[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1213 Introduced in House (IH)]







108th CONGRESS
  1st Session
                                H. R. 1213

    To facilitate the production and generation of coal-based power.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 11, 2003

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

_______________________________________________________________________

                                 A BILL


 
    To facilitate the production and generation of coal-based power.

    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 ``Clean Coal Power Act of 2003''.

SEC. 2. DEFINITIONS.

    For purposes of this Act:
            (1) Cost and performance goals.--The term ``cost and 
        performance goals'' means the cost and performance goals 
        established under section 101(a).
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

     TITLE I--CLEAN COAL GENERATION, FEEDSTOCKS, AND TRANSPORTATION

SEC. 101. COAL AND RELATED PROGRAMS.

    (a) Establishment of Cost and Performance Goals.--
            (1) In general.--The Secretary shall perform an assessment 
        that identifies cost and performance goals, for achievement in 
        2007, 2015, and the years after 2020, for technologies that 
        would permit the continued cost-competitive use of coal for 
        electricity generation, as chemical feedstocks, and as 
        transportation fuel.
            (2) Consultation.--In establishing the cost and performance 
        goals under this subsection, the Secretary shall--
                    (A) consider activities and studies undertaken by 
                industry in cooperation with the Department of Energy 
                in support of the assessment performed under paragraph 
                (1); and
                    (B) consult with interested entities, including 
                coal producers, industries using coal, organizations to 
                promote coal and advanced coal technologies, 
                environmental organizations, and organizations 
                representing workers.
            (3) Timing.--The Secretary shall--
                    (A) 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
                    (B) not later than 180 days after the date of 
                enactment of this Act, after taking into consideration 
                any public comments received, transmit to Congress the 
                final cost and performance goals.
    (b) Study.--
            (1) In general.--Not later than 1 year after the date of 
        enactment of this Act, and once every 2 years thereafter 
        through 2016, the Secretary, in cooperation with other 
        appropriate Federal agencies, shall conduct and transmit to the 
        Congress a study to--
                    (A) identify technologies that, by themselves or in 
                combination with other technologies, may be capable of 
                achieving the cost and performance goals;
                    (B) assess the costs that would be incurred by, and 
                the period of time that would be required for, the 
                deployment of technologies that, by themselves or in 
                combination with other technologies, contribute to the 
                achievement of the cost and performance goals;
                    (C) develop recommendations for technology 
                programs, which the Department of Energy could carry 
                out in cooperation with industry, by themselves or in 
                combination with other technologies, to achieve the 
                cost and performance goals; and
                    (D) develop recommendations for additional 
                authorities required to achieve the cost and 
                performance goals and review and recommend changes, if 
                any, to those cost and performance goals if the 
                Secretary determines that such changes are necessary.
            (2) Expert advice.--In carrying out this subsection, the 
        Secretary shall give due weight to the expert advice of 
        representatives of the entities described in subsection 
        (a)(2)(B).

SEC. 102. PRODUCTION AND GENERATION OF COAL-BASED POWER.

    (a) In General.--The Secretary shall carry out a program to 
facilitate production and generation of coal-based power through 
methods and equipment under--
            (1) this title;
            (2) the Federal Nonnuclear Energy Research and Development 
        Act of 1974 (42 U.S.C. 5901 et seq.);
            (3) the Energy Reorganization Act of 1974 (42 U.S.C. 5801 
        et seq.); and
            (4) title XVI of the Energy Policy Act of 1992 (42 U.S.C. 
        13381 et seq.).
    (b) Conditions.--The program described in subsection (a) shall be 
designed to achieve the cost and performance goals.

SEC. 103. AUTHORIZATION OF APPROPRIATIONS.

    (a) In General.--There are authorized to be appropriated to the 
Secretary $200,000,000 for fiscal year 2005, $210,000,000 for fiscal 
year 2006, and $220,500,000 for fiscal year 2007, to remain available 
until expended, for carrying out the program under section 102, which 
may include--
            (1) innovations for existing plants;
            (2) integrated gasification combined cycle;
            (3) advanced combustion systems;
            (4) turbines for synthesis gas derived from coal;
            (5) carbon capture and sequestration;
            (6) coal-derived transportation fuels and chemicals;
            (7) solid fuels and feedstocks;
            (8) advanced coal-related projects; and
            (9) advanced separation technologies.
    (b) Limit on Use of Funds.--The Secretary shall not use funds 
appropriated under this section until 30 days after the Secretary has 
transmitted to the Congress a report describing the proposed use of 
such funds and containing a plan that includes--
            (1) a detailed description of how proposals, if any, will 
        be solicited and evaluated, including a list of all activities 
        expected to be undertaken;
            (2) a detailed list of technical milestones for each coal 
        and related technology that will be pursued; and
            (3) a description of how the programs for which such funds 
        are authorized will be carried out so as to complement and not 
        duplicate activities authorized under the Clean Coal Power 
        Initiative authorized under title II.

                 TITLE II--CLEAN COAL POWER INITIATIVE

SEC. 201. PROJECT CRITERIA.

    (a) In General.--The Secretary shall provide funding under this 
title for coal energy generation projects that advance efficiency, 
environmental performance, and cost competitiveness well beyond the 
level of technologies that on a full scale are in operation or have 
been demonstrated as of the date of enactment of this Act.
    (b) Technical Criteria for Clean Coal Power Initiative.--
            (1) Gasification.--
                    (A) Technologies.--In allocating the funds made 
                available under section 204(a), the Secretary shall 
                ensure that up to 80 percent of the funds are used for 
                coal-based gasification technologies, including 
                gasification combined cycle, gasification fuel cells, 
                gasification coproduction, and hybrid gasification/
                combustion projects.
                    (B) Technical milestones.--The Secretary shall set 
                technical milestones specifying emissions levels for 
                projects funded under this paragraph. The milestones 
                shall be designed to increasingly restrict emissions 
                levels through the life of the program. The milestones 
                shall be designed to achieve by 2020 coal gasification 
                projects able--
                            (i) to remove 99 percent of sulfur dioxide;
                            (ii) to emit no more than .05 lb of 
                        NO<INF>X</INF> per million Btu;
                            (iii) to achieve substantial reductions in 
                        mercury emissions; and
                            (iv) to achieve a thermal efficiency of--
                                    (I) 60 percent for coal of more 
                                than 9,000 Btu;
                                    (II) 59 percent for coal of 7,000 
                                to 9,000 Btu; and
                                    (III) 50 percent for coal of less 
                                than 7,000 Btu.
            (2) Other projects.--For projects not described in 
        paragraph (1), the Secretary shall set technical milestones 
        specifying emissions levels. The milestones shall be designed 
        to increasingly restrict emissions levels through the life of 
        the program. The milestones shall be designed to achieve by 
        2010 projects able--
                    (A) to remove 97 percent of sulfur dioxide;
                    (B) to emit no more than .08 lb of NO<INF>X</INF> 
                per million Btu;
                    (C) to achieve substantial reductions in mercury 
                emissions; and
                    (D) except as provided in paragraph (4), to achieve 
                a thermal efficiency of--
                            (i) 45 percent for coal of more than 9,000 
                        Btu;
                            (ii) 44 percent for coal of 7,000 to 9,000 
                        Btu; and
                            (iii) 40 percent for coal of less than 
                        7,000 Btu.
            (3) Consultation.--Before setting the technical milestones 
        under paragraphs (1)(B) and (2), the Secretary shall consult 
        with the Administrator of the Environmental Protection Agency 
        and interested entities, including coal producers, industries 
        using coal, organizations to promote coal or advanced coal 
        technologies, environmental organizations, and organizations 
        representing workers.
            (4) Existing units.--In the case of projects at coal-
        powered electricity generating facilities existing as of the 
        date of enactment of this Act, in lieu of the thermal 
        efficiency requirements set forth in paragraph (1)(B)(iv) and 
        (2)(D), the projects shall be designed to achieve an overall 
        thermal efficiency improvement, compared to the efficiency of 
        the unit as of the date of enactment of this Act, of not less 
        than--
                    (A) 7 percent for coal of more than 9,000 Btu;
                    (B) 6 percent for coal of 7,000 to 9,000 Btu; and
                    (C) 4 percent for coal of less than 7,000 Btu.
            (5) Permitted uses.--In allocating amounts made available 
        under this title, the Secretary may fund projects that include 
        as part of the project the separation and capture of carbon 
        dioxide.
    (c) Financial Criteria.--The Secretary shall not provide a funding 
award under this title unless the recipient has documented to the 
satisfaction of the Secretary that--
            (1) the award recipient is financially viable without the 
        receipt of additional Federal funding;
            (2) the recipient will provide sufficient information to 
        the Secretary for the Secretary to ensure that the award funds 
are spent efficiently and effectively; and
            (3) a market exists for the technology, as evidenced by 
        statements of interest in writing from potential purchasers of 
        the technology.
    (d) Financial Assistance.--The Secretary shall provide financial 
assistance to projects that meet the requirements of subsections (a), 
(b), and (c) and are likely to--
            (1) achieve 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; 
        and
            (3) demonstrate methods and equipment that are applicable 
        to 25 percent of the electricity generating facilities that use 
        coal as the primary feedstock as of the date of the enactment 
        of this Act.
    (e) Federal Share.--The Federal share of the cost of a project 
funded under this title shall not exceed 50 percent.
    (f) Applicability.--No technology, or level of emission reduction, 
shall be treated as adequately demonstrated for purposes of section 111 
of the Clean Air Act, achievable for purposes of section 169 of that 
Act, or achievable in practice for purposes of section 171 of that Act 
solely by reason of the use of such technology, or the achievement of 
such emission reduction, by one or more facilities receiving assistance 
under this title.

SEC. 202. REPORT.

    Not later than 1 year after the date of the enactment of this Act, 
and once every 2 years thereafter through 2012, the Secretary, in 
consultation with other appropriate Federal agencies, shall transmit to 
the Congress a report describing--
            (1) the technical milestones set forth in section 201 and 
        how those milestones ensure progress toward meeting the 
        requirements of subsections (b)(1)(B) and (b)(2) of section 
        201; and
            (2) the status of projects funded under this title.

SEC. 203. CLEAN COAL CENTERS OF EXCELLENCE.

    As part of the program authorized under this title, the Secretary 
shall award competitive, merit-based grants to universities for the 
establishment of Centers of Excellence for Energy Systems of the 
Future. The Secretary shall provide grants to universities that can 
show the greatest potential for advancing new clean coal technologies.

SEC. 204. AUTHORIZATION OF APPROPRIATIONS.

    (a) Clean Coal Power Initiative.--Except as provided in subsection 
(b), there are authorized to be appropriated to the Secretary to carry 
out the activities authorized by this title $200,000,000 for each of 
the fiscal years 2005 through 2013, to remain available until expended.
    (b) Limit on Use of Funds.--
            (1) Obligation of funds.--The Secretary is authorized to 
        obligate the use of funds under this section prior to the 
        fiscal year such funds are authorized for under subsection (a), 
        subject to appropriations.
            (2) Report.--The Secretary shall transmit to the Congress a 
        report describing the proposed use of funds which includes--
                    (A) a detailed assessment of whether the aggregate 
                funding levels provided under subsection (a) are the 
                appropriate funding levels for this title;
                    (B) a detailed description of how proposals will be 
                solicited and evaluated, including a list of all 
                activities expected to be undertaken;
                    (C) a detailed list of technical milestones for 
                each technology that will be pursued; and
                    (D) a detailed description of how the initiative 
                under this title will avoid problems enumerated in 
                General Accounting Office reports on the Clean Coal 
                Technology Program, including problems that have 
                resulted in unspent funds and projects that failed 
                either financially or scientifically.
            (3) Use of funds.--The Secretary may not use funds 
        appropriated under this section until 30 days have elapsed 
        after receipt of the report under paragraph (2).
    (c) Applicability.--Subsection (b) shall not apply to any project 
selected before September 30, 2004.

                        TITLE III--CONSERVATION

SEC. 301. 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 new section:

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

    ``(a) General Rule.--For purposes of section 38, the qualifying 
clean coal technology production credit of any taxpayer for any taxable 
year is equal to the product of--
            ``(1) the applicable amount of clean coal technology 
        production credit, multiplied by
            ``(2) the applicable percentage of the kilowatt hours of 
        electricity produced and the equivalent heat value of other 
        fuels or chemicals produced by the taxpayer during such taxable 
        year at a qualifying clean coal technology unit, but only if 
        such production occurs during the 10-year period beginning on 
        the date the unit was returned to service after becoming a 
        qualifying clean coal technology unit.
    ``(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 per kilowatt-hour of electricity produced and 
        the equivalent heat value of other fuels or chemicals produced 
        from not more than 300,000 kilowatts of nameplate capacity at 
        the same qualifying clean coal technology unit.
            ``(2) Inflation adjustment.--For calendar years after 2004, 
        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) Applicable Percentage.--For purposes of this section, with 
respect to any qualifying clean coal technology unit, the applicable 
percentage is the percentage equal to the ratio which the portion of 
the national megawatt capacity limitation allocated to the taxpayer 
with respect to such unit under subsection (e) bears to the total 
megawatt capacity of such unit.
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualifying clean coal technology unit.--The term 
        `qualifying clean coal technology unit' means a clean coal 
        technology unit of the taxpayer which--
                    ``(A) on the date of the enactment of this section 
                was a coal-based electricity generating steam 
                generator-turbine unit which was not a clean coal 
                technology unit,
                    ``(B) has a nameplate capacity rating of 300,000 
                kilowatts as of the date of enactment of this section,
                    ``(C) becomes a clean coal technology unit as the 
                result of the retrofitting, repowering, or replacement 
                of the unit with clean coal technology, the nameplate 
                capacity of which may then be greater than 300,000 
                kilowatts, during the 10-year period beginning on the 
                date of the enactment of this section,
                    ``(D) is not receiving nor is scheduled to receive 
                funding under the Clean Coal Technology Program, the 
                Power Plant Improvement Initiative, or the Clean Coal 
                Power Initiative administered by the Secretary of 
                Energy, and (E) receives an allocation of a portion of 
                the national megawatt capacity limitation under 
                subsection (e), which shall not exceed 300,000 
                kilowatts.
            ``(2) Clean coal technology unit.--The term `clean coal 
        technology unit' means a unit which--
                    ``(A) uses clean coal technology, 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) uses at least 75 percent coal to produce 50 
                percent or more of its thermal output as electricity,
                    ``(C) has a design net heat rate of at least 500 
                less than that of such unit as described in paragraph 
                (1)(A),
                    ``(D) has a maximum design net heat rate of not 
                more than 9,500, and
                    ``(E) meets the pollution control requirements of 
                paragraph (3).
            ``(3) Pollution control requirements.--
                    ``(A) In general.--A unit meets the requirements of 
                this paragraph if--
                            ``(i) its emissions of sulfur dioxide, 
                        nitrogen oxide, or particulates meet the lower 
                        of the emission levels for each such emission 
                        specified in--
                                    ``(I) subparagraph (B), or
                                    ``(II) the new source performance 
                                standards of the Clean Air Act (42 
                                U.S.C. 7411) which are in effect for 
                                the category of source at the time of 
                                the retrofitting, repowering, or 
                                replacement of the unit, and
                            ``(ii) its emissions do not exceed any 
                        relevant emission level specified by regulation 
                        pursuant to the hazardous air pollutant 
                        requirements of the Clean Air Act (42 U.S.C. 
                        7412) in effect at the time of the 
                        retrofitting, repowering, or replacement.
                    ``(B) Specific levels.--The levels specified in 
                this subparagraph are--
                            ``(i) in the case of sulfur dioxide 
                        emissions, 50 percent of the sulfur dioxide 
                        emission levels specified in the new source 
                        performance standards of the Clean Air Act (42 
                        U.S.C. 7411) in effect on the date of the 
                        enactment of this section for the category of 
                        source,
                            ``(ii) in the case of nitrogen oxide 
                        emissions--
                                    ``(I) 0.1 pound per million Btu of 
                                heat input if the unit is not a 
                                cyclone-fired boiler, and
                                    ``(II) if the unit is a cyclone-
                                fired boiler, 15 percent of the 
                                uncontrolled nitrogen oxide emissions 
                                from such boilers, and
                            ``(iii) in the case of particulate 
                        emissions, 0.02 pound per million Btu of heat 
                        input.
            ``(4) Design net heat rate.--The design net heat rate with 
        respect to any unit, measured in Btu per kilowatt hour (HHV)--
                    ``(A) shall be based on the design annual heat 
                input to and the design annual net electrical power, 
                fuels and chemicals output from such unit (determined 
                without regard to such unit's co-generation of steam),
                    ``(B) shall be adjusted for the heat content of the 
                design coal to be used by the unit if it is less than 
                12,000 Btu per pound according to the following 
                formula:

 Design net heat rate = unit net heat rate  x  [1 - ((12,000 - design 
        coal heat contents, Btu per pound)  x  .001)  x  .013)]

                    ``(C) shall be corrected for the site reference 
                conditions of--
                            ``(i) elevation above sea level of 500 
                        feet,
                            ``(ii) air pressure of 14.4 pounds per 
                        square inch absolute (psia),
                            ``(iii) temperature, dry bulb of 63 deg.F,
                            ``(iv) temperature, wet bulb of 54 deg.F, 
                        and
                            ``(v) relative humidity of 55 percent; and
                    ``(D) shall be adjusted (or credit given) for any 
                qualifying unit that installs carbon capture controls 
                that remove not less than 50 percent of the unit's 
                carbon dioxide emissions up to the design heat rate 
                level that would have resulted without installation of 
                carbon capture controls.
            ``(5) HHV.--The term `HHV' means higher heating value.
            ``(6) Application of certain rules.--The rules of 
        paragraphs (3), (4), and (5) of section 45(d) shall apply.
            ``(7) Inflation adjustment factor.--
                    ``(A) In general.--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 2003.
                    ``(B) 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.
            ``(8) Noncompliance with pollution laws.--For purposes of 
        this section, a unit which is not in compliance with the 
        applicable State and Federal pollution prevention, control, and 
        permit requirements for any period of time shall not be 
        considered to be a qualifying clean coal technology unit during 
        such period.
    ``(e) National Limitation on the Aggregate Capacity of Qualifying 
Clean Coal Technology Units.--
            ``(1) In general.--For purposes of subsection (d)(1)(E), 
        the national megawatt capacity limitation for qualifying clean 
        coal technology units is 5,000 megawatts.
            ``(2) Allocation of limitation.--The Secretary shall 
        allocate the national megawatt capacity limitation for 
        qualifying clean coal technology units in such manner as the 
        Secretary may prescribe under the regulations under paragraph 
        (3) provided however that such allocation shall not exceed 
        300,000 kilowatts per qualifying clean coal technology unit.
            ``(3) Regulations.--Not later than 6 months after the date 
        of the enactment of this section, the Secretary shall prescribe 
        such regulations as may be necessary or appropriate--
                    ``(A) to carry out the purposes of this subsection,
                    ``(B) to limit the capacity of any qualifying clean 
                coal technology unit to which this section applies so 
                that the combined megawatt capacity allocated to all 
                such units under this subsection when all such units 
                are placed in service during the 10-year period 
                described in subsection (d)(1)(C), does not exceed 
                5,000 megawatts,
                    ``(C) to provide a certification process under 
                which the Secretary, in consultation with the Secretary 
                of Energy, shall approve and allocate the national 
                megawatt capacity limitation--
                            ``(i) to encourage that units with the 
                        highest thermal efficiencies, when adjusted for 
                        the heat content of the design coal and site 
                        reference conditions described in subsection 
                        (d)(4)(C), and environmental performance be 
                        placed in service as soon as possible,
                            ``(ii) to allocate capacity to taxpayers 
                        that have a definite and credible plan for 
                        placing into commercial operation a qualifying 
                        clean coal technology unit, including--
                                    ``(I) a site,
                                    ``(II) contractual commitments for 
                                procurement and construction or, in the 
                                case of regulated utilities, the 
                                agreement of the State utility 
                                commission,
                                    ``(III) filings for all necessary 
                                preconstruction approvals,
                                    ``(IV) a demonstrated record of 
                                having successfully completed 
                                comparable projects on a timely basis, 
                                and
                                    ``(V) such other factors that the 
                                Secretary determines are appropriate,
                    ``(D) to allocate the national megawatt capacity 
                limitation to a portion of the capacity of a qualifying 
                clean coal technology unit if the Secretary determines 
                that such an allocation would maximize the amount of 
                efficient production encouraged with the available tax 
                credits,
                    ``(E) to set progress requirements and conditional 
                approvals so that capacity allocations for clean coal 
                technology units that become unlikely to meet the 
                necessary conditions for qualifying can be reallocated 
                by the Secretary to other clean coal technology units, 
                and
                    ``(F) to provide taxpayers with opportunities to 
                correct administrative errors and omissions with 
                respect to allocations and record keeping within a 
                reasonable period after discovery, taking into account 
                the availability of regulations and other 
                administrative guidance from the Secretary.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of such Code 
is amended by striking ``plus'' at the end of paragraph (14), by 
striking the period at the end of paragraph (15) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(16) the qualifying clean coal technology production 
        credit determined under section 45G(a).''.
    (c) Transitional Rule.--Section 39(d) of such Code (relating to 
transitional rules) is amended by adding at the end the following new 
paragraph:
            ``(11) No carryback of section 45g credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying clean coal 
        technology production credit determined under section 45G may 
        be carried back to a taxable year ending on or before the date 
        of the enactment of section 45G.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code, is amended by adding 
at the end the following new item:

                              ``Sec. 45G. Credit for production from a 
                                        qualifying clean coal 
                                        technology unit.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after December 31, 2003.

SEC. 302. 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) 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 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 such Code 
(relating to rules for computing investment credit) is amended by 
inserting after section 48 the following:

``SEC. 48A. 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--
                    ``(A)(i)(I) the original use of which commences 
                with the taxpayer, or
                    ``(II) which 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) which is acquired through purchase (as 
                defined by section 179(d)(2)),
                    ``(B) which is depreciable under section 167,
                    ``(C) which has a useful life of not less than 4 
                years,
                    ``(D) which is located in the United States, and
                    ``(E) which uses qualifying advanced clean coal 
                technology.
            ``(2) Special rule for sale-leasebacks.--For purposes of 
        subparagraph (A) of paragraph (1), in the case of a facility 
        which--
                    ``(A) is originally placed in service by a person, 
                and
                    ``(B) is sold and leased back by such person, or is 
                leased to such person, within 3 months after the date 
                such facility was originally placed in service, for a 
                period of not less than 12 years,
        such facility shall be treated as originally placed in service 
        not earlier than the date on which such property is used under 
        the leaseback (or lease) referred to in subparagraph (B). The 
        preceding sentence shall not apply to any property if the 
        lessee and lessor of such property make an election under this 
        sentence. Such an election, once made, may be revoked only with 
        the consent of the Secretary.
    ``(c) Qualifying Advanced Clean Coal Technology.--For purposes of 
this section--
            ``(1) In general.--The term `qualifying advanced clean coal 
        technology' means, with respect to clean coal, technology--
                    ``(A) which has--
                            ``(i) multiple applications, with a 
                        combined capacity of not more than 1,500 
                        megawatts (750 megawatts before 2011), of 
                        advanced pulverized coal or atmospheric 
                        fluidized bed combustion technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2002 and 
                                2014, and
                                    ``(III) having a design net heat 
                                rate of not more than 8,900 Btu per 
                                kilowatt hour,
                            ``(ii) multiple applications, with a 
                        combined capacity of not more than 500 
                        megawatts (250 megawatts before 2011), of 
                        pressurized fluidized bed combustion 
                        technology--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2002 and 
                                2018, and
                                    ``(III) having a design net heat 
                                rate of not more than 8,900 Btu per 
                                kilowatt hour, and
                            ``(iii) multiple applications, with a 
                        combined capacity of not more than 2,500 
                        megawatts (750 megawatts, or no more than one 
                        project with a heat rate greater than 8,900 
                        Btu, whichever is less, in the case of units 
                        placed in service before 2011 and 1,500 
                        megawatts before 2015), 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 2002 and 
                                2018,
                                    ``(III) having a design net heat 
                                rate of not more than 8,900 Btu per 
                                kilowatt hour, and
                                    ``(IV) having a net thermal 
                                efficiency on any fuel or chemical co-
                                production of not less than 39 percent 
                                (higher heating value), or
                            ``(iv) multiple applications, with a 
                        combined capacity of not more than 500 
                        megawatts (250 megawatts before 2011) of 
                        technology for the production of electricity--
                                    ``(I) installed as a new, retrofit, 
                                or repowering application,
                                    ``(II) operated between 2002 and 
                                2018, and
                                    ``(III) having a carbon emission 
                                rate which is not more than 85 percent 
                                of conventional technology, and
                    ``(B) which reduces the discharge into the 
                atmosphere of 1 or more of the following pollutants to 
                not more than--
                            ``(i) 5 percent of the potential combustion 
                        concentration sulfur dioxide emissions for a 
                        coal with a potential combustion concentration 
                        sulfur emission of 1.2 lb/million Btu of heat 
                        input or greater,
                            ``(ii) 15 percent of the potential 
                        combustion concentration sulfur dioxide 
                        emissions for a coal with a potential 
                        combustion concentration sulfur emission of 
                        less than 1.2 lb/million Btu of heat input,
                            ``(iii) nitrogen oxide emissions of 0.1 lb 
                        per million Btu of heat input from other than 
                        cyclone-fired boilers,
                            ``(iv) 15 percent of the uncontrolled 
                        nitrogen oxide emissions from cyclone-fired 
                        boilers,
                            ``(v) particulate emissions of 0.02 lb per 
                        million Btu of heat input, and
                            ``(vi) the emission levels specified in the 
                        new source performance standards of the Clean 
                        Air Act (42 U.S.C. 7411) in effect at the time 
                        of retrofitting, repowering, or replacement of 
                        the qualifying clean coal technology unit for 
                        the category of source if such level is lower 
                        than the levels specified in clause (i), (ii), 
                        (iii), (iv), or (v).
            ``(2) Exceptions.--Such term shall not include any projects 
        receiving or scheduled to receive funding under the Clean Coal 
        Technology Program, or the Power Plant Improvement administered 
        by the Secretary of the Department of Energy.
    ``(d) Clean Coal Technology.--For purposes of this section, the 
term `clean coal technology' means advanced technology which uses coal 
to produce 75 percent or more of its thermal output as electricity 
including advanced pulverized coal or atmospheric fluidized bed 
combustion, pressurized fluidized bed combustion, integrated 
gasification combined cycle with or without fuel or chemical co-
production, and any other technology for the production of electricity 
which exceeds the performance of conventional technology.
    ``(e) Conventional Technology.--The term `conventional technology' 
means--
            ``(1) coal-fired combustion technology with a design net 
        heat rate of not less than 9,500 Btu per kilowatt hour (HHV) 
        and a carbon equivalents emission rate of not more than 0.54 
        pounds of carbon per kilowatt hour when the design coal has a 
        heat content of more than 9,000 Btu per pound,
            ``(2) coal-fired combustion technology with a design net 
        heat rate of not less than 10,500 Btu per kilowatt hour (HHV) 
        and a carbon equivalents emission rate of not more than 0.60 
        pounds of carbon per kilowatt hour when the design coal has a 
        heat content of 9,000 Btu per pound or less, or
            ``(3) natural gas-fired combustion technology with a design 
        net heat rate of not less than 7,500 Btu per kilowatt hour 
        (HHV) and a carbon equivalents emission rate of not more than 
        0.24 pounds of carbon per kilowatt hour.
    ``(f) Design Net Heat Rate.--The design net heat rate with respect 
to any unit, measured in Btu per kilowatt hour (HHV)--
            ``(1) shall be based on the design annual heat input to and 
        the design annual net electrical power, fuels and chemicals 
        output from such unit (determined without regard to such unit's 
        co-generation of steam),
            ``(2) shall be adjusted for the heat content of the design 
        coal to be used by the unit if it is less than 12,000 Btu per 
        pound according to the following formula:

 Design net heat rate = unit net heat rate  x  [1 - (((12,000 - design 
        coal heat contents, Btu per pound)  x  .001)  x  .013)]

            ``(3) shall be corrected for the site reference conditions 
        of--
                    ``(A) elevation above sea level of 500 feet,
                    ``(B) air pressure of 14.4 pounds per square inch 
                absolute (psia),
                    ``(C) temperature, dry bulb of 63 deg.F,
                    ``(D) temperature, wet bulb of 54 deg.F, and
                    ``(E) relative humidity of 55 percent; and
            ``(4) shall be adjusted (or credit given) for any 
        qualifying unit that installs carbon capture controls that 
        remove not less than 50 percent of the unit's carbon dioxide 
        emissions up to the design heat rate level that would have 
        resulted without installation of carbon capture controls .
    ``(g) Selection Criteria.--Selection criteria for qualifying 
advanced clean coal technology facilities--
            ``(1) shall be established by the Secretary of Energy as 
        part of a competitive solicitation,
            ``(2) shall include primary criteria of minimum design net 
        heat rate, maximum design thermal efficiency, environmental 
        performance, and lowest cost to the government,
            ``(3) shall include criteria for the selection of a unit(s) 
        that achieves a thermal efficiency of greater than 8,900 Btu in 
        that instance where two or more projects are otherwise eligible 
        for the credit provided by this section, and have applied to 
        the Secretary for selection at or near the same period in time, 
        and
            ``(4) shall include supplemental criteria as determined 
        appropriate by the Secretary of Energy.
    ``(h) Qualified Investment.--For purposes of subsection (a), the 
term `qualified investment' means, with respect to any taxable year, 
the basis of a qualifying advanced clean coal technology facility 
placed in service by the taxpayer during such taxable year.
    ``(i) Qualified Progress Expenditures.--
            ``(1) Increase in qualified investment.--In the case of a 
        taxpayer who has made an election under paragraph (5), the 
        amount of the qualified investment of such taxpayer for the 
        taxable year (determined under subsection (c) without regard to 
        this section) shall be increased by an amount equal to the 
        aggregate of each qualified progress expenditure for the 
        taxable year with respect to progress expenditure property.
            ``(2) Progress expenditure property defined.--For purposes 
        of this subsection, the term `progress expenditure property' 
        means any property being constructed by or for the taxpayer and 
        which it is reasonable to believe will qualify as a qualifying 
        advanced clean coal technology facility which is being 
        constructed by or for the taxpayer when it is placed in 
        service.
            ``(3) Qualified progress expenditures defined.--For 
        purposes of this subsection--
                    ``(A) Self-constructed property.--In the case of 
                any self-constructed property, the term `qualified 
                progress expenditures' means the amount which, for 
                purposes of this subpart, is properly chargeable 
                (during such taxable year) to capital account with 
                respect to such property.
                    ``(B) Nonself-constructed property.--In the case of 
                nonself-constructed property, the term `qualified 
                progress expenditures' means the amount paid during the 
                taxable year to another person for the construction of 
                such property.
            ``(4) Other definitions.--For purposes of this subsection--
                    ``(A) Self-constructed property.--The term `self-
                constructed property' means property for which it is 
                reasonable to believe that more than half of the 
                construction expenditures will be made directly by the 
                taxpayer.
                    ``(B) Nonself-constructed property.--The term 
                `nonself-constructed property' means property which is 
                not self-constructed property.
                    ``(C) Construction, etc.--The term `construction' 
                includes reconstruction and erection, and the term 
                `constructed' includes reconstructed and erected.
                    ``(D) Only construction of qualifying advanced 
                clean coal technology facility to be taken into 
                account.--Construction shall be taken into account only 
                if, for purposes of this subpart, expenditures therefor 
                are properly chargeable to capital account with respect 
                to the property.
            ``(5) Election.--An election under this subsection may be 
        made at such time and in such manner as the Secretary may by 
        regulations prescribe. Such an election shall apply to the 
        taxable year for which made and to all subsequent taxable 
        years. Such an election, once made, may not be revoked except 
        with the consent of the Secretary.
    ``(j) Coordination With Other Credits.--This section shall not 
apply to any property with respect to which the rehabilitation credit 
under section 47 or the energy credit under section 48 is allowed 
unless the taxpayer elects to waive the application of such credit to 
such property.
    ``(k) Termination.--This section shall not apply with respect to 
any qualified investment made after December 31, 2011.
    ``(l) National Limitation.--
            ``(1) In general.--Notwithstanding any other provision of 
        this section, the term `qualifying advanced clean coal 
        technology facility' shall include such a facility only to the 
        extent that such facility is allocated a portion of the 
        national megawatt limitation under this subsection.
            ``(2) National megawatt limitation.--The national megawatt 
        limitation under this subsection is 5,000 megawatts.
            ``(3) Allocation of limitation.--The national megawatt 
        limitation shall be allocated by the Secretary under rules 
        prescribed by the Secretary. Not later than 6 months after the 
        date of the enactment of this subsection, the Secretary shall 
        prescribe such regulations as may be necessary or appropriate 
        to carry out the purposes of this section, including 
        regulations--
                    ``(A) to limit which facility qualifies as 
                `qualified advanced clean coal technology' in 
                subsection (c) to particular facilities, a portion of 
                particular facilities, or a portion of the production 
                from particular facilities, so that when all such 
                facilities (or portions thereof) are placed in service 
                over the ten year period in subsection (k), the 
                combination of facilities approved for tax credits 
                (and/or portions of facilities approved for tax 
                credits) will not exceed a combined capacity of 5,000 
                megawatts;
                    ``(B) to provide a certification process in 
                consultation with the Secretary of Energy under 
                subsection (g) that will approve and allocate the 5,000 
                megawatts of available tax credits authority--
                            ``(i) to encourage that facilities with the 
                        highest thermal efficiencies and environmental 
                        performance be placed in service as soon as 
                        possible;
                            ``(ii) to allocate credits to taxpayers 
                        that have a definite and credible plan for 
                        placing into commercial operation a qualifying 
                        advanced clean coal technology facility, 
                        including--
                                    ``(I) a site,
                                    ``(II) contractual commitments for 
                                procurement and construction,
                                    ``(III) filings for all necessary 
                                preconstruction approvals,
                                    ``(IV) a demonstrated record of 
                                having successfully completed 
                                comparable projects on a timely basis, 
                                and
                                    ``(V) such other factors that the 
                                Secretary shall determine are 
                                appropriate;
                            ``(iii) to allocate credits to a portion of 
                        a facility (or a portion of the production from 
                        a facility) if the Secretary determines that 
                        such an allocation should maximize the amount 
                        of efficient production encouraged with the 
                        available tax credits;
                    ``(C) to set progress requirements and conditional 
                approvals so that credits for approved projects that 
                become unlikely to meet the necessary conditions that 
                can be reallocated by the Secretary to other projects;
                    ``(D) to reallocate credits that are not allocated 
                to 1 technology described in clauses (i) through (iv) 
                of subsection (c)(1)(A) because an insufficient number 
                of qualifying facilities requested credits for one 
                technology, to another technology described in another 
                subparagraph of subsection (c) in order to maximize the 
                amount of energy efficient production encouraged with 
                the available tax credits; and
                    ``(E) to provide taxpayers with opportunities to 
                correct administrative errors and omissions with 
                respect to allocations and recordkeeping within a 
                reasonable period after their discovery, taking into 
                account the availability of regulations and other 
                administrative guidance from the Secretary.''.
    (c) Recapture.--Section 50(a) of such Code (relating to other 
special rules) is amended by adding at the end the following:
            ``(6) 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 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 advanced clean coal 
                technology facility (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 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 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 
                advanced clean coal technology facility.''.
    (d) Transitional Rule.--Section 39(d) of such Code (relating to 
transitional rules) is amended by adding at the end the following:
            ``(12) 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 advanced clean 
        coal technology facility credit determined under section 48A 
        may be carried back to a taxable year ending before January 1, 
        2004.''.
    (e) Technical Amendments.--
            (1) Section 49(a)(1)(C) of such Code 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 advanced clean coal technology 
                        facility attributable to any qualified 
                        investment (as defined by section 48A(h)).''.
            (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 new paragraph:
            ``(6) Special rule for qualifying advanced clean coal 
        technology facilities.--Paragraphs (1) and (2) shall not apply 
        to any property with respect to the credit determined 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 advanced clean 
                                        coal technology facility 
                                        credit.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2003, under rules similar to the 
rules of section 48(m) of the Internal Revenue Code of 1986 (as in 
effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 303. 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) is 
amended by adding after section 45G the following:

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

    ``(a) General Rule.--For purposes of section 38, the qualifying 
advanced clean coal technology production credit of any taxpayer for 
any taxable year is equal to--
            ``(1) the applicable amount of advanced clean coal 
        technology production credit, multiplied by
            ``(2) the sum of--
                    ``(A) the kilowatt hours of electricity, plus
                    ``(B) each 3,413 Btu of fuels or chemicals,
        produced by the taxpayer during such taxable year at a 
        qualifying advanced clean coal technology facility during the 
        10-year period beginning on the date the facility was 
        originally placed in service.
    ``(b) Applicable Amount.--For purposes of this section, the 
applicable amount of advanced clean coal technology production credit 
with respect to production from a qualifying advanced clean coal 
technology facility shall be determined as follows:
            ``(1) Where the design coal has a heat content of more than 
        9,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2011, if--
      

------------------------------------------------------------------------
                                               The applicable amount is:
                                             ---------------------------
``The facility design net heat rate, Btu/kWh    For 1st 5     For 2d 5
                  (HHV) is:                     years of      years of
                                              such service  such service
------------------------------------------------------------------------
Not more than 8,500.........................       $.0060        $.0038
More than 8,500 but not more than 8,750.....       $.0025        $.0010
More than 8,750 but not more than 8,900.....       $.0010       $.0010.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2010 and before 2015, if--
      

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

                    ``(C) In the case of a facility originally placed 
                in service after 2014 and before 2019, if--
      

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

            ``(2) Where the design coal has a heat content of not more 
        than 9,000 Btu per pound:
                    ``(A) In the case of a facility originally placed 
                in service before 2011, if--
      

------------------------------------------------------------------------
                                               The applicable amount is:
                                             ---------------------------
``The facility design net heat rate, Btu/kWh    For 1st 5     For 2d 5
                  (HHV) is:                     years of      years of
                                              such service  such service
------------------------------------------------------------------------
Not more than 8,500.........................       $.0060        $.0038
More than 8,500 but not more than 8,750.....       $.0025        $.0010
More than 8,750 but not more than 9,000.....       $.0010       $.0010.
------------------------------------------------------------------------

                    ``(B) In the case of a facility originally placed 
                in service after 2010 and before 2015, if--
      

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

                    ``(C) In the case of a facility originally placed 
                in service after 2014 and before 2019, if--
      

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

            ``(3) Where the clean coal technology facility is producing 
        fuel or chemicals:
                    ``(A) In the case of a facility originally placed 
                in service before 2011, if--
      

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

                    ``(B) In the case of a facility originally placed 
                in service after 2010 and before 2015, if--
      

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

                    ``(C) In the case of a facility originally placed 
                in service after 2014 and before 2019, if--
      

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

    ``(c) A qualifying clean coal technology facility originally placed 
in service before 2009 that has a design heat rate that meets a lower 
heat rate test in paragraphs (1)(A), (B) and (C), (2)(A), (B) and (C), 
or (3)(A), (B) and (C) of subsection (b), or a qualifying clean coal 
technology facility originally placed in service before 2013 that has a 
design heat rate that meets a lower heat rate test in paragraphs 
(1)(C), (2)(C), or (3)(C) of subsection (b), shall receive the highest 
applicable amount with respect to a production tax credit for which it 
qualifies.
    ``(d) Inflation Adjustment Factor.--For calendar years after 2004, 
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.
    ``(e) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) In general.--Any term used in this section which is 
        also used in section 48A shall have the meaning given such term 
        in section 48A.
            ``(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 
        2003.
            ``(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 such Code 
is amended by striking ``plus'' at the end of paragraph (15), by 
striking the period at the end of paragraph (16) and inserting ``, 
plus'', and by adding at the end the following:
            ``(17) the qualifying advanced clean coal technology 
        production credit determined under section 45K(a).''.
    (c) Transitional Rule.--Section 39(d) of such Code (relating to 
transitional rules) is amended by adding after paragraph (12) the 
following:
            ``(13) No carryback of section 45k credit before effective 
        date.--No portion of the unused business credit for any taxable 
        year which is attributable to the qualifying advanced clean 
        coal technology production credit determined under section 45H 
        may be carried back to a taxable year ending before the date of 
        the enactment of section 45H.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following:

                              ``Sec. 45H. Credit for production from 
                                        qualifying advanced clean coal 
                                        technology.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production in taxable years beginning after December 31, 2003.

 SEC. 304. TREATMENT OF PERSONS NOT ABLE TO USE ENTIRE CREDIT RELATING 
              TO CLEAN COAL TECHNOLOGY.

    (a) In General.--Section 45G of the Internal Revenue Code of 1986, 
as added by this Act, is amended by adding at the end the following new 
subsection:
    ``(f) Treatment of Person Not Able To Use Entire Credit.--
            ``(1) Allowance of credits.--
                    ``(A) In general.--Any credit allowable under this 
                section, section 45H, or section 48A with respect to a 
                facility owned by a person described in subparagraph 
                (B) may be transferred or used as provided in this 
                subsection, and the determination as to whether the 
                credit is allowable shall be made without regard to the 
                tax-exempt status of the person.
                    ``(B) Persons described.--A person is described in 
                this subparagraph if the person is--
                            ``(i) an organization described in section 
                        501(c)(12)(C) and exempt from tax under section 
                        501(a),
                            ``(ii) an organization described in section 
                        1381(a)(2)(C),
                            ``(iii) a public utility (as defined in 
                        section 136(c)(2)(B)),
                            ``(iv) any State or political subdivision 
                        thereof, the District of Columbia, or any 
                        agency or instrumentality of any of the 
                        foregoing,
                            ``(v) any Indian tribal government (within 
                        the meaning of section 7871) or any agency or 
                        instrumentality thereof, or
                            ``(vi) the Tennessee Valley Authority.
            ``(2) Transfer of credit.--
                    ``(A) In general.--A person described in clause 
                (i), (ii), (iii), (iv), or (v) of paragraph (1)(B) may 
                transfer any credit to which paragraph (1)(A) applies 
                through an assignment to any other person not described 
                in paragraph (1)(B).
        Such transfer may be revoked only with the consent of the 
        Secretary.
                    ``(B) Regulations.--The Secretary shall prescribe 
                such regulations as necessary to insure that any credit 
                described in subparagraph (A) is claimed once and not 
                reassigned by such other person.
                    ``(C) Transfer proceeds treated as arising from 
                essential government function.--Any proceeds derived by 
                a person described in clause (iii), (iv), or (v) of 
                paragraph (1)(B) from the transfer of any credit under 
                subparagraph (A) shall be treated as arising from the 
                exercise of an essential government function.
            ``(3) Use by tva.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, in the case of a person described in 
                paragraph (1)(B)(vi), any credit to which paragraph 
                (1)(A) applies may be applied as a credit against the 
                payments required to be made in any fiscal year under 
                section 15d(e) of the Tennessee Valley Authority Act of 
                1933 (16 U.S.C. 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 paragraph (1)(A) with respect 
                to such person 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 
                paragraph (1)(A) with respect to such person exceeds 
                the aggregate amount of payment obligations described 
                in subparagraph (A), the excess amount shall remain 
                available for application as credits against the 
                amounts of such payment obligations in succeeding 
                fiscal years in the same manner as described in this 
                paragraph.
            ``(4) Credit not income.--Any transfer under paragraph (2) 
        of any credit to which paragraph (1)(A) applies shall not be 
        treated as income for purposes of section 501(c)(12).
            ``(5) Treatment of unrelated persons.--For purposes of this 
        subsection, sales among and between persons described in 
        clauses (i), (ii), (iii), (iv), and (v) of paragraph (1)(A) 
        shall be treated as sales between unrelated parties.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to production after December 31, 2003.
                                 <all>