To amend the Internal Revenue Code of 1986 to reduce carbon dioxide emissions in the United States domestic energy supply.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``America's Energy Security Trust Fund 
Act of 2007''.

SEC. 2. TAX ON CARBON DIOXIDE CONTENT OF CERTAIN SUBSTANCES.

    (a) In General.--Chapter 38 of the Internal Revenue Code of 1986 
(relating to environmental taxes) is amended by adding at the end 
thereof the following new subchapter:

  ``Subchapter E--Tax on Carbon Dioxide Content of Certain Substances

``Sec. 4691. Imposition of tax.
``Sec. 4692. Refunds or credits.
``Sec. 4693. Definitions and special rules.

``SEC. 4691. IMPOSITION OF TAX.

    ``(a) In General.--There is hereby imposed a tax on any taxable 
carbon substance sold by the manufacturer, producer, or importer 
thereof.
    ``(b) Amount of Tax.--
            ``(1) In general.--The amount of tax imposed by subsection 
        (a) on any taxable carbon substance shall be the applicable 
        amount per ton of carbon dioxide content of such substance, as 
        determined by the Secretary in consultation with the Secretary 
        of Energy.
            ``(2) Fractional part of ton.--In the case of a fraction of 
        a ton, the tax imposed by subsection (a) shall be the same 
        fraction of the amount of such tax imposed on a whole ton.
            ``(3) Applicable amount.--For purposes of paragraph (1)--
                    ``(A) Calendar year 2008.--The applicable amount 
                for calender year 2008 is $15.
                    ``(B) Years after 2008.--For a calendar year after 
                2008, the applicable amount is the product of--
                            ``(i) the amount in effect under this 
                        paragraph for the preceding calendar year,
                            ``(ii) 1.1, and
                            ``(iii) 1 plus the cost of living 
                        adjustment determined under section 1(f)(3) for 
                        such calendar year, determined by substituting 
                        `calendar year 2007' for `calendar year 1992' 
                        in subparagraph (B) thereof.
    ``(c) Substance Taxed Only Once.--No tax shall be imposed by 
subsection (a) with respect to a taxable carbon substance if the person 
who would be liable for such tax establishes that a prior tax imposed 
by such section has been imposed with respect to such product.

``SEC. 4692. REFUNDS OR CREDITS.

    ``(a) Sequestered Carbon.--Under regulations prescribed by the 
Secretary, if a person uses a taxable carbon substance as a feedstock 
so that the carbon associated with such substance will not be emitted, 
then an amount equal to the amount of tax in effect under section 
4691(b) with respect to such substance for the calendar year in which 
such use begins shall be allowed as a credit or refund (without 
interest) to such person in the same manner as if it were an 
overpayment of tax imposed by section 4691.
    ``(b) Offset Projects.--
            ``(1) In general.--Under regulations prescribed by the 
        Secretary, if a person carries out a qualified offset project, 
        then an amount equal to the amount of tax in effect under 
        section 4691(b) with respect to such substance for the calendar 
        year in which such project is completed shall be allowed as a 
        credit or refund (without interest) to such person in the same 
        manner as if it were an overpayment of tax imposed by section 
        4691.
            ``(2) Qualified offset project.--For purposes of paragraph 
        (1), the term `qualified offset project' means a project 
        carried out in the United States that--
                    ``(A) reduces greenhouse gas emissions,
                    ``(B) sequesters a greenhouse gas, or
                    ``(C) destroys hydrofluorocarbons.
            ``(3) Exception.--Such term does not include a project that 
        involves enhanced oil recovery.
    ``(c) Previously Taxed Carbon Substances Used to Make Another 
Taxable Carbon Substance.--Under regulations prescribed by the 
Secretary, if--
            ``(1) a tax under section 4691 was paid with respect to any 
        taxable carbon substance, and
            ``(2) such substance was used by any person in the 
        manufacture or production of any other substance which is a 
        taxable carbon substance,
then an amount equal to the tax so paid shall be allowed as a credit or 
refund (without interest) to such person in the same manner as if it 
were an overpayment of tax imposed by subsection (a). In any case to 
which this paragraph applies, the amount of any such credit or refund 
shall not exceed the amount of tax imposed by subsection (a) on the 
other taxable fuel manufactured or produced (or which would have been 
imposed by such subsection on such other fuel but for subsection (c)).
    ``(d) Exemption for Exports.--
            ``(1) Tax-free sales.--
                    ``(A) In general.--No tax shall be imposed under 
                subsection (a) on the sale by the manufacturer or 
                producer of any taxable carbon substance for export or 
                for resale by the purchaser to a second purchaser for 
                export.
                    ``(B) Proof of export required.--Rules similar to 
                the rules of section 4221(b) shall apply for purposes 
                of subparagraph (A).
            ``(2) Credit or refund where tax paid.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), if--
                            ``(i) tax under subsection (a) was paid 
                        with respect to any taxable carbon substance, 
                        and
                            ``(ii)(I) such substance was exported by 
                        any person, or
                            ``(II) such substance was used as a 
                        material in the manufacture or production of a 
                        taxable carbon substance which was exported by 
                        any person and which, at the time of export, 
                        was a taxable carbon substance,
                credit or refund (without interest) of such tax shall 
                be allowed or made to the person who paid such tax.
                    ``(B) Condition to allowance.--No credit or refund 
                shall be allowed or made under subparagraph (A) unless 
                the person who paid the tax establishes that he--
                            ``(i) has repaid or agreed to repay the 
                        amount of the tax to the person who exported 
                        the taxable carbon substance, or
                            ``(ii) has obtained the written consent of 
                        such exporter to the allowance of the credit or 
                        the making of the refund.
                    ``(C) Refunds directly to exporter.--The Secretary 
                shall provide, in regulations, the circumstances under 
                which a credit or refund (without interest) of the tax 
                under subsection (a) shall be allowed or made to the 
                person who exported the taxable carbon substance, 
                where--
                            ``(i) the person who paid the tax waives 
                        his claim to the amount of such credit or 
                        refund, and
                            ``(ii) the person exporting the taxable 
                        carbon substance provides such information as 
                        the Secretary may require in such regulations.
            ``(3) Regulations.--The Secretary shall prescribe such 
        regulations as may be necessary to carry out the purposes of 
        this subsection.

``SEC. 4693. DEFINITIONS AND SPECIAL RULES.

    ``(a) Definitions.--For purposes of this subchapter--
            ``(1) Taxable carbon substance.--The term `taxable carbon 
        substance' means--
                    ``(A) coal (including lignite and peat),
                    ``(B) petroleum and any petroleum product (as 
                defined in section 4612(a)(3)), and
                    ``(C) natural gas,
        which is extracted, manufactured, or produced in the United 
        States or entered into the United States for consumption, use, 
        or warehousing.
            ``(2) United states.--The term `United States' has the 
        meaning given such term by section 4612(a)(4).
            ``(3) Importer.--The term `importer' means the person 
        entering the taxable carbon substance for consumption, use, or 
        warehousing.
            ``(4) Ton.--The term `ton' means 2,000 pounds. In the case 
        of any taxable carbon substance which is a gas, the term `ton' 
        means the amount of such gas in cubic feet which is the 
        equivalent of 2,000 pounds on a molecular weight basis.
    ``(b) Use Treated as Sale.--If any person manufactures, produces, 
or imports any taxable carbon substance and uses such substance, then 
such person shall be liable for tax under section 4691 in the same 
manner as if such substance were sold by such person.
    ``(c) Special Rules for Inventory Exchanges.--
            ``(1) In general.--Except as provided in this paragraph, in 
        any case in which a manufacturer, producer, or importer of a 
        taxable carbon substance exchanges such substance as part of an 
        inventory exchange with another person--
                    ``(A) such exchange shall not be treated as a sale, 
                and
                    ``(B) such other person shall, for purposes of 
                section 4691, be treated as the manufacturer, producer, 
                or importer of such substance.
            ``(2) Registration requirement.--Paragraph (1) shall not 
        apply to any inventory exchange unless--
                    ``(A) both parties are registered with the 
                Secretary as manufacturers, producers, or importers of 
                taxable carbon substances, and
                    ``(B) the person receiving the taxable carbon 
                substance has, at such time as the Secretary may 
                prescribe, notified the manufacturer, producer, or 
                importer of such person's registration number and the 
                internal revenue district in which such person is 
                registered.
            ``(3) Inventory exchange.--For purposes of this subsection, 
        the term `inventory exchange' means any exchange in which 2 
        persons exchange property which is, in the hands of each 
        person, property described in section 1221(a)(1).''.
    (b) Establishment of America's Energy Security Trust Fund.--
Subchapter A of chapter 98 of such Code (relating to trust fund code) 
is amended by adding at the end the following:

``SEC. 9511. AMERICA'S ENERGY SECURITY TRUST FUND.

    ``(a) Creation of Trust Fund.--There is established in the Treasury 
of the United States a trust fund to be known as `America's Energy 
Security Trust Fund' (referred to in this section as the `Trust Fund'), 
consisting of such amounts as may be appropriated or credited to the 
Trust Fund as provided in this section or section 9602(b).
    ``(b) Transfers to Trust Fund.--There is hereby appropriated to the 
Trust Fund an amount equivalent to the increase in revenues received in 
the Treasury as the result of the tax imposed under section 4691.
    ``(c) Distribution of Amounts in Trust Fund.--Amounts in the Trust 
Fund equivalent to the taxes received in the Treasury under section 
4691 for a calendar year shall be available without further 
appropriation, as follows:
            ``(1) First, the lesser of \1/6\ of such amount or 
        $10,000,000,000 shall be available for a tax credit for 
        research, development, or investment into clean energy 
        technology.
            ``(2) Second, the affected industry transition assistance 
        amount shall be available for transition assistance to 
        industries negatively affected by this Act, as determined by 
        the Secretary of the Treasury in consultation with the 
        Secretary of Labor.
            ``(3) Third, the amount remaining after the application of 
        paragraphs (1) and (2) shall be available for payroll tax 
        relief under rebate paid under section 36.
    ``(d) Affected Industry Transition Assistance Amount.--For purposes 
of subsection (c)(2), the affected industry transition assistance 
amount is the amount determined as follows:
            ``(1) For calendar year 2008, \1/12\ of the amount in the 
        Trust Fund equivalent to the taxes received in the Treasury 
        under section 4691 for calendar year 2008, determined after the 
        application of subsection (c)(1).
            ``(2) For calendar year 2009, \9/10\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(3) For calendar year 2010, \4/5\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(4) For calendar year 2011, \7/10\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(5) For calendar year 2012, \3/5\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(6) For calendar year 2013, \1/2\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(7) For calendar year 2014, \2/5\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(8) For calendar year 2015, \3/10\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(9) For calendar year 2016, \1/5\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(10) For calendar year 2017, \1/10\ of the amount made 
        available under paragraph (1) for calendar year 2008.
            ``(11) For calendar years after 2017, zero.''.
    (c) Clerical Amendments.--
            (1) The table of subchapters for chapter 38 of such Code is 
        amended by adding at the end thereof the following new item:

``subchapter e. tax on carbon dioxide content of certain substances.''.

            (2) The table of sections for subchapter A of chapter 98 of 
        such Code is amended by adding at the end the following:

``Sec. 9511. Taxable Carbon Substances Trust Fund.''.
    (d) Effective Date.--The amendments made by this section shall take 
effect on January 1, 2008.

SEC. 3. CARBON TAX REBATE OF PAYROLL TAX.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and inserting 
after section 35 the following new section:

``SEC. 36. CARBON TAX REBATE OF PAYROLL TAX.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this subtitle for the 
taxable year an amount equal to the carbon tax rebate.
    ``(b) Carbon Tax Rebate.--
            ``(1) In general.--For purposes of this section, the term 
        `carbon tax rebate' means with respect to a taxable year the 
        individual's share of the amount determined by the Secretary on 
        a per capita basis to be the amount available under section 
        9511(c)(3) for the calendar year in which or with which the 
        taxable year begins.
            ``(2) Determination based on estimates.--The determination 
        under paragraph (1) shall be made on the basis of estimates by 
        the Secretary, and proper adjustments shall be made in amounts 
        available under section 9511(c)(3) for the succeeding taxable 
        year to the extent prior estimates were in excess of or less 
        than the amounts actually available under such section for the 
        prior taxable year.
    ``(c) Limitation Based on Payroll Taxes Paid and Social Security 
Benefits.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) with respect to any individual for a taxable 
        year shall not exceed the greater of--
                    ``(A) the total amount of taxes paid with respect 
                to such individual for such taxable year under section 
                1401 and chapters 21 and 22, determined after taking 
                into account any refund under section 31(b) and 
                6413(c), or
                    ``(B) 10 percent of the aggregate amount of social 
                security benefits (within the meaning of section 86(d)) 
                received by such individual for the taxable year.
            ``(2) Special rule for social security benefits received 
        for less than 12 months.--For purposes of paragraph (1)(B), if 
        Social Security benefits (as so defined) were not received for 
        each month in the taxable year, such benefits shall be 
        annualized by multiplying the Social Security benefits received 
        by 12 and dividing the result by the number of months in such 
        taxable year for which such benefits were received.
    ``(d) Denial of Credit to Dependents.--No credit shall be allowed 
under subsection (a) to an individual for such individual's taxable 
year if a deduction under section 151 with respect to such individual 
is allowed to another taxpayer for a taxable year beginning in the 
calendar year in which such individual's taxable year begins.''.
    (b) Conforming Amendments.--
            (1) Paragraph (2) of section 1324(b) of title 31, United 
        States Code, is amended by inserting before the period ``, or 
        from section 36 of such Code''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by redesignating section 36 as section 37 and 
        inserting after section 35 the following new section:

``Sec. 36. Carbon tax rebate of payroll tax.
``Sec. 37. Overpayments of tax.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2007.

SEC. 4. STUDY OF TAXATION OF NON-CARBON GREENHOUSE GASES.

    (a) In General.--The Secretary of the Treasury, in consultation 
with the Secretary of Energy shall conduct a study of the best methods 
to assess and collect tax on non-carbon greenhouse gases similar to the 
tax imposed by section 4691 of the Internal Revenue Code of 1986 (as 
added by this Act).
    (b) Report.--Not later than 6 months after the date of the 
enactment of this Act, the Secretary of the Treasury shall submit to 
the Congress the findings of the report required under subsection (a) 
together with such legislative recommendations as the Secretary 
determine appropriate for the assessment and collection of such tax.

SEC. 5. SENSE OF CONGRESS THAT OTHER NATIONS WILL JOIN WITH THE UNITED 
              STATES IN REDUCING GREENHOUSE GAS EMISSIONS.

    It is the sense of Congress that the major greenhouse gas emitting 
countries join with the United States in reducing greenhouse gas 
emissions.

Summary: America's Energy Security Trust Fund Act of 2007 - Amends the Internal Revenue Code to impose an excise tax on any taxable carbon substance sold by a manufacturer, producer, or importer. Defines "taxable carbon substance" as: (1) coal (including lignite and peat); (2) petroleum and any petroleum products; and (3) natural gas that is extracted, manufactured, or produced in the United States, or entered into the United States for consumption, use, or warehousing.

Establishes in the Treasury the America's Energy Security Trust Fund to finance research in clean energy technology, assist industries negatively affected by this Act, and provide carbon tax rebates to individual taxpayers.

Allows individual taxpayers a tax credit equal to carbon tax rebate amounts calculated by the Secretary of the Treasury.

Directs the Secretary of the Treasury to study and report to Congress on the best methods to assess and collect taxes on non-carbon greenhouse gases.

Expresses the sense of Congress that the major greenhouse gas emitting countries should join with the United States in reducing greenhouse gas emissions.