Energy Sector Innovation Credit Act of 2021
Bill: S.2475 | Sponsor: Sen. Crapo, Mike (R-ID)
Policy area: Taxation

Summary:
Energy Sector Innovation Credit Act of 2021
This bill adds new tax credits for investment in qualified emerging technology energy property and for the production of electricity from emerging energy technology. The bill defines qualified emerging energy property as property that is constructed, reconstructed, erected, or acquired by the taxpayer and is (1) a facility for the production of electricity from emerging energy technology, (2) carbon capture equipment, or (3) energy storage technology.
The bill also adds a new tax credit for the production of electricity from clean hydrogen. The bill defines clean hydrogen as hydrogen that is produced through a production method for which the rate of the greenhouse gas emission is greater than zero and not greater that 2,500g CO2-e per kilogram of hydrogen produced, or is equal to or less than zero.

To amend the Internal Revenue Code of 1986 to provide investment and 
production tax credits for emerging energy technologies, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Energy Sector Innovation 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 incumbency disadvantages as 
        they establish a foothold, including suboptimal resource 
        location relative to existing grid infrastructure and the lack 
        of economies of scale.
            (2) Energy sector innovation can confer numerous benefits 
        to jobs and the economy, the environment and climate, and the 
        general social welfare.
            (3) Energy sector innovation can come in numerous forms, 
        not all of which are readily quantifiable, including--
                    (A) diversifying and increasing the Nation's energy 
                generation portfolio and energy security,
                    (B) improving the dispatchability and reliability 
                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 subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 
section 48C the following new section:

``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 percentage (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 emerging energy 
        property' means property which is constructed, 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 defined 
                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 facility--
                            ``(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 
                                industrial 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 
                                        property is primarily used to 
                                        capture qualified carbon oxide 
                                        (as defined in section 45Q(c)) 
                                        which would otherwise be 
                                        released into the atmosphere as 
                                        a result of--

                                                    ``(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 
                                industrial facility described in 
                                subclause (II) for which item (cc) of 
                                such subclause 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 capture facility 
                        which can capture not less than 5,000 metric 
                        tons of qualified carbon oxide (as defined in 
                        section 45Q(c)) annually.
                            ``(ii) Direct air capture facility.--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 carbon oxide.--
                With respect to any qualified carbon 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, storing 
                energy for a period of time, and dispatching the stored 
                energy using batteries, compressed air, pumped 
                hydropower, thermal energy storage, 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--
                            ``(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 section 
                        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 taxable 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 45Q with respect to any 
                qualified carbon oxide captured using property 
                described in subparagraph (A) or (B) of paragraph (2) 
                if such carbon oxide is disposed of in a manner 
                consistent with section 45Q(a)(3)(B).
    ``(c) Applicable Percentages.--
            ``(1) Qualified production facilities.--In the case of any 
        qualified production facility which satisfies the requirements 
        for--
                    ``(A) a tier 1 facility (as described in clause (i) 
                of section 45U(b)(2)(A)), the applicable percentage 
                shall be 40 percent,
                    ``(B) a tier 2 facility (as described in clause 
                (ii) of such section), the applicable percentage shall 
                be 30 percent,
                    ``(C) a tier 3 facility (as described in clause 
                (iii) of such section), the applicable percentage shall 
                be 20 percent, and
                    ``(D) a tier 4 facility (as described in clause 
                (iv) of such section), the applicable percentage shall 
                be 10 percent.
            ``(2) Carbon capture equipment.--
                    ``(A) In general.--With respect to carbon capture 
                equipment, the applicable percentage shall be--
                            ``(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 1 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 equipment' under 
                                subclause (I), except that `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 equipment' 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 equipment' 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 subparagraph, 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--
                                            ``(aa) the total amount 
                                        (expressed 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 capture equipment 
                                        within the United States during 
                                        such calendar year (as 
                                        determined by the Secretary on 
                                        the basis of data reported by 
                                        the Energy Information 
                                        Administration and the 
                                        Environmental Protection 
                                        Agency), divided by
                                            ``(bb) the total amount of 
                                        greenhouse gas emissions in the 
                                        United States (expressed in 
                                        metric 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
                                    ``(II) the amount determined under 
                                this clause for the preceding calendar 
                                year.
                    ``(C) Division of equipment for purposes of 
                determining tier.--For purposes of determining the 
                applicable tier for any carbon capture equipment under 
                subparagraph (B), such subparagraph shall be applied 
                separately (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 purposes 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--
                            ``(i) during the year in which construction 
                        of such equipment begins (as determined under 
                        rules similar to the rules in section 45U(e)), 
                        and
                            ``(ii) based on the determinations included 
                        in 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 section 
                45U(b)(2)(D)(i) and in the same manner as described 
                under such section, publish the applicable market 
                penetration level and tier for any carbon capture 
                equipment (as determined separately for such equipment 
                pursuant to subparagraph (C)).
            ``(3) Energy storage technology.--
                    ``(A) In general.--With respect to energy storage 
                technology, the applicable percentage shall be--
                            ``(i) in the case of tier 1 technology, 40 
                        percent,
                            ``(ii) in the case of tier 2 technology, 30 
                        percent,
                            ``(iii) in the case of tier 3 technology, 
                        20 percent,
                            ``(iv) in the case of tier 4 technology, 10 
                        percent, and
                            ``(v) in the case of any other such 
                        technology, zero percent.
                    ``(B) Technology tiers.--
                            ``(i) In general.--For purposes of this 
                        paragraph--
                                    ``(I) Tier 1 technology.--The term 
                                `tier 1 technology' means any energy 
                                storage technology for which the market 
                                penetration level for the calendar year 
                                preceding the calendar year in which 
                                construction of such technology began 
                                is less than 0.75 percent.
                                    ``(II) Tier 2 technology.--The term 
                                `tier 2 technology' has the same 
                                meaning given the term `tier 1 
                                technology' under subclause (I), except 
                                that `at least 0.75 percent but less 
                                than 1.5 percent' shall be substituted 
                                for `less than 0.75 percent'.
                                    ``(III) Tier 3 technology.--The 
                                term `tier 3 technology' has the same 
                                meaning given the term `tier 1 
                                technology' 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 technology.--The term 
                                `tier 4 technology' has the same 
                                meaning given the term `tier 1 
                                technology' 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 subparagraph, 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--
                                            ``(aa) the total nameplate 
                                        capacity (expressed in 
                                        megawatts) of energy storage 
                                        technology in operation within 
                                        the United States at the 
                                        beginning of such calendar year 
                                        (as determined by the Secretary 
                                        on the basis of data reported 
                                        by the Energy Information 
                                        Administration), divided by
                                            ``(bb) the total domestic 
                                        electricity production 
                                        nameplate capacity (expressed 
                                        in megawatts) at the close of 
                                        such year, or
                                    ``(II) the amount determined under 
                                this clause for the preceding calendar 
                                year.
                    ``(C) Division of technology for purposes of 
                determining tier.--
                            ``(i) In general.--For purposes of 
                        determining the applicable tier for any energy 
                        storage technology under subparagraph (B), such 
                        subparagraph shall be applied separately (and 
                        the total capacity of such technology shall be 
                        determined separately) with respect to--
                                    ``(I) any such technology which is 
                                lithium-ion based,
                                    ``(II) any such technology which 
                                uses pumped hydropower,
                                    ``(III) any such technology which--
                                            ``(aa) is not described in 
                                        subclause (I) or (II), and
                                            ``(bb) is classified as 
                                        short-duration storage under 
                                        clause (ii), and
                                    ``(IV) any such technology which--
                                            ``(aa) is not described in 
                                        subclause (I) or (II), and
                                            ``(bb) is classified as 
                                        long-duration storage under 
                                        clause (ii).
                            ``(ii) Classification.--The Secretary of 
                        Energy (in consultation with the Secretary) 
                        shall issue such regulations or other guidance 
                        as the Secretary of Energy determines necessary 
                        or appropriate to define the terms `short-
                        duration storage' and `long-duration storage' 
                        for purposes of classifying energy storage 
                        technology under clause (i).
                    ``(D) Determination of tier.--For purposes of this 
                paragraph, the determination as to whether any energy 
                storage technology qualifies as a tier 1, 2, 3, or 4 
                technology shall be made--
                            ``(i) during the year in which construction 
                        of such technology begins (as determined under 
                        rules similar to the rules in section 45U(e)), 
                        and
                            ``(ii) based on the determinations included 
                        in 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 section 
                45U(b)(2)(D)(i) and in the same manner as described 
                under such section, publish the applicable market 
                penetration level and tier for any energy storage 
                technology (as determined separately for such 
                technology pursuant to subparagraph (C)).
    ``(d) Special Rules.--
            ``(1) Certain qualified progress expenditure rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(2) Transfer of credit.--
                    ``(A) In general.--If, with respect to a credit 
                allowed under subsection (a) for any taxable year, the 
                taxpayer elects the application of this paragraph for 
                such taxable year with respect to all (or any portion 
                specified in such election) of such credit, the 
                eligible project partner specified in such election, 
                and not the taxpayer, shall be treated as the taxpayer 
                for purposes of this title with respect to such credit 
                (or such portion thereof).
                    ``(B) Eligible project partner.--
                            ``(i) In general.--For purposes of this 
                        paragraph, the term `eligible project partner' 
                        means, with respect to any qualified emerging 
                        energy property, any person who--
                                    ``(I) has an ownership interest in 
                                such property,
                                    ``(II) provided equipment for or 
                                services in the construction of such 
                                property,
                                    ``(III) provides electric 
                                transmission or distribution services 
                                for such property,
                                    ``(IV) purchases electricity from 
                                such property pursuant to a contract, 
                                or
                                    ``(V) provides financing for such 
                                property.
                            ``(ii) Financing.--For purposes of clause 
                        (i)(V), any amount paid as consideration for a 
                        transfer described in subparagraph (A) shall 
                        not be treated as financing for qualified 
                        emerging energy property.
                    ``(C) Deduction for payments in connection with 
                transfer.--A deduction under part VI of subchapter B 
                shall be allowed in an amount equal to the amount paid 
                by the taxpayer as consideration for a transfer 
                described in subparagraph (A).
                    ``(D) Taxable year in which credit taken into 
                account.--In the case of any credit (or portion 
                thereof) with respect to which an election is made 
                under subparagraph (A), such credit shall be taken into 
                account in the first taxable year of the eligible 
                project partner ending with, or after, the electing 
                taxpayer's taxable year with respect to which the 
                credit was determined.
                    ``(E) Limitations on election.--
                            ``(i) Time for election.--An election under 
                        this paragraph to transfer any portion of the 
                        credit allowed under subsection (a) shall be 
                        made not later than the due date for the return 
                        of tax for the electing taxpayer's taxable year 
                        with respect to which the credit was 
                        determined.
                            ``(ii) No further transfers.--No election 
                        may be made under this paragraph by a taxpayer 
                        with respect to any portion of the credit 
                        allowed under subsection (a) which has been 
                        previously transferred to such taxpayer under 
                        this paragraph.
                    ``(F) Treatment of transfer under private use 
                rules.--For purposes of section 141(b)(1), any benefit 
                derived by an eligible project partner in connection 
                with an election under this paragraph shall not be 
                taken into account as a private business use.
                    ``(G) Special rules for public property.--
                            ``(i) In general.--If, with respect to a 
                        credit under subsection (a) for any taxable 
                        year--
                                    ``(I) a qualified public entity 
                                would be the taxpayer (but for this 
                                subparagraph), and
                                    ``(II) such entity elects the 
                                application of subparagraph (A) for 
                                such taxable year with respect to all 
                                (or any portion specified in such 
                                election) of such credit,
                        the eligible project partner specified in such 
                        election, and not the qualified public entity, 
                        shall be treated as the taxpayer for purposes 
                        of this title with respect to such credit (or 
                        such portion thereof).
                            ``(ii) Qualified public entity.--For 
                        purposes of this subparagraph, the term 
                        `qualified public entity' means--
                                    ``(I) any State or local 
                                government, or a political subdivision 
                                thereof, or
                                    ``(II) an Indian tribal government.
                    ``(H) Property used by certain tax-exempt 
                organizations and governmental units.--In the case of a 
                taxpayer making an election under this paragraph, the 
                credit subject to such an election shall be determined 
                notwithstanding--
                            ``(i) section 50(b)(3), and
                            ``(ii) in the case of any entity described 
                        in section 50(b)(4)(A)(i), section 50(b)(4).
                    ``(I) Additional election requirements.--The 
                Secretary may prescribe such regulations as may be 
                appropriate to carry out the purposes of this 
                paragraph, including--
                            ``(i) rules for determining which persons 
                        are eligible project partners with respect to 
                        any qualified emerging energy property, and
                            ``(ii) requiring information to be included 
                        in an election under subparagraph (A) or 
                        imposing additional reporting requirements.
    ``(e) Regulations.--The Secretary (in consultation with the 
Secretary of Energy and the Administrator of the Environmental 
Protection Agency) shall issue such regulations or other guidance as 
the Secretary determines necessary or appropriate to carry out the 
purposes of this section, including rules for reporting--
            ``(1) for purposes of paragraph (2)(B)(ii) of subsection 
        (c), the amount of carbon oxide captured by carbon capture 
        equipment, and
            ``(2) for purposes of paragraph (3)(B)(ii) of such 
        subsection, the capacity of energy storage technology.''.
    (b) Special Rule for Proceeds of Transfers for Mutual or 
Cooperative Electric Companies.--Section 501(c)(12)(I) of such Code is 
amended by inserting ``or 48D(d)(2)'' after ``section 45J(e)(1)''.
    (c) Conforming Amendments.--
            (1) Section 46 of such Code is amended by striking ``and'' 
        at the end of paragraph (5), by striking the period at the end 
        of paragraph (6) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(7) the emerging energy technology credit.''.
            (2) Section 49(a)(1)(C) of such Code is amended by striking 
        ``and'' at the end of clause (iv), by striking the period at 
        the end of clause (v) and inserting ``, and'', and by adding at 
        the end the following new clause:
                            ``(vi) the basis of any qualified emerging 
                        energy property (as defined in section 
                        48D(b)(1)).''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48C the following new item:

``Sec. 48D. Emerging energy technology credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning 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 Reconciliation 
Act of 1990).

SEC. 4. PRODUCTION CREDIT FOR EMERGING ENERGY TECHNOLOGY.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
the following new section:

``SEC. 45U. ELECTRICITY PRODUCED FROM EMERGING ENERGY TECHNOLOGY.

    ``(a) General Rule.--For purposes of section 38, the emerging 
energy technology production credit determined under this section for 
any taxable year beginning in the credit period with respect to a 
qualified production facility of the taxpayer is an amount equal to the 
applicable percentage of either of the following amounts, as elected by 
the taxpayer under subsection (g):
            ``(1) The annual gross receipts of the taxpayer from the 
        sale of electricity generated at the qualified production 
        facility to an unrelated person (within the meaning of section 
        45(e)(4)) during such taxable year.
            ``(2) An amount equal to the product of--
                    ``(A) 150 percent of the national average wholesale 
                price of a kilowatt hour of electricity in the calendar 
                year which began 2 years prior to the calendar year in 
                which such taxable year begins, multiplied by
                    ``(B) the number of kilowatt hours of electricity 
                produced at the qualified production facility and sold 
                to an unrelated person (within the meaning of section 
                45(e)(4)) during such taxable year.
    ``(b) Applicable Percentage.--
            ``(1) In general.--For purposes of subsection (a), the 
        applicable percentage is--
                    ``(A) in the case of a tier 1 facility, 60 percent,
                    ``(B) in the case of a tier 2 facility, 45 percent,
                    ``(C) in the case of a tier 3 facility, 30 percent,
                    ``(D) in the case of a tier 4 facility, 15 percent, 
                and
                    ``(E) in the case of any other facility, zero 
                percent.
            ``(2) Facility tiers.--
                    ``(A) In general.--For purposes of this section--
                            ``(i) Tier 1 facility.--The term `tier 1 
                        facility' means any qualified production 
                        facility which generates electricity from an 
                        individual energy production technology--
                                    ``(I) described in subsection 
                                (d)(2)(A), and
                                    ``(II) for which the market 
                                penetration level for the calendar year 
                                preceding the calendar year in which 
                                construction of such facility began is 
                                less than 0.75 percent.
                            ``(ii) Tier 2 facility.--The term `tier 2 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (i), except that 
                        `at least 0.75 percent but less than 1.5 
                        percent' shall be substituted for `less than 
                        0.75 percent'.
                            ``(iii) Tier 3 facility.--The term `tier 3 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (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 facility.--The term `tier 4 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (i), except that 
                        `at least 2.25 percent but less than 3 percent' 
                        shall be substituted for `less than 0.75 
                        percent'.
                    ``(B) Market penetration level.--For purposes of 
                this paragraph, 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--
                                    ``(I) the sum of all electricity 
                                produced (expressed in terawatt hours) 
                                from the individual energy production 
                                technology by all qualified production 
                                facilities (as defined in subsection 
                                (d)(1), except that subparagraph (D) of 
                                such subsection shall not apply) during 
                                such calendar year (as determined by 
                                the Secretary on the basis of data 
                                reported by the Energy Information 
                                Administration), divided by
                                    ``(II) the total domestic power 
                                sector electricity production 
                                (expressed in terawatt hours) for such 
                                calendar year, or
                            ``(ii) the amount determined under this 
                        subparagraph for the preceding calendar year.
                    ``(C) Construction begins.--For purposes of this 
                subsection and section 48D, the determination as to 
                whether a facility qualifies as a tier 1, 2, 3, or 4 
                facility shall be--
                            ``(i) made during the calendar year in 
                        which construction of such facility begins,
                            ``(ii) based on the determinations included 
                        in report described in subparagraph (D)(i)(II) 
                        with respect to such calendar year, and
                            ``(iii) contingent on the taxpayer 
                        maintaining a continuous program of 
                        construction or continuous efforts to advance 
                        towards completion of the facility.
                    ``(D) Guidance and reports.--
                            ``(i) Reports.--
                                    ``(I) Estimates.--During the month 
                                of December of the calendar year which 
                                includes the date of enactment of this 
                                section, and during the month of 
                                December of each subsequent year, the 
                                Secretary of Energy (in consultation 
                                with the Secretary) shall publish an 
                                annual report which contains estimates 
                                with respect to the applicable market 
                                penetration level and tier for each 
                                individual energy production technology 
                                described in subsection (d)(2)(A) which 
                                has been used to generate electricity 
                                by any qualified production facility 
                                (as defined in subsection (d)(1), 
                                except that subparagraph (D) of such 
                                subsection shall not apply) during such 
                                calendar year.
                                    ``(II) Final report.--During the 
                                month of February of each calendar year 
                                beginning after the date of enactment 
                                of this section, the Secretary of 
                                Energy (in consultation with the 
                                Secretary) shall publish an annual 
                                report which provides the final 
                                determination with respect to the 
                                applicable market penetration level and 
                                tier for each individual energy 
                                production technology described in 
                                subsection (d)(2)(A) which has been 
                                used to generate electricity by any 
                                qualified production facility (as 
                                defined in subsection (d)(1), except 
                                that subparagraph (D) of such 
                                subsection shall not apply) during the 
                                preceding calendar year.
                                    ``(III) Previous years.--In the 
                                case of a facility which began 
                                construction during a calendar year 
                                preceding the calendar year which 
                                includes the date of enactment of this 
                                section, for purposes of determining 
                                whether such facility qualifies as a 
                                tier 1, 2, 3, or 4 facility under 
                                subparagraph (C), the Secretary of 
                                Energy (in consultation with the 
                                Secretary) shall include, as part of 
                                the first report described in subclause 
                                (II) which is published after the date 
                                of enactment of this section, the final 
                                determination with respect to the 
                                applicable market penetration level and 
                                tier for each individual energy 
                                production technology described in 
                                subsection (d)(2)(A) which has been 
                                used to generate electricity by any 
                                qualified production facility (as 
                                defined in subsection (d)(1), except 
                                that subparagraph (D) of such 
                                subsection shall not apply) during such 
                                preceding calendar years as are 
                                determined by the Secretary to be 
                                relevant for purposes of the 
                                administration of this section.
                            ``(ii) Classification of energy production 
                        technology.--The Secretary of Energy (in 
                        consultation with the Secretary) shall issue 
                        such regulations or other guidance (as well as 
                        any subsequent updates to such regulations or 
                        guidance) as the Secretary of Energy determines 
                        necessary or appropriate to ensure that any 
                        qualified production facility or technology 
                        used for the production of electricity is 
                        classified within a single energy production 
                        technology for purposes of subsection (d)(2). 
                        In the case of any technology used for the 
                        production of electricity which may be 
                        classified within 2 or more different 
                        categories of energy production technology 
                        under such subsection, the Secretary of Energy 
                        shall make the determination as to the correct 
                        category with respect to such technology as 
                        rapidly as possible, with such determinations 
                        to be included in any report described in 
                        clause (i).
                            ``(iii) National average wholesale price.--
                        For purposes of determining the amount 
                        applicable under subsection (a)(2)(A) with 
                        respect to any calendar year, the Secretary of 
                        Energy (in consultation with the Secretary) 
                        shall include in any report described in clause 
                        (i) a determination with respect to the 
                        national average wholesale price of a kilowatt 
                        hour of electricity during such calendar year.
    ``(c) Credit Period.--For purposes of this section, the credit 
period with respect to any qualified production facility is the 10-year 
period beginning with the date the facility was originally placed in 
service.
    ``(d) Qualified Production Facility.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified production facility' means any electric generating 
        facility which--
                    ``(A) is located in the United States or a 
                possession of the United States (as such terms are used 
                in section 638),
                    ``(B) generates electricity using energy production 
                technology,
                    ``(C) produces such electricity with an emissions 
                rate less than 100g CO2-e per kWh, and
                    ``(D) is placed in service after the date of 
                enactment of this section.
            ``(2) Energy production technology.--
                    ``(A) In general.--For purposes of paragraph (1), 
                each of the following shall be treated as an individual 
                energy production technology:
                            ``(i) Traditional nuclear fission.
                            ``(ii) Light water reactor-based advanced 
                        nuclear fission.
                            ``(iii) Non-light water reactor-based 
                        advanced nuclear fission.
                            ``(iv) Nuclear fusion.
                            ``(v) Concentrating solar thermal power.
                            ``(vi) Silicon photovoltaic.
                            ``(vii) Cadmium telluride and copper indium 
                        gallium selenide solar.
                            ``(viii) Emerging photovoltaics.
                            ``(ix) Enhanced geothermal.
                            ``(x) Hydrothermal.
                            ``(xi) Marine energy.
                            ``(xii) Fixed bottom offshore wind.
                            ``(xiii) Floating offshore wind.
                            ``(xiv) Traditional onshore wind.
                            ``(xv) New onshore wind.
                            ``(xvi) Coal.
                            ``(xvii) Natural gas.
                            ``(xviii) Petroleum.
                            ``(xix) Open-loop biomass.
                            ``(xx) Closed-loop biomass.
                            ``(xxi) Hydropower.
                    ``(B) Additional specifications.--
                            ``(i) Nuclear fission.--
                                    ``(I) Traditional nuclear 
                                fission.--For purposes of clause (i) of 
                                subparagraph (A), the term `traditional 
                                nuclear fission' means any nuclear 
                                fission which is not described in 
                                subclause (II) or (III).
                                    ``(II) Light water reactor-based 
                                advanced nuclear fission.--For purposes 
                                of clause (ii) of such subparagraph, 
                                the term `light water reactor-based 
                                advanced nuclear fission' shall include 
                                small modular light water reactors.
                                    ``(III) Non-light water reactor-
                                based advanced nuclear fission.--For 
                                purposes of clause (iii) of such 
                                subparagraph, the term `non-light water 
                                reactor-based advanced nuclear fission' 
                                means any advanced nuclear fission 
                                which is not included under clause (ii) 
                                of such subparagraph.
                            ``(ii) Nuclear fusion.--For purposes of 
                        clause (iv) of subparagraph (A), only nuclear 
                        fusion for which net power is produced from the 
                        fusion reaction shall be included.
                            ``(iii) Emerging photovoltaics.--For 
                        purposes of clause (viii) of such subparagraph, 
                        the term `emerging photovoltaics' includes 
                        perovskite-based and perovskite-enhanced solar, 
                        quantum dots, organic photovoltaics, multi-
                        junction tandem devices, and any photovoltaic 
                        solar technology not included under clause 
                        (vii) of such subparagraph.
                            ``(iv) Marine energy.--For purposes of 
                        clause (xi) of such subparagraph, the term 
                        `marine energy' has the same meaning given such 
                        term under section 632 of the Energy 
                        Independence and Security Act of 2007 (42 
                        U.S.C. 17211).
                            ``(v) Traditional onshore wind.--For 
                        purposes of clause (xiv) of subparagraph (A), 
                        the term `traditional onshore wind' means any 
                        energy production technology of a design which 
                        is the same as or substantially similar to wind 
                        technology that has achieved megawatt scale or 
                        larger deployment in the United States as of 
                        the date of enactment of this section.
                            ``(vi) New onshore wind.--For purposes of 
                        clause (xv) of such subparagraph, the term `new 
                        onshore wind' means any energy production 
                        technology which is not included in clause 
                        (xiv) of such subparagraph.
                            ``(vii) Open-loop biomass.--For purposes of 
                        clause (xix) of such subparagraph, the term 
                        `open-loop biomass' has the same meaning given 
                        such term under section 45(c)(3).
                            ``(viii) Closed-loop biomass.--For purposes 
                        of clause (xx) of such subparagraph, the term 
                        `closed-loop biomass' has the same meaning 
                        given such term under section 45(c)(2).
            ``(3) Emissions rate.--
                    ``(A) Exclusions.--For purposes of paragraph 
                (1)(C), the emissions rate shall not include--
                            ``(i) any emissions which are captured 
                        using carbon capture equipment, provided that 
                        any carbon oxide captured using such equipment 
                        is disposed of, used, or utilized in a manner 
                        consistent with the requirements under section 
                        45Q, or
                            ``(ii) in the case of electricity generated 
                        from any fossil fuel, any upstream or fugitive 
                        emissions, such as emissions related to the 
                        extraction, transportation, storage of such 
                        fuel.
                    ``(B) Lifecycle analysis.--For purposes of 
                paragraph (1)(C), in the case of any facility which 
                generates electricity through combustion of a non-
                fossil fuel, the emissions rate shall be determined 
                based on a lifecycle analysis.
            ``(4) Application with other credits.--
                    ``(A) In general.--The term `qualified production 
                facility' shall not include any facility for which, for 
                the taxable year or any prior taxable year--
                            ``(i) electricity produced from such 
                        facility is taken into account for purposes of 
                        the credit allowed under section 45 or 45J,
                            ``(ii) qualified carbon oxide captured by 
                        such facility is taken into account for 
                        purposes of the credit allowed under section 
                        45Q,
                            ``(iii) the basis of any property which is 
                        part of such facility is taken into account for 
                        purposes of the credit allowed under section 
                        48, 48A, 48B, 48C, or 48D, or
                            ``(iv) hydrogen produced from such facility 
                        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 taxable year with respect to 
                any property for which a credit is allowed under this 
                section for such taxable year or any prior taxable 
                year.
            ``(5) CO2-e.--In this section, the term `CO2-e' means the 
        quantity of a greenhouse gas that has a global warming 
        potential equivalent to 1 metric ton of carbon dioxide, as 
        determined under table A-1 of subpart A of part 98 of title 40, 
        Code of Federal Regulations, as in effect on the date of 
        enactment of this section.
    ``(e) Determination of When Construction Begins; Continuous Program 
of Construction or Continuity of Effort.--
            ``(1) In general.--For purposes of this section, 
        construction of a facility begins when--
                    ``(A) physical work of a significant nature begins, 
                or
                    ``(B) during the year in which the taxpayer begins 
                physical work, a facility has invested not less than--
                            ``(i) 2 percent of construction costs, or
                            ``(ii) $50,000,000.
            ``(2) Work performed.--For purposes of paragraph (1), any 
        work performed--
                    ``(A) by the taxpayer, or
                    ``(B) for the taxpayer by other persons under a 
                binding written contract which is entered into prior to 
                the manufacture, construction, or production of the 
                property for use by the taxpayer in the taxpayer's 
                trade or business (or for the taxpayer's production of 
                income),
        shall be taken into account in determining whether construction 
        has begun.
            ``(3) Continuous program of construction.--For purposes of 
        this section, the term `continuous program of construction' 
        means continuing physical work of a significant nature, as 
        determined by the Secretary based upon relevant facts and 
        circumstances.
            ``(4) Continuous efforts.--For purposes of this section, 
        the term `continuous efforts' means making continuous efforts 
        towards completion of the facility, as determined by the 
        Secretary based upon relevant facts and circumstances.
    ``(f) Transfer of Credit.--Rules similar to the rules of subsection 
(d)(2) of section 48D shall apply for purposes of this section.
    ``(g) Election.--An election under this subsection with respect to 
the amounts described in paragraphs (1) and (2) of subsection (a) shall 
be included in the return of tax for the taxable year in which the 
qualified production facility is placed in service. Such election, once 
made, shall be irrevocable for any taxable year during the credit 
period under subsection (c).
    ``(h) Regulations.--Not later than 18 months after the date of the 
enactment of this section, the Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry out the 
purposes of this section.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986 is amended by striking 
``plus'' at the end of paragraph (32), by striking the period at the 
end of paragraph (33) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(34) the emerging energy technology production credit 
        determined under section 45U(a).''.
    (c) Special Rule for Proceeds of Transfers for Mutual or 
Cooperative Electric Companies.--Section 501(c)(12)(I) of such Code, as 
amended by section 3(b), is amended by striking ``or 48D(d)(2)'' and 
inserting ``, 45U(f), or 48D(d)(2)''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by adding at the end the following new item:

``Sec. 45U. Electricity produced from emerging energy technology.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to electricity produced and sold in taxable years beginning after 
the date of the enactment of this Act.

SEC. 5. CLEAN HYDROGEN PRODUCTION CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986, as amended by section 4, is 
amended by adding at the end the following new section:

``SEC. 45V. CLEAN HYDROGEN PRODUCTION.

    ``(a) General Rule.--
            ``(1) Amount of credit.--For purposes of section 38, the 
        clean hydrogen production credit determined under this section 
        for any taxable year beginning in the credit period with 
        respect to a qualified hydrogen production facility of the 
        taxpayer is an amount equal to the product of--
                    ``(A) the applicable percentage of an amount equal 
                to 250 percent of the national average wholesale price 
                of a kilogram of hydrogen in the calendar year which 
                began 2 years prior to the calendar year in which such 
                taxable year begins, and
                    ``(B) subject to paragraph (2), the amount of clean 
                hydrogen produced at the qualified hydrogen production 
                facility during such taxable year.
            ``(2) Increase for zero-emissions hydrogen.--In the case of 
        any clean hydrogen described in subsection (d)(1)(A)(ii), the 
        amount determined under paragraph (1)(B) with respect to such 
        clean hydrogen shall be equal to twice the amount otherwise 
        determined under such paragraph.
    ``(b) Applicable Percentage.--
            ``(1) In general.--For purposes of subsection (a)(1)(A), 
        the applicable percentage is--
                    ``(A) in the case of a tier 1 facility, 60 percent,
                    ``(B) in the case of a tier 2 facility, 45 percent,
                    ``(C) in the case of a tier 3 facility, 30 percent,
                    ``(D) in the case of a tier 4 facility, 15 percent, 
                and
                    ``(E) in the case of any other facility, zero 
                percent.
            ``(2) Facility tiers.--
                    ``(A) In general.--For purposes of this 
                subsection--
                            ``(i) Tier 1 facility.--The term `tier 1 
                        facility' means any qualified hydrogen 
                        production facility which produces clean 
                        hydrogen from a qualified production method for 
                        which the market penetration level for the 
                        calendar year preceding the calendar year in 
                        which construction or modification of such 
                        facility began is less than 0.75 percent.
                            ``(ii) Tier 2 facility.--The term `tier 2 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (i), except that 
                        `at least 0.75 percent but less than 1.5 
                        percent' shall be substituted for `less than 
                        0.75 percent'.
                            ``(iii) Tier 3 facility.--The term `tier 3 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (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 facility.--The term `tier 4 
                        facility' has the same meaning given the term 
                        `tier 1 facility' under clause (i), except that 
                        `at least 2.25 percent but less than 3 percent' 
                        shall be substituted for `less than 0.75 
                        percent'.
                    ``(B) Market penetration level.--For purposes of 
                this paragraph, 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--
                                    ``(I) subject to subsection 
                                (d)(1)(C), the total energy content 
                                (expressed in megawatt hours) of all 
                                clean hydrogen produced using the 
                                qualified production method by all 
                                qualified hydrogen production 
                                facilities (as defined in subsection 
                                (d)(2)(A), except that clause (iii) of 
                                such subsection shall not apply) during 
                                such calendar year (as determined by 
                                the Secretary on the basis of data 
                                reported by the Energy Information 
                                Administration), divided by
                                    ``(II) the total domestic power 
                                sector electricity production 
                                (expressed in megawatt hours) for such 
                                calendar year, or
                            ``(ii) the amount determined under this 
                        subparagraph for the preceding calendar year
                    ``(C) Division of production methods for purposes 
                of determining tier.--For purposes of determining the 
                applicable tier for any qualified production method 
                under subparagraph (B), such subparagraph shall be 
                applied separately with respect to--
                            ``(i) any such method described in 
                        subparagraph (A) of subsection (d)(3), and
                            ``(ii) any such method described in 
                        subparagraph (B) of such subsection.
                    ``(D) Construction begins.--For purposes of this 
                subsection, the determination as to whether a facility 
                qualifies as a tier 1, 2, 3, or 4 facility shall be--
                            ``(i) made during the year in which 
                        construction or modification of such facility 
                        begins,
                            ``(ii) based on the determinations included 
                        in report described in section 
                        45U(b)(2)(D)(i)(II) with respect to such 
                        calendar year, and
                            ``(iii) contingent on the taxpayer 
                        maintaining a continuous program of 
                        construction or continuous efforts to advance 
                        towards completion of the facility.
                    ``(E) Reports.--
                            ``(i) In general.--The Secretary shall, as 
                        part of the reports published pursuant to 
                        section 45U(b)(2)(D)(i) and in the same manner 
                        as described under such section, publish the 
                        applicable market penetration level and tier 
                        for each qualified production method which has 
                        been used to produce clean hydrogen by any 
                        qualified hydrogen production facility (as 
                        defined in subsection (d)(2)(A), except that 
                        clause (iii) of such subsection shall not 
                        apply).
                            ``(ii)  National average wholesale price.--
                        For purposes of determining the amount 
                        applicable under subsection (a)(1)(A) with 
                        respect to any calendar year, the Secretary of 
                        Energy (in consultation with the Secretary) 
                        shall include in any report described in 
                        section 45U(b)(2)(D)(i) a determination with 
                        respect to the national average wholesale price 
                        of a kilogram of hydrogen during such calendar 
                        year.
    ``(c) Credit Period.--For purposes of this section, the credit 
period with respect to any qualified hydrogen production facility is--
            ``(1) in the case of a facility described in subclause (I) 
        of subsection (d)(2)(A)(iii), the 10-year period beginning with 
        the date the facility was originally placed in service, or
            ``(2) in the case of a facility described in subclause (II) 
        of such subsection, the 10-year period beginning with the date 
        that the property required to modify such facility is placed in 
        service.
    ``(d) Definitions.--In this section--
            ``(1) Clean hydrogen.--
                    ``(A) In general.--The term `clean hydrogen' means 
                hydrogen which, as determined based on a lifecycle 
                analysis, is produced through a qualified production 
                method for which the rate of the greenhouse gas 
                emissions--
                            ``(i) is greater than zero and not greater 
                        than 2,500g CO2-e (as defined in section 
                        45U(d)(5)) per kilogram of hydrogen produced, 
                        or
                            ``(ii) is equal to or less than zero.
                    ``(B) Special rules.--
                            ``(i) Emissions from generation of 
                        electricity.--In the case of any hydrogen 
                        produced from a qualified production method 
                        described in paragraph (3)(A)--
                                    ``(I) if such method uses 
                                electricity generated from a renewable 
                                energy resource (as defined in section 
                                403 of the Renewable Energy Resources 
                                Act of 1980 (42 U.S.C. 7372)) or 
                                nuclear power, such hydrogen shall be 
                                deemed to be clean hydrogen described 
                                in subparagraph (A)(ii), or
                                    ``(II) if such method uses 
                                electricity generated from a source 
                                that emits greenhouse gases during 
                                production, any such emissions which 
                                are released into the atmosphere during 
                                such production shall be included for 
                                purposes of determining the rate of the 
                                greenhouse gas emissions under 
                                subparagraph (A).
                            ``(ii) Non-electrolysis or use of fossil 
                        fuels.--In the case of any hydrogen produced--
                                    ``(I) through the use of fossil 
                                fuels or through the use of electricity 
                                which is generated through combustion 
                                of a fossil fuel, or
                                    ``(II) using a method described in 
                                paragraph (3)(B),
                        subparagraph (A) shall be applied with respect 
                        to such hydrogen on the basis of a lifecycle 
                        analysis.
                            ``(iii) Exclusion of hydrogen emissions.--
                        For purposes of subparagraph (A), with respect 
                        to hydrogen produced through a qualified 
                        production method, any such hydrogen which is 
                        released into the atmosphere during such 
                        production shall not be included for purposes 
                        of determining the rate of the greenhouse gas 
                        emissions under such subparagraph.
                            ``(iv) Carbon capture.--For purposes of 
                        determining the rate of the greenhouse gas 
                        emissions under subparagraph (A), such 
                        subparagraph shall not apply with respect to 
                        any qualified carbon oxide (as defined in 
                        section 45Q(c)) captured using carbon capture 
                        equipment if such carbon oxide is disposed of, 
                        used, or utilized in a manner consistent with 
                        the requirements under section 45Q.
                            ``(v) Upstream and downstream emissions.--
                                    ``(I) In general.--In the case of 
                                hydrogen produced using a qualified 
                                production method described in clause 
                                (ii), for purposes of the application 
                                of subparagraph (A) based on a 
                                lifecycle analysis with respect to such 
                                method, such subparagraph shall not 
                                apply with respect to--
                                            ``(aa) any upstream 
                                        emissions, and
                                            ``(bb) any downstream 
                                        emissions related to the 
                                        compression, liquefaction, use, 
                                        or transport of hydrogen 
                                        subsequent to production.
                                    ``(II) High-temperature 
                                electrolysis.--For purposes of 
                                determining the rate of the greenhouse 
                                gas emissions under subparagraph (A) 
                                with respect to hydrogen produced using 
                                high-temperature electrolysis, such 
                                subparagraph shall apply with respect 
                                to any direct emissions resulting from 
                                the fuel source used to create heat to 
                                which clause (iv) does not apply.
                                    ``(III) Upstream emissions.--For 
                                purposes of this clause, the term 
                                `upstream emissions' means the quantity 
                                of greenhouse gases, expressed in 
                                metric tons of CO2-e, emitted to the 
                                atmosphere resulting from the 
                                extraction, processing, transportation, 
                                financing, or other preparation of 
                                hydrogen for use.
                    ``(C) Energy content.--For purposes of subsection 
                (b)(2)(B)(i)(I), the energy content of 1 kilogram of 
                clean hydrogen shall be deemed to be equal to 33.6 
                kilowatt hours of energy.
            ``(2) Qualified hydrogen production facility.--
                    ``(A) In general.--The term `qualified hydrogen 
                production facility' means any facility--
                            ``(i) which is located in the United States 
                        or a possession of the United States (as such 
                        terms are used in section 638),
                            ``(ii) which produces clean hydrogen using 
                        a qualified production method, and
                            ``(iii)(I) which is placed in service after 
                        the date of enactment of this section, or
                            ``(II) which--
                                    ``(aa) was originally placed in 
                                service before the date of enactment of 
                                this section and, prior to the 
                                modification described in item (bb), 
                                did not produce clean hydrogen, and
                                    ``(bb) after the date of enactment 
                                of this section, is modified to produce 
                                clean hydrogen, including--
                                            ``(AA) modification of a 
                                        facility which, prior to such 
                                        modification, produced hydrogen 
                                        which did not satisfy the 
                                        requirements under paragraph 
                                        (1)(A), or
                                            ``(BB) for purposes of 
                                        paragraph (1)(B)(iv), 
                                        installation of carbon capture 
                                        equipment.
                    ``(B) Application with other credits.--
                            ``(i) In general.--With respect to any 
                        taxable year, the term `qualified hydrogen 
                        production facility' shall not include--
                                    ``(I) any facility which--
                                            ``(aa) produces 
                                        electricity--

                                                    ``(AA) which is 
                                                taken into account for 
                                                purposes of the credit 
                                                allowed under section 
                                                45, 45J, or 45U for 
                                                such taxable year or 
                                                any previous taxable 
                                                year, and

                                                    ``(BB) which is 
                                                used by such facility 
                                                for the production of 
                                                clean hydrogen, or

                                            ``(bb) for such taxable 
                                        year or any previous taxable 
                                        year, the basis of any property 
                                        which is part of such facility 
                                        is taken into account for 
                                        purposes of the credit allowed 
                                        under section 48, 48A, 48B, 
                                        48C, or 48D, or
                                    ``(II) any carbon capture equipment 
                                placed in service at a facility which 
                                is used to capture qualified carbon 
                                oxide which is taken into account in 
                                such taxable year or any previous 
                                taxable year for purposes of the credit 
                                allowed under section 45Q.
                            ``(ii) Denial of double benefit.--With 
                        respect to any section described in clause (I) 
                        or (II) of clause (i), no credit shall be 
                        allowed under such section for any taxable year 
                        with respect to any property for which a credit 
                        is allowed under this section for such taxable 
                        year or any prior taxable year.
            ``(3) Qualified production method.--The term `qualified 
        production method' means--
                    ``(A) electrolysis, and
                    ``(B) any method not described in subparagraph (A).
    ``(e) Transfer of Credit.--
            ``(1) In general.--If, with respect to a credit allowed 
        under subsection (a) for any taxable year, the taxpayer elects 
        the application of this subsection for such taxable year with 
        respect to all (or any portion specified in such election) of 
        such credit, the eligible project partner specified in such 
        election, and not the taxpayer, shall be treated as the 
        taxpayer for purposes of this title with respect to such credit 
        (or such portion thereof).
            ``(2) Eligible project partner.--
                    ``(A) In general.--For purposes of this subsection, 
                the term `eligible project partner' means, with respect 
                to any qualified hydrogen production facility, any 
                person who--
                            ``(i) has an ownership interest in such 
                        facility,
                            ``(ii) provided equipment for or services 
                        in the construction of such facility,
                            ``(iii) provides electricity or feedstock 
                        for production of hydrogen at such facility,
                            ``(iv) purchases hydrogen, or a direct 
                        product thereof, produced at such facility 
                        pursuant to a contract, or
                            ``(v) provides financing for such facility.
                    ``(B) Financing.--For purposes of subparagraph 
                (A)(v), any amount paid as consideration for a transfer 
                described in paragraph (1) shall not be treated as 
                financing for qualified hydrogen production facility.
                    ``(C) Other rules.--Rules similar to the rules of 
                subparagraphs (C) through (I) of section 48D(d)(2) 
                shall apply for purposes of this subsection.
    ``(f) Determination of When Construction Begins; Continuous Program 
of Construction or Continuity of Effort.--Rules similar to the rules of 
section 45U(e) shall apply for purposes of this section.
    ``(g) Regulations.--Not later than 1 year after the date of the 
enactment of this section, the Secretary shall prescribe such 
regulations as may be necessary or appropriate to carry out the 
purposes of this section.''.
    (b) Credit Allowed as Part of General Business Credit.--Section 
38(b) of the Internal Revenue Code of 1986, as amended by section 4(b), 
is amended by striking ``plus'' at the end of paragraph (33), by 
striking the period at the end of paragraph (34) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(35) the clean hydrogen production credit determined 
        under section 45V(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of the Internal Revenue Code of 
1986, as amended by section 4(d), is amended by adding at the end the 
following new item:

``Sec. 45V. Clean hydrogen production.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to hydrogen produced in taxable years beginning after the date of 
the enactment of this Act.

SEC. 6. REPORT ON ADDITIONAL ENERGY PRODUCTION TECHNOLOGY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, and every 5 years thereafter, the Secretary of Energy 
(referred to in this section as the ``Secretary'') shall submit a 
report to the Committee on Ways and Means of the House of 
Representatives and the Committee on Finance of the Senate which--
            (1) identifies new and emerging energy production 
        technologies which--
                    (A) have less than 3 percent market penetration 
                level (as defined in subsection (b)(2)(B) of section 
                45U of the Internal Revenue Code of 1986 (as added by 
                section 4 of this Act)); and
                    (B) the Secretary recommends should be added to 
                subsection (d)(2)(A) of such section as an individual 
                energy production technology;
            (2) includes legislative language to carry out the 
        recommendations described in paragraph (1)(B); and
            (3) considers petitions and comments submitted under 
        subsection (b).
    (b) Report Process.--
            (1) In general.--Not later than 24 months after the date of 
        enactment of this Act, the Secretary shall publish in the 
        Federal Register and on a publicly available Internet website 
        of the Department of Energy a notice requesting members of the 
        public to submit to the Department of Energy during the 60-day 
        period beginning on the date of such publication petitions for 
        inclusion of any technology used for the production of 
        electricity as an individual energy production technology under 
        subsection (d)(2) of section 45U of the Internal Revenue Code 
        of 1986 (as added by section 4 of this Act).
            (2) Content.--Each petition described in paragraph (1) 
        shall include the following information:
                    (A) The name and address of the petitioner.
                    (B) A description of the technology used for the 
                production of electricity.
                    (C) A certification as to whether such technology 
                satisfies the requirements under subsection (d)(1)(C) 
                of section 45U of the Internal Revenue Code of 1986.
                    (D) Such other information as the Secretary may 
                require.
            (3) Procedures.--The Secretary shall prescribe and publish 
        in the Federal Register and on a publicly available internet 
        website of the Department of Energy procedures to be complied 
        with by members of the public submitting petitions for 
        inclusion under paragraph (1).
    (c) Review.--
            (1) Publication and public availability.--As soon as 
        practicable, the Secretary shall publish on a publicly 
        available internet website of the Department of Energy the 
        petitions for inclusions submitted under paragraph (1) of 
        subsection (b) that contain the information required under 
        paragraph (2) of such subsection.
            (2) Public comment.--
                    (A) In general.--The Secretary shall publish in the 
                Federal Register and on a publicly available internet 
                website of the Department of Energy a notice requesting 
                members of the public to submit to the Department of 
                Energy comments on the petitions for inclusion 
                published by the Department of Energy under paragraph 
                (1).
                    (B) Publication.--The Secretary shall publish a 
                notice in the Federal Register directing members of the 
                public to a publicly available internet website of the 
                Department of Energy to view the comments of the 
                members of the public received under subparagraph (A).
    (d) Sense of Congress.--It is the sense of Congress that, to 
incentivize innovation in energy generation technologies and to promote 
the reliability of and performance improvements in the United States 
energy sector, Congress should, not later than 90 days after the 
Secretary submits any report under subsection (a), consider a bill to 
add any technology used for the production of electricity which is 
included in such report to the list of individual energy production 
technologies under section 45U(d)(2) of the Internal Revenue Code of 
1986.
                                 <all>