for the taxable year is an amount equal to the product 
of $1.50 and the gallons of algae derived fuel— 
‘‘(1) produced by the taxpayer and sold at retail 
for use as a fuel or used during the taxable year by 
the taxpayer in a trade or business, or 
‘‘(2) used by the taxpayer in the production of 
a mixture with another fuel and sold for use as a 
fuel or used by the taxpayer during the taxable year 
for use as a fuel in a trade or business. 
‘‘(b) COORDINATION WITH CREDIT AGAINST EXCISE 
TAX.—The amount of the credit determined under this 
section with respect to any algae derived fuel shall be 
properly reduced to take into account any benefit provided 
with respect to such algae derived fuel solely by reason 
of the application of section 6426 or 6427(e). 
‘‘(c) DEFINITION OF ALGAE DERIVED FUEL.—For 
purposes of this section— 
‘‘(1) The term ‘algae derived fuel’ means a liq-
uid hydrocarbon product that is substantially similar 
to current commercial fuels derived from petroleum 
and is derived from the biomass of algal organisms. 
Such term shall not include any liquid with respect 
to which a credit may be determined under section 
40 or 40A. 
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‘‘(2) The term ‘algal organisms’ means single 
or multi-cellular organisms which are inherently pho-
tosynthetic and aquatic. 
‘‘(d) MIXTURE OR ALGAE DERIVED FUEL NOT USED 
AS A FUEL, ETC.—For purposes of this section, rules simi-
lar to the rules of paragraphs (3) and (4) of section 
40A(d) shall apply. 
‘‘(e) TERMINATION.—This section shall not apply to 
any sale or use after December 31, 2012.’’. 
(b) CREDIT TREATED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) of such Code is amended 
by striking ‘‘plus’’ at the end of paragraph (32), by strik-
ing the period at the end of paragraph (33) and inserting 
‘‘, plus’’, and by inserting after paragraph (33) the fol-
lowing new paragraph: 
‘‘(34) the biodiesel fuels credit determined 
under section 40B(a).’’. 
(c) CREDIT INCLUDED IN INCOME.—Section 87 of 
such Code is amended by striking ‘‘and’’ at the end of 
paragraph (1), by striking the period at the end of para-
graph (2) and inserting ‘‘, and’’, and by inserting after 
paragraph (2) the following new paragraph: 
‘‘(3) the algae derived fuels credit determined 
with respect to the taxpayer for the taxable year 
under section 40B(a).’’. 
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(d) DEDUCTION
FOR UNUSED CREDIT.—Section 
196(c) of such Code is amended by striking ‘‘and’’ at the 
end of paragraph (12), by striking the period at the end 
of paragraph (13) and inserting ‘‘, and’’, and by adding 
at the end the following new paragraph: 
‘‘(14) the algae derived fuels credit determined 
under section 40B(a).’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of such Code is amended by inserting after the item relat-
ing to section 40A the following new item: 
‘‘Sec. 40B. Algae derived fuel credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuels sold or used in taxable 
years beginning after the date of the enactment of this 
Act. 
SEC. 2. EXCISE TAX CREDIT PARITY FOR ALGAE DERIVED 
FUEL. 
(a) ALLOWANCE OF CREDIT.—Paragraph (1) of sec-
tion 6426(a) of the Internal Revenue Code of 1986 is 
amended by striking ‘‘and (e)’’ and inserting ‘‘(e), and 
(f)’’. 
(b) ALGAE DERIVED FUEL MIXTURE CREDIT.—Sec-
tion 6426 of the Internal Revenue Code of 1986 is amend-
ed by redesignating subsections (f), (g), and (h) as sub-
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sections (g), (h), and (i), respectively, and by inserting 
after subsection (e) the following new subsection: 
‘‘(f) ALGAE DERIVED FUEL MIXTURE CREDIT.— 
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the algae derived fuel credit is the product of 
$1.50 and the number of gallons— 
‘‘(A) of algae derived fuel produced by the 
taxpayer and sold at retail for use as a fuel or 
used by the taxpayer in a trade or business of 
the taxpayer, and 
‘‘(B) of algae derived fuel used by the tax-
payer in producing any mixture of such fuel 
with any other fuel subsequently sold for use as 
a fuel or used by the taxpayer for use as a fuel 
in a trade or business of the taxpayer. 
‘‘(2) ALGAE DERIVED FUEL.—For the purposes 
of this section, the term ‘algae derived fuel’ shall 
have the same meaning given such term in section 
40B. 
‘‘(3) TERMINATION.—This subsection shall not 
apply to any sale or use after December 31, 2012.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuels sold or used for any period 
after the date of the enactment of this Act. 
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SEC. 3. PARITY REGARDING PAYMENTS FOR FUEL MIX-
TURE. 
(a) IN GENERAL.—Paragraph (1) of section 6427(e) 
of the Internal Revenue Code of 1986 is amended by in-
serting ‘‘or algae derived fuel mixture credit’’ after ‘‘alter-
native fuel mixture credit’’. 
(b) 
TERMINATION.—Paragraph 
(5) 
of 
section 
6427(e) of such Code is amended by striking ‘‘and’’ at 
the end of subparagraph (C), by striking the period at the 
end of subparagraph (D) and inserting ‘‘, and’’, by insert-
ing after subparagraph (D) the following new subpara-
graph: 
‘‘(E) any algae based fuel mixture sold or 
used after December 31, 2012.’’. 
(c) CONFORMING AMENDMENT.—The heading for 
section 6427(e) of such Code is amended by striking ‘‘AND 
BIODIESEL MIXTURES’’ and inserting ‘‘, BIODIESEL MIX-
TURES, AND ALGAE DERIVED MIXTURES’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to fuels sold or used for any period 
after the date of the enactment of this Act. 
Æ 
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