I 
117TH CONGRESS 
1ST SESSION H. R. 4720 
To amend the Internal Revenue Code of 1986 to provide investment and 
production tax credits for emerging energy technologies, and for other 
purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 27, 2021 
Mr. REED (for himself, Mr. PANETTA, Mr. LAHOOD, Mr. SUOZZI, Mr. 
SCHWEIKERT, and Mr. GOTTHEIMER) introduced the following bill; which 
was referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
investment and production tax credits for emerging en-
ergy technologies, 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. 
This Act may be cited as the ‘‘Energy Sector Innova-
tion Credit Act of 2021’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) Promising energy resources with zero or 
very low market penetration often face significant 
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incumbency disadvantages as they establish a foot-
hold, including suboptimal resource location relative 
to existing grid infrastructure and the lack of econo-
mies of scale. 
(2) Energy sector innovation can confer numer-
ous benefits to jobs and the economy, the environ-
ment and climate, and the general social welfare. 
(3) Energy sector innovation can come in nu-
merous forms, not all of which are readily quantifi-
able, including— 
(A) diversifying and increasing the Na-
tion’s energy generation portfolio and energy 
security, 
(B) improving the dispatchability and reli-
ability of energy generation, and 
(C) improving energy efficiency, emissions 
reductions, or other markers of performance. 
SEC. 3. INVESTMENT CREDIT FOR EMERGING ENERGY 
TECHNOLOGY. 
(a) IN GENERAL.—Subpart E of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 48C the fol-
lowing new section: 
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‘‘SEC. 48D. EMERGING ENERGY TECHNOLOGY CREDIT. 
‘‘(a) ESTABLISHMENT OF CREDIT.—For purposes of 
section 46, the emerging energy technology credit for any 
taxable year is an amount equal to the applicable percent-
age (as determined under subsection (c)) of the basis of 
any qualified emerging energy property placed in service 
by the taxpayer during such taxable year. 
‘‘(b) QUALIFIED EMERGING ENERGY PROPERTY.— 
‘‘(1) IN GENERAL.—The term ‘qualified emerg-
ing energy property’ means property which is con-
structed, reconstructed, erected, or acquired by the 
taxpayer, and the original use of which commences 
with the taxpayer, which is— 
‘‘(A) a qualified production facility (as de-
fined in section 45U(d)), 
‘‘(B) carbon capture equipment, or 
‘‘(C) energy storage technology. 
‘‘(2) CARBON CAPTURE EQUIPMENT.— 
‘‘(A) IN GENERAL.—For purposes of this 
section, the term ‘carbon capture equipment’ 
means property which contains equipment that 
can separate and capture qualified carbon oxide 
(as defined in section 45Q(c)) and is placed in 
service at, and used in connection with, a facil-
ity— 
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‘‘(i) which satisfies the requirements 
under section 45Q(d)(2), and 
‘‘(ii) which is— 
‘‘(I) an electric generating facility 
which— 
‘‘(aa) was originally placed 
in service before such property, 
and 
‘‘(bb) is a point source of air 
pollutants, 
‘‘(II) a manufacturing or indus-
trial facility— 
‘‘(aa) which was originally 
placed in service before such 
property, 
‘‘(bb) which is a point 
source of air pollutants, and 
‘‘(cc) for which such prop-
erty is primarily used to capture 
qualified carbon oxide (as defined 
in section 45Q(c)) which would 
otherwise be released into the at-
mosphere as a result of— 
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‘‘(AA) the production of 
ammonia, helium, or ethanol 
at such facility, or 
‘‘(BB) the processing of 
natural gas at such facility, 
or 
‘‘(III) a manufacturing or indus-
trial facility described in subclause 
(II) for which item (cc) of such sub-
clause does not apply. 
‘‘(B) DIRECT AIR CAPTURE.— 
‘‘(i) IN
GENERAL.—For purposes of 
this section, the term ‘carbon capture 
equipment’ shall include any direct air cap-
ture facility which can capture not less 
than 5,000 metric tons of qualified carbon 
oxide (as defined in section 45Q(c)) annu-
ally. 
‘‘(ii) DIRECT
AIR
CAPTURE
FACIL-
ITY.—The term ‘direct air capture facility’ 
has the same meaning given such term 
under section 45Q(e)(1) (as in effect on 
the date of enactment of this section). 
‘‘(C) RULES REGARDING CAPTURE OF CAR-
BON OXIDE.—With respect to any qualified car-
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bon oxide captured using property described in 
subparagraph (A) or (B), the taxpayer shall 
physically or contractually ensure the disposal, 
utilization, or use of such qualified carbon oxide 
in a manner consistent with the requirements 
under section 45Q. 
‘‘(3) ENERGY
STORAGE
TECHNOLOGY.—For 
purposes of this section, the term ‘energy storage 
technology’ means stationary equipment which— 
‘‘(A) is capable of absorbing energy, stor-
ing energy for a period of time, and dispatching 
the stored energy using batteries, compressed 
air, pumped hydropower, thermal energy stor-
age, liquid air, regenerative fuel cells, flywheels, 
capacitors, superconducting magnets, stacked 
objects, or other technologies identified by the 
Secretary, in consultation with the Secretary of 
Energy, and 
‘‘(B) has a capacity of not less than 1 
megawatt. 
‘‘(4) APPLICATION WITH OTHER CREDITS.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
emerging energy property’ shall not include any 
property for which, for the taxable year or any 
prior taxable year— 
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‘‘(i) electricity produced from such 
property is taken into account for purposes 
of the credit allowed under section 45, 
45J, or 45U, 
‘‘(ii) qualified carbon oxide captured 
by such property is taken into account for 
purposes of the credit allowed under sec-
tion 45Q, 
‘‘(iii) the basis of such property is 
taken into account for purposes of the 
credit allowed under section 48, 48A, 48B, 
or 48C, or 
‘‘(iv) hydrogen produced from such 
property is taken into account for purposes 
of the credit allowed under section 45V. 
‘‘(B) DENIAL OF DOUBLE BENEFIT.—With 
respect to any section described in clause (i), 
(ii), (iii), or (iv) of subparagraph (A), no credit 
shall be allowed under such section for any tax-
able year with respect to any property for which 
a credit is allowed under this section for such 
taxable year or any prior taxable year. 
‘‘(C) ADDITIONAL RULE.—Subparagraphs 
(A)(ii) and (B) shall not apply for purposes of 
the credit allowed under this section or section 
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‘‘(i) in the case of tier 1 equipment, 
40 percent, 
‘‘(ii) in the case of tier 2 equipment, 
30 percent, 
‘‘(iii) in the case of tier 3 equipment, 
20 percent, 
‘‘(iv) in the case of tier 4 equipment, 
10 percent, and 
‘‘(v) in the case of any other such 
equipment, zero percent. 
‘‘(B) EQUIPMENT TIERS.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph— 
‘‘(I) TIER
EQUIPMENT.—The 
term ‘tier 1 equipment’ means any 
carbon capture equipment for which 
the market penetration level for the 
calendar year preceding the calendar 
year in which construction of such 
equipment began is less than 0.75 
percent. 
‘‘(II) TIER 2 EQUIPMENT.—The 
term ‘tier 2 equipment’ has the same 
meaning given the term ‘tier 1 equip-
ment’ under subclause (I), except that 
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‘at least 0.75 percent but less than 
1.5 percent’ shall be substituted for 
‘less than 0.75 percent’. 
‘‘(III) TIER 3 EQUIPMENT.—The 
term ‘tier 3 equipment’ has the same 
meaning given the term ‘tier 1 equip-
ment’ under subclause (I), except that 
‘at least 1.5 percent but less than 
2.25 percent’ shall be substituted for 
‘less than 0.75 percent’. 
‘‘(IV) TIER 4 EQUIPMENT.—The 
term ‘tier 4 equipment’ has the same 
meaning given the term ‘tier 1 equip-
ment’ under subclause (I), except that 
‘at least 2.25 percent but less than 3 
percent’ shall be substituted for ‘less 
than 0.75 percent’. 
‘‘(ii) 
MARKET
PENETRATION 
LEVEL.—For purposes of this subpara-
graph, the term ‘market penetration level’ 
means, with respect to any calendar year, 
the amount equal to the greater of— 
‘‘(I) the amount (expressed as a 
percentage) equal to the quotient of— 
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‘‘(aa) the total amount (ex-
pressed in metric tons) of carbon 
oxide captured and disposed of, 
used, or utilized in a manner 
consistent with the requirements 
under section 45Q by carbon cap-
ture equipment within the United 
States during such calendar year 
(as determined by the Secretary 
on the basis of data reported by 
the Energy Information Adminis-
tration and the Environmental 
Protection Agency), divided by 
‘‘(bb) the total amount of 
greenhouse gas emissions in the 
United States (expressed in met-
ric tons of CO2-e) during the 
most recent calendar year ending 
prior to the date of enactment of 
this section for which such data 
is available to the Administrator 
of the Environmental Protection 
Agency, or 
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‘‘(II) the amount determined 
under this clause for the preceding 
calendar year. 
‘‘(C) DIVISION OF EQUIPMENT FOR PUR-
POSES OF DETERMINING TIER.—For purposes 
of determining the applicable tier for any car-
bon capture equipment under subparagraph 
(B), such subparagraph shall be applied sepa-
rately (and the total amount of carbon oxide 
captured by such equipment shall be determined 
separately) with respect to— 
‘‘(i) any such equipment described in 
subclause (I) of subsection (b)(2)(A)(ii), 
‘‘(ii) any such equipment described in 
subclause (II) of such subsection, 
‘‘(iii) any such equipment described in 
subclause (III) of such subsection, and 
‘‘(iv) any such equipment described in 
subparagraph (B) of subsection (b)(2). 
‘‘(D) DETERMINATION OF TIER.—For pur-
poses of this paragraph, the determination as to 
whether any carbon capture equipment qualifies 
as a tier 1, 2, 3, or 4 equipment shall be 
made— 
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‘‘(i) during the year in which con-
struction of such equipment begins (as de-
termined under rules similar to the rules in 
section 45U(e)), and 
‘‘(ii) based on the determinations in-
cluded in the report described in section 
45U(b)(2)(D)(i)(II) with respect to such 
calendar year. 
‘‘(E) REPORTING.—The Secretary shall, as 
part of the reports published pursuant to sec-
tion 45U(b)(2)(D)(i) and in the same manner 
as described under such section, publish the ap-
plicable market penetration level and tier for 
any carbon capture equipment (as determined 
separately for such equipment pursuant to sub-
paragraph (C)). 
‘‘(3) ENERGY STORAGE TECHNOLOGY.— 
‘‘(A) IN GENERAL.—With respect to en-
ergy storage technology, the applicable percent-
age shall be— 
‘‘(i) in the case of tier 1 technology, 
40 percent, 
‘‘(ii) in the case of tier 2 technology, 
30 percent, 
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