[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2323 Introduced in House (IH)]







107th CONGRESS
  1st Session
                                H. R. 2323

To authorize Department of Energy programs to develop and implement an 
 accelerated research and development program for advanced clean coal 
 technologies for use in coal-based electricity generating facilities 
  and to amend the Internal Revenue Code of 1986 to provide financial 
    incentives to encourage new construction and the retrofitting, 
    repowering, or replacement of coal-based electricity generating 
   facilities to protect the environment and improve efficiency and 
   encourage the early commercial application of advanced clean coal 
technologies, so as to allow coal to help meet the growing need to the 
      United States for the generation of reliable and affordable 
                              electricity.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 26, 2001

  Mr. Whitfield (for himself, Mr. Boucher, Mr. Shimkus, Mr. Mollohan, 
Mrs. Capito, Mr. Costello, Mr. Lewis of Kentucky, Mr. Phelps, Ms. Hart, 
  Mr. Strickland, Mr. Doyle, Mr. Tiberi, and Mr. Rogers of Kentucky) 
 introduced the following bill; which was referred to the Committee on 
  Ways and Means, and in addition to the Committee on Science, for a 
 period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To authorize Department of Energy programs to develop and implement an 
 accelerated research and development program for advanced clean coal 
 technologies for use in coal-based electricity generating facilities 
  and to amend the Internal Revenue Code of 1986 to provide financial 
    incentives to encourage new construction and the retrofitting, 
    repowering, or replacement of coal-based electricity generating 
   facilities to protect the environment and improve efficiency and 
   encourage the early commercial application of advanced clean coal 
technologies, so as to allow coal to help meet the growing need to the 
      United States for the generation of reliable and affordable 
                              electricity.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``National 
Electricity and Environmental Technology Act''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Findings.
      TITLE I--TECHNOLOGY ASSESSMENT AND RESEARCH AND DEVELOPMENT

Sec. 101. Definitions.
Sec. 102. Technology assessment.
Sec. 103. Study.
Sec. 104. Technology research and development program.
Sec. 105. Authorization of appropriations.
Sec. 106. Clean Coal Power Commercial Applications Initiative.
Sec. 107. Financial assistance.
TITLE II--CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY IMPROVEMENTS IN 
         EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES

Sec. 201. Credit for investment in qualifying clean coal technology.
Sec. 202. Credit for production from a qualifying clean coal technology 
                            unit.
  TITLE III--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED 
                        CLEAN COAL TECHNOLOGIES

Sec. 301. Credit for investment in qualifying advanced clean coal 
                            technology.
Sec. 302. Credit for production from qualifying advanced clean coal 
                            technology.
Sec. 303. Risk pool for qualifying advanced clean coal technology.
     TITLE IV--TREATMENT OF CERTAIN GOVERNMENTAL AND OTHER ENTITIES

Sec. 401. Credits for certain organizations and governmental units.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) reliable, affordable, increasingly clean electricity 
        will continue to power the growing United States economy;
            (2) an increasing use of electrotechnologies, the desire 
        for continuous environmental improvement, a more competitive 
        electricity market, and concerns about rising energy prices add 
        importance to the need for reliable, affordable, increasingly 
        clean electricity;
            (3) coal, which, as of the date of enactment of this Act, 
        accounts for more than \1/2\ of all electricity generated in 
        the United States, is the most abundant fossil energy resource 
        of the United States;
            (4) coal comprises more than 85 percent of all fossil 
        resources in the United States and exists in quantities 
        sufficient to supply the United States for 250 years at current 
        usage rates;
            (5) investments in electricity generating facility 
        emissions control technology over the past 30 years have 
        reduced the aggregate emissions of pollutants from coal-based 
        generating facilities by 21 percent, even as coal use for 
        electricity generation has nearly tripled;
            (6) continuous improvement in efficiency and environmental 
        performance from electricity generating facilities would allow 
        continued use of coal and preserve less abundant energy 
        resources for other energy uses;
            (7) new technologies for converting coal into electricity 
        can effectively eliminate health-threatening emissions and 
        improve efficiency by as much as 50 percent, but initial 
        commercial deployment of new coal generation technologies 
        entails significant risk that generators may be unable to 
        accept in a newly competitive electricity market; and
            (8) continued environmental improvement in coal-based 
        generation through continued research, development, and 
        demonstration toward an ultimate goal of near-zero emissions is 
        important and desirable.

      TITLE I--TECHNOLOGY ASSESSMENT AND RESEARCH AND DEVELOPMENT

SEC. 101. DEFINITIONS.

    In this title:
            (1) Cost and performance goals.--The term ``cost and 
        performance goals'' means the cost and performance goals 
established under section 102.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

SEC. 102. TECHNOLOGY ASSESSMENT.

    (a) In General.--The Secretary shall perform an assessment that 
establishes cost and performance goals with respect to technologies 
that would permit the continued cost-competitive use of coal for 
electricity generation, as chemical feedstocks, and as transportation 
fuel in 2007, 2015, and 2020.
    (b) Consultation.--In establishing the cost and performance goals, 
the Secretary shall consult with representatives of--
            (1) the United States coal industry;
            (2) State coal development agencies;
            (3) the electric utility industry;
            (4) railroads and other transportation industries;
            (5) manufacturers of equipment using advanced coal 
        technologies;
            (6) organizations representing workers;
            (7) organizations formed to--
                    (A) promote the use of coal;
                    (B) further the goals of environmental protection; 
                and
                    (C) promote the development and use of advanced 
                coal technologies; and
            (8) other appropriate Federal and State agencies.
    (c) Timing.--The Secretary shall--
            (1) not later than 120 days after the date of enactment of 
        this Act, issue a set of draft cost and performance goals for 
        public comment; and
            (2) not later than 180 days after the date of enactment of 
        this Act, after taking into consideration any public comments 
        received, submit to Congress the final cost and performance 
        goals.

SEC. 103. STUDY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, and once every 2 years thereafter through 2016, the 
Secretary, in cooperation with the Secretary of the Interior and the 
Administrator of the Environmental Protection Agency, shall transmit to 
the Congress a report containing the results of a study to--
            (1) identify technologies that, by themselves or in 
        combination with other technologies, may be capable of 
        achieving the cost and performance goals;
            (2) assess the costs that would be incurred by, and the 
        period of time that would be required for, the development and 
        demonstration of technologies that, by themselves or in 
        combination with other technologies, contribute to the 
        achievement of the cost and performance goals;
            (3) develop recommendations for technology development 
        programs, which the Department of Energy could carry out in 
        cooperation with industry, to develop and demonstrate 
        technologies that, by themselves or in combination with other 
        technologies, achieve the cost and performance goals; and
            (4) develop recommendations for additional authorities 
        required to achieve the cost and performance goals.
    (b) Expert Advice.--In carrying out this section, the Secretary 
shall give due weight to the expert advice of representatives of the 
entities described in section 102(b).

SEC. 104. TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM.

    (a) In General.--The Secretary shall carry out a program of 
research on and development, demonstration, and commercial application 
of coal-based technologies under--
            (1) this title;
            (2) the Federal Nonnuclear Energy Research and Development 
        Act of 1974 (42 U.S.C. 5901 et seq.);
            (3) the Energy Reorganization Act of 1974 (42 U.S.C. 5801 
        et seq.); and
            (4) title XIII of the Energy Policy Act of 1992 (42 U.S.C. 
        13331 et seq.).
    (b) Conditions.--The research, development, demonstration, and 
commercial application program described in subsection (a) shall be 
designed to achieve the cost and performance goals.

SEC. 105. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated to the 
Secretary to carry out sections 102, 103, and 104, $100,000,000 for 
each of the fiscal years 2002 through 2012, to remain available until 
expended.
    (b) Conditions of Authorization.--The authorization of 
appropriations under subsection (a)--
            (1) shall be in addition to authorizations of 
        appropriations in effect on the date of enactment of this Act; 
        and
            (2) shall not be a cap on Department of Energy fossil 
        energy research and development and clean coal technology 
        appropriations.

SEC. 106. CLEAN COAL POWER COMMERCIAL APPLICATIONS INITIATIVE.

    (a) In General.--The Secretary shall establish a clean coal power 
commercial applications initiative that will demonstrate commercial 
applications of advanced coal-based technologies applicable to new or 
existing power plants, including coproduction plants.
    (b) Requirements.--The technologies to be demonstrated under the 
initiative--
            (1) shall be technologies that, by themselves or in 
        combination with other technologies, advance efficiency, 
        environmental performance, and cost competitiveness well beyond 
        that which is in operation or has been demonstrated as of the 
        date of enactment of this Act; and
            (2) may include technologies that have not previously been 
        envisioned for commercial applications.
    (c) Plan.--Not later than 120 days after the date of enactment of 
this Act, the Secretary shall transmit to Congress a plan to carry out 
subsection (a) that includes a description of--
            (1) the program elements and management structure to be 
        used;
            (2) the technical milestones to be achieved with respect to 
        each of the advanced coal-based technologies included in the 
        plan; and
            (3) the demonstration activities proposed to be conducted 
        at facilities that serve or are located at new or existing 
        coal-based electric generation units having at least 50 
        megawatts nameplate rating, including improvements to allow the 
        units to achieve 1 or more of the following:
                    (A) An overall design efficiency improvement of not 
                less than 3 percent as compared with the efficiency of 
                the unit as operated as of the date of enactment of 
                this Act and before any retrofit, repowering, 
                replacement, or installation.
                    (B) A significant improvement in, or new 
                alternative technology to enhance, the environmental 
                performance related to the control of sulfur dioxide, 
                nitrogen oxide, or mercury in a manner that is 
                different and well below the cost of technologies that 
                are in operation or have been demonstrated as of the 
                date of enactment of this Act.
                    (C) A means of recycling or reusing a significant 
                portion of coal combustion or gasification wastes or 
                byproducts produced by coal-based generating units, 
                excluding practices that are commercially available as 
                of the date of enactment of this Act.
                    (D) A means to capture, separate, and reuse or 
                dispose of carbon dioxide that is different and well 
                below the cost of technologies that are in operation or 
                have been demonstrated as of the date of enactment of 
                this Act.

SEC. 107. FINANCIAL ASSISTANCE.

    (a) In General.--Not later than 180 days after the date on which 
the Secretary transmits to Congress the plan under section 106(c), the 
Secretary shall solicit proposals for projects that serve or are 
located at new or existing facilities designed to achieve 1 or more of 
the levels of performance set forth in section 106(c)(3).
    (b) Project Criteria.--A solicitation under subsection (a) may 
include solicitation of a proposal for a project to demonstrate--
            (1) an overall design efficiency improvement of not less 
        than 3 percentage points as compared with the efficiency of the 
        unit as operated as of the date of enactment of this Act and 
        with no increase in the potential to emit sulfur dioxide, 
        nitrogen oxide, particulate matter, mercury, or carbon 
        monoxide;
            (2) a reduction of emissions to a level of not more than--
                    (A)(i) in the case of sulfur dioxide--
                            (I) in the case of coal with a potential 
                        combustion concentration sulfur emission of 1.2 
                        or more pounds per million British thermal 
                        units of heat input, 5 percent of the potential 
                        combustion concentration sulfur dioxide 
                        emissions; or
                            (II) in the case of a coal with a potential 
                        combustion concentration of less than 1.2 
                        pounds per million British thermal units of 
                        heat input, 15 percent of the potential 
                        combustion concentration of sulfur dioxide 
                        emissions;
                    (ii) in the case of nitrogen oxide--
                            (I) in the case of a boiler other than a 
                        cyclone-fired boiler, emissions of 0.1 pound 
                        per million British thermal units of heat; or
                            (II) in the case of a cyclone-fired boiler, 
                        15 percent of the uncontrolled nitrogen oxide 
                        emissions from the boiler; or
                    (iii) in the case of particulate matter, emissions 
                of 0.02 pound per million British thermal units of heat 
                input; or
                    (B) the emission levels for the pollutants 
                identified in subparagraph (A) that are specified in 
                the new source performance standards of the Clean Air 
                Act (42 U.S.C. 7411) in effect at the time of 
                construction, installation, or retrofitting of the 
                advanced coal-based technology for the category of 
                source if they are lower than the levels specified in 
                subparagraph (A); or
            (3) the production of coal combustion byproducts that are 
        capable of obtaining economic values significantly greater than 
        byproducts produced as of the date of enactment of this Act 
        with no increase in the potential to emit sulfur dioxide, 
        nitrogen oxide, particulate matter, mercury, or carbon 
        monoxide.
    (c) Financial Assistance.--The Secretary shall provide financial 
assistance to projects that--
            (1) demonstrate overall cost reductions in the utilization 
        of coal to generate useful forms of energy;
            (2) improve the competitiveness of coal among various forms 
        of energy in order to maintain a diversity of fuel choices in 
        the United States to meet electricity generation requirements;
            (3) achieve, in a cost-effective manner, 1 or more of the 
        criteria described in the solicitation; and
            (4) demonstrate technologies that are applicable to 25 
        percent of the electricity generating facilities that use coal 
        as the primary feedstock as of the date of enactment of this 
        Act.
    (d) Federal Share.--The Federal share of the cost of a project 
funded under this section shall not exceed 50 percent.
    (e) Funding.--To carry out this section, the Secretary may use any 
unobligated funds available to the Secretary and any funds obligated to 
any project selected under the clean coal technology program that 
become unobligated.

TITLE II--CREDIT FOR EMISSION REDUCTIONS AND EFFICIENCY IMPROVEMENTS IN 
         EXISTING COAL-BASED ELECTRICITY GENERATION FACILITIES

SEC. 201. CREDIT FOR INVESTMENT IN QUALIFYING CLEAN COAL TECHNOLOGY.

    (a) Allowance of Qualifying Clean Coal Technology Unit Credit.--
Section 46 of the Internal Revenue Code of 1986 (relating to amount of 
credit) is amended by striking ``and'' at the end of paragraph (2), by 
striking the period at the end of paragraph (3) and inserting ``, 
and'', and by adding at the end the following:
            ``(4) the qualifying clean coal technology unit credit.''.
    (b) Amount of Qualifying Clean Coal Technology Unit Credit.--
Subpart E of part IV of subchapter A of chapter 1 of the Internal 
Revenue Code of 1986 (relating to rules for computing investment 
credit) is amended by inserting after section 48 the following:

``SEC. 48A. QUALIFYING CLEAN COAL TECHNOLOGY UNIT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying clean 
coal technology unit credit for any taxable year is an amount equal to 
10 percent of the qualified investment in a qualifying system of 
continuous emission control for such taxable year.
    ``(b) Qualifying System of Continuous Emission Control.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying system of continuous emission control' means a 
        system of the taxpayer which--
                    ``(A) serves, is added to, or retrofits an existing 
                coal-based electricity generation unit, the 
                construction, installation, or retrofitting of which is 
                completed by the taxpayer (but only with respect to 
                that portion of the basis which is properly 
                attributable to such construction, installation, or 
                retrofitting),
                    ``(B) reduces the discharge into the atmosphere of 
                1 or more of the following pollutants to not more 
                than--
                            ``(i) 5 percent of the potential combustion 
                        concentration sulfur dioxide emissions for a 
                        coal with a potential combustion concentration 
                        sulfur emission of 1.2 lb/million btu of heat 
                        input or greater,
                            ``(ii) 15 percent of the potential 
                        combustion concentration sulfur dioxide 
                        emissions for a coal with a potential 
                        combustion concentration sulfur emission of 
                        less than 1.2 lb/million btu of heat input,
                            ``(iii) nitrogen oxide emissions of 0.l lb 
                        per million btu of heat input from other than 
                        cyclone-fired boilers,
                            ``(iv) 15 percent of the uncontrolled 
                        nitrogen oxide emissions from cyclone-fired 
                        boilers,
                            ``(v) particulate emission of 0.02 lb per 
                        million btu of heat input, and
                            ``(vi) the emission levels specified in the 
                        new source performance standards of the Clean 
                        Air Act (42 U.S.C. 7411) in force at the time 
                        of construction, installation or retrofitting 
                        of the qualifying system of continuous emission 
                        control for the category of source if such 
                        level is lower than the levels specified in 
                        clause (i), (ii), (iii), (iv), or (v),
                    ``(C) is depreciable under section 167,
                    ``(D) has a useful life of not less than 4 years, 
                and
                    ``(E) is located in the United States.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a unit 
        which--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such unit was originally placed in service, for a 
                period of not less than 12 years,
        such unit shall be treated as originally placed in service not 
        earlier than the date on which such property is used under the 
        leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
    ``(c) Existing Coal-Based Electricity Generation Unit.--For 
purposes of subsection (a), the term `existing coal-based electricity 
generating unit' means, with respect to any taxable year, a steam 
generator-turbine unit which uses coal to produce 75 percent or more of 
its output as electricity and was operated commercially before the 
effective date of this section.
    ``(d) Limit on Qualifying Clean Coal Technology Unit Credit.--For 
purposes of subsection (a), the credit shall be applicable to not more 
than the first $100,000,000 of qualifying investment in a qualifying 
system of continuous emission control at any 1 existing coal-based 
electricity generating unit.
    ``(e) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying system of continuous emission control placed 
in service by the taxpayer during such taxable year.
    ``(f) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (e) without regard to 
        this subsection) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
means any property being constructed by or for the taxpayer and which 
it is reasonable to believe will qualify as a qualifying system of 
continuous emission control which is being constructed by or for the 
taxpayer when it is placed in service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Nonself-constructed property.--In the case of 
                nonself-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Nonself-constructed property.--The term 
                `nonself-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying system of 
                continuous emission control to be taken into account.--
                Construction shall be taken into account only if, for 
                purposes of this subpart, expenditures therefor are 
                properly chargeable to capital account with respect to 
                the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(g) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(h) Termination.--This section shall not apply with respect to 
any qualified investment made more than 10 years after the effective 
date of this section.''.
    (c) Recapture.--Section 50(a) of the Internal Revenue Code of 1986 
(relating to other special rules) is amended by adding at the end the 
following:
            ``(6) Special rules relating to qualifying system of 
        continuous emission control.--For purposes of applying this 
        subsection in the case of any credit allowable by reason of 
        section 48A, the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying system of continuous 
                emission control (as defined by section 48A(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying system of continuous emission control 
                disposed of, and whose denominator is the total number 
                of years over which such unit would otherwise have been 
                subject to depreciation. For purposes of the preceding 
                sentence, the year of disposition of the qualifying 
                system of continuous emission control property shall be 
                treated as a year of remaining depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying system of continuous 
                emission control under section 48A, except that the 
                amount of the increase in tax under subparagraph (A) of 
                this paragraph shall be substituted in lieu of the 
                amount described in such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying system 
                of continuous emission control.''.
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules) is amended by adding at the 
end the following:
            ``(11) No carryback of section 48a credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology unit credit determined under section 48A may be 
        carried back to a taxable year ending before the date of 
        enactment of section 48A.''.
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) of the Internal Revenue Code of 
        1986 is amended by striking ``and'' at the end of clause (ii), 
        by striking the period at the end of clause (iii) and inserting 
        ``, and'', and by adding at the end the following:
                            ``(iv) the portion of the basis of any 
                        qualifying system of continuous emission 
                        control attributable to any qualified 
                        investment (as defined by section 48A(e)).''.
            (2) Section 50(a)(4) of such Code is amended by striking 
        ``and (2)'' and inserting ``, (2), and (6)''.
            (3) Section 50(c) of such Code is amended by adding at the 
        end the following:
            ``(6) Nonapplication.--Paragraphs (1) and (2) shall not 
        apply to any qualifying clean coal technology unit credit under 
        section 48A.''.
            (4) 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 48 the following:

``Sec. 48A. Qualifying clean coal technology unit credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2001, 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 enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 202. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL TECHNOLOGY 
              UNIT.

    (a) Credit for Production From a Qualifying Clean Coal Technology 
Unit.--Subpart D of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to business related credits) is 
amended by adding at the end the following:

``SEC. 45G. CREDIT FOR PRODUCTION FROM A QUALIFYING CLEAN COAL 
              TECHNOLOGY UNIT.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
clean coal technology production credit of any taxpayer for any taxable 
year is equal to the product of--
            ``(1) the applicable amount of clean coal technology 
        production credit, multiplied by
            ``(2) the kilowatt hours of electricity produced by the 
        taxpayer during such taxable year at a qualifying clean coal 
        technology unit during the 10-year period beginning on the date 
        the unit was returned to service after retrofit, repowering, or 
        replacement.
    ``(b) Applicable Amount.--
            ``(1) In general.--For purposes of this section, the 
        applicable amount of clean coal technology production credit is 
        equal to $0.0034.
            ``(2) Inflation adjustment factor.--For calendar years 
        after 2001, the applicable amount of clean coal technology 
        production credit shall be adjusted by multiplying such amount 
        by the inflation adjustment factor for the calendar year in 
        which the amount is applied. If any amount as increased under 
        the preceding sentence is not a multiple of 0.01 cent, such 
        amount shall be rounded to the nearest multiple of 0.01 cent.
    ``(c) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualifying clean coal technology unit.--The term 
        `qualifying clean coal technology unit' means a unit of the 
        taxpayer which--
                    ``(A) is an existing coal-based electricity 
                generating steam generator-turbine unit,
                    ``(B) has a nameplate capacity rating of not more 
                than 300,000 kilowatts, and
                    ``(C) has been retrofitted, repowered, or replaced 
                with a clean coal technology within 10 years after the 
                effective date of this section.
            ``(2) Clean coal technology.--The term `clean coal 
        technology' means technology which--
                    ``(A) uses coal to produce 50 percent or more of 
                its thermal output as electricity, including advanced 
                pulverized coal or atmospheric fluidized bed 
                combustion, pressurized fluidized bed combustion, 
                integrated gasification combined cycle, or any other 
                technology for the production of electricity,
                    ``(B) has a design heat rate not less than 500 Btu/
                kWh below that of the existing unit before it is 
                retrofit, repowered, or replaced with the qualifying 
                clean coal technology,
                    ``(C) has a maximum design heat rate of not more 
                than 9,500 Btu/kWh when the design coal has a heat 
                content of more than 9,000 Btu per pound,
                    ``(D) has a maximum design heat rate of not more 
                than 10,500 Btu/kWh when the design coal has a heat 
                content of 9,000 Btu per pound or less, and
                    ``(E) reduces the discharge into the atmosphere of 
                1 or more of the following pollutants to not more 
                than--
                            ``(i) 5 percent of the potential combustion 
                        concentration sulfur dioxide emissions for a 
                        coal with a potential combustion concentration 
                        sulfur emission of 1.2 lb/million btu of heat 
                        input or greater,
                            ``(ii) 15 percent of the potential 
                        combustion concentration sulfur dioxide 
                        emissions for a coal with a potential 
                        combustion concentration sulfur emission of 
                        less than 1.2 lb/million btu of heat input,
                            ``(iii) nitrogen oxide emissions of 0.1 lb 
                        per million btu of heat input from other than 
                        cyclone-fired boilers,
                            ``(iv) 15 percent of the uncontrolled 
                        nitrogen oxide emissions from cyclone-fired 
                        boilers,
                            ``(v) particulate emissions of 0.02 lb per 
                        million btu of heat input, and
                            ``(vi) the emission levels specified in the 
                        new source performance standards of the Clean 
                        Air Act (42 U.S.C. 7411) in effect at the time 
                        of construction, installation or retrofitting 
                        of the qualifying clean coal technology unit 
                        for the category of source if such level is 
                        lower than the levels specified in clause (i), 
                        (ii), (iii), (iv), or (v).
            ``(3) Application of certain rules.--The rules of 
        paragraphs (3), (4), and (5) of section 45 shall apply.
            ``(4) Inflation adjustment factor.--The term `inflation 
        adjustment factor' means, with respect to a calendar year, a 
        fraction the numerator of which is the GDP implicit price 
        deflator for the preceding calendar year and the denominator of 
        which is the GDP implicit price deflator for the calendar year 
        2001.
            ``(5) GDP implicit price deflator.--The term `GDP implicit 
        price deflator' means the most recent revision of the implicit 
        price deflator for the gross domestic product as computed by 
        the Department of Commerce before March 15 of the calendar 
        year.
    ``(d) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the qualifying clean coal 
technology unit credit under section 48A is allowed unless the taxpayer 
elects to waive the application of such credit to such property.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 is amended by striking ``plus'' at the 
end of paragraph (14), by striking the period at the end of paragraph 
(15) and inserting ``, plus'', and by adding at the end the following:
            ``(16) the qualifying clean coal technology production 
        credit determined under section 45G(a).''.
    (c) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 201(d), 
is amended by adding at the end the following:
            ``(12) No carryback of section 45g credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology production credit determined under section 45G may 
        be carried back to a taxable year ending before the date of 
        enactment of section 45G.''.
    (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:

``Sec. 45G. Credit for production from a qualifying clean coal 
                            technology unit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after the date of enactment of this Act.

  TITLE III--INCENTIVES FOR EARLY COMMERCIAL APPLICATIONS OF ADVANCED 
                        CLEAN COAL TECHNOLOGIES

SEC. 301. CREDIT FOR INVESTMENT IN QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

    (a) Allowance of Qualifying Advanced Clean Coal Technology Facility 
Credit.--Section 46 of the Internal Revenue Code of 1986 (relating to 
amount of credit), as amended by section 201(a), is amended by striking 
``and'' at the end of paragraph (3), by striking the period at the end 
of paragraph (4) and inserting ``, and'', and by adding at the end the 
following:
            ``(5) the qualifying advanced clean coal technology 
        facility credit.''.
    (b) Amount of Qualifying Advanced Clean Coal Technology Facility 
Credit.--Subpart E of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to rules for computing 
investment credit), as amended by section 201(b), is amended by 
inserting after section 48A the following:

``SEC. 48B. QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY FACILITY CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying 
advanced clean coal technology facility credit for any taxable year is 
an amount equal to 10 percent of the qualified investment in a 
qualifying advanced clean coal technology facility for such taxable 
year.
    ``(b) Qualifying Advanced Clean Coal Technology Facility.--
            ``(1) In general.--For purposes of subsection (a), the term 
        `qualifying advanced clean coal technology facility' means a 
        facility of the taxpayer which--
                    ``(A)(i)(I) original use of which commences with 
                the taxpayer, or
                    ``(II) is a retrofitted or repowered conventional 
                technology facility, the retrofitting or repowering of 
                which is completed by the taxpayer (but only with 
                respect to that portion of the basis which is properly 
                attributable to such retrofitting or repowering), or
                    ``(ii) is acquired through purchase (as defined by 
                section 179(d)(2)),
                    ``(B) is depreciable under section 167,
                    ``(C) has a useful life of not less than 4 years,
                    ``(D) is located in the United States, and
                    ``(E) uses qualifying advanced clean coal 
                technology.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        which--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years,
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under 
this sentence. Such an election, once made, may be revoked only with 
the consent of the Secretary.
    ``(c) Qualifying Advanced Clean Coal Technology.--For purposes of 
paragraph (1)--
            ``(1) In general.--The term `qualifying advanced clean coal 
        technology' means, with respect to clean coal technology--
                    ``(A) which has--
                            ``(i) multiple applications, with a 
                        combined capacity of not more than 5,000 
                        megawatts (4,000 megawatts before 2009), of 
                        advanced pulverized coal or atmospheric 
                        fluidized bed combustion technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2012, and
                                    ``(III) having a design net heat 
                                rate of not more than 9,500 Btu per 
                                kilowatt hour when the design coal has 
                                a heat content of more than 9,000 Btu 
                                per pound, or a design net heat rate of 
                                not more than 9,900 Btu per kilowatt 
                                hour when the design coal has a heat 
                                content of 9,000 Btu per pound or less,
                            ``(ii) multiple applications, with a 
                        combined capacity of not more than 1,000 
                        megawatts (500 megawatts before 2009 and 750 
                        megawatts before 2013), of pressurized 
                        fluidized bed combustion technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2016, and
                                    ``(III) having a design net heat 
                                rate of not more than 8,400 Btu per 
                                kilowatt hour when the design coal has 
                                a heat content of more than 9,000 Btu 
                                per pound, or a design net heat rate of 
                                not more than 9,900 Btu's per kilowatt 
                                hour when the design coal has a heat 
                                content of 9,000 Btu per pound or less, 
                                and
                            ``(iii) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts (1,000 megawatts before 2009 and 
                        1,500 megawatts before 2013), of integrated 
                        gasification combined cycle technology, with or 
                        without fuel or chemical co-production--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2016,
                                    ``(III) having a design net heat 
                                rate of not more than 8,550 Btu per 
                                kilowatt hour when the design coal has 
                                a heat content of more than 9,000 Btu 
                                per pound, or a design net heat rate of 
                                not more than 9,900 Btu per kilowatt 
                                hour when the design coal has a heat 
                                content of 9,000 Btu per pound or less, 
                                and
                                    ``(IV) having a net thermal 
                                efficiency on any fuel or chemical co-
                                production of not less than 39 percent 
                                (higher heating value), or
                            ``(iv) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts (1,000 megawatts before 2009 and 
                        1,500 megawatts before 2013) of technology for 
                        the production of electricity--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2016, and
                                    ``(III) having a carbon emission 
                                rate which is not more than 85 percent 
                                of conventional technology, and
                    ``(B) which reduces the discharge into the 
                atmosphere of 1 or more of the following pollutants to 
                not more than--
                            ``(i) 5 percent of the potential combustion 
                        concentration sulfur dioxide emissions for a 
                        coal with a potential combustion concentration 
                        sulfur emission of 1.2 lb/million btu of heat 
                        input or greater,
                            ``(ii) 15 percent of the potential 
                        combustion concentration sulfur dioxide 
                        emissions for a coal with a potential 
                        combustion concentration sulfur emission of 
                        less than 1.2 lb/million btu of heat input,
                            ``(iii) nitrogen oxide emissions of 0.1 lb 
                        per million btu of heat input from other than 
                        cyclone-fired boilers,
                            ``(iv) 15 percent of the uncontrolled 
                        nitrogen oxide emissions from cyclone-fired 
                        boilers,
                            ``(v) particulate emissions of 0.02 lb per 
                        million btu of heat input, and
                            ``(vi) the emission levels specified in the 
                        new source performance standards of the Clean 
                        Air Act (42 U.S.C. 7411) in effect at the time 
                        of retrofitting, repowering, or replacement of 
                        the qualifying clean coal technology unit for 
                        the category of source if such level is lower 
                        than the levels specified in clause (i), (ii), 
                        (iii), (iv), or (v).
            ``(2) Exceptions.--Such term shall not include any projects 
        receiving or scheduled to receive funding under the Clean Coal 
        Technology Program, or the Power Plant Improvement administered 
        by the Secretary of the Department of Energy or a Qualifying 
        Clean Coal Technology Unit as defined in section 45G(c)(1).
    ``(d) Clean Coal Technology.--The term `clean coal technology' 
means advanced technology which uses coal to produce 75 percent or more 
of its thermal output as electricity including advanced pulverized coal 
or atmospheric fluidized bed combustion, pressurized fluidized 
bed combustion, integrated gasification combined cycle with or without 
fuel or chemical co-production, and any other technology for the 
production of electricity which exceeds the performance of conventional 
technology.
    ``(e) Conventional Technology.--The term `conventional technology' 
means--
            ``(1) coal-fired combustion technology with a design net 
        heat rate of not less than 9,500 Btu per kilowatt hour (HHV) 
        and a carbon equivalents emission rate of not more than 0.54 
        pounds of carbon per kilowatt hour when the design coal has a 
        heat content of more than 9,000 Btu per pound,
            ``(2) coal-fired combustion technology with a design net 
        heat rate of not less than 10,500 Btu per kilowatt hour (HHV) 
        and a carbon equivalents emission rate of not more than 0.60 
        pounds of carbon per kilowatt hour when the design coal has a 
        heat content of 9,000 Btu per pound or less, or
            ``(3) natural gas-fired combustion technology with a design 
        net heat rate of not less than 7,500 Btu per kilowatt hour 
        (HHV) and a carbon equivalents emission rate of not more than 
        0.24 pounds of carbon per kilowatt hour.
    ``(f) Design Net Heat Rate.--The design net heat rate shall be 
based on the design annual heat input to and the design annual net 
electrical output from the qualifying advanced clean coal technology 
(determined without regard to such technology's co-generation of 
steam).
    ``(g) Selection Criteria.--Selection criteria for qualifying 
advanced clean coal technology facilities--
            ``(1) shall be established by the Secretary of Energy as 
        part of a competitive solicitation,
            ``(2) shall include primary criteria of minimum design net 
        heat rate, maximum design thermal efficiency, environmental 
        performance, and lowest cost to the government, and
            ``(3) shall include supplemental criteria as determined 
        appropriate by the Secretary of Energy.
    ``(h) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying advanced clean coal technology facility 
placed in service by the taxpayer during such taxable year.
    ``(i) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        advanced clean coal technology facility which is being 
        constructed by or for the taxpayer when it is placed in 
        service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Nonself-constructed property.--In the case of 
                nonself-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Nonself-constructed property.--The term 
                `nonself-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying advanced 
                clean coal technology facility to be taken into 
                account.--Construction shall be taken into account only 
                if, for purposes of this subpart, expenditures therefor 
                are properly chargeable to capital account with respect 
                to the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(j) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(k) Termination.--This section shall not apply with respect to 
any qualified investment made more than 10 years after the effective 
date of this section.''.
    (c) Recapture.--Section 50(a) of the Internal Revenue Code of 1986 
(relating to other special rules), as amended by section 201(c), is 
amended by adding at the end the following:
            ``(7) Special rules relating to qualifying advanced clean 
        coal technology facility.--For purposes of applying this 
        subsection in the case of any credit allowable by reason of 
        section 48B, the following shall apply:
                    ``(A) General rule.--In lieu of the amount of the 
                increase in tax under paragraph (1), the increase in 
                tax shall be an amount equal to the investment tax 
                credit allowed under section 38 for all prior taxable 
                years with respect to a qualifying advanced clean coal 
                technology facility (as defined by section 48B(b)(1)) 
                multiplied by a fraction whose numerator is the number 
                of years remaining to fully depreciate under this title 
                the qualifying advanced clean coal technology facility 
                disposed of, and whose denominator is the total number 
                of years over which such facility would otherwise have 
                been subject to depreciation. For purposes of the 
                preceding sentence, the year of disposition of the 
                qualifying advanced clean coal technology facility 
                property shall be treated as a year of remaining 
                depreciation.
                    ``(B) Property ceases to qualify for progress 
                expenditures.--Rules similar to the rules of paragraph 
                (2) shall apply in the case of qualified progress 
                expenditures for a qualifying advanced clean coal 
                technology facility under section 48B, except that the 
                amount of the increase in tax under subparagraph (A) of 
this paragraph shall be substituted in lieu of the amount described in 
such paragraph (2).
                    ``(C) Application of paragraph.--This paragraph 
                shall be applied separately with respect to the credit 
                allowed under section 38 regarding a qualifying 
                advanced clean coal technology facility.''.
    (d) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 202(c), 
is amended by adding at the end the following:
            ``(13) No carryback of section 48b credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology facility credit determined under section 48B 
        may be carried back to a taxable year ending before the date of 
        enactment of section 48B.''.
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) of the Internal Revenue Code of 
        1986, as amended by section 201(e)(1), is amended by striking 
        ``and'' at the end of clause (iii), by striking the period at 
        the end of clause (iv) and inserting ``, and'', and by adding 
        at the end the following:
                            ``(v) the portion of the basis of any 
                        qualifying advanced clean coal technology 
                        facility attributable to any qualified 
                        investment (as defined by section 48B(c)).''.
            (2) Section 50(a)(4) of such Code, as amended by section 
        201(e)(2), is amended by striking ``and (6)'' and inserting 
        ``(6), and (7)''.
            (3) Section 50(c)(6) of such Code, as added by section 
        201(e)(3), is amended by inserting ``or any advanced clean coal 
        technology facility credit under section 48B'' after ``section 
        48A''.
            (4) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 201(e)(4), is 
        amended by inserting after the item relating to section 48A the 
        following:

``Sec. 48B. Qualifying advanced clean coal technology facility 
                            credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2001, 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 enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 302. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

    (a) Credit for Production From Qualifying Advanced Clean Coal 
Technology.--Subpart D of part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to business related credits), 
as amended by section 202(a), is amended by adding at the end the 
following:

``SEC. 45H. CREDIT FOR PRODUCTION FROM QUALIFYING ADVANCED CLEAN COAL 
              TECHNOLOGY.

    ``(a) General Rule.--For purposes of section 38, the qualifying 
advanced clean coal technology production credit of any taxpayer for 
any taxable year is equal to--
            ``(1) the applicable amount of advanced clean coal 
        technology production credit, multiplied by
            ``(2) the sum of--
                    ``(A) the kilowatt hours of electricity, plus
                    ``(B) each 3,413 Btu of fuels or chemicals,
        produced by the taxpayer during such taxable year at a 
        qualifying advanced clean coal technology facility during the 
        10-year period beginning on the date the facility was 
        originally placed in service.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount of advanced clean coal technology production credit 
with respect to production from a qualifying advanced clean coal 
technology facility shall be determined as follows:
            ``(1) Where the design coal has a heat content of more than 
        9,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2009, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,400.........         $.0060                $.0038
More than 8,400 but not more         $.0025                $.0010
 than 8,550.
More than 8,550 but not more         $.0010                $.0010.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2008 and before 2013, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,770.........         $.0105                $.0090
More than 7,770 but not more         $.0085                $.0068
 than 8,125.
More than 8,125 but not more         $.0075                $.0055.
 than 8,350.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2012 and before 2017, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,380.........         $.0140                 $.01
More than 7,380 but not more         $.0120                $.0090.
 than 7,720.
------------------------------------------------------------------------

            ``(2) Where the design coal has a heat content of not more 
        than 9,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2009, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,500.........         $.0060                $.0038
More than 8,500 but not more         $.0025                $.0010
 than 8,650.
More than 8,650 but not more         $.0010                $.0010.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2008 and before 2013, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 8,000.........         $.0105                 $.009
More than 8,000 but not more         $.0085                $.0068
 than 8,250.
More than 8,250 but not more         $.0075                $.0055.
 than 8,400.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2012 and before 2017, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 heat rate, Btu/kWh (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not more than 7,800.........         $.0140                $.0115
More than 7,800 but not more         $.0120                $.0090.
 than 7,950.
------------------------------------------------------------------------

            ``(3) Where the clean coal technology facility is producing 
        fuel or chemicals:
                    ``(A) In the case of a facility originally placed 
                in service before 2009, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 40.6 percent..         $.0060                $.0038
Less than 40.6 but not less          $.0025                $.0010
 than 40 percent.
Less than 40 but not less            $.0010                $.0010.
 than 39 percent.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2008 and before 2013, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 43.9 percent..         $.0105                 $.009
Less than 43.9 but not less          $.0085                $.0068
 than 42 percent.
Less than 42 but not less            $.0075                $.0055.
 than 40.9 percent.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2012 and before 2017, if--
      

------------------------------------------------------------------------
                                       The applicable amount is:
  ``The facility design net  -------------------------------------------
 thermal efficiency (HHV) is   For 1st 5 years of     For 2d 5 years of
          equal to:               such service          such service
------------------------------------------------------------------------
Not less than 44.2 percent..         $.0140                $.0115
Less than 44.2 but not less          $.0120                $.0090.
 than 43.6 percent.
------------------------------------------------------------------------

    ``(c) Inflation Adjustment Factor.--For calendar years after 2001, 
each amount in paragraphs (1), (2), and (3) shall be adjusted by 
multiplying such amount by the inflation adjustment factor for the 
calendar year in which the amount is applied. If any amount as 
increased under the preceding sentence is not a multiple of 0.01 cent, 
such amount shall be rounded to the nearest multiple of 0.01 cent.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--Any term used in this section which is 
        also used in section 48B shall have the meaning given such term 
        in section 48B.
            ``(2) Applicable rules.--The rules of paragraphs (3), (4), 
        and (5) of section 45 shall apply.
            ``(3) Inflation adjustment factor.--The term `inflation 
        adjustment factor' means, with respect to a calendar year, a 
        fraction the numerator of which is the GDP implicit price 
        deflator for the preceding calendar year and the denominator of 
        which is the GDP implicit price deflator for the calendar year 
        2001.
            ``(4) GDP implicit price deflator.--The term `GDP implicit 
        price deflator' means the most recent revision of the implicit 
        price deflator for the gross domestic product as computed by 
        the Department of Commerce before March 15 of the calendar 
        year.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986, as amended by section 202(b), is amended 
by striking ``plus'' at the end of paragraph (15), by striking the 
period at the end of paragraph (16) and inserting ``, plus'', and by 
adding at the end the following:
            ``(17) the qualifying advanced clean coal technology 
        production credit determined under section 45H(a).''.
    (c) Transitional Rule.--Section 39(d) of the Internal Revenue Code 
of 1986 (relating to transitional rules), as amended by section 301(d), 
is amended by adding at the end the following:
            ``(14) No carryback of section 45h credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology production credit determined under section 45H 
        may be carried back to a taxable year ending before the date of 
        enactment of section 45H.''.
    (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, as amended by section 202(d), is amended by adding at the end the 
following:

``Sec. 45H. Credit for production from qualifying advanced clean coal 
                            technology.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after the date of enactment of this Act.

SEC. 303. RISK POOL FOR QUALIFYING ADVANCED CLEAN COAL TECHNOLOGY.

    (a) Establishment.--The Secretary of the Treasury shall establish a 
financial risk pool which shall be available to any United States owner 
of a qualifying advanced clean coal technology which has qualified for 
an advanced clean coal technology production credit (as defined in 
section 45H of the Internal Revenue Code of 1986, as added by section 
302) to offset for the first 3 years of the operation of such 
technology the costs (not to exceed 5 percent of the total cost of 
installation) for modifications resulting from the technology's failure 
to achieve its design performance.
    (b) Authorization of Appropriations.--There is authorized to be 
appropriated such sums as are necessary to carry out the purposes of 
this section.

     TITLE IV--TREATMENT OF CERTAIN GOVERNMENTAL AND OTHER ENTITIES

SEC. 401. CREDITS FOR CERTAIN ORGANIZATIONS AND GOVERNMENTAL UNITS.

    Section 6401(b) of the Internal Revenue Code of 1986 (relating to 
excessive credits) is amended by adding at the end the following:
            ``(3) Credits for certain organizations and governmental 
        units.--
                    ``(A) Allowance of credits.--Any credit which would 
                be allowable under section 45G, 45H, 48A, or 48B with 
                respect to a facility of an entity whether or not such 
                entity is exempt from tax, shall be treated as a credit 
                allowable under subpart C of part IV of subchapter A 
of chapter 1 of subtitle A to such entity if such entity is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C),
                            ``(iii) a public utility (as defined in 
                        section 136(c)(2)(B)),
                            ``(iv) a State, the District of Columbia, 
                        or a possession of the United States, or any 
                        political subdivision thereof, or
                            ``(v) the Tennessee Valley Authority.
                    ``(B) Use of credit.--
                            ``(i) Transfer of credit.--An entity 
                        described in clause (i), (ii), (iii), or (iv) 
                        of subparagraph (A) may assign, trade, sell, or 
                        otherwise transfer any credit allowable to such 
                        entity under subparagraph (A) to any other 
                        person or entity.
                            ``(ii) Use of credit as an offset.--
                        Notwithstanding any other provision of law, in 
                        the case of any entity described in clause (i) 
                        or (ii) of subparagraph (A), any credit 
                        allowable to such entity under subparagraph (A) 
                        may be applied by such entity, without penalty, 
                        as a prepayment of any loan, debt or other 
                        obligation the entity has made, incurred or 
                        guaranteed under the Rural Electrification Act 
                        of 1936 (7 U.S.C. 901 et seq.).
                            ``(iii) Use by tva.--
                                    ``(I) In general.--Notwithstanding 
                                any other provision of law, in the case 
                                of an entity described in subparagraph 
                                (A)(v), any credit allowable under 
                                subparagraph (A) to such entity may be 
                                applied as a credit against the 
                                payments required to be made in any 
                                fiscal year under section 15d(e) of the 
                                Tennessee Valley Authority Act of 1933 
                                (16 U.S.C. 83ln-4(e)) as an annual 
                                return on the appropriations investment 
                                and an annual repayment sum.
                                    ``(II) Treatment of credits.--The 
                                aggregate amount of credits described 
                                in subparagraph (A) shall be treated in 
                                the same manner and to the same extent 
                                as if such credits were a payment in 
                                cash and shall be applied first against 
                                the annual return on the appropriations 
                                investment.
                                    ``(III) Credit carryover.--With 
                                respect to any fiscal year, if the 
                                aggregate amount of the credits 
                                described in subparagraph (A) exceeds 
                                the aggregate amount of payment 
                                obligations described in subclause (I), 
                                the excess amount shall remain 
                                available for application as credits 
                                against the amounts of such payment 
                                obligations in succeeding fiscal years 
                                in the same manner as described in this 
                                clause.
                    ``(C) Credit not income.--Neither a transfer under 
                clause (i) nor a use under clause (ii) of subparagraph 
                (B) of any credit allowable under subparagraph (A) 
                shall result in income for purposes of section 
                501(c)(12).
                    ``(D) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                an entity described in clause (iii) or (iv) of 
                subparagraph (A) from the transfer of any such credit 
                under subparagraph (B)(I) shall be treated as arising 
                from an essential government function.
                    ``(E) Treatment of unrelated persons.--For purposes 
                of this title, sales among and between entities 
                described in clauses (i), (ii), (iii), and (iv) of 
                subparagraph (A) shall be treated as sales between 
                unrelated parties.''.
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