SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Renewable Energy Investment Act of 
2003.''

SEC. 2. DEFINITIONS.

    In this Act:
            (1) Biomass.--
                    (A) In general.--The term ``biomass'' means--
                            (i) organic material from a plant that is 
                        planted for the purpose of being used to 
                        produce energy;
                            (ii) nonhazardous, cellulosic or 
                        agricultural waste material that is segregated 
                        from other waste materials and is derived 
                        from--
                                    (I) a forest-related resource, 
                                including--
                                            (aa) mill and harvesting 
                                        residue;
                                            (bb) precommercial 
                                        thinnings;
                                            (cc) slash; and
                                            (dd) brush;
                                    (II) an agricultural resource, 
                                including--
                                            (aa) orchard tree crops;
                                            (bb) vineyards;
                                            (cc) grains;
                                            (dd) legumes;
                                            (ee) sugar; and
                                            (ff) other crop byproducts 
                                        or residues; or
                                    (III) miscellaneous waste such as--
                                            (aa) waste pallet;
                                            (bb) crate; and
                                            (cc) landscape or right-of-
                                        way tree trimmings; and
                            (iii) animal waste that is converted to a 
                        fuel rather than directly combusted, the 
                        residue of which is converted to a biological 
                        fertilizer, oil, or activated carbon.
                    (B) Exclusions.--The term ``biomass'' does not 
                include--
                            (i) incineration of municipal solid waste;
                            (ii) recyclable postconsumer waste paper;
                            (iii) painted, treated, or pressurized 
                        wood;
                            (iv) wood contaminated with plastic or 
                        metal; or
                            (v) tires.
            (2) Distributed generation.--The term ``distributed 
        generation'' means reduced electricity consumption from the 
        electric grid due to use by a customer of renewable energy 
        generated at a customer site.
            (3) Incremental hydropower.--The term ``incremental 
        hydropower'' means additional generation achieved from 
        increased efficiency after January 1, 2003, at a hydroelectric 
        dam that was placed in service before January 1, 2003.
            (4) Landfill gas.--The term ``landfill gas'' means gas 
        generated from the decomposition of household solid waste, 
        commercial solid waste, or industrial solid waste disposed of 
        in a municipal solid waste landfill unit (as those terms are 
        defined in regulations promulgated under subtitle D of the 
        Solid Waste Disposal Act (42 U.S.C. 6941 et seq.)).
            (5) Renewable energy.--The term ``renewable energy'' means 
        electricity generated from--
                    (A) a renewable energy source; or
                    (B) hydrogen that is produced from a renewable 
                energy source.
            (6) Renewable energy source.--The term ``renewable energy 
        source'' means--
                    (A) wind;
                    (B) ocean waves;
                    (C) biomass;
                    (D) solar sources;
                    (E) landfill gas;
                    (F) incremental hydropower; or
                    (G) a geothermal source.
            (7) Retail electric supplier.--The term ``retail electric 
        supplier'', with respect to any calendar year, means a person 
        or entity that--
                    (A) sells retail electricity to consumers; and
                    (B) sold not less than 500,000 megawatt-hours of 
                electric energy to consumers for purposes other than 
                resale during the preceding calendar year.
            (8) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

SEC. 3. RENEWABLE ENERGY GENERATION STANDARDS.

    (a) Renewable Energy Credits.--
            (1) In general.--For each calendar year beginning in 
        calendar year 2006, each retail electric supplier shall submit 
        to the Secretary, not later than April 30 of each year, 
        renewable energy credits in an amount equal to the required 
        annual percentage of the retail electric supplier's total 
        amount of kilowatt-hours of nonhydropower electricity sold to 
        consumers during the previous calendar year.
            (2) Carryover of renewable energy credits.--A renewable 
        energy credit for any year that is not used to satisfy the 
        minimum requirement for that year may be carried over for use 
        within the next 2 years.
    (b) Required Annual Percentage.--Of the total amount of 
nonhydropower electricity sold by each retail electric supplier during 
a calendar year, the amount generated by renewable energy sources shall 
be not less than the percentage specified below:

Calendar year:                      Percentage of Renewable energy each 
                                                                  year:
    2006-2009.....................................                   5 
    2010-2014.....................................                  10 
    2015-2019.....................................                  15 
    2020 and subsequent years.....................                  20.
    (c) Submission of Renewable Energy Credits.--
            (1) In general.--To meet the requirements under subsection 
        (a), a retail electric supplier shall submit to the Secretary--
                    (A) renewable energy credits issued to the retail 
                electric supplier under subsection (e);
                    (B) renewable energy credits obtained by purchase 
                or exchange under subsection (f);
                    (C) renewable energy credits purchased from the 
                United States under subsection (g); or
                    (D) any combination of renewable energy credits 
                obtained under subsections (e), (f), and (g).
            (2) No double counting.--A renewable energy credit may be 
        counted toward compliance with subsection (a) only once.
    (d) Renewable Energy Credit Program.--Not later than 1 year after 
the date of enactment of this Act, the Secretary shall establish a 
program to issue, monitor the sale or exchange of, and track renewable 
energy credits.
    (e) Issuance of Renewable Energy Credits.--
            (1) Application.--
                    (A) In general.--Under the program established 
                under subsection (d), an entity that generates electric 
                energy through the use of a renewable energy resource 
                may apply to the Secretary for the issuance of 
                renewable energy credits.
                    (B) Contents.--An application under subparagraph 
                (A) shall indicate--
                            (i) the type of renewable energy resource 
                        used to produce the electric energy;
                            (ii) the State in which the electric energy 
                        was produced; and
                            (iii) any other information that the 
                        Secretary determines to be appropriate.
            (2) Issuances.--
                    (A) In general.--Except as provided in subparagraph 
                (C), the Secretary shall issue to an entity applying 
                under this subsection 1 renewable energy credit for 
                each kilowatt-hour of renewable energy generated in any 
                State from the date of enactment of this Act and in 
                each subsequent calendar year.
                    (B) Vesting.--A renewable energy credit will vest 
                with the owner of the system or facility that generates 
                the renewable energy unless the owner explicitly 
                transfers the renewable energy credit.
                    (C) Amount.--The Secretary shall issue 3 renewable 
                energy credits for each kilowatt-hour of distributed 
                generation.
            (3) Eligibility.--
                    (A) In general.--To be eligible for a renewable 
                energy credit, the unit of electricity generated 
                through the use of a renewable energy resource shall be 
                sold for retail consumption or used by the generator.
                    (B) Energy generated from a combination of 
                sources.--If both a renewable energy resource and a 
                nonrenewable energy resource are used to generate the 
                electric energy, the Secretary shall issue renewable 
                energy credits based on the proportion of the renewable 
                energy resource used.
                    (C) Identification of type and date.--The Secretary 
                shall identify renewable energy credits by the type and 
                date of generation.
            (4) Sale under contract under purpa.--In a case in which a 
        generator sells electric energy generated through the use of a 
        renewable energy resource to a retail electric supplier under a 
        contract subject to section 210 of the Public Utilities 
        Regulatory Policies Act of 1978 (16 U.S.C. 824a-3), the retail 
        electric supplier shall be treated as the generator of the 
        electric energy for the purposes of this Act for the duration 
        of the contract.
    (f) Sale or Exchange of Renwable Energy Credits.--
            (1) In general.--A renewable energy credit may be sold or 
        exchanged by the entity issued the renewable energy credit or 
        by any other entity that acquires the renewable energy credit.
            (2) Manner of sale.--A renewable energy credit may be sold 
        or exchanged in any manner not in conflict with existing law, 
        including on the spot market or by contractual arrangements of 
        any duration.
    (g) Purchase From the United States.--
            (1) In general.--The Secretary shall offer renewable energy 
        credits for sale at the lesser of 3 cents per kilowatt-hour or 
        110 percent of the average market value of renewable energy 
        credits for the applicable compliance period.
            (2) Adjustment for inflation.--On January 1 of each year 
        following calendar year 2006, the Secretary shall adjust for 
        inflation the price charged per renewable energy credit for the 
        calendar year.
    (h) State Programs.--Nothing in this section precludes any State 
from requiring additional renewable energy generation in the State 
under any renewable energy program conducted by the State not in 
conflict with this Act.
    (i) Consumer Allocation.--
            (1) Rates.--The rates charged to classes of consumers by a 
        retail electric supplier shall reflect a proportional 
        percentage of the cost of generating or acquiring the required 
        annual percentage of renewable energy under subsection (a).
            (2) Representations to customers.--A retail electric 
        supplier shall not represent to any customer or prospective 
        customer that any product contains more than the percentage of 
        eligible resources if the additional amount of eligible 
        resources is being used to satisfy the renewable generation 
        requirement under subsection (a).
    (j) Enforcement.--
            (1) In general.--A retail electric supplier that does not 
        submit renewable energy credits as required under subsection 
        (a) shall be liable for the payment of a civil penalty.
            (2) Amount.--The amount of a civil penalty under paragraph 
        (1) shall be calculated on the basis of the number of renewable 
        energy credits not submitted, multiplied by the lesser of 4.5 
        cents or 300 percent of the average market value of renewable 
        energy credits for the compliance period.
    (k) Information Collection.--The Secretary may collect the 
information necessary to verify and audit--
            (1) the annual electric energy generation and renewable 
        energy generation of any entity applying for renewable energy 
        credits under this section;
            (2) the validity of renewable energy credits submitted by a 
        retail electric supplier to the Secretary; and
            (3) the quantity of electricity sales of all retail 
        electric suppliers.
    (l) Voluntary Participation.--The Secretary may issue a renewable 
energy credit under subsection (e) to any entity not subject to the 
requirements of this Act only if the entity applying for the renewable 
energy credit meets the terms and conditions of this Act to the same 
extent as entities subject to this Act.

SEC. 4. STATE RENEWABLE ENERGY GRANT PROGRAM.

    (a) Distribution of Amounts.--The Secretary shall distribute 
amounts received from sales under subsection 3(h) and from amounts 
received under subsection 3(k) to States to be used for the purposes of 
this section.
    (b) Program.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, the Secretary shall establish a program 
        to promote State renewable energy production and use.
            (2) Use of funds.--The Secretary shall make funds available 
        under this section to State energy agencies for grant programs 
        for--
                    (A) renewable energy research and development;
                    (B) loan guarantees to encourage construction of 
                renewable energy facilities;
                    (C) consumer rebate or other programs to offset 
                costs of small residential or small commercial 
                renewable energy systems including solar hot water; or
                    (D) promotion of distributed generation.
    (c) Preference.--In allocating funds under the program, the 
Secretary shall give preference to--
            (1) States that have a disproportionately small share of 
        economically sustainable renewable energy generation capacity; 
        and
            (2) State grant programs that are most likely to stimulate 
        or enhance innovative renewable energy technologies.
Output: Renewable Energy Investment Act of 2003 - Requires each retail electric supplier to submit annually to the Secretary of Energy renewable energy credits according to a prescribed annual percentage of the supplier's total amount of kilowatt-hours of nonhydropower electricity sold to consumers during the previous calendar year.

Requires each retail electric supplier during a calendar year to generate a specified percentage of nonhydropower electricty by renewable energy sources, escalating from five percent during calendar 2006 through 2009 by five percent increments during subsequent five-year periods up to twenty percent in calendar 2020 and beyond.

Directs the Secretary to establish a program to issue, monitor the sale or exchange of, and track renewable energy credits.

Authorizes any entity that is issued or has acquired a renewable energy credit to sell or exchange it. Requires the Secretary to sell credits at prices determined by a certain formula.

Subjects to a civil penalty a retail electric supplier who does not submit the requisite renewable energy credits.

Authorizes the Secretary to distribute receipts from sales to the States in order to promote State renewable energy production and use.