having successfully completed com5 parable projects on a timely basis, and 

6 ‘‘(V) such other factors that the 

7 Secretary determines are appropriate, 

8 ‘‘(D) to allocate the national megawatt ca9 pacity limitation to a portion of the capacity of 

10 a qualifying clean coal technology unit if the 

11 Secretary determines that such an allocation 

12 would maximize the amount of efficient produc13 tion encouraged with the available tax credits, 

14 ‘‘(E) to set progress requirements and con15 ditional approvals so that capacity allocations 

16 for clean coal technology units which become 

17 unlikely to meet the necessary conditions for 

18 qualifying can be reallocated by the Secretary 

19 to other clean coal technology units, and 

20 ‘‘(F) to provide taxpayers with opportuni21 ties to correct administrative errors and omis22 sions with respect to allocations and record 

23 keeping within a reasonable period after dis24 covery, taking into account the availability of 
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1 regulations and other administrative guidance 

2 from the Secretary.’’. 

3 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec4 tion 38(b) (relating to current year business credit), as 

5 amended by this Act, is amended by striking ‘‘plus’’ at 

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

7 end of paragraph (20) and inserting ‘‘, plus’’, and by add8 ing at the end the following new paragraph: 

9 ‘‘(21) the qualifying clean coal technology pro10 duction credit determined under section 45K(a).’’. 

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

12 for subpart D of part IV of subchapter A of chapter 1, 

13 as amended by this Act, is amended by adding at the end 

14 the following new item:

‘‘Sec. 45K. Credit for production from a qualifying clean coal technology unit.’’.

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

16 this section shall apply to production after December 31, 

17 2004, in taxable years ending after such date. 

18 PART II—INCENTIVES FOR EARLY COMMERCIAL 

19 APPLICATIONS OF ADVANCED CLEAN COAL 

20 TECHNOLOGIES 

21 SEC. 212. CREDIT FOR INVESTMENT IN QUALIFYING AD22 VANCED CLEAN COAL TECHNOLOGY. 

23 (a) ALLOWANCE OF QUALIFYING ADVANCED CLEAN

24 COAL TECHNOLOGY UNIT CREDIT.—Section 46 (relating 

25 to amount of credit) is amended by striking ‘‘and’’ at the 
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1 end of paragraph (1), by striking the period at the end 

2 of paragraph (2) and inserting ‘‘, and’’, and by adding 

3 at the end the following new paragraph: 

4 ‘‘(3) the qualifying advanced clean coal tech5 nology unit credit.’’. 

6 (b) AMOUNT OF QUALIFYING ADVANCED CLEAN

7 COAL TECHNOLOGY UNIT CREDIT.—Subpart E of part 

8 IV of subchapter A of chapter 1 (relating to rules for com9 puting investment credit) is amended by inserting after 

10 section 48 the following new section: 

11 ‘‘SEC. 48A. QUALIFYING ADVANCED CLEAN COAL TECH12 NOLOGY UNIT CREDIT. 

13 ‘‘(a) IN GENERAL.—For purposes of section 46, the 

14 qualifying advanced clean coal technology unit credit for 

15 any taxable year is an amount equal to 10 percent of the 

16 applicable percentage of the qualified investment in a 

17 qualifying advanced clean coal technology unit for such 

18 taxable year. 

19 ‘‘(b) QUALIFYING ADVANCED CLEAN COAL TECH20 NOLOGY UNIT.— 

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

22 (a), the term ‘qualifying advanced clean coal tech23 nology unit’ means an advanced clean coal tech24 nology unit of the taxpayer— 
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1 ‘‘(A)(i) in the case of a unit first placed in 

2 service after December 31, 2004, the original 

3 use of which commences with the taxpayer, or 

4 ‘‘(ii) in the case of the retrofitting or 

5 repowering of a unit first placed in service be6 fore January 1, 2005, the retrofitting or 

7 repowering of which is completed by the tax8 payer after such date, or 

9 ‘‘(B) which is depreciable under section 

10 167, 

11 ‘‘(C) which has a useful life of not less 

12 than 4 years, 

13 ‘‘(D) which is located in the United States, 

14 ‘‘(E) which is not receiving nor is sched15 uled to receive funding under the Clean Coal 

16 Technology Program, the Power Plant Improve17 ment Initiative, or the Clean Coal Power Initia18 tive administered by the Secretary of Energy, 

19 ‘‘(F) which is not a qualifying clean coal 

20 technology unit, and 

21 ‘‘(G) which receives an allocation of a por22 tion of the national megawatt capacity limita23 tion under subsection (f). 
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1 ‘‘(2) SPECIAL RULE FOR SALE-LEASEBACKS.—

2 For purposes of subparagraph (A) of paragraph (1), 

3 in the case of a unit which— 

4 ‘‘(A) is originally placed in service by a 

5 person, and 

6 ‘‘(B) is sold and leased back by such per7 son, or is leased to such person, within 3 

8 months after the date such unit was originally 

9 placed in service, for a period of not less than 

10 12 years, such unit shall be treated as originally 

11 placed in service not earlier than the date on 

12 which such unit is used under the leaseback (or 

13 lease) referred to in subparagraph (B). The 

14 preceding sentence shall not apply to any prop15 erty if the lessee and lessor of such property 

16 make an election under this sentence. Such an 

17 election, once made, may be revoked only with 

18 the consent of the Secretary. 

19 ‘‘(3) NONCOMPLIANCE WITH POLLUTION

20 LAWS.—For purposes of this subsection, a unit 

21 which is not in compliance with the applicable State 

22 and Federal pollution prevention, control, and per23 mit requirements for any period of time shall not be 

24 considered to be a qualifying advanced clean coal 

25 technology unit during such period. 
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1 ‘‘(c) APPLICABLE PERCENTAGE.—For purposes of 

2 this section, with respect to any qualifying advanced clean 

3 coal technology unit, the applicable percentage is the per4 centage equal to the ratio which the portion of the national 

5 megawatt capacity limitation allocated to the taxpayer 

6 with respect to such unit under subsection (f) bears to 

7 the total megawatt capacity of such unit. 

8 ‘‘(d) ADVANCED CLEAN COAL TECHNOLOGY UNIT.—

9 For purposes of this section— 

10 ‘‘(1) IN GENERAL.—The term ‘advanced clean 

11 coal technology unit’ means a new, retrofit, or 

12 repowering unit of the taxpayer which— 

13 ‘‘(A) is— 

14 ‘‘(i) an eligible advanced pulverized 

15 coal or atmospheric fluidized bed combus16 tion technology unit, 

17 ‘‘(ii) an eligible pressurized fluidized 

18 bed combustion technology unit, 

19 ‘‘(iii) an eligible integrated gasifi20 cation combined cycle technology unit, or 

21 ‘‘(iv) an eligible other technology unit, 

22 and 

23 ‘‘(B) meets the carbon emission rate re24 quirements of paragraph (6). 
28

•S 387 IS

1 ‘‘(2) ELIGIBLE ADVANCED PULVERIZED COAL

2 OR ATMOSPHERIC FLUIDIZED BED COMBUSTION

3 TECHNOLOGY UNIT.—The term ‘eligible advanced 

4 pulverized coal or atmospheric fluidized bed combus5 tion technology unit’ means a clean coal technology 

6 unit using advanced pulverized coal or atmospheric 

7 fluidized bed combustion technology which— 

8 ‘‘(A) is placed in service after December 

9 31, 2004, and before January 1, 2013, and 

10 ‘‘(B) has a design net heat rate of not 

11 more than 8,500 (8,900 in the case of units 

12 placed in service before 2009). 

13 ‘‘(3) ELIGIBLE PRESSURIZED FLUIDIZED BED

14 COMBUSTION TECHNOLOGY UNIT.—The term ‘eligi15 ble pressurized fluidized bed combustion technology 

16 unit’ means a clean coal technology unit using pres17 surized fluidized bed combustion technology which— 

18 ‘‘(A) is placed in service after December 

19 31, 2004, and before January 1, 2017, and 

20 ‘‘(B) has a design net heat rate of not 

21 more than 7,720 (8,900 in the case of units 

22 placed in service before 2009, and 8,500 in the 

23 case of units placed in service after 2008 and 

24 before 2013). 
29

•S 387 IS

1 ‘‘(4) ELIGIBLE INTEGRATED GASIFICATION

2 COMBINED CYCLE TECHNOLOGY UNIT.—The term 

3 ‘eligible integrated gasification combined cycle tech4 nology unit’ means a clean coal technology unit 

5 using integrated gasification combined cycle tech6 nology, with or without fuel or chemical co-produc7 tion, which— 

8 ‘‘(A) is placed in service after December 

9 31, 2004, and before January 1, 2017, 

10 ‘‘(B) has a design net heat rate of not 

11 more than 7,720 (8,900 in the case of units 

12 placed in service before 2009, and 8,500 in the 

13 case of units placed in service after 2008 and 

14 before 2013), and 

15 ‘‘(C) has a net thermal efficiency (HHV) 

16 using coal with fuel or chemical co-production 

17 of not less than 44.2 percent (38.4 percent in 

18 the case of units placed in service before 2009, 

19 and 40.2 percent in the case of units placed in 

20 service after 2008 and before 2013). 

21 ‘‘(5) ELIGIBLE OTHER TECHNOLOGY UNIT.—

22 The term ‘eligible other technology unit’ means a 

23 clean coal technology unit using any other tech24 nology for the production of electricity which is 
30

•S 387 IS

1 placed in service after December 31, 2004, and be2 fore January 1, 2017. 

3 ‘‘(6) CARBON EMISSION RATE REQUIRE4 MENTS.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 subparagraph (B), a unit meets the require7 ments of this paragraph if— 

8 ‘‘(i) in the case of a unit using design 

9 coal with a heat content of not more than 

10 9,000 Btu per pound, the carbon emission 

11 rate is less than 0.60 pound of carbon per 

12 kilowatt hour, and 

13 ‘‘(ii) in the case of a unit using design 

14 coal with a heat content of more than 

15 9,000 Btu per pound, the carbon emission 

16 rate is less than 0.54 pound of carbon per 

17 kilowatt hour. 

18 ‘‘(B) ELIGIBLE OTHER TECHNOLOGY

19 UNIT.—In the case of an eligible other tech20 nology unit, subparagraph (A) shall be applied 

21 by substituting ‘0.51’ and ‘0.459’ for ‘0.60’ and 

22 ‘0.54’, respectively. 

23 ‘‘(e) GENERAL DEFINITIONS.—Any term used in this 

24 section which is also used in section 45K shall have the 

25 meaning given such term in section 45M. 
31

•S 387 IS

1 ‘‘(f) NATIONAL LIMITATION ON THE AGGREGATE CA2 PACITY OF ADVANCED CLEAN COAL TECHNOLOGY

3 UNITS.— 

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

5 (b)(1)(G), the national megawatt capacity limitation 

6 is— 

7 ‘‘(A) for qualifying advanced clean coal 

8 technology units using advanced pulverized coal 

9 or atmospheric fluidized bed combustion tech10 nology, not more than 1,000 megawatts (not 

11 more than 500 megawatts in the case of units 

12 placed in service before 2009), 

13 ‘‘(B) for such units using pressurized flu14 idized bed combustion technology, not more 

15 than 500 megawatts (not more than 250 

16 megawatts in the case of units placed in service 

17 before 2009), 

18 ‘‘(C) for such units using integrated gasifi19 cation combined cycle technology, with or with20 out fuel or chemical co-production, not more 

21 than 2,000 megawatts (not more than 1,000 

22 megawatts in the case of units placed in service 

23 before 2009), and 

24 ‘‘(D) for such units using other technology 

25 for the production of electricity, not more than 
32

•S 387 IS

1 500 megawatts (not more than 250 megawatts 

2 in the case of units placed in service before 

3 2009). 

4 ‘‘(2) ALLOCATION OF LIMITATION.—The Sec5 retary shall allocate the national megawatt capacity 

6 limitation for qualifying advanced clean coal tech7 nology units in such manner as the Secretary may 

8 prescribe under the regulations under paragraph (3). 

9 ‘‘(3) REGULATIONS.—Not later than 6 months 

10 after the date of the enactment of this section, the 

11 Secretary shall prescribe such regulations as may be 

12 necessary or appropriate— 

13 ‘‘(A) to carry out the purposes of this sub14 section and section 45L, 

15 ‘‘(B) to limit the capacity of any qualifying 

16 advanced clean coal technology unit to which 

17 this section applies so that the combined mega18 watt capacity of all such units to which this sec19 tion applies does not exceed 4,000 megawatts, 

20 ‘‘(C) to provide a certification process de21 scribed in section 45K(e)(3)(C), 

22 ‘‘(D) to carry out the purposes described 

23 in subparagraphs (D), (E), and (F) of section 

24 45K(e)(3), and 
33

•S 387 IS

1 ‘‘(E) to reallocate capacity which is not al2 located to any technology described in subpara3 graphs (A) through (D) of paragraph (1) be4 cause an insufficient number of qualifying units 

5 request an allocation for such technology, to an6 other technology described in such subpara7 graphs in order to maximize the amount of en8 ergy efficient production encouraged with the 

9 available tax credits. 

10 ‘‘(4) SELECTION CRITERIA.—For purposes of 

11 this subsection, the selection criteria for allocating 

12 the national megawatt capacity limitation to quali13 fying advanced clean coal technology units— 

14 ‘‘(A) shall be established by the Secretary 

15 of Energy as part of a competitive solicitation, 

16 ‘‘(B) shall include primary criteria of min17 imum design net heat rate, maximum design 

18 thermal efficiency, environmental performance, 

19 and lowest cost to the Government, and 

20 ‘‘(C) shall include supplemental criteria as 

21 determined appropriate by the Secretary of En22 ergy. 

23 ‘‘(g) QUALIFIED INVESTMENT.—For purposes of 

24 subsection (a), the term ‘qualified investment’ means, with 

25 respect to any taxable year, the basis of a qualifying ad-
34

•S 387 IS

1 vanced clean coal technology unit placed in service by the 

2 taxpayer during such taxable year (in the case of a unit 

3 described in subsection (b)(1)(A)(ii), only that portion of 

4 the basis of such unit which is properly attributable to 

5 the retrofitting or repowering of such unit). 

6 ‘‘(h) QUALIFIED PROGRESS EXPENDITURES.— 

7 ‘‘(1) INCREASE IN QUALIFIED INVESTMENT.—

8 In the case of a taxpayer who has made an election 

9 under paragraph (5), the amount of the qualified in10 vestment of such taxpayer for the taxable year (de11 termined under subsection (g) without regard to this 

12 subsection) shall be increased by an amount equal to 

13 the aggregate of each qualified progress expenditure 

14 for the taxable year with respect to progress expend15 iture property. 

16 ‘‘(2) PROGRESS EXPENDITURE PROPERTY DE17 FINED.—For purposes of this subsection, the term 

18 ‘progress expenditure property’ means any property 

19 being constructed by or for the taxpayer and which 

20 it is reasonable to believe will qualify as a qualifying 

21 advanced clean coal technology unit which is being 

22 constructed by or for the taxpayer when it is placed 

23 in service. 

24 ‘‘(3) QUALIFIED PROGRESS EXPENDITURES DE25 FINED.—For purposes of this subsection— 
35

•S 387 IS

1 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—In 

2 the case of any self-constructed property, the 

3 term ‘qualified progress expenditures’ means 

4 the amount which, for purposes of this subpart, 

5 is properly chargeable (during such taxable 

6 year) to capital account with respect to such 

7 property. 

8 ‘‘(B) NONSELF-CONSTRUCTED PROP9 ERTY.—In the case of nonself-constructed prop10 erty, the term ‘qualified progress expenditures’ 

11 means the amount paid during the taxable year 

12 to another person for the construction of such 

13 property. 

14 ‘‘(4) OTHER DEFINITIONS.—For purposes of 

15 this subsection— 

16 ‘‘(A) SELF-CONSTRUCTED PROPERTY.—

17 The term ‘self-constructed property’ means 

18 property for which it is reasonable to believe 

19 that more than half of the construction expendi20 tures will be made directly by the taxpayer. 

21 ‘‘(B) NONSELF-CONSTRUCTED PROP22 ERTY.—The term ‘nonself-constructed property’ 

23 means property which is not self-constructed 

24 property. 
36

•S 387 IS

1 ‘‘(C) CONSTRUCTION, ETC.—The term 

2 ‘construction’ includes reconstruction and erec3 tion, and the term ‘constructed’ includes recon4 structed and erected. 

5 ‘‘(D) ONLY CONSTRUCTION OF QUALI6 FYING ADVANCED CLEAN COAL TECHNOLOGY

7 UNIT TO BE TAKEN INTO ACCOUNT.—Construc8 tion shall be taken into account only if, for pur9 poses of this subpart, expenditures therefor are 

10 properly chargeable to capital account with re11 spect to the property. 

12 ‘‘(5) ELECTION.—An election under this sub13 section may be made at such time and in such man14 ner as the Secretary may by regulations prescribe. 

15 Such an election shall apply to the taxable year for 

16 which made and to all subsequent taxable years. 

17 Such an election, once made, may not be revoked ex18 cept with the consent of the Secretary. 

19 ‘‘(i) COORDINATION WITH OTHER CREDITS.—This 

20 section shall not apply to any property with respect to 

21 which the rehabilitation credit under section 47 or the en22 ergy credit under section 48 is allowed unless the taxpayer 

23 elects to waive the application of such credit to such prop24 erty.’’. 
37

•S 387 IS

1 (c) RECAPTURE.—Section 50(a) (relating to other 

2 special rules) is amended by adding at the end the fol3 lowing new paragraph: 

4 ‘‘(6) SPECIAL RULES RELATING TO QUALIFYING

5 ADVANCED CLEAN COAL TECHNOLOGY UNIT.—For 

6 purposes of applying this subsection in the case of 

7 any credit allowable by reason of section 48A, the 

8 following rules shall apply: 

9 ‘‘(A) GENERAL RULE.—In lieu of the 

10 amount of the increase in tax under paragraph 

11 (1), the increase in tax shall be an amount 

12 equal to the investment tax credit allowed under 

13 section 38 for all prior taxable years with re14 spect to a qualifying advanced clean coal tech15 nology unit (as defined by section 48A(b)(1)) 

16 multiplied by a fraction the numerator of which 

17 is the number of years remaining to fully depre18 ciate under this title the qualifying advanced 

19 clean coal technology unit disposed of, and the 

20 denominator of which is the total number of 

21 years over which such unit would otherwise 

22 have been subject to depreciation. For purposes 

23 of the preceding sentence, the year of disposi24 tion of the qualifying advanced clean coal tech-
38

•S 387 IS

1 nology unit shall be treated as a year of re2 maining depreciation. 

3 ‘‘(B) PROPERTY CEASES TO QUALIFY FOR

4 PROGRESS EXPENDITURES.—Rules similar to 

5 the rules of paragraph (2) shall apply in the 

6 case of qualified progress expenditures for a 

7 qualifying advanced clean coal technology unit 

8 under section 48A, except that the amount of 

9 the increase in tax under subparagraph (A) of 

10 this paragraph shall be substituted for the 

11 amount described in such paragraph (2). 

12 ‘‘(C) APPLICATION OF PARAGRAPH.—This 

13 paragraph shall be applied separately with re14 spect to the credit allowed under section 38 re15 garding a qualifying advanced clean coal tech16 nology unit.’’. 

17 (d) TECHNICAL AMENDMENTS.— 

18 (1) Section 49(a)(1)(C) is amended by striking 

19 ‘‘and’’ at the end of clause (ii), by striking the pe20 riod at the end of clause (iii) and inserting ‘‘, and’’, 

21 and by adding at the end the following new clause: 

22 ‘‘(iv) the portion of the basis of any 

23 qualifying advanced clean coal technology 

24 unit attributable to any qualified invest25 ment (as defined by section 48A(g)).’’. 
39

•S 387 IS

1 (2) Section 50(a)(4) is amended by striking 

2 ‘‘and (2)’’ and inserting ‘‘, (2), and (6)’’. 

3 (3) Section 50(c) is amended by adding at the 

4 end the following new paragraph: 

5 ‘‘(6) NONAPPLICATION.—Paragraphs (1) and 

6 (2) shall not apply to any qualifying advanced clean 

7 coal technology unit credit under section 48A.’’. 

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

9 IV of subchapter A of chapter 1 is amended by in10 serting after the item relating to section 48 the fol11 lowing new item:

‘‘Sec. 48A. Qualifying advanced clean coal technology unit credit.’’.

12 (e) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to periods after December 31, 

14 2004, under rules similar to the rules of section 48(m) 

15 of the Internal Revenue Code of 1986 (as in effect on the 

16 day before the date of the enactment of the Revenue Rec17 onciliation Act of 1990). 

18 SEC. 213. CREDIT FOR PRODUCTION FROM A QUALIFYING 

19 ADVANCED CLEAN COAL TECHNOLOGY UNIT. 

20 (a) IN GENERAL.—Subpart D of part IV of sub21 chapter A of chapter 1 (relating to business related cred22 its), as amended by this Act, is amended by adding at 

23 the end the following new section: 
40

•S 387 IS

1 ‘‘SEC. 45L. CREDIT FOR PRODUCTION FROM A QUALIFYING 

2 ADVANCED CLEAN COAL TECHNOLOGY UNIT. 

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

4 the qualifying advanced clean coal technology production 

5 credit of any taxpayer for any taxable year is equal to— 

6 ‘‘(1) the applicable amount of advanced clean 

7 coal technology production credit, multiplied by 

8 ‘‘(2) the applicable percentage (as determined 

9 under section 48A(c)) of the sum of— 

10 ‘‘(A) the kilowatt hours of electricity, plus 

11 ‘‘(B) each 3,413 Btu of fuels or chemicals, 

12 produced by the taxpayer during such taxable 

13 year at a qualifying advanced clean coal tech14 nology unit, but only if such production occurs 

15 during the 10-year period beginning on the date 

16 the unit was originally placed in service (or re17 turned to service after becoming a qualifying 

18 advanced clean coal technology unit). 

19 ‘‘(b) APPLICABLE AMOUNT.—For purposes of this 

20 section— 

21 ‘‘(1) IN GENERAL.—Except as provided in para22 graph (2), the applicable amount of advanced clean 

23 coal technology production credit with respect to 

24 production from a qualifying advanced clean coal 

25 technology unit shall be determined as follows: 
41

•S 387 IS

1 ‘‘(A) If the qualifying advanced clean coal 

2 technology unit is producing electricity only: 

3 ‘‘(i) In the case of a unit originally 

4 placed in service before 2009, if—

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 8,500 ...................................................................... $.0060 $.0038

More than 8,500 but not more than 8,750 .................................... $.0025 $.0010

More than 8,750 but less than 8,900 ............................................. $.0010 $.0010. 

5 ‘‘(ii) In the case of a unit originally 

6 placed in service after 2008 and before 

7 2013, if—

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 7,770 ...................................................................... $.0105 $.0090

More than 7,770 but not more than 8,125 .................................... $.0085 $.0068

More than 8,125 but less than 8,500 ............................................. $.0075 $.0055. 

8 ‘‘(iii) In the case of a unit originally 

9 placed in service after 2012 and before 

10 2017, if—

‘‘The design net heat rate is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not more than 7,380 ...................................................................... $.0140 $.0115

More than 7,380 but not more than 7,720 .................................... $.0120 $.0090. 

11 ‘‘(B) If the qualifying advanced clean coal 

12 technology unit is producing fuel or chemicals: 

13 ‘‘(i) In the case of a unit originally 

14 placed in service before 2009, if—
42

•S 387 IS

‘‘The unit design net thermal efficiency (HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 40.2 percent ............................................................. $.0060 $.0038

Less than 40.2 but not less than 39 percent ................................. $.0025 $.0010

Less than 39 but not less than 38.4 percent ................................. $.0010 $.0010. 

1 ‘‘(ii) In the case of a unit originally 

2 placed in service after 2008 and before 

3 2013, if—

‘‘The unit design net thermal efficiency (HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 43.9 percent ............................................................. $.0105 $.0090

Less than 43.9 but not less than 42 percent ................................. $.0085 $.0068

Less than 42 but not less than 40.2 percent ................................. $.0075 $.0055. 

4 ‘‘(iii) In the case of a unit originally 

5 placed in service after 2012 and before 

6 2017, if—

‘‘The unit design net thermal efficiency (HHV) is: 

The applicable amount is: 

For 1st 5 

years of such 

service 

For 2d 5 years 

of such service 

Not less than 46.3 percent ............................................................. $.0140 $.0115

Less than 46.3 but not less than 44.2 percent .............................. $.0120 $.0090. 

7 ‘‘(2) SPECIAL RULE FOR UNITS QUALIFYING

8 FOR GREATER APPLICABLE AMOUNT WHEN PLACED

9 IN SERVICE.—If, at the time a qualifying advanced 

10 clean coal technology unit is placed in service, pro11 duction from the unit would be entitled to a greater 

12 applicable amount if such unit had been placed in 

13 service at a later date, the applicable amount for 

14 such unit shall be such greater amount. 
43

•S 387 IS

1 ‘‘(c) INFLATION ADJUSTMENT.—For calendar years 

2 after 2005, each dollar amount in subsection (b)(1) shall 

3 be adjusted by multiplying such amount by the inflation 

4 adjustment factor for the calendar year in which the 

5 amount is applied. If any amount as increased under the 

6 preceding sentence is not a multiple of 0.01 cent, such 

7 amount shall be rounded to the nearest multiple of 0.01 

8 cent. 

9 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur10 poses of this section— 

11 ‘‘(1) IN GENERAL.—Any term used in this sec12 tion which is also used in section 45K or 48A shall 

13 have the meaning given such term in such section. 

14 ‘‘(2) APPLICABLE RULES.—The rules of para15 graphs (3), (4), and (5) of section 45(e) shall 

16 apply.’’. 

17 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec18 tion 38(b) (relating to current year business credit), as 

19 amended by this Act, is amended by striking ‘‘plus’’ at 

20 the end of paragraph (20), by striking the period at the 

21 end of paragraph (21) and inserting ‘‘, plus’’, and by add22 ing at the end the following new paragraph: 

23 ‘‘(22) the qualifying advanced clean coal tech24 nology production credit determined under section 

25 45L(a).’’. 
44

•S 387 IS

1 (c) DENIAL OF DOUBLE BENEFIT.—Section 29(d) 

2 (relating to other definitions and special rules) is amended 

3 by adding at the end the following new paragraph: 

4 ‘‘(9) DENIAL OF DOUBLE BENEFIT.—This sec5 tion shall not apply with respect to any qualified fuel 

6 the production of which may be taken into account 

7 for purposes of determining the credit under section 

8 45L.’’. 

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

10 for subpart D of part IV of subchapter A of chapter 1, 

11 as amended by this Act, is amended by adding at the end 

12 the following new item:

‘‘Sec. 45L. Credit for production from a qualifying advanced clean coal technology unit.’’.

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

14 this section shall apply to production after December 31, 

15 2004, in taxable years ending after such date. 

16 PART III—TREATMENT OF PERSONS NOT ABLE 

17 TO USE ENTIRE CREDIT 

18 SEC. 214. TREATMENT OF PERSONS NOT ABLE TO USE EN19 TIRE CREDIT. 

20 (a) IN GENERAL.—Section 45K, as added by this 

21 Act, is amended by adding at the end the following new 

22 subsection: 

23 ‘‘(f) TREATMENT OF PERSON NOT ABLE TO USE EN24 TIRE CREDIT.— 
45

•S 387 IS

1 ‘‘(1) ALLOWANCE OF CREDITS.— 

2 ‘‘(A) IN GENERAL.—Any credit allowable 

3 under this section, section 45L, or section 48A 

4 with respect to a facility owned by a person de5 scribed in subparagraph (B) may be transferred 

6 or used as provided in this subsection, and the 

7 determination as to whether the credit is allow8 able shall be made without regard to the tax9 exempt status of the person. 

10 ‘‘(B) PERSONS DESCRIBED.—A person is 

11 described in this subparagraph if the person 

12 is— 

13 ‘‘(i) an organization described in sec14 tion 501(c)(12)(C) and exempt from tax 

15 under section 501(a), 

16 ‘‘(ii) an organization described in sec17 tion 1381(a)(2)(C), 

18 ‘‘(iii) a public utility (as defined in 

19 section 136(c)(2)(B)), 

20 ‘‘(iv) any State or political subdivision 

21 thereof, the District of Columbia, or any 

22 agency or instrumentality of any of the 

23 foregoing, 
46

•S 387 IS

1 ‘‘(v) any Indian tribal government 

2 (within the meaning of section 7871) or 

3 any agency or instrumentality thereof, or 

4 ‘‘(vi) the Tennessee Valley Authority. 

5 ‘‘(2) TRANSFER OF CREDIT.— 

6 ‘‘(A) IN GENERAL.—A person described in 

7 clause (i), (ii), (iii), (iv), or (v) of paragraph 

8 (1)(B) may transfer any credit to which para9 graph (1)(A) applies through an assignment to 

10 any other person not described in paragraph 

11 (1)(B). Such transfer may be revoked only with 

12 the consent of the Secretary. 

13 ‘‘(B) REGULATIONS.—The Secretary shall 

14 prescribe such regulations as necessary to en15 sure that any credit described in subparagraph 

16 (A) is claimed once and not reassigned by such 

17 other person. 

18 ‘‘(C) TRANSFER PROCEEDS TREATED AS

19 ARISING FROM ESSENTIAL GOVERNMENT FUNC20 TION.—Any proceeds derived by a person de21 scribed in clause (iii), (iv), or (v) of paragraph 

22 (1)(B) from the transfer of any credit under 

23 subparagraph (A) shall be treated as arising 

24 from the exercise of an essential government 

25 function. 
47

•S 387 IS

1 ‘‘(3) USE OF CREDIT AS AN OFFSET.—Notwith2 standing any other provision of law, in the case of 

3 a person described in clause (i), (ii), or (v) of para4 graph (1)(B), any credit to which paragraph (1)(A) 

5 applies may be applied by such person, to the extent 

6 provided by the Secretary of Agriculture, as a pre7 payment of any loan, debt, or other obligation the 

8 entity has incurred under subchapter I of chapter 31 

9 of title 7 of the Rural Electrification Act of 1936 (7 

10 U.S.C. 901 et seq.), as in effect on the date of the 

11 enactment of this section. 

12 ‘‘(4) USE BY TVA.— 

13 ‘‘(A) IN GENERAL.—Notwithstanding any 

14 other provision of law, in the case of a person 

15 described in paragraph (1)(B)(vi), any credit to 

16 which paragraph (1)(A) applies may be applied 

17 as a credit against the payments required to be 

18 made in any fiscal year under section 15d(e) of 

19 the Tennessee Valley Authority Act of 1933 (16 

20 U.S.C. 831n–4(e)) as an annual return on the 

21 appropriations investment and an annual repay22 ment sum. 

23 ‘‘(B) TREATMENT OF CREDITS.—The ag24 gregate amount of credits described in para25 graph (1)(A) with respect to such person shall 
48

•S 387 IS

1 be treated in the same manner and to the same 

2 extent as if such credits were a payment in cash 

3 and shall be applied first against the annual re4 turn on the appropriations investment. 

5 ‘‘(C) CREDIT CARRYOVER.—With respect 

6 to any fiscal year, if the aggregate amount of 

7 credits described paragraph (1)(A) with respect 

8 to such person exceeds the aggregate amount of 

9 payment obligations described in subparagraph 

10 (A), the excess amount shall remain available 

11 for application as credits against the amounts 

12 of such payment obligations in succeeding fiscal 

13 years in the same manner as described in this 

14 paragraph. 

15 ‘‘(5) CREDIT NOT INCOME.—Any transfer 

16 under paragraph (2) or use under paragraph (3) of 

17 any credit to which paragraph (1)(A) applies shall 

18 not be treated as income for purposes of section 

19 501(c)(12). 

20 ‘‘(6) TREATMENT OF UNRELATED PERSONS.—

21 For purposes of this subsection, transfers among 

22 and between persons described in clauses (i), (ii), 

23 (iii), (iv), and (v) of paragraph (1)(B) shall be treat24 ed as transfers between unrelated parties.’’. 
49

•S 387 IS

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

2 this section shall apply to production after December 31, 

3 2004, in taxable years ending after such date. 

4 Subtitle C—Nuclear Power 

5 SEC. 221. CREDIT FOR PRODUCTION FROM ADVANCED NU6 CLEAR POWER FACILITIES. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 (relating to business related cred9 its), as amended by this Act, is amended by adding at 

10 the end the following new section: 

11 ‘‘SEC. 45M. CREDIT FOR PRODUCTION FROM ADVANCED 

12 NUCLEAR POWER FACILITIES. 

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

14 the advanced nuclear power facility production credit of 

15 any taxpayer for any taxable year is equal to the product 

16 of— 

17 ‘‘(1) 1.8 cents, multiplied by 

18 ‘‘(2) the kilowatt hours of electricity— 

19 ‘‘(A) produced by the taxpayer at an ad20 vanced nuclear power facility during the 8-year 

21 period beginning on the date the facility was 

22 originally placed in service, and 

23 ‘‘(B) sold by the taxpayer to an unrelated 

24 person during the taxable year. 

25 ‘‘(b) NATIONAL LIMITATION.— 
50

•S 387 IS

1 ‘‘(1) IN GENERAL.—The amount of credit 

2 which would (but for this subsection and subsection 

3 (c)) be allowed with respect to any facility for any 

4 taxable year shall not exceed the amount which 

5 bears the same ratio to such amount of credit as— 

6 ‘‘(A) the national megawatt capacity limi7 tation allocated to the facility, bears to 

8 ‘‘(B) the total megawatt nameplate capac9 ity of such facility. 

10 ‘‘(2) AMOUNT OF NATIONAL LIMITATION.—The 

11 national megawatt capacity limitation shall be 6,000 

12 megawatts. 

13 ‘‘(3) ALLOCATION OF LIMITATION.—The Sec14 retary shall allocate the national megawatt capacity 

15 limitation in such manner as the Secretary may pre16 scribe. 

17 ‘‘(4) REGULATIONS.—Not later than 6 months 

18 after the date of the enactment of this section, the 

19 Secretary shall prescribe such regulations as may be 

20 necessary or appropriate to carry out the purposes 

21 of this subsection. Such regulations shall provide a 

22 certification process under which the Secretary, after 

23 consultation with the Secretary of Energy, shall ap24 prove and allocate the national megawatt capacity 

25 limitation. 
51

•S 387 IS

1 ‘‘(c) OTHER LIMITATIONS.— 

2 ‘‘(1) ANNUAL LIMITATION.—The amount of the 

3 credit allowable under subsection (a) (after the ap4 plication of subsection (b)) for any taxable year with 

5 respect to any facility shall not exceed an amount 

6 which bears the same ratio to $125,000,000 as— 

7 ‘‘(A) the national megawatt capacity limi8 tation allocated under subsection (b) to the fa9 cility, bears to 

10 ‘‘(B) 1000. 

11 ‘‘(2) OTHER LIMITATIONS.—Rules similar to 

12 the rules of section 45(b) shall apply for purposes of 

13 this section, except that paragraph (2) thereof shall 

14 not apply to the 1.8 cents under subsection (a)(1). 

15 ‘‘(d) ADVANCED NUCLEAR POWER FACILITY.—For 

16 purposes of this section— 

17 ‘‘(1) IN GENERAL.—The term ‘advanced nu18 clear power facility’ means any advanced nuclear fa19 cility— 

20 ‘‘(A) which is owned by the taxpayer and 

21 which uses nuclear energy to produce elec22 tricity, and 

23 ‘‘(B) which is originally placed in service 

24 after the date of the enactment of this para25 graph and before January 1, 2021. 
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1 ‘‘(2) ADVANCED NUCLEAR FACILITY.—For pur2 poses of paragraph (1), the term ‘advanced nuclear 

3 facility’ means any nuclear facility the reactor design 

4 for which is approved after the date of the enact5 ment of this paragraph by the Nuclear Regulatory 

6 Commission (and such design or a substantially 

7 similar design of comparable capacity was not ap8 proved on or before such date). 

9 ‘‘(e) OTHER RULES TO APPLY.—Rules similar to the 

10 rules of paragraphs (1), (2), (3), (4), and (5) of section 

11 45(e) shall apply for purposes of this section.’’ 

12 (b) CREDIT TREATED AS BUSINESS CREDIT.—Sec13 tion 38(b), as amended by this Act, is amended by striking 

14 ‘‘plus’’ at the end of paragraph (21), by striking the period 

15 at the end of paragraph (22) and inserting ‘‘, plus’’, and 

16 by adding at the end the following: 

17 ‘‘(23) the advanced nuclear power facility pro18 duction credit determined under section 45M(a).’’. 

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

20 for subpart D of part IV of subchapter A of chapter 1, 

21 as amended by this Act, is amended by adding at the end 

22 the following:

‘‘Sec. 45M. Credit for production from advanced nuclear power facilities.’’.

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

24 this section shall apply to production in taxable years be25 ginning after December 31, 2004. 
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1 Subtitle D—Sunset 

2 SEC. 231. SUNSET. 

3 (a) IN GENERAL.—All provisions of, and amend4 ments made by, this title shall not apply to taxable years 

5 beginning after December 31, 2010. 

6 (b) APPLICATION OF CERTAIN LAWS.—The Internal 

7 Revenue Code of 1986 shall be applied and administered 

8 to taxable years beginning after December 31, 2010, as 

9 if the provisions and amendments described in subsection 

10 (a) had never been enacted. 

11 TITLE III—RESEARCH CREDITS 

12 SEC. 301. SENSE OF THE SENATE REGARDING PERMANENT 

13 EXTENSION OF RESEARCH CREDIT. 

14 It is the sense of the Senate that the income tax cred15 it for increasing research activities under section 41 of the 

16 Internal Revenue Code of 1986 should be permanently ex17 tended, the rates of the alternative incremental credit 

18 under such section should be increased, and an alternative 

19 simplified credit for qualified research expenses should be 

20 instituted.

Æ