[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 60 Introduced in Senate (IS)]







107th CONGRESS
  1st Session
                                 S. 60

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 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 of the United States for the generation of reliable 
                      and affordable electricity.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            January 22, 2001

   Mr. Byrd introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 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 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 of 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 and purposes.
 TITLE I--ACCELERATED TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM FOR 
 ADVANCED CLEAN COAL TECHNOLOGY FOR COAL-BASED ELECTRICITY GENERATING 
                               FACILITIES

Sec. 101. Purpose.
Sec. 102. Definitions.
Subtitle A--National Coal-Based Technology Development and Applications 
                                Program

Sec. 111. Cost and performance goals.
Sec. 112. Study.
Sec. 113. Technology research and development program.
Sec. 114. Authorization of appropriations.
             Subtitle B--Power Plant Improvement Initiative

Sec. 121. Power plant improvement initiative program.
Sec. 122. Financial assistance.
Sec. 123. Funding.
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 TAX-EXEMPT ENTITIES

Sec. 401. Offset credits for electric cooperatives or publicly owned 
                            electric utilities.
Sec. 402. Offset of certain annual payment obligations in lieu of 
                            qualifying clean coal technology credits.

SEC. 2. FINDINGS AND PURPOSES.

    (a) 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.
    (b) Purposes.--The purposes of this Act are--
            (1) 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
            (2) to amend the Internal Revenue Code of 1986--
                    (A) to provide financial incentives to encourage 
                the retrofitting, repowering, or replacement of coal-
                based electricity generating facilities to protect the 
                environment and improve efficiency;
                    (B) to encourage the early commercial application 
                of advanced clean coal technologies; and
                    (C) to develop technologies that provide 
                flexibility in obtaining environmental objectives at 
                the lowest possible cost in order to provide 
                electricity to the consumer at the lowest possible 
                cost;
so as to allow coal to help meet the growing need of the United States 
for the generation of clean, reliable, and affordable electricity.

 TITLE I--ACCELERATED TECHNOLOGY RESEARCH AND DEVELOPMENT PROGRAM FOR 
 ADVANCED CLEAN COAL TECHNOLOGY FOR COAL-BASED ELECTRICITY GENERATING 
                               FACILITIES

SEC. 101. PURPOSE.

    The purpose of this title is to direct the Secretary--
            (1) to establish a coal-based technology development 
        program designed to achieve cost and performance goals;
            (2) to carry out a study to identify technologies that may 
        be capable of achieving the cost and performance goals and for 
        other purposes; and
            (3) to implement a research, development, and demonstration 
        program to develop and demonstrate in commercial-scale 
        applications advanced clean coal technologies for coal-fired 
        generating units constructed before the date of enactment of 
        this Act.

SEC. 102. DEFINITIONS.

    In this title:
            (1) Cost and performance goals.--The term ``cost and 
        performance goals'' means the cost and performance goals 
        established under section 111.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

Subtitle A--National Coal-Based Technology Development and Applications 
                                Program

SEC. 111. COST AND PERFORMANCE GOALS.

    (a) In General.--The Secretary shall perform an assessment that 
identifies costs and associated performance of 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 the years after 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; and
            (7) organizations formed to--
                    (A) further the goals of environmental protection;
                    (B) promote the use of coal; or
                    (C) promote the development and use of advanced 
                coal technologies.
    (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. 112. STUDY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Secretary, in cooperation with the Secretary of the 
Interior and the Administrator of the Environmental Protection Agency, 
shall conduct a study to--
            (1) identify technologies 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 the cost and performance goals; and
            (3) develop recommendations for technology development 
        programs, which the Department of Energy could carry out in 
        cooperation with industry, to develop and demonstrate the cost 
        and performance goals.
    (b) Cooperation.--In carrying out this section, the Secretary shall 
give due weight to the expert advice of representatives of the entities 
described in section 111(b).

SEC. 113. 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 Act;
            (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 XVI of the Energy Policy Act of 1992 (42 U.S.C. 
        13381 et seq.).
    (b) Conditions.--The research, development, demonstration, and 
commercial application programs identified in section 112(a) shall be 
designed to achieve the cost and performance goals.
    (c) Report.--Not later than 18 months after the date of enactment 
of this Act, the Secretary shall submit to the President and Congress a 
report containing--
            (1) a description of the programs that, as of the date of 
        the report, are in effect or are to be carried out by the 
        Department of Energy to support technologies that are designed 
        to achieve the cost and performance goals; and
            (2) recommendations for additional authorities required to 
        achieve the cost and performance goals.

SEC. 114. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There is authorized to be appropriated to carry 
out this subtitle $100,000,000 for each of 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.

             Subtitle B--Power Plant Improvement Initiative

SEC. 121. POWER PLANT IMPROVEMENT INITIATIVE PROGRAM.

    (a) In General.--The Secretary shall carry out a power plant 
improvement initiative program that will demonstrate commercial 
applications of advanced coal-based technologies applicable to new or 
existing power plants, including co-production plants, which must 
advance the efficiency, environmental performance, and cost 
competitiveness well beyond that which is in operation or has been 
demonstrated on the date of enactment of this Act.
    (b) Plan.--Not later than 120 days after the date of enactment of 
this Act, the Secretary shall submit 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 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 on the date of enactment of this 
                Act and before any retrofit, repowering, replacement, 
                or installation.
                    (B) A significant improvement in the environmental 
                performance related to the control of sulfur dioxide, 
                nitrogen oxide, and mercury in a manner that is 
                different and well below the cost of technologies that 
                are in operation or have been demonstrated on the date 
                of enactment of this Act.
                    (C) A means of recycling or reusing a significant 
                portion of coal combustion wastes produced by coal-
                based generating units excluding practices that are 
                commercially available at the date of enactment of this 
                Act.

SEC. 122. FINANCIAL ASSISTANCE.

    (a) In General.--Not later than 180 days after the date on which 
the Secretary submits to Congress the plan under section 121(b), the 
Secretary shall solicit proposals for projects at new or existing 
facilities designed to achieve the levels of performance set forth in 
section 121(b)(3).
    (b) Project Criteria.--A solicitation under subsection (a) may 
include solicitation of a proposal for a project to demonstrate--
            (1) the control of emissions of 1 or more pollutants; or
            (2) the production of coal combustion byproducts that are 
        capable of obtaining economic values significantly greater than 
        byproducts produced on the date of enactment of this Act.
    (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 on the date of enactment of this Act.
    (d) Federal Share.--The Federal share cost of a project funded 
under this subtitle shall not exceed 50 percent.
    (e) Exemption From New Source Review Provisions.--A project funded 
under this subtitle shall be exempt from the new source review 
provisions of the Clean Air Act (42 U.S.C. 7401 et seq.).

SEC. 123. FUNDING.

    To carry out this subtitle, 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) removes or reduces 1 or more of the 
                pollutants regulated under title I of the Clean Air Act 
                (42 U.S.C. 7401 et seq.),
                    ``(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 in operation 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:
            ``(9) 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) Installations Not Subject to New Source Review, Etc.--
            (1) Exemption from new source review.--The installation of 
        a qualifying system of continuous emission control (as defined 
        in section 48A(b)(1) of the Internal Revenue Code of 1986, as 
        added by subsection (b)), shall be exempt from the new source 
        review provisions of the Clean Air Act (42 U.S.C. 7401 et 
        seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying system of continuous emission 
        control (as so defined) on an existing coal-based electricity 
        generating unit, which meets or exceeds, for the applicable 
        source category and pollutant being controlled by such 
        qualified system, the standard of performance for new 
        stationary sources, shall exempt the existing unit from any new 
        or increased emission control requirements for the pollutant 
        being controlled by such qualified system under title I of the 
        Clean Air Act (42 U.S.C. 7401 et seq.) for a period of 10 years 
        after the date such qualified system is originally placed in 
        service.
    (g) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2000, 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. 45E. 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 of 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 9,000 Btu/kWh when the design coal has a heat 
                content of more than 8,000 Btu per pound, and
                    ``(D) has a maximum design heat rate of not more 
                than 10,500 Btu/kWh when the design coal has a heat 
                content of 8,000 Btu per pound or less.
            ``(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 
        2000.
            ``(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 (11), by striking the period at the end of paragraph 
(12) and inserting ``, plus'', and by adding at the end the following:
            ``(13) the qualifying clean coal technology production 
        credit determined under section 45E(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:
            ``(10) No carryback of section 45e 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 45E may 
        be carried back to a taxable year ending before the date of 
        enactment of section 45E.''.
    (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. 45E. Credit for production from a qualifying clean coal 
                            technology unit.''.
    (e) Modifications and Installations Not Subject to New Source 
Review, Etc.--
            (1) Exemption from new source review.--Modifications made 
        to an existing coal-based generation unit because of, or as 
        part of a qualifying clean coal technology unit (as defined in 
        section 45E(c)(1) of the Internal Revenue Code of 1986, as 
        added by subsection (a)), shall be exempt from the new source 
        review provisions of the Clean Air Act (42 U.S.C. 7401 et 
        seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying clean coal technology unit (as so 
        defined) on an existing coal-based electricity generating unit, 
        which meets or exceeds, for the applicable source category, the 
        standard of performance for new stationary sources under 
        section 111 of the Clean Air Act (42 U.S.C. 7411), shall exempt 
        the existing unit from any new or increased emission control 
        requirements under title I of such Act (42 U.S.C. 7401 et seq.) 
        for a period of 10 years after the date the qualifying clean 
        coal technology is originally placed in service.
    (f) 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) replaces a conventional technology 
                facility of the taxpayer and the 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.
            ``(3) Qualifying advanced clean coal technology.--For 
        purposes of paragraph (1)--
                    ``(A) In general.--The term `qualifying advanced 
                clean coal technology' means, with respect to clean 
                coal technology--
                            ``(i) multiple applications, with a 
                        combined capacity of not more than 5,000 
                        megawatts, of advanced pulverized coal or 
                        atmospheric fluidized bed combustion 
                        technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2011, and
                                    ``(III) with 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 8,000 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 8,000 Btu per pound or less,
                            ``(ii) multiple applications, with a 
                        combined capacity of not more than 1,000 
                        megawatts, of pressurized fluidized bed 
                        combustion technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2015, and
                                    ``(III) with 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 8,000 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 8,000 Btu per pound or less,
                            ``(iii) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts, 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 
                                2015,
                                    ``(III) with 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 8,000 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 8,000 Btu per pound or less, and
                                    ``(IV) with a net thermal 
                                efficiency on any fuel or chemical co-
                                production of not less than 39 percent 
                                (higher heating value), and
                            ``(iv) multiple applications, with a 
                        combined capacity of not more than 2,000 
                        megawatts of technology for the production of 
                        electricity--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2000 and 
                                2015, and
                                    ``(III) with a carbon emission rate 
                                which is not more than 85 percent of 
                                conventional technology.
                    ``(B) Exceptions.--Such term shall not include 
                clean coal technology projects receiving or scheduled 
                to receive funding under the Clean Coal Technology 
                Program of the Department of Energy.
                    ``(C) 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.
                    ``(D) Conventional technology.--The term 
                `conventional technology' means--
                            ``(i) 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 
                        8,000 Btu per pound,
                            ``(ii) 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 8,000 Btu per 
                        pound or less, or
                            ``(iii) 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.
                    ``(E) 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).
                    ``(F) Selection criteria.--Selection criteria for 
                clean coal technology facilities--
                            ``(i) shall be established by the Secretary 
                        of Energy as part of a competitive 
                        solicitation,
                            ``(ii) shall include primary criteria of 
                        minimum design net heat rate, maximum design 
                        thermal efficiency, and lowest cost to the 
                        government, and
                            ``(iii) shall include supplemental criteria 
                        as determined appropriate by the Secretary of 
                        Energy.
    ``(c) 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.
    ``(d) 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.
    ``(e) 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.
    ``(f) 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:
            ``(11) 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, 2000, 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. 45F. 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 
        8,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2008, 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.........         $.0050                $.0030
More than 8,400 but not more         $.0010                $.0010
 than 8,550.
More than 8,550 but not more         $.0005                $.0005.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, 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.........         $.0090                $.0075
More than 7,770 but not more         $.0070                $.0050
 than 8,125.
More than 8,125 but not more         $.0060                $.0040.
 than 8,350.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, 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.........         $.0120                $.0090
More than 7,380 but not more         $.0095                $.0070.
 than 7,720.
------------------------------------------------------------------------

            ``(2) Where the design coal has a heat content of not more 
        than 8,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2008, 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.........         $.0050                $.0030
More than 8,500 but not more         $.0010                $.0010
 than 8,650.
More than 8,650 but not more         $.0005                $.0005.
 than 8,750.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, 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.........         $.0090                $.0075
More than 8,000 but not more         $.0070                $.0050
 than 8,250.
More than 8,250 but not more         $.0060                $.0040.
 than 8,400.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, 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.........         $.0120                $.0090
More than 7,800 but not more         $.0095                $.0070.
 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 2008, 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..         $.0050                $.0030
Less than 40.6 but not less          $.0010                $.0010
 than 40 percent.
Less than 40 but not less            $.0005                $.0005.
 than 39 percent.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2007 and before 2012, 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..         $.0090                $.0075
Less than 43.9 but not less          $.0070                $.0050
 than 42 percent.
Less than 42 but not less            $.0060                $.0040.
 than 40.9 percent.
------------------------------------------------------------------------

                    ``(C) In the case of a facility originally placed 
                in service after 2011 and before 2015, 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..         $.0120                $.0090
Less than 44.2 but not less          $.0095                $.0070.
 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 
        2000.
            ``(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 (12), by striking the 
period at the end of paragraph (13) and inserting ``, plus'', and by 
adding at the end the following:
            ``(14) the qualifying advanced clean coal technology 
        production credit determined under section 45F(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:
            ``(12) No carryback of section 45f 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 45F 
        may be carried back to a taxable year ending before the date of 
        enactment of section 45F.''.
    (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. 45F. Credit for production from qualifying advanced clean coal 
                            technology.''.
    (e) Installations Not Subject to New Source Review, Etc.--
            (1) Exemption from new source review.--The installation of 
        a qualifying advanced clean coal technology facility which has 
        qualified for a qualifying advanced clean coal technology 
        production credit determined under section 45F of the Internal 
        Revenue Code of 1986, as added by subsection (a), shall be 
        exempt from the new source review provisions of the Clean Air 
        Act (42 U.S.C. 7401 et seq.).
            (2) Exemption from emission control requirements.--The 
        installation of a qualifying advanced clean coal technology 
        facility which has qualified for a qualifying advanced clean 
        coal technology production credit determined under such section 
        45F and which meets or exceeds, for the applicable source 
        category, the standard of performance for new stationary 
        sources established under section 111 of the Clean Air Act (42 
        U.S.C. 7411), shall exempt that facility from any new or 
        increased emission control requirements under title I of such 
        Act (42 U.S.C. 7401 et seq.) for a period of 10 years after the 
        date the qualifying clean coal technology facility is 
        originally placed in service.
    (f) 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 45F 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 TAX-EXEMPT ENTITIES

SEC. 401. OFFSET CREDITS FOR ELECTRIC COOPERATIVES OR PUBLICLY OWNED 
              ELECTRIC UTILITIES.

    (a) Offset Credits.--Section 6401(b) of the Internal Revenue Code 
of 1986 (relating to excessive credits) is amended by adding at the end 
the following:
            ``(3) Special rule for credits under sections 45e, 45f, 
        48a, and 48b.--
                    ``(A) In general.--For purposes of paragraph (1), 
                the credits allowed under sections 45E, 45F, 48A, and 
                48B (relating to credits for emission reductions and 
                efficiency improvements in existing coal-based 
                generating facilities) shall be treated for the taxable 
                year as credits allowable under subpart C of part IV of 
                subchapter A of chapter 1 (relating to refundable 
                credits) only if with respect to such taxable year--
                            ``(i) the taxpayer is an electric 
                        cooperative which is--
                                    ``(I) an organization engaged in 
                                marketing, generating, purchasing, 
                                transmitting, or distributing electric 
                                energy,
                                    ``(II) recognized for purposes of 
                                this title as operating on a 
                                cooperative basis, and
                                    ``(III) the owner of a qualifying 
                                system of continuous emission control 
                                or a qualifying clean coal technology 
                                unit or both or a qualifying advanced 
                                clean coal technology facility from 
                                which such credits are derived, or
                            ``(ii) the taxpayer is a public utility 
                        which is--
                                    ``(I) organized by an Act of 
                                Congress or whose income would qualify 
                                under section 115 as income derived 
                                from a State or any subdivision 
                                thereof, and
                                    ``(II) the owner of the existing 
                                coal-based generating facility which is 
                                retrofitted, repowered, or replaced 
                                with a qualifying clean coal technology 
                                for purposes of the credit under 
                                section 45E or served by, added to by, 
                                or retrofitted with a qualifying system 
                                of continuous emission control for 
                                purposes of the credit under section 
                                48A, or the owner of qualifying 
                                advanced clean coal technology for 
                                purposes of the credits under sections 
                                45F and 48B.
                    ``(B) Treatment of cooperative taxpayer.--For 
                purposes of this paragraph--
                            ``(i) In general.--An electric cooperative 
                        shall be deemed a taxpayer thereby qualifying 
                        for the credits described in sections 45E, 45F, 
                        48A, and 48B notwithstanding any other 
                        provision to the contrary.
                            ``(ii) Use of offset credits.--
                        Notwithstanding any other provision of law, in 
                        the case of a cooperative taxpayer, the credits 
                        described in sections 45E, 45F, 48A, and 48B 
                        shall be applied, without penalty, as a 
                        prepayment of any debt or obligation the 
                        cooperative has incurred under subchapter I of 
                        chapter 31 of title 7 of the Rural 
                        Electrification Act of 1936 (7 U.S.C. 901 et 
                        seq.). Such credits shall be applied to loans 
                        as selected by the cooperative.
                    ``(C) Public utility defined.--For purposes of this 
                paragraph only, the term `public utility' means a 
                utility providing electricity which is owned by the 
                Federal Government, a State or local government, or any 
                political subdivision thereof.
                    ``(D) Treatment of credit.--Neither the amount of 
                credit produced nor the amount of credit refunded 
                pursuant to this paragraph shall result in income for 
                purposes of section 501(c)(12).
                    ``(E) Treatment of unrelated persons.--For purpose 
                of this paragraph, the rules of section 45(d)(4) shall 
                apply.
                    ``(F) Treatment of tva.--This paragraph shall not 
                apply with respect to the Tennessee Valley 
                Authority.''.

SEC. 402. OFFSET OF CERTAIN ANNUAL PAYMENT OBLIGATIONS IN LIEU OF 
              QUALIFYING CLEAN COAL TECHNOLOGY CREDITS.

    (a) In General.--Notwithstanding any other provision of law, the 
Tennessee Valley Authority shall be entitled, with respect to its being 
an owner of a qualifying system of continuous emission control for 
purposes of the credit under section 45E of the Internal Revenue Code 
of 1986, a qualifying clean coal technology unit for purposes of the 
credit under section 48A of such Code, or a qualifying advanced clean 
coal technology facility for purposes of the credit under section 45F 
or 48B of such Code, to have an amount, equal to the aggregate amount 
of such credits for any fiscal year, applied as a credit against the 
payments required to be made in such fiscal year under section 15d(e) 
of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 831n-4(e)) as 
an annual return on the appropriations investment and an annual 
repayment sum.
    (b) Treatment of Credits.--The aggregate amount of credits 
described in subsection (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.
    (c) Credit Carryover.--With respect to any fiscal year, if the 
aggregate amount of credits described in subsection (a) exceeds the 
aggregate amount of payment obligations described in subsection (a), 
the excess amount shall remain available to the Tennessee Valley 
Authority for application as credits against the amounts of such 
payment obligations in succeeding fiscal years in the same manner as 
described in this section.
                                 <all>