SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; 
TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Renewable Energy and Energy Conservation Tax Act of 
2008’’. 
(b) AMENDMENT OF 1986 CODE.—Except as other-
wise expressly provided, whenever in this Act an amend-
ment or repeal is expressed in terms of an amendment 
to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provi-
sion of the Internal Revenue Code of 1986. 
(c) TABLE OF CONTENTS.—The table of contents of 
this Act is as follows: 
Sec. 1. Short title; amendment of 1986 Code; table of contents. 
TITLE I—PRODUCTION INCENTIVES 
Sec. 101. Extension and modification of renewable energy credit. 
Sec. 102. Production credit for electricity produced from marine renewables. 
Sec. 103. Extension and modification of energy credit. 
Sec. 104. New clean renewable energy bonds. 
Sec. 105. Extension and modification of special rule to implement FERC and 
State electric restructuring policy. 
Sec. 106. Extension and modification of credit for residential energy efficient 
property. 
TITLE II—CONSERVATION 
Subtitle A—Transportation 
PART 1—VEHICLES 
Sec. 201. Credit for plug-in hybrid vehicles. 
Sec. 202. Extension and modification of alternative fuel vehicle refueling prop-
erty credit. 
Sec. 203. Modification of limitation on automobile depreciation. 
PART 2—FUELS 
Sec. 211. Extension and modification of credits for biodiesel and renewable die-
sel. 
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Sec. 212. Clarification that credits for fuel are designed to provide an incentive 
for United States production. 
Sec. 213. Credit for production of cellulosic alcohol. 
PART 3—OTHER TRANSPORTATION INCENTIVES 
Sec. 221. Extension of transportation fringe benefit to bicycle commuters. 
Sec. 222. Restructuring of New York Liberty Zone tax credits. 
Subtitle B—Other Conservation Provisions 
Sec. 231. Qualified energy conservation bonds. 
Sec. 232. Extension and modification of credit for nonbusiness energy property. 
Sec. 233. Extension of energy efficient commercial buildings deduction. 
Sec. 234. Modifications of energy efficient appliance credit for appliances pro-
duced after 2007. 
Sec. 235. Five-year applicable recovery period for depreciation of qualified en-
ergy management devices. 
TITLE III—REVENUE PROVISIONS 
Sec. 301. Limitation of deduction for income attributable to domestic produc-
tion of oil, gas, or primary products thereof. 
Sec. 302. Clarification of determination of foreign oil and gas extraction in-
come. 
Sec. 303. Time for payment of corporate estimated taxes. 
TITLE IV—OTHER PROVISIONS 
Subtitle A—Studies 
Sec. 401. Carbon audit of the tax code. 
Sec. 402. Comprehensive study of biofuels. 
Subtitle B—Application of Certain Labor Standards on Projects Financed 
Under Tax Credit Bonds 
Sec. 411. Application of certain labor standards on projects financed under tax 
credit bonds. 
TITLE I—PRODUCTION 
INCENTIVES 
SEC. 101. EXTENSION AND MODIFICATION OF RENEWABLE 
ENERGY CREDIT. 
(a) EXTENSION OF CREDIT.—Each of the following 
provisions of section 45(d) (relating to qualified facilities) 
is amended by striking ‘‘January 1, 2009’’ and inserting 
‘‘January 1, 2012’’: 
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(1) Paragraph (1). 
(2) Clauses (i) and (ii) of paragraph (2)(A). 
(3) Clauses (i)(I) and (ii) of paragraph (3)(A). 
(4) Paragraph (4). 
(5) Paragraph (5). 
(6) Paragraph (6). 
(7) Paragraph (7). 
(8) Subparagraphs (A) and (B) of paragraph 
(9). 
(b) MODIFICATION OF CREDIT PHASEOUT.— 
(1) REPEAL OF PHASEOUT.—Subsection (b) of 
section 45 is amended— 
(A) by striking paragraph (1), and 
(B) by striking ‘‘the 8 cent amount in 
paragraph (1),’’ in paragraph (2) thereof. 
(2) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—Subsection (b) of section 45 is amended by 
inserting before paragraph (2) the following new 
paragraph: 
‘‘(1) LIMITATION
BASED
ON
INVESTMENT
IN 
FACILITY.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified facility originally placed in service 
after December 31, 2009, the amount of the 
credit determined under subsection (a) for any 
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taxable year with respect to electricity produced 
at such facility shall not exceed the product 
of— 
‘‘(i) the applicable percentage with re-
spect to such facility, multiplied by 
‘‘(ii) the eligible basis of such facility. 
‘‘(B) CARRYFORWARD OF UNUSED LIMITA-
TION AND EXCESS CREDIT.— 
‘‘(i) UNUSED
LIMITATION.—If the 
limitation imposed under subparagraph (A) 
with respect to any facility for any taxable 
year exceeds the prelimitation credit for 
such facility for such taxable year, the lim-
itation imposed under subparagraph (A) 
with respect to such facility for the suc-
ceeding taxable year shall be increased by 
the amount of such excess. 
‘‘(ii) 
EXCESS
CREDIT.—If 
the 
prelimitation credit with respect to any fa-
cility for any taxable year exceeds the limi-
tation imposed under subparagraph (A) 
with respect to such facility for such tax-
able year, the credit determined under sub-
section (a) with respect to such facility for 
the succeeding taxable year (determined 
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before the application of subparagraph (A) 
for such succeeding taxable year) shall be 
increased by the amount of such excess. 
With respect to any facility, no amount 
may be carried forward under this clause 
to any taxable year beginning after the 10- 
year 
period 
described 
in 
subsection 
(a)(2)(A)(ii) with respect to such facility. 
‘‘(iii) PRELIMITATION
CREDIT.—The 
term ‘prelimitation credit’ with respect to 
any facility for a taxable year means the 
credit determined under subsection (a) 
with respect to such facility for such tax-
able year, determined without regard to 
subparagraph (A) and after taking into ac-
count any increase for such taxable year 
under clause (ii). 
‘‘(C) 
APPLICABLE
PERCENTAGE.—For 
purposes of this paragraph— 
‘‘(i) IN GENERAL.—The term ‘applica-
ble percentage’ means, with respect to any 
facility, the appropriate percentage pre-
scribed by the Secretary for the month in 
which such facility is originally placed in 
service. 
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‘‘(ii) METHOD
OF
PRESCRIBING
AP-
PLICABLE PERCENTAGES.—The applicable 
percentages prescribed by the Secretary for 
any month under clause (i) shall be per-
centages which yield over a 10-year period 
amounts of limitation under subparagraph 
(A) which have a present value equal to 35 
percent of the eligible basis of the facility. 
‘‘(iii) METHOD
OF
DISCOUNTING.— 
The present value under clause (ii) shall be 
determined— 
‘‘(I) as of the last day of the 1st 
year of the 10-year period referred to 
in clause (ii), 
‘‘(II) by using a discount rate 
equal to the greater of 110 percent of 
the Federal long-term rate as in effect 
under section 1274(d) for the month 
preceding the month for which the ap-
plicable percentage is being pre-
scribed, or 4.5 percent, and 
‘‘(III) by taking into account the 
limitation under subparagraph (A) for 
any year on the last day of such year. 
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‘‘(D) ELIGIBLE
BASIS.—For purposes of 
this paragraph— 
‘‘(i) IN GENERAL.—The term ‘eligible 
basis’ means, with respect to any facility, 
the sum of— 
‘‘(I) the basis of such facility de-
termined as of the time that such fa-
cility is originally placed in service, 
and 
‘‘(II) the portion of the basis of 
any shared qualified property which is 
properly allocable to such facility 
under clause (ii). 
‘‘(ii) RULES FOR ALLOCATION.—For 
purposes of subclause (II) of clause (i), the 
basis of shared qualified property shall be 
allocated among all qualified facilities 
which are projected to be placed in service 
and which require utilization of such prop-
erty in proportion to projected generation 
from such facilities. 
‘‘(iii) 
SHARED
QUALIFIED
PROP-
ERTY.—For purposes of this paragraph, 
the term ‘shared qualified property’ means, 
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with respect to any facility, any property 
described in section 168(e)(3)(B)(vi)— 
‘‘(I) which a qualified facility will 
require for utilization of such facility, 
and 
‘‘(II) which is not a qualified fa-
cility. 
‘‘(iv) SPECIAL
RULE
RELATING
TO 
GEOTHERMAL FACILITIES.—In the case of 
any qualified facility using geothermal en-
ergy to produce electricity, the basis of 
such facility for purposes of this paragraph 
shall be determined as though intangible 
drilling and development costs described in 
section 263(c) were capitalized rather than 
expensed. 
‘‘(E) SPECIAL RULE FOR FIRST AND LAST 
YEAR OF CREDIT PERIOD.—In the case of any 
taxable year any portion of which is not within 
the 10-year period described in subsection 
(a)(2)(A)(ii) with respect to any facility, the 
amount of the limitation under subparagraph 
(A) with respect to such facility shall be re-
duced by an amount which bears the same ratio 
to the amount of such limitation (determined 
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without regard to this subparagraph) as such 
portion of the taxable year which is not within 
such period bears to the entire taxable year. 
‘‘(F) ELECTION TO TREAT ALL FACILITIES 
PLACED IN SERVICE IN A YEAR AS 1 FACIL-
ITY.—At the election of the taxpayer, all quali-
fied facilities which are part of the same project 
and which are placed in service during the same 
calendar year shall be treated for purposes of 
this section as 1 facility which is placed in serv-
ice at the mid-point of such year or the first 
day of the following calendar year.’’. 
(c) TRASH FACILITY CLARIFICATION.—Paragraph 
(7) of section 45(d) is amended— 
(1) by striking ‘‘facility which burns’’ and in-
serting ‘‘facility (other than a facility described in 
paragraph (6)) which uses’’, and 
(2) by striking ‘‘COMBUSTION’’. 
(d) EXPANSION OF BIOMASS FACILITIES.— 
(1) OPEN-LOOP
BIOMASS
FACILITIES.—Para-
graph (3) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
by inserting after subparagraph (A) the following 
new subparagraph: 
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‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A), but only to the extent of the 
increased amount of electricity produced at the 
facility by reason of such new unit.’’. 
(2) CLOSED-LOOP BIOMASS FACILITIES.—Para-
graph (2) of section 45(d) is amended by redesig-
nating subparagraph (B) as subparagraph (C) and 
inserting after subparagraph (A) the following new 
subparagraph: 
‘‘(B) EXPANSION
OF
FACILITY.—Such 
term shall include a new unit placed in service 
after the date of the enactment of this subpara-
graph in connection with a facility described in 
subparagraph (A)(i), but only to the extent of 
the increased amount of electricity produced at 
the facility by reason of such new unit.’’. 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall apply to property originally placed 
in service after December 31, 2008. 
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(2) REPEAL
OF
CREDIT
PHASEOUT.—The 
amendments made by subsection (b)(1) shall apply 
to taxable years ending after December 31, 2008. 
(3) LIMITATION BASED ON INVESTMENT IN FA-
CILITY.—The amendment made by subsection (b)(2) 
shall apply to property originally placed in service 
after December 31, 2009. 
(4) TRASH
FACILITY
CLARIFICATION.—The 
amendments made by subsection (c) shall apply to 
electricity produced and sold after the date of the 
enactment of this Act. 
(5) EXPANSION OF BIOMASS FACILITIES.—The 
amendments made by subsection (d) shall apply to 
property placed in service after the date of the en-
actment of this Act. 
SEC. 102. PRODUCTION CREDIT FOR ELECTRICITY PRO-
DUCED FROM MARINE RENEWABLES. 
(a) IN GENERAL.—Paragraph (1) of section 45(c) 
(relating to resources) is amended by striking ‘‘and’’ at 
the end of subparagraph (G), by striking the period at 
the end of subparagraph (H) and inserting ‘‘, and’’, and 
by adding at the end the following new subparagraph: 
‘‘(I) marine and hydrokinetic renewable en-
ergy.’’. 
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(b) MARINE RENEWABLES.—Subsection (c) of sec-
tion 45 is amended by adding at the end the following 
new paragraph: 
‘‘(10) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY.— 
‘‘(A) IN GENERAL.—The term ‘marine and 
hydrokinetic renewable energy’ means energy 
derived from— 
‘‘(i) waves, tides, and currents in 
oceans, estuaries, and tidal areas, 
‘‘(ii) free flowing water in rivers, 
lakes, and streams, 
‘‘(iii) free flowing water in an irriga-
tion system, canal, or other man-made 
channel, including projects that utilize non-
mechanical structures to accelerate the 
flow of water for electric power production 
purposes, or 
‘‘(iv) differentials in ocean tempera-
ture (ocean thermal energy conversion). 
‘‘(B) EXCEPTIONS.—Such term shall not 
include any energy which is derived from any 
source which utilizes a dam, diversionary struc-
ture (except as provided in subparagraph 
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(A)(iii)), or impoundment for electric power 
production purposes.’’. 
(c) DEFINITION
OF FACILITY.—Subsection (d) of 
section 45 is amended by adding at the end the following 
new paragraph: 
‘‘(11) MARINE
AND
HYDROKINETIC
RENEW-
ABLE ENERGY FACILITIES.—In the case of a facility 
producing electricity from marine and hydrokinetic 
renewable energy, the term ‘qualified facility’ means 
any facility owned by the taxpayer— 
‘‘(A) which has a nameplate capacity rat-
ing of at least 150 kilowatts, and 
‘‘(B) which is originally placed in service 
on or after the date of the enactment of this 
paragraph and before January 1, 2012.’’. 
(d) CREDIT RATE.—Subparagraph (A) of section 
45(b)(4) is amended by striking ‘‘or (9)’’ and inserting 
‘‘(9), or (11)’’. 
(e) 
COORDINATION
WITH
SMALL
IRRIGATION 
POWER.—Paragraph (5) of section 45(d), as amended by 
section 101(a), is amended by striking ‘‘January 1, 2012’’ 
and inserting ‘‘the date of the enactment of paragraph 
(11)’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity produced and sold 
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(c) INCREASE OF CREDIT LIMITATION FOR FUEL 
CELL PROPERTY.—Subparagraph (B) of section 48(c)(1) 
is amended by striking ‘‘$500’’ and inserting ‘‘$1,500’’. 
(d) PUBLIC ELECTRIC UTILITY PROPERTY TAKEN 
INTO ACCOUNT.— 
(1) IN
GENERAL.—Paragraph (3) of section 
48(a) is amended by striking the second sentence 
thereof. 
(2) CONFORMING AMENDMENTS.— 
(A) Paragraph (1) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D). 
(B) Paragraph (2) of section 48(c) is 
amended by striking subparagraph (D) and re-
designating subparagraph (E) as subparagraph 
(D). 
(e) EFFECTIVE DATE.— 
(1) IN
GENERAL.—Except as otherwise pro-
vided in this subsection, the amendments made by 
this section shall take effect on the date of the en-
actment of this Act. 
(2) ALLOWANCE AGAINST ALTERNATIVE MIN-
IMUM TAX.—The amendments made by subsection 
(b) shall apply to credits determined under section 
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46 of the Internal Revenue Code of 1986 in taxable 
years beginning after the date of the enactment of 
this Act and to carrybacks of such credits. 
(3) INCREASE IN LIMITATION FOR FUEL CELL 
PROPERTY.—The amendment made by subsection 
(c) shall apply to periods after the date of the enact-
ment of this Act, in taxable years ending after such 
date, under rules similar to the rules of section 
48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990). 
(4) PUBLIC
ELECTRIC
UTILITY
PROPERTY.— 
The amendments made by subsection (d) shall apply 
to periods after February 13, 2008, in taxable years 
ending after such date, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code 
of 1986 (as in effect on the day before the date of 
the enactment of the Revenue Reconciliation Act of 
1990). 
SEC. 104. NEW CLEAN RENEWABLE ENERGY BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 (relating to credits against tax) is amended by add-
ing at the end the following new subpart: 
‘‘Subpart I—Qualified Tax Credit Bonds 
‘‘Sec. 54A. Credit to holders of qualified tax credit bonds. 
‘‘Sec. 54B. New clean renewable energy bonds. 
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‘‘SEC. 54A. CREDIT TO HOLDERS OF QUALIFIED TAX CRED-
IT BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified tax credit bond on one or more credit allowance 
dates of the bond during any taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the sum of the 
credits determined under subsection (b) with respect to 
such dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a qualified tax credit bond 
is 25 percent of the annual credit determined with 
respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified tax credit 
bond is the product of— 
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (2), the applicable credit rate is the 
rate which the Secretary estimates will permit the 
issuance of qualified tax credit bonds with a speci-
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fied maturity or redemption date without discount 
and without interest cost to the qualified issuer. The 
applicable credit rate with respect to any qualified 
tax credit bond shall be determined as of the first 
day on which there is a binding, written contract for 
the sale or exchange of the bond. 
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3- 
month period during which the bond is outstanding. 
A similar rule shall apply when the bond is redeemed 
or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
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‘‘(B) the sum of the credits allowable 
under this part (other than subpart C and this 
subpart). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) QUALIFIED TAX CREDIT BOND.—For purposes 
of this section— 
‘‘(1) QUALIFIED TAX CREDIT BOND.—The term 
‘qualified tax credit bond’ means a new clean renew-
able energy bond which is part of an issue that 
meets the requirements of paragraphs (2), (3), (4), 
(5), and (6). 
‘‘(2) SPECIAL RULES RELATING TO EXPENDI-
TURES.— 
‘‘(A) IN
GENERAL.—An issue shall be 
treated as meeting the requirements of this 
paragraph if, as of the date of issuance, the 
issuer reasonably expects— 
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‘‘(i) 100 percent or more of the avail-
able project proceeds to be spent for 1 or 
more qualified purposes within the 3-year 
period beginning on such date of issuance, 
and 
‘‘(ii) a binding commitment with a 
third party to spend at least 10 percent of 
such available project proceeds will be in-
curred within the 6-month period begin-
ning on such date of issuance. 
‘‘(B) 
FAILURE
TO
SPEND
REQUIRED 
AMOUNT
OF
BOND
PROCEEDS
WITHIN
YEARS.— 
‘‘(i) IN GENERAL.—To the extent that 
less than 100 percent of the available 
project proceeds of the issue are expended 
by the close of the expenditure period for 
1 or more qualified purposes, the issuer 
shall redeem all of the nonqualified bonds 
within 90 days after the end of such pe-
riod. For purposes of this paragraph, the 
amount of the nonqualified bonds required 
to be redeemed shall be determined in the 
same manner as under section 142. 
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‘‘(ii) 
EXPENDITURE
PERIOD.—For 
purposes of this subpart, the term ‘expend-
iture period’ means, with respect to any 
issue, the 3-year period beginning on the 
date of issuance. Such term shall include 
any extension of such period under clause 
(iii). 
‘‘(iii) EXTENSION OF PERIOD.—Upon 
submission of a request prior to the expira-
tion of the expenditure period (determined 
without regard to any extension under this 
clause), the Secretary may extend such pe-
riod if the issuer establishes that the fail-
ure to expend the proceeds within the 
original expenditure period is due to rea-
sonable cause and the expenditures for 
qualified purposes will continue to proceed 
with due diligence. 
‘‘(C) QUALIFIED PURPOSE.—For purposes 
of this paragraph, the term ‘qualified purpose’ 
means a purpose specified in section 54B(a)(1). 
‘‘(D) REIMBURSEMENT.—For purposes of 
this subtitle, available project proceeds of an 
issue shall be treated as spent for a qualified 
purpose if such proceeds are used to reimburse 
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