I 
110TH CONGRESS 
1ST SESSION H. R. 1385 
To amend the Internal Revenue Code of 1986 to improve and extend certain 
energy-related tax provisions, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 7, 2007 
Mr. MCDERMOTT (for himself, Mr. MARKEY, and Mr. WELLER of Illinois) in-
troduced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to improve 
and extend certain energy-related tax provisions, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; ETC. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘EXTEND the Energy Efficiency Incentives Act of 
2007’’. 
(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 
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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; etc. 
TITLE I—NON-BUSINESS ENERGY IMPROVEMENTS 
Sec. 101. Performance based energy improvements for non-business property. 
Sec. 102. Extension and modification of credit for nonbusiness energy property. 
TITLE II—BUSINESS-RELATED ENERGY IMPROVEMENTS 
Sec. 201. Extension and clarification of new energy efficient home credit. 
Sec. 202. Extension and modification of deduction for energy efficient commer-
cial buildings. 
Sec. 203. Deduction for energy efficient low-rise buildings. 
Sec. 204. Energy efficient property deduction. 
TITLE III—INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS 
Sec. 301. Credit for energy savings certifications. 
TITLE I—NON-BUSINESS 
ENERGY IMPROVEMENTS 
SEC. 101. PERFORMANCE BASED ENERGY IMPROVEMENTS 
FOR NON-BUSINESS PROPERTY. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 is amended by inserting after sec-
tion 25D the following new section: 
‘‘SEC. 
25E. 
PERFORMANCE 
BASED 
ENERGY 
IMPROVE-
MENTS. 
‘‘(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 an amount equal to 
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the amount of qualified energy efficiency expenditures 
paid or incurred by the taxpayer during the taxable year. 
‘‘(b) LIMITATIONS.— 
‘‘(1) IN GENERAL.—The amount allowed as a 
credit under subsection (a) shall not exceed the 
product of— 
‘‘(A) the qualified energy savings achieved, 
and 
‘‘(B) $4,000. 
‘‘(2) MINIMUM AMOUNT OF QUALIFIED ENERGY 
SAVINGS.—No credit shall be allowed under sub-
section (a) with respect to any principal residence 
which achieves a qualified energy savings of less 
than 20 percent. 
‘‘(3) LIMITATION
BASED
ON
AMOUNT
OF 
TAX.—In the case of taxable years to which section 
26(a)(2) does not apply, 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 
‘‘(B) the sum of the credit allowable under 
this subpart (other than this section and sec-
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tions 23, 24, and 25B) and section 27 for the 
taxable year. 
‘‘(c) QUALIFIED ENERGY EFFICIENCY EXPENDI-
TURES.—For purposes of this section: 
‘‘(1) IN GENERAL.—The term ‘qualified energy 
efficiency expenditures’ means any amount paid or 
incurred which is related to producing qualified en-
ergy savings in a principal residence of the taxpayer 
which is located in the United States. 
‘‘(2) NO DOUBLE BENEFIT FOR CERTAIN EX-
PENDITURES.—The term ‘qualified energy efficiency 
expenditures’ shall not include any expenditure for 
which a deduction or credit is otherwise allowed to 
the taxpayer under this chapter. 
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121, except that— 
‘‘(A) no ownership requirement shall be 
imposed, and 
‘‘(B) the period for which a building is 
treated as used as a principal residence shall 
also include the 60-day period ending on the 1st 
day on which it would (but for this subpara-
graph) first be treated as used as a principal 
residence. 
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‘‘(d) QUALIFIED ENERGY SAVINGS.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘qualified energy 
savings’ means, with respect to any principal resi-
dence, the amount (measured as a percentage) by 
which— 
‘‘(A) the annual energy use with respect to 
the principal residence after qualified energy ef-
ficiency expenditures are made, as certified 
under paragraph (2), is less than 
‘‘(B) the annual energy use with respect to 
the principal residence before the qualified en-
ergy efficiency expenditures were made, as cer-
tified under paragraph (2). 
In determining annual energy use under subpara-
graph (B), any energy efficiency improvements 
which are not attributable to qualified energy effi-
ciency expenditures shall be disregarded. 
‘‘(2) CERTIFICATION.— 
‘‘(A) IN GENERAL.—The Secretary, in con-
sultation with the Secretary of Energy, shall 
prescribe the procedures and methods for the 
making of certifications under this paragraph 
based on the Residential Energy Services Net-
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work (RESNET) Technical Guidelines in effect 
on the date of the enactment of this section. 
‘‘(B) QUALIFIED INDIVIDUALS.—Any cer-
tification made under this paragraph may only 
be made by an individual who is recognized by 
an organization certified by the Secretary for 
such purposes. 
‘‘(e) SPECIAL RULES.—For purposes of this section 
rules similar to the rules under paragraphs (4), (5), (6), 
(7), (8), and (9) of section 25D(e) and section 25C(e)(2) 
shall apply. 
‘‘(f) BASIS ADJUSTMENTS.—For purposes of this 
subtitle, if a credit is allowed under this section with re-
spect to any expenditure with respect to any property, the 
increase in the basis of such property which would (but 
for this subsection) result from such expenditure shall be 
reduced by the amount of the credit so allowed. 
‘‘(g) TERMINATION.—This section shall not apply 
with respect to any property placed in service after Decem-
ber 31, 2011.’’. 
(b) INTERIM GUIDANCE ON CERTIFICATION.— 
(1) IN GENERAL.—Not later than 90 days after 
the date of the enactment of this Act, the Secretary 
of the Treasury, in consultation with the Secretary 
of Energy, shall issue interim guidance on— 
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(A) the procedures and methods for mak-
ing certifications under sections 25E(d)(2)(A) 
and 179F(d)(2)(A) of the Internal Revenue 
Code of 1986, as added by subsection (a) and 
section 203, respectively; 
(B) the recognition of qualified individuals 
under 
sections 
25E(d)(2)(B) 
and 
179F(d)(2)(B) of such Code for the purpose of 
making such certifications; 
(C) how participation in State energy effi-
ciency programs can be used in the procedures 
and methods described in subparagraph (A). 
(2) CONSULTATION WITH STAKEHOLDERS.— 
(A) IN GENERAL.—The Secretary of the 
Treasury, in issuing guidance pursuant to para-
graph (1), shall consider comments from energy 
efficiency experts and other interested parties. 
(B) OTHER CONSIDERATIONS.—In the case 
of guidance issued pursuant to paragraph 
(1)(B), the Secretary of the Treasury shall also 
consider— 
(i) the Residential Energy Services 
Network Technical Guidelines and other 
pertinent guidelines for evaluating energy 
savings; 
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(ii) energy modeling software, includ-
ing software accredited through the Resi-
dential Energy Services Network; and 
(iii) quality assurance procedures of 
the Building Performance Institute, Home 
Performance through Energy Star, and the 
Residential Energy Services Network. 
(c) ALTERNATIVE CERTIFICATION METHODS.— 
(1) IN GENERAL.—The Secretary of the Treas-
ury shall establish a procedure for individuals and 
businesses to petition for the approval of alternative 
methods of certification under sections 25E(d)(2)(A) 
and 179F(d)(2)(A) of the Internal Revenue Code of 
1986, as added by subsection (a) and section 203, 
respectively. 
(2) DETERMINATION.—The Secretary of the 
Treasury shall make a determination on the ap-
proval or disapproval of such alternative methods of 
certification not later than 90 days after receiving a 
petition under paragraph (1). 
(d) CONFORMING AMENDMENTS.— 
(1) Section 1016(a) is amended by striking 
‘‘and’’ at the end of paragraph (36), by striking the 
period at the end of paragraph (37) and inserting ‘‘, 
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and’’, and by adding at the end the following new 
paragraph: 
‘‘(38) to the extent provided in section 
25E(f).’’. 
(2) The table of sections for subpart A of part 
IV of subchapter A chapter 1 is amended by insert-
ing after the item relating to section 25D the fol-
lowing new item: 
‘‘Sec. 25E. Performance based energy improvements.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to amounts paid or incurred in tax-
able years beginning after the date of the enactment of 
this Act. 
SEC. 102. EXTENSION AND MODIFICATION OF CREDIT FOR 
NONBUSINESS ENERGY PROPERTY. 
(a) EXTENSION.—Subsection (g) of section 25C (re-
lating to termination) is amended by striking ‘‘December 
31, 2007’’ and inserting ‘‘December 31, 2011’’. 
(b) LABOR COSTS FOR QUALIFIED ENERGY EFFI-
CIENCY IMPROVEMENTS.—Section 25C(c)(1) is amended 
by adding at the end the following new flush sentence: 
‘‘The amount taken into account under subsection 
(a)(1) with respect to qualified energy efficiency im-
provements shall include expenditures for labor costs 
properly allocable to the onsite preparation, assem-
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bly, or original installation of any component de-
scribed in this paragraph.’’. 
(c) MODIFICATIONS FOR RESIDENTIAL ENERGY EF-
FICIENCY PROPERTY EXPENDITURES.— 
(1) INCREASED LIMITATION FOR OIL FURNACES 
AND NATURAL GAS, PROPANE, AND OIL HOT WATER 
BOILERS.— 
(A) IN GENERAL.—Subparagraphs (B) and 
(C) of section 25C(b)(3) are amended to read 
as follows: 
‘‘(B) $150 for any qualified natural gas 
furnace or qualified propane furnace, and 
‘‘(C) $300 for— 
‘‘(i) any item of energy-efficient build-
ing property, and 
‘‘(ii) any qualified oil furnace, quali-
fied natural gas hot water boiler, qualified 
propane hot water boiler, or qualified oil 
hot water boiler.’’. 
(B) CONFORMING
AMENDMENT.—Clause 
(ii) of section 25C(d)(2)(A) is amended to read 
as follows: 
‘‘(ii) any qualified natural gas fur-
nace, qualified propane furnace, qualified 
oil furnace, qualified natural gas hot water 
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boiler, qualified propane hot water boiler, 
or qualified oil hot water boiler, or’’. 
(2) MODIFICATIONS OF STANDARDS FOR EN-
ERGY-EFFICIENT BUILDING PROPERTY.— 
(A) ELECTRIC
HEAT
PUMPS.—Subpara-
graph (B) of section 25C(d)(3) is amended to 
read as follows: 
‘‘(A) an electric heat pump which achieves 
the highest efficiency tier established by the 
Consortium for Energy Efficiency, as in effect 
on January 1, 2008.’’. 
(B) CENTRAL
AIR
CONDITIONERS.—Sec-
tion 25C(d)(3)(D) is amended by striking 
‘‘2006’’ and inserting ‘‘2008’’. 
(C) WATER HEATERS.—Subparagraph (E) 
of section 25C(d) is amended to read as follows: 
‘‘(E) a natural gas, propane, or oil water 
heater which has either an energy factor of at 
least 0.80 or a thermal efficiency of at least 90 
percent.’’. 
(D) OIL FURNACES AND HOT WATER BOIL-
ERS.—Paragraph (4) of section 25C(d) is 
amended to read as follows: 
‘‘(4) QUALIFIED NATURAL GAS, PROPANE, AND 
OIL FURNACES AND HOT WATER BOILERS.— 
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