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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2003. 
SEC. 41002. EXTENSION AND EXPANSION OF CREDIT FOR 
ELECTRICITY PRODUCED FROM RENEWABLE 
RESOURCES. 
(a) EXTENSION OF CREDIT FOR WIND AND CLOSED-
LOOP BIOMASS FACILITIES.—Subparagraphs (A) and (B) 
of section 45(c)(3) are each amended by striking ‘‘2004’’ 
and inserting ‘‘2007’’. 
(b) EXPANSION OF CREDIT FOR OPEN-LOOP BIO-
MASS, LANDFILL GAS FACILITIES, AND TRASH COMBUS-
TION FACILITIES.—Paragraph (3) of section 45(c) is 
amended by adding at the end the following new subpara-
graphs: 
‘‘(D) OPEN-LOOP BIOMASS FACILITIES.—
In the case of a facility using open-loop biomass 
to produce electricity, the term ‘qualified facil-
ity’ means any facility owned by the taxpayer 
which is originally placed in service before Jan-
uary 1, 2007. 
‘‘(E) LANDFILL GAS FACILITIES.—In the 
case of a facility producing electricity from gas 
derived from the biodegradation of municipal 
solid waste, the term ‘qualified facility’ means
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any facility owned by the taxpayer which is 
originally placed in service before January 1, 
2007. 
‘‘(F) TRASH COMBUSTION FACILITIES.—In 
the case of a facility which burns municipal 
solid waste to produce electricity, the term 
‘qualified facility’ means any facility owned by 
the taxpayer which is originally placed in serv-
ice after the date of the enactment of this sub-
paragraph and before January 1, 2007.’’. 
(c) DEFINITION AND SPECIAL RULES.—Subsection 
(c) of section 45 is amended by adding at the end the 
following new paragraphs: 
‘‘(5) OPEN-LOOP
BIOMASS.—The term ‘open-
loop biomass’ means any solid, nonhazardous, cel-
lulosic waste material which is segregated from other 
waste materials and which is derived from—
‘‘(A) any of the following forest-related re-
sources: mill residues, precommercial thinnings, 
slash, and brush, 
‘‘(B) solid wood waste materials, including 
waste pallets, crates, dunnage, manufacturing 
and construction wood wastes (other than pres-
sure-treated, 
chemically-treated, 
or 
painted 
wood wastes), and landscape or right-of-way
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tree trimmings, but not including municipal 
solid waste (garbage), gas derived from the bio-
degradation of solid waste, or paper that is 
commonly recycled, or 
‘‘(C) agriculture sources, including orchard 
tree crops, vineyard, grain, legumes, sugar, and 
other crop by-products or residues. 
Such term shall not include closed-loop biomass. 
‘‘(6) 
REDUCED
CREDIT
FOR
CERTAIN 
PREEFFECTIVE DATE FACILITIES.—In the case of 
any facility described in subparagraph (D) or (E) of 
paragraph (3) which is placed in service before the 
date of the enactment of this paragraph—
‘‘(A) subsection (a)(1) shall be applied by 
substituting ‘1.0 cents’ for ‘1.5 cents’, and 
‘‘(B) the 5-year period beginning on the 
date of the enactment of this paragraph shall 
be substituted in lieu of the 10-year period in 
subsection (a)(2)(A)(ii). 
‘‘(7) CREDIT ELIGIBILITY FOR OPEN-LOOP BIO-
MASS FACILITIES.—In the case of any facility de-
scribed in paragraph (3)(D) which is placed in serv-
ice before the date of enactment of this paragraph, 
if the owner of such facility is not the producer of 
the electricity, the person eligible for the credit al-
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lowable under subsection (a) is the lessee or the op-
erator of such facility. 
‘‘(8) LIMIT ON REDUCTIONS FOR GRANTS, ETC., 
FOR
OPEN-LOOP
BIOMASS
FACILITIES.—If 
the 
amount of the credit determined under subsection 
(a) with respect to any open-loop biomass facility is 
required to be reduced under paragraph (3) of sub-
section (b), the fraction under such paragraph shall 
in no event be greater than 1⁄2. 
‘‘(9) COORDINATION
WITH
SECTION
29.—The 
term ‘qualified facility’ shall not include any facility 
the production from which is allowed as a credit 
under section 29 for the taxable year or any prior 
taxable year.’’. 
(d) QUALIFIED ENERGY RESOURCES.—Paragraph 
(1) of section 45(c) (relating to qualified energy resources) 
is amended to read as follows: 
‘‘(1) QUALIFIED
ENERGY
RESOURCES.—The 
term ‘qualified energy resources’ means any resource 
described in paragraph (3) which is used to generate 
electricity at a qualified facility.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to electricity sold after the date 
of the enactment of this Act, in taxable years ending after 
such date.
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SEC. 41003. CREDIT FOR QUALIFIED FUEL CELL POWER 
PLANTS. 
(a) BUSINESS PROPERTY.—
(1) IN GENERAL.—Subparagraph (A) of section 
48(a)(3) (defining energy property) is amended by 
striking ‘‘or’’ at the end of clause (i), by adding 
‘‘or’’ at the end of clause (ii), and by inserting after 
clause (ii) the following new clause: 
‘‘(iii) equipment which is part of a 
qualified fuel cell power plant,’’. 
(2) QUALIFIED FUEL CELL POWER PLANT.—
Subsection (a) of section 48 is amended by redesig-
nating paragraphs (4) and (5) as paragraphs (5) 
and (6), respectively, and by inserting after para-
graph (3) the following new paragraph: 
‘‘(4) QUALIFIED FUEL CELL POWER PLANT.—
For purposes of this subsection—
‘‘(A) IN
GENERAL.—The term ‘qualified 
fuel cell power plant’ means a fuel cell power 
plant that has an electricity-only generation ef-
ficiency greater than 30 percent. 
‘‘(B) LIMITATION.—The energy credit with 
respect to any qualified fuel cell power plant for 
any taxable year shall not exceed—
‘‘(i) $500 for each 1⁄2 kilowatt of ca-
pacity of the power plant, reduced by
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‘‘(ii) the aggregate energy credits al-
lowed with respect to such power plant for 
all prior taxable years. 
‘‘(C) FUEL
CELL
POWER
PLANT.—The 
term ‘fuel cell power plant’ means an integrated 
system comprised of a fuel cell stack assembly 
and associated balance of plant components 
that converts a fuel into electricity using elec-
trochemical means. 
‘‘(D) TERMINATION.—Such term shall not 
include any property placed in service after De-
cember 31, 2006.’’. 
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to property placed in 
service after December 31, 2003, 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). 
(b) NONBUSINESS PROPERTY.—
(1) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable 
personal credits) is amended by inserting after sec-
tion 25C the following new section:
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‘‘SEC. 25D. NONBUSINESS QUALIFIED FUEL CELL POWER 
PLANT. 
‘‘(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 
10 percent of the qualified fuel cell power plant expendi-
tures which are paid or incurred during such year. 
‘‘(b) LIMITATIONS.—The credit allowed under sub-
section (a) with respect to any qualified fuel cell power 
plant for any taxable year shall not exceed—
‘‘(1) $500 for each 1⁄2 kilowatt of capacity of 
the power plant, reduced by 
‘‘(2) the aggregate energy credits allowed with 
respect to such power plant for all prior taxable 
years. 
‘‘(c) QUALIFIED FUEL CELL POWER PLANT EX-
PENDITURES.—For purposes of this section, the term 
‘qualified fuel cell power plant expenditures’ means ex-
penditures by the taxpayer for any qualified fuel cell power 
plant (as defined in section 48(a)(4))—
‘‘(1) which meets the requirements of subpara-
graphs (B) and (D) of section 48(a)(3), and 
‘‘(2) which is installed on or in connection with 
a dwelling unit—
‘‘(A) which is located in the United States, 
and
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‘‘(B) which is used by the taxpayer as a 
residence. 
Such term includes expenditures for labor costs properly 
allocable to the onsite preparation, assembly, or original 
installation of the property. 
‘‘(d) SPECIAL RULES.—For purposes of this section, 
rules similar to the rules of section 25C(d) shall apply. 
‘‘(e) BASIS ADJUSTMENTS.—For purposes of this 
subtitle, if a credit is allowed under this section for any 
expenditure with respect to any property, the increase in 
the basis of such property which would (but for this sub-
section) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(f) TERMINATION.—This section shall not apply to 
any expenditure made after December 31, 2006.’’. 
(2) CONFORMING AMENDMENTS.—
(A) Subsection (a) of section 1016 is 
amended by striking ‘‘and’’ at the end of para-
graph (28), by striking the period at the end of 
paragraph (29) and inserting ‘‘, and’’, and by 
adding at the end the following new paragraph: 
‘‘(30) to the extent provided in section 25D(e), 
in the case of amounts with respect to which a credit 
has been allowed under section 25D.’’.
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(B) The table of sections for subpart A of 
part IV of subchapter A of chapter 1 is amend-
ed by inserting after the item relating to section 
25C the following new item:
‘‘Sec. 25D. Nonbusiness qualified fuel cell power plant.’’.
(3) EFFECTIVE DATE.—The amendments made 
by this subsection shall apply to expenditures paid 
or incurred after December 31, 2003, in taxable 
years ending after such date. 
SEC. 41004. CREDIT FOR ENERGY EFFICIENCY IMPROVE-
MENTS TO EXISTING HOMES. 
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 (relating to nonrefundable personal 
credits) is amended by inserting after section 25D the fol-
lowing new section: 
‘‘SEC. 25E. ENERGY EFFICIENCY IMPROVEMENTS TO EXIST-
ING HOMES. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this chapter for the taxable year an amount 
equal to 20 percent of the amount paid or incurred by 
the taxpayer for qualified energy efficiency improvements 
installed during such taxable year. 
‘‘(b) LIMITATIONS.—
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‘‘(1) MAXIMUM CREDIT.—The credit allowed by 
this section with respect to a dwelling shall not ex-
ceed $2,000. 
‘‘(2) PRIOR CREDIT AMOUNTS FOR TAXPAYER 
ON SAME DWELLING TAKEN INTO ACCOUNT.—If a 
credit was allowed to the taxpayer under subsection 
(a) with respect to a dwelling in 1 or more prior tax-
able years, the amount of the credit otherwise allow-
able for the taxable year with respect to that dwell-
ing shall not exceed the amount of $2,000 reduced 
by the sum of the credits allowed under subsection 
(a) to the taxpayer with respect to the dwelling for 
all prior taxable years. 
‘‘(c) CARRYFORWARD OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a) for such taxable year re-
duced by the sum of the credits allowable under this sub-
part (other than this section) 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 
succeeding taxable year. 
‘‘(d) QUALIFIED ENERGY EFFICIENCY IMPROVE-
MENTS.—For purposes of this section, the term ‘qualified 
energy efficiency improvements’ means any energy effi-
cient building envelope component which meets the pre-
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scriptive criteria for such component established by the 
2000 International Energy Conservation Code (or, in the 
case of metal roofs with appropriate pigmented coatings, 
meets the Energy Star program requirements), if—
‘‘(1) such component is installed in or on a 
dwelling—
‘‘(A) located in the United States, and 
‘‘(B) owned and used by the taxpayer as 
the taxpayer’s principal residence (within the 
meaning of section 121), 
‘‘(2) the original use of such component com-
mences with the taxpayer, and 
‘‘(3) such component reasonably can be ex-
pected to remain in use for at least 5 years. 
If the aggregate cost of such components with respect to 
any dwelling exceeds $1,000, such components shall be 
treated as qualified energy efficiency improvements only 
if such components are also certified in accordance with 
subsection (e) as meeting such criteria. 
‘‘(e) CERTIFICATION.—The certification described in 
subsection (d) shall be—
‘‘(1) determined on the basis of the technical 
specifications or applicable ratings (including prod-
uct labeling requirements) for the measurement of 
energy efficiency, based upon energy use or building
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envelope component performance, for the energy effi-
cient building envelope component, 
‘‘(2) provided by a local building regulatory au-
thority, a utility, a manufactured home production 
inspection primary inspection agency (IPIA), or an 
accredited home energy rating system provider who 
is accredited by or otherwise authorized to use ap-
proved energy performance measurement methods by 
the 
Residential 
Energy 
Services 
Network 
(RESNET), and 
‘‘(3) made in writing in a manner that specifies 
in readily verifiable fashion the energy efficient 
building envelope components installed and their re-
spective energy efficiency levels. 
‘‘(f) DEFINITIONS AND SPECIAL RULES.—
‘‘(1) TENANT-STOCKHOLDER IN COOPERATIVE 
HOUSING CORPORATION.—In the case of an indi-
vidual who is a tenant-stockholder (as defined in sec-
tion 216) in a cooperative housing corporation (as 
defined in such section), such individual shall be 
treated as having paid his tenant-stockholder’s pro-
portionate share (as defined in section 216(b)(3)) of 
the cost of qualified energy efficiency improvements 
made by such corporation. 
‘‘(2) CONDOMINIUMS.—
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‘‘(A) IN GENERAL.—In the case of an indi-
vidual who is a member of a condominium man-
agement association with respect to a condo-
minium which he owns, such individual shall be 
treated as having paid his proportionate share 
of the cost of qualified energy efficiency im-
provements made by such association. 
‘‘(B) CONDOMINIUM
MANAGEMENT
ASSO-
CIATION.—For purposes of this paragraph, the 
term ‘condominium management association’ 
means an organization which meets the require-
ments of paragraph (1) of section 528(c) (other 
than subparagraph (E) thereof) with respect to 
a condominium project substantially all of the 
units of which are used as residences. 
‘‘(3) BUILDING ENVELOPE COMPONENT.—The 
term ‘building envelope component’ means insulation 
material or system which is specifically and pri-
marily designed to reduce the heat loss or gain of a 
dwelling when installed in or on such dwelling, exte-
rior windows (including skylights) and doors, and 
metal roofs with appropriate pigmented coatings 
which are specifically and primarily designed to re-
duce the heat gain of a dwelling when installed in 
or on such dwelling.