[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 1293 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                S. 1293

 To amend the Internal Revenue Code of 1986 to provide incentives for 
the voluntary reduction, avoidance, and sequestration of greenhouse gas 
    emissions and to advance global climate science and technology 
                      development and deployment.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 1, 2001

 Mr. Craig (for himself and Mr. Hagel) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives for 
the voluntary reduction, avoidance, and sequestration of greenhouse gas 
    emissions and to advance global climate science and technology 
                      development and deployment.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Climate Change Tax Amendments of 
2001''.

SEC. 2. PERMANENT TAX CREDIT FOR RESEARCH AND DEVELOPMENT REGARDING 
              GREENHOUSE GAS EMISSIONS REDUCTION, AVOIDANCE, OR 
              SEQUESTRATION.

    (a) In General.--Section 41(h) of the Internal Revenue Code of 1986 
(relating to termination) is amended by adding at the end the 
following:
            ``(3) Exception for certain research.--Paragraph (1)(B) 
        shall not apply in the case of any qualified research expenses 
        if the research--
                    ``(A) has as one of its purposes the reducing, 
                avoiding, or sequestering of greenhouse gas emissions, 
                and
                    ``(B) has been reported to the Department of Energy 
                under section 1605(b) of the Energy Policy Act of 
                1992.''.
    (b) Effective Date.--The amendment made by subsection (a) applies 
with respect to amounts paid or incurred after the date of enactment of 
this Act, except that such amendment shall not take effect unless the 
Climate Change Risk Management Act of 2001 is enacted into law.

SEC. 3. TAX CREDIT FOR GREENHOUSE GAS EMISSIONS FACILITIES.

    (a) Allowance of Greenhouse Gas Emissions Facilities 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 greenhouse gas emissions facilities credit.''.
    (b) Amount of 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. CREDIT FOR GREENHOUSE GAS EMISSIONS FACILITIES.

    ``(a) In General.--For purposes of section 46, the greenhouse gas 
emissions facilities credit for any taxable year is the applicable 
percentage of the qualified investment in a greenhouse gas emissions 
facility for such taxable year.
    ``(b) Greenhouse Gas Emissions Facility.--For purposes of 
subsection (a), the term `greenhouse gas emissions facility' means a 
facility of the taxpayer--
            ``(1)(A) the construction, reconstruction, or erection of 
        which is completed by the taxpayer, or
            ``(B) which is acquired by the taxpayer if the original use 
        of such facility commences with the taxpayer,
            ``(2) the operation of which--
                    ``(A) replaces the operation of a facility of the 
                taxpayer,
                    ``(B) reduces, avoids, or sequesters greenhouse gas 
                emissions on a per unit of output basis as compared to 
                such emissions of the replaced facility, and
                    ``(C) uses the same type of fuel (or combination of 
                the same type of fuel and biomass fuel) as was used in 
                the replaced facility,
            ``(3) with respect to which depreciation (or amortization 
        in lieu of depreciation) is allowable, and
            ``(4) which meets the performance and quality standards (if 
        any) which--
                    ``(A) have been jointly prescribed by the Secretary 
                and the Secretary of Energy by regulations,
                    ``(B) are consistent with regulations prescribed 
                under section 1605(b) of the Energy Policy Act of 1992, 
                and
                    ``(C) are in effect at the time of the acquisition 
                of the facility.
    ``(c) Applicable Percentage.--For purposes of subsection (a), the 
applicable percentage is one-half of the percentage reduction, 
avoidance, or sequestration of greenhouse gas emissions described in 
subsection (b)(2) and reported and certified under section 1605(b) of 
the Energy Policy Act of 1992.
    ``(d) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a greenhouse gas emissions facility placed in service by 
the taxpayer during such taxable year, but only with respect to that 
portion of the investment attributable to providing production capacity 
not greater than the production capacity of the facility being 
replaced.
    ``(e) 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 (d) 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 greenhouse 
        gas emissions 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) Non-self-constructed property.--In the case 
                of non-self-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) Non-self-constructed property.--The term 
                `non-self-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 greenhouse gas emissions 
                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.''
    (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 greenhouse gas emissions 
        facility.--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 greenhouse gas emissions 
                facility (as defined by section 48A(b)) multiplied by a 
                fraction whose numerator is the number of years 
                remaining to fully depreciate under this title the 
                greenhouse gas emissions 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 greenhouse gas 
                emissions 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 greenhouse gas emissions facility 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 greenhouse gas 
                emissions facility.''
    (d) 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 
                        greenhouse gas emissions facility attributable 
                        to any qualified investment (as defined by 
                        section 48A(d)).''
            (2) Section 50(a)(4) of such Code is amended by striking 
        ``and (2)'' and inserting ``, (2), and (6)''.
            (3) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 48 the following:

                              ``Sec. 48A. Credit for greenhouse gas 
                                        emissions facilities.''
    (e) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act, under rules similar to the rules of section 48(m) of the 
Internal Revenue Code of 1986 (as in effect on the day before the date 
of the enactment of the Revenue Reconciliation Act of 1990).
    (f) Study of Additional Incentives for Voluntary Reduction, 
Avoidance, or Sequestration of Greenhouse Gas Emissions.--
            (1) In general.--The Secretary of the Treasury and the 
        Secretary of Energy shall jointly study possible additional 
        incentives for, and removal of barriers to, voluntary, non 
        recoupable expenditures for the reduction, avoidance, or 
        sequestration of greenhouse gas emissions. For purposes of this 
        subsection, an expenditure shall be considered voluntary and 
        non recoupable if the expenditure is not recoupable--
                    (A) from revenues generated from the investment, 
                determined under generally accepted accounting 
                standards (or under the applicable rate-of-return 
                regulation, in the case of a taxpayer subject to such 
                regulation), or
                    (B) from any tax or other financial incentive 
                program established under Federal, State, or local law.
            (2) Report.--Within 6 months of the date of enactment of 
        this Act, the Secretary of the Treasury and the Secretary of 
        Energy shall jointly report to Congress on the results of the 
        study described in paragraph (1), along with any 
        recommendations for legislative action.
    (g) Scope and Impact.--
            (1) Policy.--In order to achieve the broadest response for 
        reduction, avoidance, or sequestration of greenhouse gas 
        emissions and to ensure that the incentives established by or 
        pursuant to this Act do not advantage one segment of an 
        industry to the disadvantage of another, it is the sense of 
        Congress that such incentives should be available for 
        individuals, organizations, and entities, including both for-
        profit and non-profit institutions.
            (2) Level playing field study and report.--
                    (A) In general.--The Secretary of the Treasury and 
                the Secretary of Energy shall jointly study possible 
                additional measures that would provide non-profit 
                entities (such as municipal utilities and energy 
                cooperatives) with economic incentives for greenhouse 
                gas emissions facilities comparable to those incentives 
                provided to taxpayers under the amendments made to the 
                Internal Revenue Code of 1986 by this Act.
                    (B) Report.--Within 6 months after the date of 
                enactment of this Act, the Secretary of the Treasury 
                and the Secretary of Energy shall jointly report to 
                Congress on the results of the study described in 
                subparagraph (A), along with any recommendations for 
                legislative action.
                                 <all>