Clean Energy Victory Bond Act of 2014

To promote the domestic development and deployment of clean energy technologies required for the 21st century. 1. Short title; table of contents (a) Short title This Act may be cited as the Clean Energy Victory Bond Act of 2014 (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. Findings. Title I—Clean Energy Victory Bonds Sec. 101. Clean Energy Victory Bonds. Title II—Revenue provisions Sec. 201. Extension and modification of energy investment tax credit. Sec. 202. Extension of residential energy efficient property credit. Sec. 203. Extension and modification of credit for electricity produced from certain renewable resources. Sec. 204. Extension of credit for nonbusiness energy property. Sec. 205. Performance based home energy improvements. Sec. 206. Extension of new energy efficient home credit. Sec. 207. Extension and modification of energy efficient commercial buildings deduction. Sec. 208. Plug-in electric vehicle grants in lieu of tax credits. 2. Findings Congress finds the following: (1) There is enormous potential for increasing renewable energy production and energy efficiency installation in the United States. (2) A major barrier to rapid expansion of renewable energy and energy efficiency is upfront capital costs. Government tax incentives and other assistance programs have proven beneficial in encouraging private sector development, manufacturing and installation of renewable energy and energy efficiency projects nationwide. However, these government incentives are not currently meeting demand from the private sector, and we are not taking full advantage of the potential for clean energy and transportation, as well as energy efficiency in the United States. (3) Other nations, including China and Germany are ahead of the United States in manufacturing and deploying various clean energy technologies, even though the United States invented many of these technologies. (4) Investments in renewable energy and energy efficiency projects in the United States create green jobs for U.S. citizens across the United States. Hundreds of thousands of jobs could be created through expanded government support for clean energy and energy efficiency. (5) As Americans choose energy efficiency and clean energy and transportation, it reduces our dependence on foreign oil and improves our energy security. (6) Bonds are a low-cost method for encouraging clean energy, not requiring direct budget allocations or expenditures. The projects supported through Clean Energy Victory Bonds will create jobs and business revenues that will increase Federal tax revenues, while simultaneously reducing health and environmental costs incurred by the Federal Government nationwide. (7) In World War II, over 80 percent of American households purchased Victory Bonds to support the war effort, raising over $185 billion, or over $2 trillion in today’s dollars. I Clean Energy Victory Bonds 101. Clean Energy Victory Bonds (a) Initial capitalization The Secretary of the Treasury shall issue Clean Energy Victory Bonds in an amount not to exceed $7,500,000,000 on the credit of the United States for purposes of raising revenue for the extension of certain energy-related tax benefits extended by this Act. (b) Denominations and maturity Clean Energy Victory Bonds shall be in the form of United States Savings Bonds of Series EE or as administered by the Bureau of the Public Debt of the Department of the Treasury in denominations of $25, and shall mature within such periods as determined by the Secretary of the Treasury. (c) Interest Clean Energy Victory Bonds shall bear interest at the rate the Secretary of the Treasury sets for Savings Bonds of Series EE and Series I, plus a rate of return determined by the Secretary of the Treasury which is based on the valuation of carbon mitigated or energy saved through funded projects funded from the proceeds of such bonds. (d) Promotion (1) In general The Secretary of the Treasury shall take such actions, independently and in conjunction with financial institutions offering Clean Energy Victory Bonds, to promote the purchase of Clean Energy Victory Bonds, including campaigns describing the financial and social benefits of purchasing Clean Energy Victory Bonds. (2) Promotional activities Such promotional activities may include advertisements, pamphlets, or other promotional materials— (A) in periodicals; (B) on billboards and other outdoor venues; (C) on television; (D) on radio; (E) on the Internet; (F) within financial institutions that offer Clean Energy Victory Bonds; or (G) any other venues or outlets the Secretary of the Treasury may identify. (3) Limitation There are authorized to be appropriated for such promotional activities not more than— (A) $10,000,000 in the first year after the date of the enactment of this Act, and (B) $2,000,000 in each year thereafter. (e) Future capitalization (1) In general After the initial capitalization limit is reached under subsection (a), the Secretary of the Treasury may issue additional Clean Energy Victory Bonds on the credit of the United States. (2) Single issue limitation No such additional issue may exceed $7,500,000,000. (3) Aggregate limitations The aggregate of any such additional issues during the 4-year period beginning on the day after the initial capitalization limit is reached under subsection (a) may not exceed $50,000,000,000. The aggregate of any such additional issues after the expiration of such 4-year period may not exceed $50,000,000,000. (f) Lawful investments Clean Energy Victory Bonds shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under the authority or control of the United States or any officer or officers thereof. II Revenue provisions 201. Extension and modification of energy investment tax credit (a) Extension (1) Solar energy Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) January 1, 2017 January 1, 2023 (2) Geothermal heat pumps Clause (vii) of section 48(a)(3)(A) of such Code is amended by striking January 1, 2017 January 1, 2023 (3) Fuel cell property Subparagraph (D) of section 48(c)(1) of such Code is amended by striking December 31, 2016 December 31, 2022 (4) Microturbine property Subparagraph (D) of section 48(c)(2) of such Code is amended by striking December 31, 2016 December 31, 2022 (5) Combined heat and power Clause (iv) of section 48(c)(3) of such Code is amended by striking January 1, 2017 January 1, 2023 (6) Small wind Subparagraph (C) of section 48(c)(4) of such Code is amended by striking December 31, 2016 December 31, 2022 (7) Offshore wind (A) In general Clause (ii) of section 48(a)(5)(C) of such Code is amended— (i) by striking is placed in service in is— (I) except as provided in subclause (II), placed in service in , (ii) by adding at the end the following new subclause: (II) in the case of an offshore wind facility, placed in service after December 31, 2008, and before January 1, 2021, and . (B) Offshore wind facility Paragraph (5) of section 48(a) of such Code is amended by adding at the end the following new subparagraph: (E) Offshore wind facility The term offshore wind facility . (b) Modification of fuel cell property Paragraph (1) of section 48(c) of such Code, as amended by this Act, is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph: (D) Exception for fuel derived from fossil fuels The term qualified fuel cell powerplant . (c) Effective date The amendments made by this section shall take effect on the date of the enactment of this Act. 202. Extension of residential energy efficient property credit (a) In general Subsection (g) of section 25D December 31, 2016 December 31, 2023 (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2016. 203. Extension and modification of credit for electricity produced from certain renewable resources (a) Extension Subsection (d) of section 45 (1) by striking January 1, 2013 January 1, 2023 (2) by striking January 1, 2014 January 1, 2023 (3) by striking January 1, 2006 January 1, 2023 (b) Modifications with respect to closed-Loop biomass (1) In general Paragraph (2) of section 45(c) of such Code is amended to read as follows: (2) Closed-Loop biomass (A) In general The term closed-loop biomass (i) is planted exclusively for purposes of being used at a qualified facility to produce electricity, or (ii) is a byproduct from harvesting timber (including tops, branches, crooks) or is invasive woody vegetation that interferes with regeneration or the natural growth of the forest from which timber is harvested. (B) Limitation For purposes of subparagraph (A)(ii), byproduct from harvesting timber shall not be treated as closed-loop biomass unless— (i) such byproduct does not exceed 30 percent (by weight) of the harvested timber to which it relates, and (ii) the percentage byproduct removed (by weight) does not exceed— (I) 25 percent in the case of timber harvested from good soil, and (II) 0 percent in the case of timber harvested from poor soil. For purposes of the preceding sentence, soil quality shall be determined by reference to soil classifications by the Natural Resources Conservation Service. . (2) Qualified facility Paragraph (2) of section 45(d) of such Code is amended by adding at the end the following new subparagraph: (D) Greenhouse gas emissions In the case of a facility placed in service after December 31, 2014, such term shall not include any facility unless, with respect to the facility, the taxpayer annually during the 10-year period described in subsection (a) demonstrates to the satisfaction of the Secretary that such facility’s use of closed-loop biomass will result in a 50-percent reduction in greenhouse gas emissions compared to a similar facility using natural gas combined-cycle generation. . (c) Modification of open-Loop biomass definition The second sentence of subparagraph (A) of section 45(c)(3) of such Code is amended— (1) by striking or biomass , biomass (2) by inserting before the period at the end the following: , any biomass which is primarily a food crop, or biomass derived from any crop that displaces any forest existing on the date of the enactment of the Clean Energy Victory Bond Act of 2014 (d) Modification of biofuel as qualified energy resource (1) In general Paragraph (1) of section 45(c) of such Code is amended by striking and , and (J) second generation biomass. . (2) Second generation biomass defined Subsection (c) of section 45 of such Code is amended by adding at the end the following new paragraph: (11) Second generation biomass The term second generation biomass . (3) Qualified facility Subsection (d) of section 45 of such Code is amended by adding at the end the following new paragraph: (12) Second generation biomass In the case of a facility producing electricity from second generation biomass, the term qualified facility . (4) Conforming amendments (A) Subsection (d) of section 45 of such Code is amended by striking January 1, 2014 the date of the enactment of the Clean Energy Victory Bond Act of 2014 (B) Clause (ii) of section 45(d)(2)(A) of such Code is amended by striking January 1, 2014, the date of the enactment of the Clean Energy Victory Bond Act of 2014 (e) Effective date The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act. 204. Extension of credit for nonbusiness energy property (a) In general Paragraph (2) of section 25C(g) December 31, 2013 December 31, 2022 (b) Effective date The amendment made by this section shall apply to property placed in service after December 31, 2013. 205. Performance based home energy improvements (a) In general Subpart A of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section: 25E. Performance based energy improvements (a) In general In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year for a qualified whole home energy efficiency retrofit an amount determined under subsection (b). (b) Amount determined (1) In general Subject to paragraph (4), the amount determined under this subsection is equal to— (A) the base amount under paragraph (2), increased by (B) the amount determined under paragraph (3). (2) Base amount For purposes of paragraph (1)(A), the base amount is $2,000, but only if the energy use for the residence is reduced by at least 20 percent below the baseline energy use for such residence as calculated according to paragraph (5). (3) Increase amount For purposes of paragraph (1)(B), the amount determined under this paragraph is $500 for each additional 5 percentage point reduction in energy use. (4) Limitation In no event shall the amount determined under this subsection exceed the lesser of— (A) $5,000 with respect to any residence, or (B) 30 percent of the qualified home energy efficiency expenditures paid or incurred by the taxpayer under subsection (c) with respect to such residence. (5) Determination of energy use reduction For purposes of this subsection— (A) In general The reduction in energy use for any residence shall be determined by modeling the annual predicted percentage reduction in total energy costs for heating, cooling, hot water, and permanent lighting. It shall be modeled using computer modeling software approved under subsection (d)(2) and a baseline energy use calculated according to subsection (d)(1)(C). (B) Energy costs For purposes of subparagraph (A), the energy cost per unit of fuel for each fuel type shall be determined by dividing the total actual energy bill for the residence for that fuel type for the most recent available 12-month period by the total energy units of that fuel type used over the same period. (c) Qualified home energy efficiency expenditures For purposes of this section, the term qualified home energy efficiency expenditures (1) means any amount paid or incurred by the taxpayer during the taxable year for a qualified whole home energy efficiency retrofit, including the cost of diagnostic procedures, labor, and modeling, (2) includes only measures that have an average estimated life of 5 years or more as determined by the Secretary, after consultation with the Secretary of Energy, (3) does not include any amount which is paid or incurred in connection with any expansion of the building envelope of the residence, and (4) does not include improvements to swimming pools or hot tubs or any other expenditure specifically excluded by the Secretary, after consultation with the Secretary of Energy. (d) Qualified whole home energy efficiency retrofit For purposes of this section— (1) In general The term qualified whole home energy efficiency retrofit (A) be designed, implemented, and installed by a contractor which is— (i) accredited by the Building Performance Institute (hereafter in this section referred to as BPI (ii) a Residential Energy Services Network (hereafter in this section referred to as RESNET (iii) accredited by an equivalent certification program approved by the Secretary, after consultation with the Secretary of Energy, for this purpose, (B) install a set of measures modeled to achieve a reduction in energy use of at least 20 percent below the baseline energy use established in subparagraph (C), using computer modeling software approved under paragraph (2), (C) establish the baseline energy use by calibrating the model using sections 3 and 4 and Annex D of BPI Standard BPI–2400–S–2011: Standardized Qualification of Whole House Energy Savings Estimates, or an equivalent standard approved by the Secretary, after consultation with the Secretary of Energy, for this purpose, (D) document the measures implemented in the residence through photographs taken before and after the retrofit, including photographs of its visible energy systems and envelope as relevant, and (E) implement a test-out procedure, following guidelines of the applicable certification program specified under clause (i) or (ii) of subparagraph (A), or equivalent guidelines approved by the Secretary, after consultation with the Secretary of Energy, for this purpose, to ensure— (i) the safe operation of all systems post retrofit, and (ii) that all improvements are included in, and have been installed according to, standards of the applicable certification program specified under clause (i) or (ii) of subparagraph (A), or equivalent standards approved by the Secretary, after consultation with the Secretary of Energy, for this purpose. For purposes of subparagraph (A)(iii), an organization or State may submit an equivalent certification program for approval by the Secretary, in consultation with the Secretary of Energy. The Secretary shall approve or deny such submission not later than 180 days after receipt, and, if the Secretary fails to respond in that time period, the submitted equivalent certification program shall be considered approved. (2) Approved modeling software For purposes of paragraph (1)(B), the contractor shall use modeling software certified by RESNET as following the software verification test suites in section 4.2.1 of RESNET Publication No. 06–001 or certified by an alternative organization as following an equivalent standard, as approved by the Secretary, after consultation with the Secretary of Energy, for this purpose. (3) Documentation The Secretary, after consultation with the Secretary of Energy, shall prescribe regulations directing what specific documentation is required to be retained or submitted by the taxpayer in order to claim the credit under this section, which shall include, in addition to the photographs under paragraph (1)(D), a form approved by the Secretary that is completed and signed by the qualified whole home energy efficiency retrofit contractor under penalties of perjury. Such form shall include— (A) a statement that the contractor followed the specified procedures for establishing baseline energy use and estimating reduction in energy use, (B) the name of the software used for calculating the baseline energy use and reduction in energy use, the percentage reduction in projected energy savings achieved, and a statement that such software was certified for this program by the Secretary, after consultation with the Secretary of Energy, (C) a statement that the contractor will retain the details of the calculations and underlying energy bills for 5 years and will make such details available for inspection by the Secretary or the Secretary of Energy, if so requested, (D) a list of measures installed and a statement that all measures included in the reduction in energy use estimate are included in, and installed according to, standards of the applicable certification program specified under clause (i) or (ii) of subparagraph (A), or equivalent standards approved by the Secretary, after consultation with the Secretary of Energy, (E) a statement that the contractor meets the requirements of paragraph (1)(A), and (F) documentation of the total cost of the project in order to comply with the limitation under subsection (b)(4)(B). (e) Additional rules For purposes of this section— (1) No double benefit (A) In general With respect to any residence, no credit shall be allowed under this section for any taxable year in which the taxpayer claims a credit under section 25C. (B) Renewable energy systems and appliances In the case of a renewable energy system or appliance that qualifies for another credit under this chapter, the resulting reduction in energy use shall not be taken into account in determining the percentage energy use reductions under subsection (b). (C) No double benefit for certain expenditures The term qualified home energy efficiency expenditures (2) Principal residence The term principal residence (3) Special rules Rules similar to the rules under paragraphs (4), (5), (6), (7), and (8) of section 25D(e) and section 25C(e)(2) shall apply, as determined by the Secretary, after consultation with the Secretary of Energy. (4) Basis adjustments For purposes of this subtitle, if a credit is allowed under this section with respect to any expenditure with respect to any property, the increase in the basis of such property which would (but for this paragraph) result from such expenditure shall be reduced by the amount of the credit so allowed. (5) Election not to claim credit No credit shall be determined under subsection (a) for the taxable year if the taxpayer elects not to have subsection (a) apply to such taxable year. (6) Multiple year retrofits If the taxpayer has claimed a credit under this section in a previous taxable year, the baseline energy use for the calculation of reduced energy use must be established after the previous retrofit has been placed in service. (f) Termination This section shall not apply with respect to any costs paid or incurred after December 31, 2022. (g) Secretary review The Secretary, after consultation with the Secretary of Energy, shall establish a review process for the retrofits performed, including an estimate of the usage of the credit and a statistically valid analysis of the average actual energy use reductions, utilizing utility bill data collected on a voluntary basis, and report to Congress not later than June 30, 2016, any findings and recommendations for— (1) improvements to the effectiveness of the credit under this section, and (2) expansion of the credit under this section to rental units. . (b) Conforming amendments (1) Section 1016(a) is amended— (A) by striking and (B) by striking the period at the end of paragraph (37) and inserting , and (C) by adding at the end the following new paragraph: (38) to the extent provided in section 25E(e)(4), in the case of amounts with respect to which a credit has been allowed under section 25E. . (2) Section 6501(m) is amended by inserting 25E(e)(5), section (3) The table of sections for subpart A of part IV of subchapter A chapter 1 is amended by inserting after the item relating to section 25D the following new item: Sec. 25E. Performance based energy improvements. . (c) Effective date The amendments made by this section shall apply to amounts paid or incurred for a qualified whole home energy efficiency retrofit placed in service after December 31, 2013. 206. Extension of new energy efficient home credit (a) In general Subsection (g) of section 45L December 31, 2013 December 31, 2022 (b) Effective date The amendment made by this section shall apply to homes acquired after December 31, 2013. 207. Extension and modification of energy efficient commercial buildings deduction (a) In general Subsection (h) of section 179D December 31, 2013 December 31, 2022 (b) Increase in deduction limitations (1) In general Subparagraph (A) of section 179D(b)(1) of such Code is amended by striking $1.80 $3.00 (2) Partial pay Subparagraph (A) of section 179D(d)(1) is amended by striking substituting $.60 $1.80 substituting $1.00 $3.00 (3) Reduced amount for lower efficiency property Subsection (d) of section 179D of such Code is amended by adding at the end the following new paragraph: (1) 30 to 50 percent property In the case of property which would be energy efficient commercial building property were subsection (c)(1)(D) applied by substituting more than 30 percent and less than 50 percent 50 percent or more $1.80 $3.00 . (c) Updating partial allowance regulations Subparagraph (B) of section 179D(d)(1) of such Code is amended by adding at the end the following: Not later than 1 year after the date of the enactment of the Clean Energy Victory Bond Act of 2014 (d) Effective date The amendment made by this section shall apply to property placed in service after December 31, 2013. 208. Plug-in electric vehicle grants in lieu of tax credits (a) In general The Secretary of Energy, in consultation with the Secretary of the Treasury, shall establish a voluntary program through which the Secretary of Energy shall— (1) authorize the issuance of an electronic voucher to offset the purchase price of a qualified plug-in electric vehicle or a new qualified plug-in electric drive motor vehicle purchased from a dealer participating in the program; (2) register dealers for participation in the program and require that all dealers so registered accept such vouchers as partial payment or down payment for the purchase of any such vehicle offered for sale by such dealer; (3) make electronic payments to dealers for eligible transactions by such dealers; and (4) in consultation with the Inspector General of the Department of Transportation establish and provide for the enforcement of measures to prevent and penalize fraud under the program. (b) Voucher limitations A voucher issued under the program shall have a value that may be applied to offset the purchase price of a vehicle by— (1) in the case of a qualified plug-in electric vehicle, $2,500; or (2) in the case of a new qualified plug-in electric drive motor vehicle, $2,500 plus an amount determined with respect to the vehicle under section 30D(b)(3) of the Internal Revenue Code of 1986. (c) Treated as advance payment of credit Use of a voucher under the program to offset the purchase price of a vehicle shall, for purposes of the Internal Revenue Code of 1986, be treated as advance payment of the credit allowed under section 30 or 30D of such Code, as the case may be, and the amount of credit which would (but for this paragraph) be allowable with respect to such vehicle under either such section shall be reduced (but not below zero) by the amount of the voucher so used. (d) Definitions and special rules For purposes of this section— (1) Qualified plug-in electric vehicle The term qualified plug-in electric vehicle section 30(d) (2) New qualified plug-in electric drive motor vehicle The term new qualified plug-in electric drive motor vehicle (3) No combination of vouchers Only 1 voucher issued under the program may be applied toward the purchase of a single vehicle. (4) Combination with other incentives permitted The availability or use of a Federal, State, or local incentive or a State-issued voucher for the purchase of any vehicle shall not limit the value or issuance of a voucher under the program to any person otherwise eligible to receive such a voucher. (5) No additional fees A dealer participating in the program may not charge a person purchasing a vehicle any additional fees associated with the use of a voucher under the program. (6) Application of certain rules Rules similar to the rules of paragraphs (1), (2), (3), (4), and (5) of section 30(e) of such Code shall apply for purposes of this section. (e) Termination and phaseout (1) Termination for qualified plug-in electric vehicles This section shall not apply to any qualified plug-in electric vehicle acquired after December 31, 2017. (2) Phaseout for new qualified plug-in electric drive motor vehicle The amount of any voucher with respect to any new qualified plug in electric drive motor vehicle shall be reduced as provided in section 30D(e) of the Internal Revenue Code of 1986. (f) Regulations The Secretary of Energy, in consultation with the Secretary of the Treasury, shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.

Summary: Clean Energy Victory Bond Act of 2014 - Directs the Secretary of the Treasury to issue, and promote the purchase of, Clean Energy Victory Bonds to pay for the energy-related tax benefits extended by this Act. Amends the Internal Revenue Code to: extend through 2022 the tax credit for investment in solar energy property, geothermal heat pumps, fuel cell property, microturbine property, combined heat and power system property, and small wind energy property; allow an energy tax credit for investment in offshore wind facilities placed in service before January 1, 2021; extend through 2022 the tax credit for residential energy efficiency improvements; extend through 2022 the placed-in-service requirement for wind facilities and other renewable energy facilities for purposes of the tax credit for producing electricity from renewable resources; extend through 2022 the tax credit for nonbusiness residential energy property; allow a new tax credit, through 2022, for home energy efficiency improvements that increase energy efficiency by at least 20%; extend through 2022 the tax credit for new energy efficient homes; and increase, and extend through 2022, the tax deduction for energy efficient commercial buildings. Directs the Secretary of Energy to establish a voluntary voucher program, through 2017, for the purchase of plug-in electric vehicles.