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and sequester greenhouse gases which result from the 
generation of electricity. 
‘‘(5) ELECTRIC
GENERATION
UNIT.—The term 
‘electric generation unit’ means any facility at least 
50 percent of the total annual net output of which is 
electrical power, including an otherwise eligible facil-
ity which is used in an industrial application. 
‘‘(6) 
INTEGRATED
GASIFICATION
COMBINED 
CYCLE.—The term ‘integrated gasification combined 
cycle’ means an electric generation unit which pro-
duces electricity by converting coal to synthesis gas 
which is used to fuel a combined-cycle plant which 
produces electricity from both a combustion turbine 
(including a combustion turbine/fuel cell hybrid) and 
a steam turbine. 
‘‘(d) QUALIFYING ADVANCED COAL PROJECT PRO-
GRAM.— 
‘‘(1) ESTABLISHMENT.—Not later than 180 days 
after the date of enactment of this section, the Sec-
retary, in consultation with the Secretary of Energy, 
shall establish a qualifying advanced coal project pro-
gram for the deployment of advanced coal-based gen-
eration technologies. 
‘‘(2) CERTIFICATION.—
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‘‘(A) APPLICATION
PERIOD.—Each appli-
cant for certification under this paragraph shall 
submit an application meeting the requirements 
of subparagraph (B). An applicant may only 
submit an application during the 3-year period 
beginning on the date the Secretary establishes 
the program under paragraph (1). 
‘‘(B) REQUIREMENTS
FOR
APPLICATIONS 
FOR CERTIFICATION.—An application under sub-
paragraph (A) shall contain such information as 
the Secretary may require in order to make a de-
termination to accept or reject an application 
for certification as meeting the requirements 
under subsection (e)(1). Any information con-
tained in the application shall be protected as 
provided in section 552(b)(4) of title 5, United 
States Code. 
‘‘(C) TIME TO ACT UPON APPLICATIONS FOR 
CERTIFICATION.—The Secretary shall issue a de-
termination as to whether an applicant has met 
the requirements under subsection (e)(1) within 
60 days following the date of submittal of the ap-
plication for certification. 
‘‘(D) TIME TO MEET CRITERIA FOR CER-
TIFICATION.—Each applicant for certification
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shall have 2 years from the date of acceptance by 
the Secretary of the application during which to 
provide to the Secretary evidence that the cri-
teria set forth in subsection (e)(2) have been met. 
‘‘(E) PERIOD OF ISSUANCE.—An applicant 
which receives a certification shall have 5 years 
from the date of issuance of the certification in 
order to place the project in service and if such 
project is not placed in service by that time pe-
riod then the certification shall no longer be 
valid.’’. 
‘‘(3) AGGREGATE GENERATING CAPACITY.— 
‘‘(A) IN
GENERAL.—The aggregate gener-
ating capacity of projects certified by the Sec-
retary under paragraph (2) may not exceed 
7,500 megawatts. 
‘‘(B) PARTICULAR PROJECTS.—Of the total 
megawatts of capacity which the Secretary is au-
thorized to certify— 
‘‘(i) 4,125 megawatts shall be available 
only for use for integrated gasification com-
bined cycle projects, and 
‘‘(ii) 3,375 megawatts shall be avail-
able only for use for projects which use other 
advanced coal-based generation technologies.
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‘‘(C) DETERMINATION OF CAPACITY.—In de-
termining capacity under this paragraph in the 
case of a retrofitted or repowered plant, capacity 
shall be determined based on total design capac-
ity after the retrofit or repowering of the existing 
facility is accomplished. 
‘‘(5) REVIEW AND REDISTRIBUTION.— 
‘‘(A) REVIEW.—Not later than 6 years after 
the date of enactment of this section, the Sec-
retary shall review the projects certified and 
megawatts allocated under this section as of the 
date which is 6 years after the date of enactment 
of this section. 
‘‘(B) 
REDISTRIBUTION.—The 
Secretary 
may reallocate the megawatts available under 
clauses (i) and (ii) of paragraph (3)(B) if the 
Secretary determines that— 
‘‘(i) capacity cannot be used because 
there is an insufficient quantity of quali-
fying applications for certification pending 
for any available capacity at the time of the 
review, or 
‘‘(ii) any certification made pursuant 
to subsection paragraph (2) has not been re-
voked pursuant to subsection paragraph
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(2)(D) because the project subject to the cer-
tification has been delayed as a result of 
third party opposition or litigation to the 
proposed project. 
‘‘(C) REALLOCATION.—If the Secretary de-
termines that megawatts under clause (i) or (ii) 
of paragraph (3)(B) are available for realloca-
tion pursuant to the requirements set forth in 
paragraph (2), the Secretary is authorized to 
conduct an additional program for applications 
for certification.’’. 
‘‘(e) QUALIFYING ADVANCED COAL PROJECTS.— 
‘‘(1) REQUIREMENTS.—For purposes of sub-
section (c)(1), a project shall be considered a quali-
fying advanced coal project that the Secretary may 
certify under subsection (d)(2) if the Secretary deter-
mines that, at a minimum— 
‘‘(A) the project uses an advanced coal-based 
generation technology— 
‘‘(i) to power a new electric generation 
unit, or 
‘‘(ii) to retrofit or repower an existing 
electric generation unit (including an exist-
ing natural gas-fired combined cycle unit),
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‘‘(B) the fuel input for the project, when 
completed, is at least 75 percent coal, 
‘‘(C) the project, consisting of one or more 
electric generation units at one site, will have a 
total nameplate generating capacity of at least 
400 megawatts; 
‘‘(D) the applicant demonstrates that there 
is a letter of intent signed by an officer of an en-
tity willing to purchase the majority of the out-
put of the project or signed by an officer of a 
utility indicating that the electricity capacity 
addition is consistent with that utility’s inte-
grated resource plan as approved by the regu-
latory or governing body that oversees electricity 
capacity allocations of the utility; 
‘‘(E) there is evidence of ownership or con-
trol of a site of sufficient size to allow the pro-
posed project to be constructed and to operate on 
a long-term basis; and 
‘‘(F) the project will be located in the 
United States. 
‘‘(2) REQUIREMENTS FOR CERTIFICATION.—For 
the purpose of subsection (d)(2)(D), a project shall be 
eligible for certification only if the Secretary deter-
mines that—
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‘‘(A) the applicant for certification has re-
ceived all Federal and State environmental au-
thorizations or reviews necessary to commence 
construction of the project; and 
‘‘(B) the applicant for certification, except 
in the case of a retrofit or repower of an existing 
electric generation unit, has purchased or entered 
into a binding contract for the purchase of the 
main steam turbine or turbines for the project, 
except that such contract may be contingent 
upon receipt of a certification under subsection 
(d)(2).’’. 
‘‘(3) PRIORITY FOR INTEGRATED GASIFICATION 
COMBINED CYCLE PROJECTS.—In determining which 
qualifying advanced coal projects to certify under 
subsection (d)(2), the Secretary shall— 
‘‘(A) certify capacity, in accordance with 
the procedures set forth in subsection (d), in rel-
atively equal amounts to— 
‘‘(i) projects using bituminous coal as 
a primary feedstock, 
‘‘(ii) projects using subbituminous coal 
as a primary feedstock, and 
‘‘(iii) projects using lignite as a pri-
mary feedstock, and
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‘‘(B) give high priority to projects which in-
clude, as determined by the Secretary— 
‘‘(i) greenhouse gas capture capability, 
‘‘(ii) increased by-product utilization, 
and 
‘‘(iii) other benefits. 
‘‘(g) ADVANCED COAL-BASED GENERATION TECH-
NOLOGY.— 
‘‘(1) IN GENERAL.—For the purpose of this sec-
tion, an electric generation unit uses advanced coal- 
based generation technology if— 
‘‘(A) the unit— 
‘‘(i) uses integrated gasification com-
bined cycle technology, or 
‘‘(ii) except as provided in paragraph 
(3), has a design net heat rate of 8530 Btu/ 
kWh (40 percent efficiency), and 
‘‘(B) the unit is designed to meet the per-
formance requirements in the following table: 
Performance characteristic: 
Design level for 
project: 
SO2 (percent removal) ................................................
99 percent 
NOx (emissions) ..........................................................
0.07 lbs/MMBTU 
PM* (emissions) .........................................................
0.015 lbs/MMBTU 
Hg (percent removal) ..................................................
90 percent 
‘‘(2) DESIGN NET HEAT RATE.—For purposes of 
this subsection, design net heat rate with respect to an 
electric generation unit shall—
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‘‘(A) be measured in Btu per kilowatt hour 
(higher heating value), 
‘‘(B) be based on the design annual heat 
input to the unit and the rated net electrical 
power, fuels, and chemicals output of the unit 
(determined without regard to the cogeneration 
of steam by the unit), 
‘‘(C) be adjusted for the heat content of the 
design coal to be used by the unit— 
‘‘(i) if the heat content is less than 
13,500 Btu per pound, but greater than 
7,000 Btu per pound, according to the fol-
lowing formula: design net heat rate = unit 
net heat rate x [1–{((13,500-design coal 
heat 
content, 
Btu 
per 
pound)/1,000)* 
0.013}], and 
‘‘(ii) if the heat content is less than or 
equal to 7,000 Btu per pound, according to 
the following formula: design net heat rate 
= unit net heat rate x [1–{((13,500-design 
coal heat content, Btu per pound)/1,000)* 
0.018}], and 
‘‘(D) be corrected for the site reference con-
ditions of—
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‘‘(i) elevation above sea level of 500 
feet, 
‘‘(ii) air pressure of 14.4 pounds per 
square inch absolute, 
‘‘(iii) temperature, dry bulb of 63/o/F, 
‘‘(iv) temperature, wet bulb of 54/o/F, 
and 
‘‘(v) relative humidity of 55 percent. 
(3) EXISTING UNITS.—In the case of any electric 
generation unit in existence on the date of the enact-
ment of this section, such unit uses advanced coal- 
based generation technology if, in lieu of the require-
ments under paragraph (1)(A)(ii), such unit achieves 
a minimum efficiency of 35 percent and an overall 
thermal design efficiency improvement, compared to 
the efficiency of the unit as operated, of not less 
than— 
(A) 7 percentage points for coal of more 
than 9,000 Btu, 
(B) 6 percentage points for coal of 7,000 to 
9,000 Btu, or 
(C) 4 percentage points for coal of less than 
7,000 Btu. 
‘‘(h) APPLICABILITY.—No use of technology (or level of 
emission reduction solely by reason of the use of the tech-
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nology), and no achievement of any emission reduction by 
the demonstration of any technology or performance level, 
by or at one or more facilities with respect to which a credit 
is allowed under this section, shall be considered to indicate 
that the technology or performance level is— 
‘‘(1) adequately demonstrated for purposes of sec-
tion 111 of the Clean Air Act (42 U.S. C. 7411); 
‘‘(2) achievable for purposes of section 169 of 
that Act (42 U.S. C. 7479); or 
‘‘(3) achievable in practice for purposes of sec-
tion 171 of such Act (42 U.S.C. 7501). 
‘‘SEC. 48B. QUALIFYING GASIFICATION PROJECT CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
qualifying gasification project credit for any taxable year 
is an amount equal to 20 percent of the qualified investment 
for such taxable year. 
‘‘(b) QUALIFIED INVESTMENT.— 
‘‘(1) IN GENERAL.—For purposes of subsection 
(a), the qualified investment for any taxable year is 
the basis of property placed in service by the taxpayer 
during such taxable year which is part of a quali-
fying gasification project— 
‘‘(A)(i) the construction, reconstruction, or 
erection of which is completed by the taxpayer, 
or
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‘‘(ii) which is acquired by the taxpayer if 
the original use of such property commences with 
the taxpayer, and 
‘‘(B) with respect to which depreciation (or 
amortization in lieu of depreciation) is allow-
able. 
‘‘(2) APPLICABLE RULES.—For purposes of this 
section, rules similar to the rules of subsection (a)(4) 
and (b) of section 48 shall apply. 
‘‘(c) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFYING GASIFICATION PROJECT.—The 
term ‘qualifying gasification project’ means any 
project which— 
‘‘(A) employs gasification technology, 
‘‘(B) will be carried out by an eligible enti-
ty, and 
‘‘(C) any portion of the qualified investment 
in which is certified under the qualifying gasifi-
cation program as eligible for credit under this 
section 
in 
an 
amount 
(not 
to 
exceed 
$1,000,000,000) determined by the Secretary. 
‘‘(2) GASIFICATION
TECHNOLOGY.—The term 
‘gasification technology’ means any process which 
converts a solid or liquid product from coal, petro-
leum residue, biomass, or other materials which are
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recovered for their energy or feedstock value into a 
synthesis gas composed primarily of carbon monoxide 
and hydrogen for direct use or subsequent chemical or 
physical conversion. 
‘‘(3) BIOMASS.— 
‘‘(A) IN
GENERAL.—The term ‘biomass’ 
means any— 
‘‘(i) agricultural or plant waste, 
‘‘(ii) byproduct of wood or paper mill 
operations, 
including 
lignin 
in 
spent 
pulping liquors, and 
‘‘(iii) other products of forestry main-
tenance. 
‘‘(B) EXCLUSION.—The term ‘biomass’ does 
not include paper which is commonly recycled. 
‘‘(4) CARBON CAPTURE CAPABILITY.—The term 
‘carbon capture capability’ means a gasification 
plant design which is determined by the Secretary to 
reflect reasonable consideration for, and be capable of, 
accommodating the equipment likely to be necessary 
to capture carbon dioxide from the gaseous stream, for 
later use or sequestration, which would otherwise be 
emitted in the flue gas from a project which uses a 
nonrenewable fuel.
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‘‘(5) COAL.—The term ‘coal’ means any carbon-
ized or semicarbonized matter, including peat. 
‘‘(6) ELIGIBLE ENTITY.—The term ‘eligible enti-
ty’ means any person whose application for certifi-
cation is principally intended for use in a domestic 
project which employs domestic gasification applica-
tions related to— 
‘‘(A) chemicals, 
‘‘(B) fertilizers, 
‘‘(C) glass, 
‘‘(D) steel, 
‘‘(E) petroleum residues, 
‘‘(F) forest products, and 
‘‘(G) agriculture, including feedlots and 
dairy operations. 
‘‘(7) PETROLEUM
RESIDUE.—The term ‘petro-
leum residue’ means the carbonized product of high- 
boiling hydrocarbon fractions obtained in petroleum 
processing. 
‘‘(d) QUALIFYING
GASIFICATION
PROJECT
PRO-
GRAM.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of Energy, shall establish a 
qualifying gasification project program to consider 
and award certifications for qualified investment eli-
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gible for credits under this section to qualifying gas-
ification project sponsors under this section. The total 
qualified investment which may be awarded eligi-
bility for credit under the program shall not exceed 
$4,000,000,000. 
‘‘(2) PERIOD OF ISSUANCE.—A certificate of eli-
gibility under paragraph (1) may be issued only dur-
ing the 10-fiscal year period beginning on October 1, 
2005. 
‘‘(3) SELECTION CRITERIA.—The Secretary shall 
not make a competitive certification award for quali-
fied investment for credit eligibility under this section 
unless the recipient has documented to the satisfaction 
of the Secretary that— 
‘‘(A) the award recipient is financially via-
ble without the receipt of additional Federal 
funding associated with the proposed project, 
‘‘(B) the recipient will provide sufficient in-
formation to the Secretary for the Secretary to 
ensure that the qualified investment is spent effi-
ciently and effectively, 
‘‘(C) a market exists for the products of the 
proposed project as evidenced by contracts or 
written statements of intent from potential cus-
tomers,
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‘‘(D) the fuels identified with respect to the 
gasification technology for such project will com-
prise at least 90 percent of the fuels required by 
the project for the production of chemical feed-
stocks, liquid transportation fuels, or coproduc-
tion of electricity, 
‘‘(E) the award recipient’s project team is 
competent in the construction and operation of 
the gasification technology proposed, with pref-
erence given to those recipients with experience 
which demonstrates successful and reliable oper-
ations of the technology on domestic fuels so 
identified, and 
‘‘(F) the award recipient has met other cri-
teria established and published by the Sec-
retary.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 49(a)(1)(C) is amended by striking 
‘‘and’’ at the end of clause (ii), by striking clause 
(iii), and by adding after clause (ii) the following 
new clauses: 
‘‘(iii) the basis of any property which 
is part of a qualifying advanced coal 
project under section 48A, and
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‘‘(iv) the basis of any property which 
is part of a qualifying gasification project 
under section 48B.’’. 
(2) The table of sections for subpart E of part IV 
of subchapter A of chapter 1 is amended by inserting 
after the item relating to section 48 the following new 
items: 
‘‘48A. Qualifying advanced coal project credit. 
‘‘48B. Qualifying gasification project credit.’’. 
(e) EFFECTIVE DATE.—The amendments made by this 
section shall apply to periods after the date of the enactment 
of this Act, 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 Rec-
onciliation Act of 1990). 
SEC. 1509. CLEAN ENERGY COAL BONDS. 
(a) IN GENERAL.—Subpart H of part IV of subchapter 
A of chapter 1 (relating to credits against tax), as added 
by this Act, is amended by adding at the end the following 
new section: 
‘‘SEC. 54A. CREDIT TO HOLDERS OF CLEAN ENERGY COAL 
BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds a 
clean energy coal bond on 1 or more credit allowance dates 
of the bond occurring during any taxable year, there shall 
be allowed as a credit against the tax imposed by this chap-
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ter 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 de-
termined under this subsection with respect to any 
credit allowance date for a clean energy coal bond is 
25 percent of the annual credit determined with re-
spect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit deter-
mined with respect to any clean energy coal bond is 
the product of— 
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (3) for the day on which 
such bond was sold, multiplied by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) DETERMINATION.—For purposes of para-
graph (2), with respect to any clean energy coal bond, 
the Secretary shall determine daily or cause to be de-
termined daily a credit rate which shall apply to the 
first day on which there is a binding, written con-
tract for the sale or exchange of the bond. The credit 
rate for any day is the credit rate which the Sec-
retary or the Secretary’s designee estimates will per-
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mit the issuance of clean energy coal bonds with a 
specified maturity or redemption date without dis-
count and without interest cost to the qualified issuer. 
‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 
of this section, the term ‘credit allowance date’ 
means— 
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term also includes the last day on which the 
bond is outstanding. 
‘‘(5) SPECIAL RULE FOR ISSUANCE AND REDEMP-
TION.—In the case of a bond which is issued during 
the 3-month period ending on a credit allowance date, 
the amount of the credit determined under this sub-
section with respect to such credit allowance date 
shall be a ratable portion of the credit otherwise deter-
mined 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.—The 
credit allowed under subsection (a) for any taxable year 
shall not exceed the excess of—
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‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by section 
55, over 
‘‘(2) the sum of the credits allowable under this 
part (other than subpart C thereof (relating to refund-
able credits) and this section) and section 1397E. 
‘‘(d) CLEAN ENERGY COAL BOND.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘clean energy coal 
bond’ means any bond issued as part of an issue if— 
‘‘(A) the bond is issued by a qualified issuer 
pursuant to an allocation by the Secretary to 
such issuer of a portion of the national clean en-
ergy coal bond limitation under subsection (f)(2), 
‘‘(B) 95 percent or more of the proceeds 
from the sale of such issue are to be used for cap-
ital expenditures incurred by qualified borrowers 
for 1 or more qualified projects, 
‘‘(C) the qualified issuer designates such 
bond for purposes of this section and the bond is 
in registered form, and 
‘‘(D) the issue meets the requirements of 
subsection (h). 
‘‘(2) 
QUALIFIED
PROJECT; 
SPECIAL
USE 
RULES.—
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‘‘(A) IN
GENERAL.—The term ‘qualified 
project’ means a qualifying advanced coal 
project (as defined in section 48A(c)(1)) placed 
in service by a qualified borrower. 
‘‘(B) REFINANCING
RULES.—For purposes 
of paragraph (1)(B), a qualified project may be 
refinanced with proceeds of a clean energy coal 
bond only if the indebtedness being refinanced 
(including any obligation directly or indirectly 
refinanced by such indebtedness) was originally 
incurred by a qualified borrower after the date 
of the enactment of this section. 
‘‘(C) REIMBURSEMENT.—For purposes of 
paragraph (1)(B), a clean energy coal bond may 
be issued to reimburse a qualified borrower for 
amounts paid after the date of the enactment of 
this section with respect to a qualified project, 
but only if— 
‘‘(i) prior to the payment of the origi-
nal expenditure, the qualified borrower de-
clared its intent to reimburse such expendi-
ture with the proceeds of a clean energy coal 
bond, 
‘‘(ii) not later than 60 days after pay-
ment of the original expenditure, the quali-