Title: Energy Opportunity Zones Act of 2020
Policy area: Taxation

Summary:
Energy Opportunity Zones Act of 2020
This bill designates energy opportunity zones for areas that are within 120 miles of a nuclear or coal power plant used to generate electricity that has ceased operations or is scheduled to cease operations within 6 years, or areas that can demonstrate how changes in the nuclear or coal economy have resulted or may result in job losses.
The bill modifies or extends the new energy efficient home tax credit, the nonbusiness energy property tax credit, the investment tax credit, and the tax credit for production of electricity, and establishes a new tax credit for offshore wind and energy storage. The bill also extends through 2050 the tax deduction for energy efficient commercial buildings.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8530 Introduced in House (IH)]

<DOC>






116th CONGRESS
  2d Session
                                H. R. 8530

   To amend the Internal Revenue Code of 1986 to provide for energy 
                           opportunity zones.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 6, 2020

 Mr. Carbajal (for himself and Mr. Lowenthal) introduced the following 
      bill; which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to provide for energy 
                           opportunity zones.

    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 Opportunity Zones Act of 
2020''.

SEC. 2. OPPORTUNITY ZONES.

    (a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting before subchapter Z the following new subchapter:

                ``Subchapter Y--Energy Opportunity Zones

``Sec. 1400Y-1. Energy opportunity zones.

``SEC. 1400Y-1. ENERGY OPPORTUNITY ZONES.

    ``(a) Production Tax Credit.--In the case of a qualified energy 
opportunity zone facility, section 45 shall be administered as if--
            ``(1) subsection (b)(5) did not apply,
            ``(2) `2050' were substituted for `2021' in subsection 
        (d)(1), and
            ``(3) `2050' were substituted for `2021' each place such 
        date appears in paragraphs (2)(A), (3)(A)(i), (4)(B), (6), (7), 
        (9), and (11)(B) of subsection (d).
    ``(b) Investment Tax Credit.--In the case of qualified energy 
opportunity zone property, section 48 shall be administered as if--
            ``(1) `2050' were substituted for `2022' in paragraphs 
        (2)(A)(i)(II), (3)(A)(ii), and (3)(A)(vii) of subsection (a),
            ``(2) `2050' were substituted for `2021' in subsection 
        (a)(5)(C)(ii),
            ``(3) paragraphs (5)(E), (6), and (7) of subsection (a) did 
        not apply,
            ``(4) paragraphs (1)(D) and (2)(D) of subsection (c) did 
        not apply,
            ``(5) `2050' were substituted for `2022' in subsection 
        (c)(3)(A)(iv), and
            ``(6) subsection (c)(4)(C) did not apply.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified energy opportunity zone facility.--The term 
        `qualified energy opportunity zone facility' means any facility 
        which is located within an energy opportunity zone and the 
        construction of which was subject to a project labor agreement.
            ``(2) Qualified energy opportunity zone property.--The term 
        `qualified energy opportunity zone property' means any property 
        if--
                    ``(A) such property is located within an energy 
                opportunity zone,
                    ``(B) the construction of such property was subject 
                to a project labor agreement, and
                    ``(C) all laborers and mechanics employed by any 
                contractor or subcontractor in the construction of such 
                property were paid wages at rates not less than those 
                prevailing on similar construction in the locality as 
                determined by the Secretary of Labor under subchapter 
                IV of chapter 31 of title 40, United States Code 
                (commonly referred to as the ``Davis-Bacon Act'').
            ``(3) Energy opportunity zone defined.--The term `energy 
        opportunity zone' means--
                    ``(A) any area which is within 120 miles of--
                            ``(i) a nuclear power plant, or a facility 
                        which utilizes coal to generate electricity, 
                        which (after the date which is 10 years before 
                        the date of the enactment of this section) 
                        ceases operation, or
                            ``(ii) a nuclear power plant which is 
                        scheduled to cease operation not later than 6 
                        years after the date of the enactment of this 
                        section, and
                    ``(B) any other area that can reasonably 
                demonstrate how changes in the nuclear or coal economy 
                have resulted (or are anticipated to result) in job 
                losses in such area.
            ``(4) Project labor agreement.--The term `project labor 
        agreement' means a pre-hire collective bargaining agreement 
        with one or more labor organizations that establishes the terms 
        and conditions of employment for a specific construction 
        project and which is an agreement described in section 8(f) of 
        the National Labor Relations Act (26 U.S.C. 158(f)).''.
    (b) Clerical Amendment.--The table of subchapters for chapter 1 of 
such Code is amended by inserting before the item relating to 
subchapter Z the following new item:

              ``subchapter y--energy opportunity zones''.

    (c) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to property placed 
        in service after the date of the enactment of this Act.
            (2) Application of progress expenditure rules.--So much of 
        the amendments made by this section as relate to section 48 of 
        the Internal Revenue Code of 1986 shall apply to periods after 
        the date of the enactment of this Act under rules similar to 
        the rules of section 48(m) of the Internal Revenue Code of 1986 
        (as in effect on the day before the date of the enactment of 
        the Revenue Reconciliation Act of 1990).

SEC. 3. ENERGY CREDIT FOR QUALIFIED OFFSHORE WIND FACILITIES AND ENERGY 
              STORAGE.

    (a) In General.--Section 48 of the Internal Revenue Code of 1986 is 
amended--
            (1) in subsection (a)--
                    (A) in paragraph (2)(A)(i)--
                            (i) in subclause (II), by striking 
                        ``paragraph (3)(A)(i)'' and inserting ``clause 
                        (i) or (ix) of paragraph (3)(A)'', and
                            (ii) by striking ``and'' at the end of 
                        subclause (III), and
                            (iii) by adding at the end the following 
                        new subclause:
                                    ``(V) qualified offshore wind 
                                property, and'', and
                    (B) in paragraph (3)(A)--
                            (i) in clause (vi), by striking ``or'' at 
                        the end, and
                            (ii) by adding at the end the following new 
                        clause:
                            ``(viii) qualified offshore wind property, 
                        but only with respect to property the 
                        construction of which begins before January 1, 
                        2050, or
                            ``(ix) any equipment if--
                                    ``(I) such equipment receives, 
                                stores, and delivers energy using 
                                batteries, compressed air, pumped 
                                hydropower, hydrogen storage (including 
                                hydrolysis), thermal energy storage, 
                                regenerative fuel cells, flywheels, 
                                capacitors, superconducting magnets, or 
                                other technologies identified by the 
                                Secretary in consultation with the 
                                Secretary of Energy,
                                    ``(II) such equipment has a 
                                capacity of not less than 5 megawatt 
                                hours,
                                    ``(III) such equipment is located 
                                in an energy opportunity zone (as 
                                defined in section 1400Y-1),
                                    ``(IV) the construction of such 
                                equipment was subject to a project 
                                labor agreement (as defined in section 
                                1400Y-1), and
                                    ``(V) all laborers and mechanics 
                                employed by any contractor or 
                                subcontractor in the construction of 
                                such equipment were paid wages at rates 
                                not less than those prevailing on 
                                similar construction in the locality as 
                                determined by the Secretary of Labor 
                                under subchapter IV of chapter 31 of 
                                title 40, United States Code (commonly 
                                referred to as the ``Davis-Bacon 
                                Act'').'', and
            (2) in subsection (c), by adding at the end the following 
        new paragraph:
            ``(5) Qualified offshore wind property.--
                    ``(A) In general.--The term `qualified offshore 
                wind property' means an offshore facility, other than 
                qualified small wind energy property, if--
                            ``(i) such facility uses wind to produce 
                        electricity,
                            ``(ii) such facility is located not farther 
                        than 50 miles from the boundary of an energy 
                        opportunity zone (as defined in section 1400Y-
                        1),
                            ``(iii) the construction of such facility 
                        was subject to a project labor agreement (as 
                        defined in section 1400Y-1), and
                            ``(iv) all laborers and mechanics employed 
                        by any contractor or subcontractor in the 
                        construction of such facility were paid wages 
                        at rates not less than those prevailing on 
                        similar construction in the locality as 
                        determined by the Secretary of Labor under 
                        subchapter IV of chapter 31 of title 40, United 
                        States Code (commonly referred to as the 
                        ``Davis-Bacon Act'').
                    ``(B) Offshore facility.--The term `offshore 
                facility' means any facility located in the inland 
                navigable waters of the United States, including the 
                Great Lakes, or in the coastal waters of the United 
                States, including the territorial seas of the United 
                States, the exclusive economic zone of the United 
                States, and the outer Continental Shelf of the United 
                States.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to periods after the date of the enactment of this Act under 
rules similar to the rules of section 48(m) of the Internal Revenue 
Code of 1986 (as in effect on the day before the date of the enactment 
of the Revenue Reconciliation Act of 1990).

SEC. 4. IMPROVEMENTS TO CREDIT FOR NONBUSINESS ENERGY PROPERTY.

    (a) Extension of Credit.--
            (1) In general.--Section 25C(g)(2) of the Internal Revenue 
        Code of 1986 is amended by striking ``December 31, 2020'' and 
        inserting ``December 31, 2050''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2020.
    (b) Other Improvements.--
            (1) In general.--Section 25C of the Internal Revenue Code 
        of 1986 is amended--
                    (A) in subsection (a)(1), by striking ``10 
                percent'' and inserting ``15 percent'',
                    (B) in subsection (b)--
                            (i) in paragraph (1)--
                                    (I) by striking ``$500'' and 
                                inserting ``$1,200'', and
                                    (II) by striking ``December 31, 
                                2005'' and inserting ``December 31, 
                                2019'', and
                            (ii) by striking paragraphs (2) and (3) and 
                        inserting the following:
            ``(2) Limitation on insulation material or system.--In the 
        case of amounts paid or incurred for components described in 
        subsection (c)(3)(A) by any taxpayer for any taxable year, the 
        credit allowed under this section with respect to such amounts 
        for such year shall not exceed the excess (if any) of $600 over 
        the aggregate credits allowed under this section with respect 
        to such amounts for all prior taxable years ending after 
        December 31, 2019.
            ``(3) Limitation on windows.--
                    ``(A) In general.--
                            ``(i) Energy star most efficient.--In the 
                        case of amounts paid or incurred by any 
                        taxpayer for any taxable year for components 
                        described in subsection (c)(3)(B) which meet 
                        the most efficient certification under 
                        applicable Energy Star program requirements, 
                        the credit allowed under this section with 
                        respect to such amounts for such year shall not 
                        exceed the excess (if any) of $600 over the 
                        aggregate credits allowed under this section 
                        with respect to such amounts for all prior 
                        taxable years ending after December 31, 2019.
                            ``(ii) Energy star.--In the case of amounts 
                        paid or incurred by any taxpayer for any 
                        taxable year for components described in 
                        subsection (c)(3)(B) which do not meet the most 
                        efficient certification under applicable Energy 
                        Star program requirements, the credit allowed 
                        under this section with respect to such amounts 
                        for such year shall not exceed the excess (if 
                        any) of $200 over the aggregate credits allowed 
                        under this section with respect to such amounts 
                        for all prior taxable years ending after 
                        December 31, 2019.
                    ``(B) Election.--
                            ``(i) In general.--For purposes of any 
                        amounts paid or incurred by any taxpayer for 
                        components described in subsection (c)(3)(B), 
                        the credit allowed under this section shall 
                        only be allowed for components described in 
                        clause (i) of subparagraph (A) or clause (ii) 
                        of such subparagraph, but not both, as elected 
                        by the taxpayer during the first taxable year 
                        in which such credit is being claimed by the 
                        taxpayer.
                            ``(ii) Irrevocability.--The Secretary 
                        shall, through such rules, regulations, and 
                        procedures as are determined appropriate, 
                        establish procedures for making an election 
                        under this subparagraph, which shall require 
                        that--
                                    ``(I) any election made by the 
                                taxpayer shall be irrevocable, and
                                    ``(II) such election shall remain 
                                in effect for all subsequent taxable 
                                years.
            ``(4) Limitation on doors.--In the case of amounts paid or 
        incurred for components described in subsection (c)(3)(C) by 
        any taxpayer for any taxable year, the credit allowed under 
        this section with respect to such amounts for such year shall 
        not exceed--
                    ``(A) the excess (if any) of $500 over the 
                aggregate credits allowed under this section with 
                respect to such amounts for all prior taxable years 
                ending after December 31, 2019, or
                    ``(B) $250 for each exterior door.
            ``(5) Limitation on residential energy property 
        expenditures.--The amount of the credit allowed under this 
        section by reason of subsection (a)(2) shall not exceed--
                    ``(A) in the case of any energy-efficient building 
                property--
                            ``(i) for any item of property described in 
                        subparagraph (A), (B), or (C) of subsection 
                        (d)(3), $600, and
                            ``(ii) for any item of property described 
                        in subparagraph (D) or (E) of such subsection, 
                        $400, and
                    ``(B) in the case of any qualified natural gas, 
                propane, or oil furnace or hot water boiler (as defined 
                in subsection (d)(4)), an amount equal to--
                            ``(i) $600 for a hot water boiler, and
                            ``(ii) in the case of a furnace, an amount 
                        equal to the sum of--
                                    ``(I) $300, plus
                                    ``(II) if the taxpayer is 
                                converting from a non-condensing 
                                furnace to a condensing furnace, 
                                $300.'',
                    (C) in subsection (c)--
                            (i) in paragraph (2)--
                                    (I) by striking subparagraphs (A) 
                                and (B) and inserting the following:
                    ``(A) applicable Energy Star program requirements, 
                in the case of an exterior window, a skylight, or an 
                exterior door, and'',
                                    (II) by redesignating subparagraph 
                                (C) as subparagraph (B), and
                                    (III) in subparagraph (B), as so 
                                redesignated, by striking ``2009 
                                International'' and all that follows 
                                through ``Act of 2009'' and inserting 
                                ``2015 IECC (as defined in section 
                                45L(b)(5))'',
                            (ii) in paragraph (3)--
                                    (I) in subparagraph (B), by adding 
                                ``and'' at the end,
                                    (II) in subparagraph (C), by 
                                striking ``, and'' and inserting a 
                                period, and
                                    (III) by striking subparagraph (D), 
                                and
                            (iii) by adding at the end the following 
                        new paragraph:
            ``(5) Labor costs.--The term `qualified energy efficiency 
        improvements' includes expenditures for labor costs properly 
        allocable to the onsite preparation, assembly, or original 
        installation of any energy efficient building envelope 
        component.'',
                    (D) in subsection (d)--
                            (i) in paragraph (2)(A)--
                                    (I) in clause (i), by adding ``or'' 
                                at the end,
                                    (II) in clause (ii), by striking 
                                ``, or'' and inserting a period, and
                                    (III) by striking clause (iii),
                            (ii) in paragraph (3)--
                                    (I) by striking subparagraph (A) 
                                and inserting the following:
                    ``(A) an electric heat pump water heater which, in 
                the standard Department of Energy test procedure, 
                yields a uniform energy factor of at least 3.0,'',
                                    (II) in subparagraph (B), by 
                                striking ``January 1, 2009'' and 
                                inserting ``the date of enactment of 
                                the Home Energy Savings Act'',
                                    (III) in subparagraph (C), by 
                                striking ``January 1, 2009'' and 
                                inserting ``the date of enactment of 
                                the Home Energy Savings Act'',
                                    (IV) by striking subparagraph (D) 
                                and inserting the following:
                    ``(D) a natural gas, propane, or oil water heater 
                which, in the standard Department of Energy test 
                procedure, yields--
                            ``(i) in the case of a storage tank water 
                        heater--
                                    ``(I) in the case of a medium-draw 
                                water heater, a uniform energy factor 
                                of not less than 0.78, and
                                    ``(II) in the case of a high-draw 
                                water heater, a uniform energy factor 
                                of not less than 0.80, and
                            ``(ii) in the case of a tankless water 
                        heater--
                                    ``(I) in the case of a medium-draw 
                                water heater, a uniform energy factor 
                                of not less than 0.87, and
                                    ``(II) in the case of a high-draw 
                                water heater, a uniform energy factor 
                                of not less than 0.90, and'', and
                                    (V) in subparagraph (E), by 
                                striking ``of at least 75 percent'' and 
                                inserting the following: ``(as 
                                determined pursuant to the applicable 
                                list published by the Environmental 
                                Protection Agency for certified wood 
                                stoves, hydronic heaters, or forced-air 
                                furnaces) of at least--
                            ``(i) in the case of any stove placed in 
                        service before January 1, 2021, 73 percent, and
                            ``(ii) in the case of any stove placed in 
                        service after December 31, 2020, 75 percent.'',
                            (iii) in paragraph (4), by striking ``not 
                        less than 95'' and inserting the following: 
                        ``not less than--
                    ``(A) in the case of a furnace, 97 percent, and
                    ``(B) in the case of a hot water boiler, 95 
                percent.'',
                            (iv) by striking paragraph (5), and
                            (v) by redesignating paragraph (6) as 
                        paragraph (5), and
                    (E) in subsection (e), by adding the following new 
                paragraphs at the end:
            ``(4) Installation standards.--The terms `energy efficient 
        building envelope component' and `qualified energy property' 
        shall not include any components or property which are not 
        installed according to any applicable Air Conditioning 
        Contractors of America Quality Installation standards which are 
        in effect at the time that such components or property are 
        placed in service.
            ``(5) Replacement of terminated standards.--In the case of 
        any standard, requirement, or criteria applicable to any energy 
        efficient building envelope component or qualified energy 
        property which is terminated after the date of enactment of the 
        Home Energy Savings Act, the Secretary, in consultation with 
        the Secretary of Energy, shall identify a similar standard, 
        requirement, or criteria for purposes of determining the 
        eligibility of any such component or property for purposes of 
        credit allowed under this section.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to property placed in service after December 31, 
        2019.
    (c) Periodic Report to Congress Regarding Improved Standards.--Not 
later than 5 years after the date of the enactment of this Act (and 
each 5 years thereafter until the termination of the credit determined 
under section 25C of the Internal Revenue Code of 1986), the Secretary 
of Energy, after consultation with the Secretary of Treasury, shall 
submit a written report to Congress evaluating the effectiveness of 
such credit. Such report shall include--
            (1) an evaluation of each standard used under such section 
        in determining the eligibility of property for credit under 
        such section including whether relevant higher industry 
        standards have been developed, and
            (2) recommendations (if any) for higher standards which 
        would supplement or replace such current standards and an 
        analysis of how such higher standards would be expected to 
        improve the effectiveness of such credit.

SEC. 5. IMPROVEMENTS TO NEW ENERGY EFFICIENT HOME CREDIT.

    (a) Extension of Credit.--
            (1) In general.--Section 45L(g) of the Internal Revenue 
        Code of 1986 is amended by striking ``December 31, 2020'' and 
        inserting ``December 31, 2050''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to qualified new energy efficient homes acquired 
        after December 31, 2020.
    (b) Updating New Energy Efficient Home Credit.--
            (1) In general.--Section 45L of the Internal Revenue Code 
        of 1986 is amended--
                    (A) in subsection (a)(2)--
                            (i) in subparagraph (A), by striking 
                        ``$2,000'' and inserting ``$2,500''; and
                            (ii) in subparagraph (B), by inserting ``or 
                        (4)'' after ``paragraph (3)'';
                    (B) in subsection (b)--
                            (i) in paragraph (2)(B), by striking ``this 
                        section'' and inserting ``the New Home Energy 
                        Efficiency Act''; and
                            (ii) by adding at the end the following:
            ``(5) 2018 iecc.--
                    ``(A) In general.--The term `2018 IECC' means the 
                2018 International Energy Conservation Code, as such 
                Code (including supplements) is in effect on the date 
                of the enactment of the New Home Energy Efficiency Act.
                    ``(B) Special rule.--For purposes of subsection 
                (c)(1)(B)(i)(I), in determining whether a dwelling unit 
                has been constructed in accordance with the standards 
                of chapter 4 of the 2018 IECC by achieving a level of 
                energy efficiency which meets Section R406.4 (N1106.4) 
                of such Code, such determination shall be made without 
                accounting for on-site energy generation.''; and
                    (C) by striking subsection (c) and inserting the 
                following:
    ``(c) Energy Saving Requirements.--A dwelling unit meets the energy 
saving requirements of this subsection if such unit--
            ``(1)(A) is certified--
                    ``(i) to have a level of annual heating and cooling 
                energy consumption which is at least 60 percent below 
                the annual level of heating and cooling energy 
                consumption of a comparable dwelling unit--
                            ``(I) which is constructed in accordance 
                        with the standards of chapter 4 of the 2006 
                        International Energy Conservation Code, as such 
                        Code (including supplements) is in effect on 
                        January 1, 2006, and
                            ``(II) for which the heating and cooling 
                        equipment efficiencies correspond to the 
                        minimum allowed under the regulations 
                        established by the Department of Energy 
                        pursuant to the National Appliance Energy 
                        Conservation Act of 1987 and in effect at the 
                        time of completion of construction, and
                    ``(ii) to have building envelope component 
                improvements account for at least \1/5\ of such 60 
                percent, or
            ``(B) is certified--
                    ``(i) to have a level of annual energy consumption 
                which is at least 15 percent below the annual level of 
                energy consumption of a comparable dwelling unit--
                            ``(I) which is constructed in accordance 
                        with the standards of chapter 4 of the 2018 
                        IECC, and
                            ``(II) which meets the requirements 
                        described in subparagraph (A)(i)(II), and
                    ``(ii) to have building envelope component 
                improvements account for at least \1/5\ of such 15 
                percent,
            ``(2) is a manufactured home which--
                    ``(A) conforms to Federal Manufactured Home 
                Construction and Safety Standards (part 3280 of title 
                24, Code of Federal Regulations), and
                    ``(B) meets the requirements described in 
                subparagraph (A) or (B) of paragraph (1),
            ``(3) meets the requirements established by the 
        Administrator of the Environmental Protection Agency under the 
        Energy Star Labeled Homes program, or
            ``(4) is a manufactured home which--
                    ``(A) conforms to the standards described in 
                paragraph (2)(A), and
                    ``(B) meets the requirements described in paragraph 
                (3).''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to qualified new energy efficient homes acquired 
        after December 31, 2020.
    (c) Periodic Report to Congress Regarding Improved Standards.--Not 
later than 5 years after the date of the enactment of this Act (and 
each 5 years thereafter until the termination of the credit determined 
under section 45L of the Internal Revenue Code of 1986), the Secretary 
of Energy, after consultation with the Secretary of Treasury, shall 
submit a written report to Congress evaluating the effectiveness of 
such credit. Such report shall include--
            (1) an evaluation of each standard used under such section 
        in determining the eligibility of property for credit under 
        such section including whether relevant higher industry 
        standards have been developed, and
            (2) recommendations (if any) for higher standards which 
        would supplement or replace such current standards and an 
        analysis of how such higher standards would be expected to 
        improve the effectiveness of such credit.

SEC. 6. EXTENSION ENERGY EFFICIENT COMMERCIAL BUILDINGS DEDUCTION.

    (a) In General.--Section 179D(h) of the Internal Revenue Code of 
1986 is amended by striking ``December 31, 2020'' and inserting 
``December 31, 2050''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after December 31, 2020.
                                 <all>