[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 1133 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                S. 1133

   To authorize the Secretary of Energy to develop and implement an 
   accelerated research, development, and demonstration program for 
   advanced clean coal technologies for use in coal-based generation 
 facilities and to provide financial incentives to encourage the early 
 commercial deployment of advanced clean coal technologies through the 
  retrofitting, repowering, replacement, and new construction of coal-
  based electricity generating facilities and industrial gasification 
                              facilities.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 26, 2005

Mr. Byrd (for himself, Mr. Rockefeller, and Mr. Specter) introduced the 
 following bill; which was read twice and referred to the Committee on 
                      Energy and Natural Resources

_______________________________________________________________________

                                 A BILL


 
   To authorize the Secretary of Energy to develop and implement an 
   accelerated research, development, and demonstration program for 
   advanced clean coal technologies for use in coal-based generation 
 facilities and to provide financial incentives to encourage the early 
 commercial deployment of advanced clean coal technologies through the 
  retrofitting, repowering, replacement, and new construction of coal-
  based electricity generating facilities and industrial gasification 
                              facilities.

    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 ``Clean Coal 
Research, Development, Demonstration, and Deployment Act of 2005''.
    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
                     TITLE I--CLEAN COAL INITIATIVE

Subtitle A--Clean Coal Research, Development, and Demonstration Program

Sec. 101. Clean coal power initiative.
Sec. 102. Research and development programs.
Sec. 103. Authorization of appropriations.
     Subtitle B--Coal-Based Electric Generation Deployment Program

Sec. 111. Purpose.
Sec. 112. Definitions.
Sec. 113. Deployment incentive program.
Sec. 114. Election of Federal financial incentives.
Sec. 115. Qualifying advanced coal projects.
Sec. 116. Advanced coal-based generation technology.
Sec. 117. Federal project coordinator.
Sec. 118. Applicability.
Sec. 119. Investment tax credit and shortened recovery period.
Sec. 120. Credit to holders of clean energy bonds.
              TITLE II--INDUSTRIAL GASIFICATION INITIATIVE

Sec. 201. Findings and purpose.
Sec. 202. Definitions.
    Subtitle A--Industrial Gasification Research, Development, and 
                         Demonstration Program

Sec. 211. Establishment.
Sec. 212. Cost and performance goals.
Sec. 213. Study.
Sec. 214. Authorization of appropriations.
         Subtitle B--Industrial Gasification Deployment Program

Sec. 221. Establishment of certification program.
Sec. 222. Credit for production from certified industrial gasification 
                            projects.

SEC. 2. DEFINITIONS.

    In this Act:
            (1)  Department.--The term ``Department'' means the 
        Department of Energy.
            (2) Secretary.--The term ``Secretary'' means the Secretary 
        of Energy.

                     TITLE I--CLEAN COAL INITIATIVE

Subtitle A--Clean Coal Research, Development, and Demonstration Program

SEC. 101. CLEAN COAL POWER INITIATIVE.

    (a) In General.--
            (1) Establishment.--The Secretary shall establish a clean 
        coal power initiative under which the Secretary shall provide 
        assistance under this subtitle for projects described in 
        paragraph (2).
            (2) Projects.--To be eligible to receive assistance under 
        this subtitle, a project shall--
                    (A) significantly advance efficiency, reliability, 
                environmental performance, and cost competitiveness or 
                develop alternative technology pathways beyond the 
                levels of technologies that--
                            (i) are in commercial service as of the 
                        date of enactment of this Act; or
                            (ii) have been demonstrated at scales 
                        sufficient to demonstrate that commercial 
                        service is viable, as determined by the 
                        Secretary; and
                    (B) be operated in the United States using United 
                States coal.
    (b) Technical Criteria.--
            (1) Gasification projects.--
                    (A) Allocation of funds.--In allocating the funds 
                made available under section 103(a), the Secretary 
                shall ensure that at least 65 percent of the funds are 
                used to fund projects using coal-based gasification 
                technologies, including--
                            (i) gasification combined cycle;
                            (ii) gasification fuel cells and turbine 
                        combined cycle;
                            (iii) gasification coproduction; and
                            (iv) hybrid gasification and combustion.
                    (B) Technical milestones.--
                            (i) Periodic determination.--
                                    (I) In general.--The Secretary 
                                shall periodically establish technical 
                                milestones specifying the emission and 
                                thermal efficiency levels to which 
                                power and coproduction projects under 
                                this subtitle shall be designed, and 
                                reasonably expected, to achieve.
                                    (II) Prescriptive milestones.--The 
                                technical milestones shall become more 
                                prescriptive during the period of the 
                                clean coal power initiative.
                            (ii) 2020 goals.--The Secretary shall 
                        establish periodic milestones so as to achieve, 
                        by the year 2020, coal gasification projects 
                        able--
                                    (I) to remove at least 99 percent 
                                of the sulfur compounds;
                                    (II) to emit not more than .05 lbs 
                                of NOx per million Btu;
                                    (III) to achieve 95 percent 
                                reductions in mercury emissions; and
                                    (IV) to achieve thermal to 
                                electrical conversion efficiencies 
                                (also known as ``higher heating 
                                value'') of at least--
                                            (aa) 50 percent for coal of 
                                        more than 9,000 Btu;
                                            (bb) 48 percent for coal of 
                                        7,000 to 9,000 Btu; and
                                            (cc) 46 percent for coal of 
                                        less than 7,000 Btu.
            (2) Other projects.--
                    (A) Allocation of funds.--The Secretary shall 
                ensure that not more than 35 percent of the funds made 
                available under section 103(a) are used to fund 
                projects other than those described in paragraph 
                (1)(A).
                    (B) Technical milestones.--
                            (i) Periodic determination.--
                                    (I) In general.--The Secretary 
                                shall periodically establish technical 
                                milestones specifying the emission and 
                                thermal efficiency levels that projects 
                                other than those described in paragraph 
                                (1)(A) shall be designed, and 
                                reasonably expected, to achieve.
                                    (II) Prescriptive milestones.--The 
                                technical milestones shall become more 
                                prescriptive during the period of the 
                                clean coal power initiative.
                            (ii) 2020 goals.--The Secretary shall 
                        establish the periodic milestones so as to 
                        achieve, by the year 2020, projects able--
                                    (I) to remove at least 97 percent 
                                of sulfur dioxide;
                                    (II) to emit not more than .08 lbs 
                                of NOx per million Btu;
                                    (III) to achieve 90 percent 
                                reductions in mercury emissions; and
                                    (IV) to achieve thermal to 
                                electrical conversion efficiencies 
                                (also known as ``higher heating 
                                value'') of at least--
                                            (aa) 43 percent for coal of 
                                        more than 9,000 Btu;
                                            (bb) 41 percent for coal of 
                                        7,000 to 9,000 Btu; and
                                            (cc) 39 percent for coal of 
                                        less than 7,000 Btu.
            (3) Existing units.--In the case of projects at units in 
        existence on the date of enactment of this Act, in lieu of the 
        thermal efficiency requirements described in paragraphs 
        (1)(B)(ii) and (2)(B)(ii), the milestones shall be designed to 
        achieve an overall thermal design efficiency improvement, 
        compared to the efficiency of the unit as operated, of not less 
        than--
                    (A) 7 percentage points for coal of more than 9,000 
                Btu;
                    (B) 6 percentage points for coal of 7,000 to 9,000 
                Btu; or
                    (C) 4 percentage points for coal of less than 7,000 
                Btu.
    (c) Project Selection.--
            (1) In general.--In evaluating project proposals, the 
        Secretary shall select those demonstration projects that are 
        expected to demonstrate progress toward achieving the 
        milestones described in paragraphs (1) and (2) of subsection 
        (b).
            (2) Site elevation and rank of coal.--In evaluating project 
        proposals to achieve the milestones described in paragraphs 
        (1)(B)(i), (2)(B)(i), and (3) of subsection (b), and in 
        determining progress toward achieving the milestones described 
        in paragraph (4) and paragraphs (1)(B)(ii) and (2)(B)(ii) of 
        subsection (b), the Secretary shall take into account and make 
        adjustments for the Btu value of various coals and the 
        elevation of the site at which a project is proposed to be 
        constructed.
            (3) Consultation.--Before establishing the technical 
        milestones under paragraphs (1)(B)(i)(I) and (2)(B)(i)(I) of 
        subsection (b), the Secretary shall consult with--
                    (A) the Administrator of the Environmental 
                Protection Agency; and
                    (B) interested persons, including--
                            (i) coal producers;
                            (ii) industries using coal;
                            (iii) organizations that promote coal or 
                        advanced coal technologies;
                            (iv) environmental organizations;
                            (v) organizations representing workers; and
                            (vi) organizations representing consumers.
            (4) Permitted uses.--In carrying out this subtitle, the 
        Secretary shall give high priority to projects that include, as 
        part of the project--
                    (A) the separation or capture of carbon dioxide; or
                    (B) the reduction of the demand for natural gas if 
                deployed.
    (d) Financial Criteria.--The Secretary shall not provide assistance 
under this subtitle for a project unless the recipient documents to the 
satisfaction of the Secretary that--
            (1) the recipient organization is financially responsible;
            (2) the recipient shall provide sufficient information to 
        the Secretary to ensure the Secretary that the federally-
        awarded funds will be spent efficiently and effectively; and
            (3) a market exists for the technology being demonstrated 
        or applied, as evidenced by statements of interest in writing 
        from potential purchasers of the technology.
    (e) Financial Assistance.--The Secretary shall provide assistance 
to projects that, as determined by the Secretary--
            (1) meet the requirements of subsections (a), (b), and (c); 
        and
            (2) are likely--
                    (A) to achieve overall cost reductions in the use 
                of coal to generate useful forms of energy or chemical 
                feedstocks; and
                    (B) to 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 or chemical feedstock 
                requirements.
    (f) Federal Share.--The Federal share of the cost of a coal or 
related technology project carried out using funds made available under 
this subtitle shall not exceed 50 percent, as determined by the 
Secretary.
    (g) Scheduled Completion of Selected Projects.--
            (1) In general.--In selecting a project for financial 
        assistance under this section, the Secretary shall establish a 
        reasonable period of time during which the owner or operator of 
        the project shall complete the construction or demonstration 
        phase of the project, as the Secretary determines to be 
        appropriate.
            (2) Condition of financial assistance.--The Secretary shall 
        require as a condition of receipt of any financial assistance 
        under this subtitle that the recipient of the assistance enter 
        into an agreement with the Secretary not to request an 
        extension of the time period established for the project by the 
        Secretary under paragraph (1).
            (3) Extension of time period.--
                    (A) In general.--Subject to subparagraph (B), the 
                Secretary may extend the time period established under 
                paragraph (1) if the Secretary determines, in the sole 
                discretion of the Secretary, that the owner or operator 
                of the project cannot complete the construction or 
                demonstration phase of the project within the time 
                period due to circumstances beyond the control of the 
                owner or operator.
                    (B) Limitation.--The Secretary shall not extend a 
                time period under subparagraph (A) by more than 4 
                years.
    (h) Repayment of Federal Share.--Notwithstanding any other 
provision of law, the Secretary shall not condition an award of 
financial assistance to a Clean Coal Power Initiative project under 
this subtitle on repayment of the Federal share of the cost of the 
project.
    (i) Applicability.--No technology, or level of emission reduction, 
solely by reason of the use of the technology, or the achievement of 
the emission reduction by the demonstration of any technology or 
performance level by 1 or more facilities receiving assistance under 
this subtitle, shall be considered to indicate that the technology or 
performance level is--
            (1) adequately demonstrated for purposes of section 111 of 
        the Clean Air Act (42 U.S. C. 7411);
            (2) achievable for purposes of section 169 of that Act (42 
        U.S. C. 7479); or
            (3) achievable in practice for purposes of section 171 of 
        that Act (42 U.S. C. 7501).
    (j) Report.--Not later than 1 year after the date of enactment of 
this Act, and once every 2 years thereafter through 2013, the 
Secretary, in consultation with other appropriate Federal agencies, 
shall submit to Congress a report describing--
            (1)(A) the technical milestones described in this section; 
        and
            (B) how those milestones ensure progress toward meeting the 
        requirements of paragraphs (1)(B)(ii) and (2)(B)(ii) of 
        subsection (b);
            (2) how the technologies being demonstrated under the clean 
        coal power initiative demonstrate methods and equipment that 
        can be used in broader commercial applications in addition to 
        electric power generation; and
            (3) the status of projects that receive assistance under 
        this subtitle.
    (k) Fee Title.--The Secretary may vest fee title or other property 
interests acquired under cost-share Clean Coal Power Initiative 
agreements in any entity, including the United States.
    (l) Data Protection.--For a period not exceeding 5 years after 
completion of the operations phase of a cooperative agreement, the 
Secretary may provide appropriate protections, including exemptions 
from subchapter II of chapter 5 of title 5, United States Code, against 
the dissemination of information that results from demonstration 
activities carried out under the Clean Coal Power Initiative Program 
and that would be a trade secret or commercial or financial information 
that is privileged or confidential if the information had been obtained 
from and first produced by a non-Federal party participating in a Clean 
Coal Power Initiative project.

SEC. 102. RESEARCH AND DEVELOPMENT PROGRAMS.

    (a) Objectives.--The Secretary shall conduct a program of 
technology research, development, demonstration, and commercial 
application for coal and power systems, including programs to 
facilitate production and generation of coal-based energy through--
            (1) innovations for existing plants;
            (2) gasification systems;
            (3) advanced combustion systems;
            (4) turbines for synthesis gas derived from coal;
            (5) carbon capture and sequestration research and 
        development;
            (6) coal-derived chemicals and liquid transportation fuels;
            (7) solid fuels and feedstocks;
            (8) advanced coal-related research;
            (9) advanced separation technologies;
            (10) fuel cells for operation on synthesis gas derived from 
        coal; and
            (11) projects for permeability enhancement in coals for 
        natural gas production and carbon dioxide sequestration.
    (b) Carbon Capture Research and Development Program.--
            (1) In general.--In addition to the research and 
        development activities authorized under subsection (a)(5), the 
        Secretary shall carry out a 10-year carbon capture research and 
        development program to develop carbon dioxide capture 
        technologies for use--
                    (A) in new coal utilization facilities; and
                    (B) on the existing fleet of coal-based units.
            (2) Objectives.--The program objectives shall be--
                    (A) to develop carbon dioxide capture technologies, 
                including adsorption and absorption techniques and 
                chemical processes, to remove the carbon dioxide from 
                gas streams containing carbon dioxide potentially 
                amenable to sequestration;
                    (B) to develop technologies that would directly 
                produce concentrated streams of carbon dioxide 
                potentially amenable to sequestration;
                    (C) to increase the efficiency of the overall 
                system to reduce the quantity of carbon dioxide 
                emissions released from the system per megawatt 
                generated; and
                    (D) in conjunction with the carbon dioxide capture 
                program, to promote a robust carbon sequestration 
                program and continue the work of the Department in 
                conjunction with the private sector, through regional 
                carbon sequestration partnerships.
    (c) Cost and Performance Goals.--
            (1) In general.--In carrying out programs under this 
        section, in each of fiscal years 2008 and 2016 and in each year 
        following fiscal year 2021, the Secretary shall identify cost 
        and performance goals for coal-based technologies that would 
        permit the continued cost-competitive use of coal for the 
        production of electricity, chemical feedstocks, and liquid 
        transportation fuels.
            (2) Establishing goals.--In identifying cost and 
        performance goals under paragraph (1), the Secretary shall--
                    (A) consider activities and studies undertaken as 
                of the date of enactment of this Act by industry in 
                cooperation with the Department in support of the 
                goals;
                    (B) consult with interested persons, including--
                            (i) coal producers;
                            (ii) industries using coal;
                            (iii) organizations that promote coal and 
                        advanced coal technologies;
                            (iv) environmental organizations;
                            (v) organizations representing workers; and
                            (vi) organizations representing consumers;
                    (C) not later than 120 days after the date of 
                enactment of this Act, publish in the Federal Register 
                proposed draft cost and performance goals for public 
                comment; and
                    (D) not later than 180 days after the date of 
                enactment of this Act and every 4 years thereafter, 
                submit to Congress a report that--
                            (i) describes final cost and performance 
                        goals for technologies described in paragraph 
                        (1);
                            (ii) includes a list of technical 
                        milestones; and
                            (iii) explains how programs authorized in 
                        this section will not duplicate activities 
                        carried out under section 101.

SEC. 103. AUTHORIZATION OF APPROPRIATIONS.

    (a) Clean Coal Power Initiative.--
            (1) In general.--There is authorized to be appropriated to 
        the Secretary to carry out section 101 $200,000,000 for each of 
        fiscal years 2006 through 2012, to remain available until 
        expended.
            (2) Report.--Not later than March 31, 2006, the Secretary 
        shall submit to Congress a report that includes a 10-year plan 
        that includes--
                    (A) a detailed assessment of whether the aggregate 
                assistance levels provided under paragraph (1) are the 
                appropriate assistance levels for the clean coal power 
                initiative;
                    (B) a detailed description of how proposals for 
                assistance under the clean coal power initiative will 
                be solicited and evaluated, including a list of all 
                activities expected to be undertaken;
                    (C) a detailed list of technical milestones for 
                each coal and related technology that will be pursued; 
                and
                    (D) a detailed description of how the clean coal 
                initiative will avoid problems enumerated in Government 
                Accountability Office reports on the Clean Coal 
                Technology Program of the Department, including 
                problems that have resulted in unspent funds and 
                projects that failed either financially or 
                scientifically.
    (b) Research and Development Programs.--
            (1) In general.--There are authorized to be appropriated to 
        the Secretary to carry out clean coal technology research, 
        development, demonstration, and commercial application 
        activities, including activities described in section 102(a)--
                    (A) $324,000,000 for fiscal year 2005;
                    (B) $337,000,000 for fiscal year 2006;
                    (C) $364,000,000 for fiscal year 2007;
                    (D) $394,000,000 for fiscal year 2008; and
                    (E) $427,000,000 for fiscal year 2009.
            (2) Carbon capture research and development program.--In 
        addition to the funds authorized to be appropriated to carry 
        out section 102(a)(5), there are authorized to be appropriated 
        to the Secretary to carry out section 102(b)--
                    (A) $20,000,000 for fiscal year 2006;
                    (B) $25,000,000 for fiscal year 2007;
                    (C) $30,000,000 for fiscal year 2008;
                    (D) $35,000,000 for fiscal year 2009; and
                    (E) $40,000,000 for fiscal year 2010.

     Subtitle B--Coal-Based Electric Generation Deployment Program

SEC. 111. PURPOSE.

    The purpose of this subtitle is to provide Federal financial 
assistance for projects that will use integrated gasification combined 
cycle or other advanced coal-based generation technologies--
            (1) in new electric generating units;
            (2) to repower existing electric generation units; or
            (3) to retrofit existing natural gas combined cycle units 
        to operate on coal instead of natural gas.

SEC. 112. DEFINITIONS.

    In this subtitle:
            (1) Advanced coal-based generation technology.--The term 
        ``advanced coal-based generation technology'' means a 
        technology that meets the requirements of section 116.
            (2) Carbon capture capability.--The term ``carbon capture 
        capability'' means an integrated gasification combined cycle 
        technology facility capable of adding components that can 
        capture, separate on a long-term basis, isolate, remove, and 
        sequester greenhouse gases that result from the generation of 
        electricity.
            (3) Electric generation unit.--The term ``electric 
        generation unit'' means any facility at least 50 percent of the 
        total annual net output of which is electrical power, including 
        an otherwise eligible facility that is used in an industrial 
        application.
            (4) Integrated gasification combined cycle.--The term 
        ``integrated gasification combined cycle'' means an electric 
        generation unit that produces electricity by converting coal to 
        synthesis gas that is used to fuel a combined-cycle plant that 
        produces electricity from both a combustion turbine (including 
        a combustion turbine/fuel cell hybrid) and a steam turbine.
            (5) Qualifying advanced coal project.--The term 
        ``qualifying advanced coal project'' means a project that meets 
        the requirements of section 115.

SEC. 113. DEPLOYMENT INCENTIVE PROGRAM.

    (a) Establishment.--Not later than 180 days after the date of 
enactment of this Act, the Secretary shall begin carrying out a program 
to provide Federal financial incentives for deployment of advanced 
coal-based generation technologies.
    (b) Certification.--
            (1) In general.--The Secretary may certify a qualifying 
        advanced coal project as eligible to receive 1 of the Federal 
        financial incentives provided under section 114.
            (2) Period of issuance.--A certificate of eligibility under 
        this subsection may be issued only during the 10 fiscal year 
        period beginning on October 1, 2005.
            (3) Aggregate generating capacity.--
                    (A) In general.--The aggregate generating capacity 
                of projects certified by the Secretary under paragraph 
                (1) may not exceed 10,000 megawatts.
                    (B) Particular projects.--Of the total megawatts of 
                capacity that the Secretary is authorized to certify--
                            (i) 6,000 megawatts shall be available only 
                        for use for integrated gasification combined 
                        cycle projects; and
                            (ii) 4,000 megawatts shall be available 
                        only for use for projects that use other 
                        advanced coal-based generation technologies.
                    (C) Determination of capacity.--In determining 
                capacity under this paragraph in the case of a 
                retrofitted or repowered plant, capacity shall be 
                determined based on total design capacity after the 
                retrofit or repowering of the existing facility is 
                accomplished.
            (4) Applications.--The Secretary shall act on applications 
        for certification as the applications are received.
            (5) Determination.--In determining whether to certify a 
        qualifying advanced coal project, the Secretary shall take into 
        account any written statement from the Governor of the State in 
        which the project is to be sited that the construction and 
        operation of the project is consistent with State environmental 
        and energy policy and requirements.
            (6) Application requirement.--An application for 
        certification shall specify which of the incentives under 
        section 114 the project sponsor will elect.
            (7) Review and redistribution.--
                    (A) Review.--Not later than 6 years after the date 
                of enactment of this Act, the Secretary shall review 
                the projects certified and megawatts allocated under 
                this section as of the date that is 6 years after the 
                date of enactment of this Act.
                    (B) Redistribution.--The Secretary may reallocate 
                the megawatts available under clauses (i) and (ii) of 
                subsection (b)(3)(B) if the Secretary determines that--
                            (i) capacity cannot be used because there 
                        is an insufficient quantity of qualifying 
                        applications for certification pending for any 
                        available capacity at the time of the review; 
                        or
                            (ii) any certification commitment made 
                        pursuant to section 115(d)(2) has not been 
                        revoked pursuant to section 115(d)(2)(B)(ii) 
                        because the project subject to the 
                        certification commitment has been delayed as a 
                        result of third party opposition or litigation 
                        to the proposed project.

SEC. 114. ELECTION OF FEDERAL FINANCIAL INCENTIVES.

    (a) In General.--The project sponsor of a qualifying advanced coal 
project certified under section 113(b) may elect to receive the Federal 
financial incentives described in either section 119 or 120.
    (b) Limitation.--A project sponsor may not elect more than 1 
section described in subsection (a).

SEC. 115. QUALIFYING ADVANCED COAL PROJECTS.

    (a) Requirements.--For the purpose of section 113(b), a project 
shall be considered a qualifying advanced coal project that the 
Secretary may certify under section 113(b) if the Secretary determines 
that, at a minimum--
            (1) the project uses an advanced coal-based generation 
        technology--
                    (A) to power a new electric generation or 
                polygeneration unit; or
                    (B) to retrofit or repower an existing electric 
                generation unit (including an existing natural gas-
                fired combined cycle unit);
            (2) the fuel input for the project, when completed, is at 
        least 75 percent coal;
            (3) the applicant provides an assurance satisfactory to the 
        Secretary that--
                    (A) the project is technologically feasible; and
                    (B) the project is not financially feasible without 
                the Federal financial incentives, after taking into 
                account--
                            (i) regulatory approvals or power purchase 
                        contracts referred to in paragraph (4);
                            (ii) arrangements for the supply of fuel to 
                        the project;
                            (iii) contracts or other arrangements for 
                        construction of the project facilities;
                            (iv) any performance guarantees to be 
                        provided by contractors and equipment vendors; 
                        and
                            (v) evidence of the availability of funds 
                        to develop and construct the project;
            (4) the applicant demonstrates that the applicant has 
        obtained--
                    (A) approval by the appropriate regulatory 
                commission of the recovery of the cost of the project; 
                or
                    (B) a power purchase agreement (or letter of 
                intent, subject to subsection (c)) that has been 
                approved by the board of directors of, and executed by, 
                a creditworthy purchasing party;
            (5) except as provided in subsection (d), the applicant 
        demonstrates that the applicant has, or will, obtain all 
        project agreements and approvals; and
            (6) the project will be operated in the United States using 
        United States coal.
    (b) Priority for Integrated Gasification Combines Cycle Projects.--
In determining which qualifying advanced coal projects to certify under 
section 113(b)(3)(B)(i), the Secretary shall give high priority to 
projects that include, as determined by the Secretary--
            (1) carbon capture capability;
            (2) increased by-product utilization; and
            (3) other benefits.
    (c) Letter of Intent.--A letter of intent described in subsection 
(a)(4)(B) shall be replaced by a binding contract before a certificate 
may be issued.
    (d) Project Agreements and Approvals.--
            (1) Definition of project agreements and approvals.--In 
        this section, the term ``project agreements and approvals'' 
        means--
                    (A) all necessary power purchase agreements, and 
                all other contracts, that the Secretary determines are 
                necessary to construct, finance, and operate a project; 
                and
                    (B) all authorizations by Federal, State, and local 
                agencies that are required to construct, operate, and 
                recover the cost of the project.
            (2) Certification commitment.--
                    (A) In general.--If the applicant has not obtained 
                all agreements and approvals prior to application, the 
                Secretary may issue a certification commitment.
                    (B) Requirements.--
                            (i) In general.--An applicant that receives 
                        a certification commitment shall obtain any 
                        remaining project agreements and approvals not 
                        later than 4 years after the issuance of the 
                        certification commitment.
                            (ii) Revocation.--If all project agreements 
                        and approvals are not obtained during the 4-
                        year period described in clause (i), the 
                        certification commitment is terminated without 
                        any other action by the Secretary.
                            (iii) Final certificate.--No certificate 
                        may be issued until all project agreements and 
                        approvals are obtained.

SEC. 116. ADVANCED COAL-BASED GENERATION TECHNOLOGY.

    (a) In General.--For the purpose of this subtitle, an electric 
generation unit uses advanced coal-based generation technology if--
            (1) the unit--
                    (A) uses integrated gasification combined cycle 
                technology; or
                    (B) has a design net heat rate of 8530 Btu/kWh (40 
                percent efficiency); and
            (2) the vendor warrants that the unit is designed to meet 
        the performance requirements in the following table:

 
 
 
Performance characteristic:         Design level for project:
  SO2 (percent removal)...........  99 percent
  NOx (emissions).................  0.07 lbs/MMBTU
  PM* (emissions).................  0.015 lbs/MMBTU
  Hg (percent removal)............  90 percent

    (b) Design Net Heat Rate.--For purposes of this section, design net 
heat rate with respect to an electric generation unit shall--
            (1) be measured in Btu per kilowatt hour (higher heating 
        value);
            (2) be based on the design annual heat input to the unit 
        and the rated net electrical power, fuels, and chemicals output 
        of the unit (determined without regard to the cogeneration of 
        steam by the unit);
            (3) be adjusted for the heat content of the design coal to 
        be used by the unit--
                    (A) if the heat content is less than 13,500 Btu per 
                pound, but greater than 7,000 Btu per pound, according 
                to the following formula: design net heat rate = unit 
                net heat rate x [1-{((13,500-design coal heat content, 
                Btu per pound)/1,000)* 0.013}]; and
                    (B) if the heat content is less than or equal to 
                7,000 Btu per pound, according to the following 
                formula: design net heat rate = unit net heat rate x 
                [1-{((13,500-design coal heat content, Btu per pound)/
                1,000)* 0.018}]; and
            (4) 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;
                    (C) temperature, dry bulb of 63\o\F;
                    (D) temperature, wet bulb of 54\o\F; and
                    (E) relative humidity of 55 percent.

SEC. 117. FEDERAL PROJECT COORDINATOR.

    The Secretary shall designate a Federal project coordinator to 
facilitate any Federal agency approvals of eligible advanced coal-
generation projects.

SEC. 118. APPLICABILITY.

    No technology, or level of emission reduction, solely by reason of 
the use of the technology, or the achievement of the emission reduction 
by the demonstration of any technology or performance level by 1 or 
more facilities receiving assistance under this subtitle, shall be 
considered to indicate that the technology or performance level is--
            (1) adequately demonstrated for purposes of section 111 of 
        the Clean Air Act (42 U.S. C. 7411);
            (2) achievable for purposes of section 169 of that Act (42 
        U.S. C. 7479); or
            (3) achievable in practice for purposes of section 171 of 
        that Act (42 U.S. C. 7501).

SEC. 119. INVESTMENT TAX CREDIT AND SHORTENED RECOVERY PERIOD.

    (a) In General.--Section 48(a)(3)(A) of the Internal Revenue Code 
of 1986 (relating to energy property) is amended--
            (1) by striking ``or'' at the end of clause (i),
            (2) by inserting ``or'' at the end of clause (ii), and
            (3) by adding at the end the following new clause:
                            ``(iii) certified coal property,''.
    (b) Credit Rate.--Section 48(a)(2)(A) of such Code (relating to 
energy percentage) is amended by striking ``10 percent'' and inserting 
``10 percent for energy property other than certified coal property, 
and 20 percent for certified coal property''.
    (c) Definition.--Section 48 of such Code (relating to energy 
credit) is amended by adding at the end the following new subsection:
    ``(c) Certified Coal Property.--For purposes of this section, the 
term `certified coal property' means any property that is part of a 
qualifying advanced coal project that the Secretary of Energy has 
certified under section 113(b) of the Clean Coal Research, Development, 
Demonstration, and Deployment Act of 2005, if the project sponsor has 
elected the application of this section for such project under section 
114(a) of such Act.''.

SEC. 120. CREDIT TO HOLDERS OF CLEAN ENERGY BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to credits against tax) is 
amended by adding at the end the following new subpart:

   ``Subpart H--Nonrefundable Credit to Holders of Clean Energy Bonds

``Sec. 54. Credit to holders of clean energy bonds.

``SEC. 54. CREDIT TO HOLDERS OF CLEAN ENERGY BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
clean energy bond on a credit allowance date of such bond, which occurs 
during the taxable year, there shall be allowed as a credit against the 
tax imposed by this chapter for such taxable year an amount equal to 
the sum of the credits determined under subsection (b) with respect to 
credit allowance dates during such year on which the taxpayer holds 
such bond.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a clean energy bond is 25 percent of the annual credit 
        determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any clean energy bond is the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any clean energy bond, the Secretary shall determine 
        daily or caused to be determined daily a credit rate which 
        shall apply to the first day on which there is a binding, 
        written contract for the sale or exchange of the bond. The 
        credit rate for any day is the credit rate which the Secretary 
        or the Secretary's designee estimates will permit the issuance 
        of clean energy bonds with a specified maturity or redemption 
        date without discount and without interest cost to the 
        qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is 
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed or matures.
    ``(c) Limitation Based on Amount of Tax.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subpart C thereof, relating to 
                refundable credits).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, the difference shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) Clean Energy Bond.--For purposes of this section--
            ``(1) In general.--The term `clean energy bond' means any 
        bond issued as part of an issue if--
                    ``(A) the bond is issued by a qualified issuer,
                    ``(B) 95 percent or more of the proceeds from the 
                sale of such issue are to be used for capital 
                expenditures incurred by qualified borrowers for 1 or 
                more qualified projects,
                    ``(C) the qualified issuer designates such bond for 
                purposes of this section and the bond is in registered 
                form, and
                    ``(D) the issue meets the requirements of 
                subsections (e), (g), and (h).
            ``(2) Qualified project; special use rules.--
                    ``(A) In general.--The term `qualified project' 
                means a certified coal property (as defined in section 
                48(c)(1)) placed in service by a qualified borrower.
                    ``(B) Refinancing rules.--For purposes of paragraph 
                (1)(B), a qualified project may be refinanced with 
                proceeds of a clean energy bond only if the 
                indebtedness being refinanced (including any obligation 
                directly or indirectly refinanced by such indebtedness) 
                was originally incurred by a qualified borrower after 
                the date of the enactment of this section.
                    ``(C) Reimbursement.--For purposes of paragraph 
                (1)(B), a clean energy bond may be issued to reimburse 
                a qualified borrower for amounts paid after the date of 
                the enactment of this section with respect to a 
                qualified project, but only if prior to the payment of 
                such expenditure, the qualified borrower declared its 
                intent to reimburse such expenditure with the proceeds 
                of a clean energy bond.
                    ``(D) Treatment of changes in use.--For purposes of 
                paragraph (1)(B), the proceeds of an issue shall not be 
                treated as used for a qualified project to the extent 
                that a qualified borrower takes any action within its 
                control which causes such proceeds not to be used for a 
                qualified project. The Secretary shall prescribe 
                regulations specifying remedial actions that may be 
                taken (including conditions to taking such remedial 
                actions) to prevent an action described in the 
                preceding sentence from causing a bond to fail to be a 
                clean energy bond.
    ``(e) Maturity Limitations.--
            ``(1) Duration of term.--A bond shall not be treated as a 
        clean energy bond if such bond is issued as part of an issue 
        and--
                    ``(A) the average maturity of bonds issued as a 
                part of such issue, exceeds
                    ``(B) 120 percent of the average reasonable 
                expected economic life of the facilities being financed 
                with the proceeds from the sale of such issue.
            ``(2) Determination of averages.--For purposes of paragraph 
        (1), the determination of averages of an issue and economic 
        life of any facility shall be determined in accordance with 
        section 147(b).
            ``(3) Ratable principal amortization required.--A bond 
        shall not be treated as a clean energy bond unless it is part 
        of an issue which provides for an equal amount of principal to 
        be paid by the qualified issuer during each calendar year that 
        the issue is outstanding.
    ``(f) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)) and the amount so 
included shall be treated as interest income.
    ``(g) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the 
        requirements of this subsection if, as of the date of issuance, 
        the qualified issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds from the 
                sale of the issue are to be spent for 1 or more 
                qualified projects within the 5-year period beginning 
                on such date,
                    ``(B) a binding commitment with a third party to 
                spend at least 10 percent of the proceeds from the sale 
                of the issue will be incurred within the 6-month period 
                beginning on the date of issuance of the clean energy 
                bond or, in the case of a clean energy bond, the 
                proceeds of which are to be loaned to 2 or more 
                qualified borrowers, such binding commitment will be 
                incurred within the 6-month period beginning on the 
                date of the loan of such proceeds to a qualified 
                borrower, and
                    ``(C) such projects will be completed with due 
                diligence and the proceeds from the sale of the issue 
                will be spent with due diligence.
            ``(2) Extension of period.--Upon submission of a request 
        prior to the expiration of the period described in paragraph 
        (1)(A), the Secretary may extend such period if the qualified 
        issuer establishes that the failure to satisfy the 5-year 
        requirement is due to reasonable cause and the related projects 
        will continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds 
        within 5 years.--To the extent that less than 95 percent of the 
        proceeds of such issue are expended within such 5-year period 
        (and no extension has been obtained under paragraph (2)), the 
        qualified issuer shall redeem all of the nonqualified bonds on 
        the earliest call date subsequent to the expiration of the 5-
        year period. If such earliest call date is more than 90 days 
        subsequent to the expiration of the 5-year period, the 
        qualified issuer shall establish a yield-restricted defeasance 
        escrow within such 90 days to retire such nonqualified bonds on 
        the earlier of the date which is 10 years after the issue date 
        or the first call date. For purposes of this paragraph, the 
        term `nonqualified bonds' means the portion of the outstanding 
        bonds in an amount that, if the remaining bonds were issued on 
        the fifth anniversary of the date of the issuance of the issue, 
        at least 95 percent of the proceeds of the remaining bonds 
        would be used to provide qualified projects.
    ``(h) Special Rules Relating to Arbitrage.--
            ``(1) In general.--A bond which is part of an issue shall 
        not be treated as a clean energy bond unless, with respect to 
        the issue of which the bond is a part, the issuer satisfies the 
        arbitrage rebate requirements of section 148 with respect to 
        gross proceeds of the issue (other than any amounts applied in 
        accordance with subsection (g)). For purposes of such 
        requirements, yield over the term of an issue shall be 
        determined under the principles of section 148 based on the 
        qualified issuer's payments of principal, interest (if any), 
        and fees for guarantees on such issue.
            ``(2) Exception.--Amounts on deposit in a bona fide debt 
        service fund with regard to any clean energy bond are not 
        subject to the arbitrage rebate requirements of section 148.
    ``(i) Cooperative Electric Company; Clean Energy Bond Lender; 
Governmental Body; Qualified Borrower.--For purposes of this section--
            ``(1) Cooperative electric company.--The term `cooperative 
        electric company' means a mutual or cooperative electric 
        company described in section 501(c)(12) or section 
        1381(a)(2)(C), or a not-for-profit electric utility which has 
        received a loan or loan guarantee under the Rural 
        Electrification Act.
            ``(2) Clean energy bond lender.--The term `clean energy 
        bond lender' means a lender which is a cooperative which is 
        owned by, or has outstanding loans to, 100 or more cooperative 
        electric companies and is in existence on February 1, 2002, and 
        shall include any affiliated entity which is controlled by such 
        lender.
            ``(3) Governmental body.--The term `governmental body' 
        means any State, territory, possession of the United States, 
        the District of Columbia, Indian tribal government, and any 
        political subdivision thereof.
            ``(4) Qualified issuer.--The term `qualified issuer' 
        means--
                    ``(A) a clean energy bond lender,
                    ``(B) a cooperative electric company,
                    ``(C) a governmental body, or
                    ``(D) the Tennessee Valley Authority.
            ``(5) Qualified borrower.--The term `qualified borrower' 
        means--
                    ``(A) a cooperative electric company,
                    ``(B) a governmental body, or
                    ``(C) the Tennessee Valley Authority.
    ``(j) Pool Bonds.--The portion of a clean energy bond issue 
allocable to each loan, if any, shall be deemed to be (and treated as) 
a separate issue of clean energy bonds and the failure of any such 
deemed separate clean energy bond issue to satisfy the requirements set 
forth under this section shall not affect the qualification of any 
other deemed separate clean energy bond issue.
    ``(k) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Partnership; s corporation; and other pass-thru 
        entities.--Under regulations prescribed by the Secretary, in 
        the case of a partnership, trust, S corporation, or other pass-
        thru entity, rules similar to the rules of section 41(g) shall 
        apply with respect to the credit allowable under subsection 
        (a).
            ``(3) Bonds held by regulated investment companies.--If any 
        clean energy bond is held by a regulated investment company, 
        the credit determined under subsection (a) shall be allowed to 
        shareholders of such company under procedures prescribed by the 
        Secretary.
            ``(4) Treatment for estimated tax purposes.--Solely for 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a clean energy bond 
        on a credit allowance date shall be treated as if it were a 
        payment of estimated tax made by the taxpayer on such date.
            ``(5) Reporting.--Issuers of clean energy bonds shall 
        submit reports similar to the reports required under section 
        149(e).
    ``(l) Termination.--This section shall not apply with respect to 
any bond issued after December 31, 2008.''.
    (b) Reporting.--Subsection (d) of section 6049 of the Internal 
Revenue Code of 1986 (relating to returns regarding payments of 
interest) is amended by adding at the end the following new paragraph:
            ``(8) Reporting of credit on clean energy bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(f) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A), subsection 
                (b)(4) shall be applied without regard to subparagraphs 
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following new item:
 ``subpart h. nonrefundable credit to holders of clean energy bonds.''.
            (2) Section 6401(b)(1) of such Code is amended by striking 
        ``and G'' and inserting ``G, and H''.
    (d) Issuance of Regulations.--The Secretary of Treasury shall issue 
regulations required under section 54 of the Internal Revenue Code of 
1986 (as added by this section) not later than 120 days after the date 
of the enactment of this Act.

              TITLE II--INDUSTRIAL GASIFICATION INITIATIVE

SEC. 201. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that widespread domestic use of 
gasification technologies can make significant contributions to the 
economy, environmental beneficiation, and the general welfare of the 
citizens of the United States.
    (b) Purpose.--The purpose of the industrial gasification research, 
development, and demonstration program shall be to support a 
significant acceleration of gasification technology deployment in 
industrial applications to--
            (1) reduce the demand pressure on domestic natural gas 
        prices and supply for all consumers by promoting the use of 
        synthesis gas derived from domestic coal, biomass, petroleum 
        residues, and other domestic fuel sources for industrial use;
            (2) promote the use of those fuel sources in an 
        environmentally benign manner;
            (3) preserve domestic jobs;
            (4) reduce the deficit of the United States as of the date 
        of enactment of this Act;
            (5) reduce imports of energy from foreign sources;
            (6) avoid dependence on remote foreign sources for 
        chemicals, ammonia-based fertilizers, and other strategic 
        products for which natural gas has traditionally been a 
        significant component in the manufacturing process;
            (7) promote the position of the United States as a global 
        leader in advanced gasification technology development and 
        sales of related products;
            (8) promote the potential for future use or sequestration 
        of industrial carbon emissions in an efficient manner;
            (9) provide coordination within the Department for 
        research, development, and demonstration of industrial 
        gasification technologies using a diverse fuel mix; and
            (10) support the deployment of industrial gasification 
        technologies that will produce or displace, by 2020, the 
        equivalent of 1.5 trillion cubic feet of natural gas annually.

SEC. 202. DEFINITIONS.

    In this title:
            (1) Biomass.--
                    (A) In general.--The term ``biomass'' means--
                            (i) any agricultural or plant waste;
                            (ii) byproduct of wood or paper mill 
                        operations, including lignin in spent pulping 
                        liquors; and
                            (iii) other products of forestry 
                        maintenance.
                    (B) Exclusion.--The term ``biomass'' does not 
                include paper that is commonly recycled.
            (2) Carbon capture capability.--The term ``carbon capture 
        capability'' means an industrial gasification plant design that 
        is determined by the Secretary to reflect reasonable 
        consideration for, and be capable of, accommodating the 
        equipment likely to be necessary to capture carbon dioxide from 
        the gaseous stream, for later use or sequestration, that would 
        otherwise be emitted in the flue gas from a project that uses a 
        nonrenewable fuel.
            (3) Coal.--The term ``coal'' means any carbonized or 
        semicarbonized matter, including peat.
            (4) Coproduced power.--The term ``coproduced power'' means 
        heat, steam, or electricity derived from a plant or plant 
        product.
            (5) Eligible entity.--The term ``eligible entity'' means 
        any person whose application for Federal assistance under 
        subtitle A, or whose application for certification under 
        subtitle B, is principally intended for use in a domestic 
        project that employs domestic gasification applications related 
        to--
                    (A) chemicals;
                    (B) fertilizers;
                    (C) glass;
                    (D) steel;
                    (E) petroleum residues;
                    (F) forest products; and
                    (G) agriculture, including feedlots and dairy 
                operations.
            (6) Gasification technology.--The term ``gasification 
        technology'' means any process that converts a solid or liquid 
        product from coal, petroleum residue, biomass, or other 
        materials that are recovered for their energy or feedstock 
        value into a synthesis gas composed primarily of carbon 
        monoxide and hydrogen for direct use or subsequent chemical or 
        physical conversion.
            (7) Industrial gasification project.--The term ``industrial 
        gasification project'' means any project that--
                    (A) employs gasification technology; and
                    (B) will be carried out by an eligible entity.
            (8) Petroleum residue.--The term ``petroleum residue'' 
        means the carbonized product of high-boiling hydrocarbon 
        fractions obtained in petroleum processing.
            (9) Total plant investment.--The term ``total plant 
        investment'' means the total project cost for engineering, 
        design, procurement, construction, project development and 
        financing, and reasonable contingency reserves as agreed upon 
        by the Secretary and the project sponsor.

    Subtitle A--Industrial Gasification Research, Development, and 
                         Demonstration Program

SEC. 211. ESTABLISHMENT.

    (a) In General.--The Secretary shall establish an industrial 
gasification technology research, development, and demonstration 
program to facilitate production of synthesis gas, chemical feedstocks, 
ammonia-based fertilizers, or liquid transportation fuels and 
generation of coproduced power, through methods and equipment under--
            (1) this subtitle;
            (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 established under 
section 212.
    (c) Office of Industrial Gasification Coordination.--The Secretary 
shall establish an Office of Industrial Gasification Coordination that 
shall--
            (1) report directly to the Secretary;
            (2) analyze the strategic and economic consequences of 
        natural gas dependency in the industrial and agricultural 
        sectors;
            (3) prepare biannual plans for the development and 
        deployment of industrial gasification technologies that may be 
        capable of reducing this dependence in a manner that is cost-
        effective for the United States as a whole;
            (4) not later than 180 days after the date of enactment of 
        this Act and thereafter not later than the first day of March 
        every 2 years through 2016, in coordination with the study 
        under section 213, submit the biannual plan to--
                    (A) the Committee on Energy and Commerce of the 
                House of Representatives;
                    (B) the Committee on Energy and Natural Resources 
                of the Senate; and
                    (C) the Committees on Appropriations; and
            (5) make recommendations to the Secretary to coordinate 
        gasification research and associated expenditures among the 
        several relevant programs of the Department.

SEC. 212. COST AND PERFORMANCE GOALS.

    (a) In General.--The Secretary shall perform an assessment that 
identifies cost and performance goals of industrial gasification 
technologies the deployment of which would permit the continued cost-
competitive gasification of the fuels identified in section 202(6) to--
            (1) produce chemical feedstocks or ammonia-based 
        fertilizers;
            (2) produce liquid transportation fuels; and
            (3) coproduce power.
    (b) Consultation.--In establishing the cost and performance goals, 
the Secretary shall--
            (1) consider activities and studies undertaken to date by 
        industry in cooperation with the Department in support of the 
        assessment described in subsection (a);
            (2) consult with interested entities, including--
                    (A) coal producers;
                    (B) industries using the fuels identified in 
                section 202(6);
                    (C) organizations that promote fuels identified in 
                section 202(6) and advanced gasification technologies 
                that use those fuels;
                    (D) environmental organizations;
                    (E) organizations representing workers;
                    (F) organizations representing consumers; and
            (3) consult with the Administrator of the Environmental 
        Protection Agency and the Secretary of Agriculture.
    (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 a description of the final cost 
        and performance goals.

SEC. 213. STUDY.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, and once every 2 years thereafter through 2016, the 
Secretary, in cooperation with other appropriate Federal agencies, 
shall conduct a study to--
            (1) identify industrial gasification technologies that, 
        alone or in combination with other technologies, may be capable 
        of achieving the cost and performance goals;
            (2) assess the costs that would be incurred by, and the 
        period of time that would be required for, the development and 
        demonstration of industrial gasification technologies that, 
        alone or in combination with other technologies, contribute to 
        the achievement of the cost and performance goals;
            (3) develop recommendations for industrial gasification 
        technology development programs that the Department could carry 
        out in cooperation with industry, to develop, demonstrate, and 
        deploy technologies that, alone or in combination with other 
        technologies, achieve the cost and performance goals; and
            (4) develop recommendations for additional authorities 
        required to achieve the industrial gasification cost and 
        performance goals, and review and recommend changes, if any, to 
        those cost and performance goals if the Secretary determines 
        that the changes are necessary as a result of ongoing research, 
        development, demonstration, and deployment of technologies.
    (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 212(b)(2).

SEC. 214. AUTHORIZATION OF APPROPRIATIONS.

    (a) Authorization.--
            (1) In general.--There are authorized to be appropriated to 
        the Secretary to carry out activities described in paragraph 
        (2), to remain available until expended--
                    (A) $80,000,000 for fiscal year 2006;
                    (B) $100,000,000 for fiscal year 2007;
                    (C) $150,000,000 for fiscal year 2008;
                    (D) $160,000,000 for fiscal year 2009; and
                    (E) $120,000,000 for fiscal year 2010.
            (2) Activities.--Activities covered by paragraph (1) are 
        industrial gasification and related technologies research, 
        development, and demonstration programs, including--
                    (A) innovations for existing plants;
                    (B) industrial-scale turbines (less than 50MW) for 
                synthesis gas derived from the fuels identified in 
                section 202(6);
                    (C) synthesis gas, chemicals feedstocks, ammonia-
                based fertilizers, and transportation liquid fuels 
                derived from the fuels identified in section 202(6); 
                and
                    (D) collection and gasification of biomass.
    (b) Limit on Use of Funds.--
            (1) In general.--Before the use of funds authorized by 
        subsection (a), the Secretary shall submit to Congress a report 
        that--
                    (A) describes the proposed use of funds; and
                    (B) contains a plan that includes--
                            (i) a detailed description of how any 
                        proposals will be solicited and evaluated, 
                        including a list of all activities expected to 
                        be undertaken;
                            (ii) a detailed list of technical 
                        milestones for each fuel application and 
                        related technology that will be pursued; and
                            (iii) a description of how the programs 
                        authorized by this section will be carried out 
                        so as to complement and not duplicate 
                        activities authorized under--
                                    (I) the Industries of the Future 
                                Program;
                                    (II) the Biomass Program;
                                    (III) the Clean Coal Power 
                                Initiative; and
                                    (IV) other programs and authorities 
                                being carried out by the Secretary.
            (2) Waiting period.--The Secretary may not use any funds 
        authorized by subsection (a) before the date that is 30 days 
        after the date of receipt by Congress of the report required by 
        paragraph (1).

         Subtitle B--Industrial Gasification Deployment Program

SEC. 221. ESTABLISHMENT OF CERTIFICATION PROGRAM.

    (a) In General.--The Secretary shall establish a competitive 
program to consider and award certifications for investment and 
production tax credits to industrial gasification project sponsors.
    (b) Competitive Awards.--
            (1) In general.--Not later than 270 days after the date of 
        enactment of this Act, and every 2 years thereafter through 
        2016, the Secretary, in consultation with the Secretary of the 
        Treasury and the Secretary of Agriculture, shall carry out a 
        competitive solicitation for the award of certifications that 
        entitle the recipients to specific investment and production 
        tax credits associated with the year of certification as 
        described in section 45J of the Internal Revenue Code of 1986 
        (as added by section 222(a)).
            (2) Competitive certification process.--Notwithstanding the 
        limitations imposed in section 45J of the Internal Revenue Code 
        of 1986 (as added by section 222(a)), the Secretary may during 
        a biannual competitive certification process deem that a 
        certification award be considered as having been awarded up to 
        4 years earlier than the actual date of certification for not 
        more than 2 projects that the Secretary determines use a 
        technology that has not previously been deployed.
    (c) Applications Limited to Eligible Entities.--A project sponsor 
shall be eligible to compete for the tax credit certifications awarded 
competitively by the Secretary under subsection (a) only if--
            (1) the project sponsor is an eligible entity; and
            (2) the project of the project sponsor advances the 
        purposes described in section 201.
    (d) Selection Criteria.--The Secretary shall not make a competitive 
certification award for production tax credit eligibility 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 associated with the 
        proposed project;
            (2) the recipient will provide sufficient information to 
        the Secretary for the Secretary to ensure that the award funds 
        are spent efficiently and effectively;
            (3) a market exists for the products of the proposed 
        deployment project as evidenced by contracts or written 
        statements of intent from potential customers;
            (4) the fuels identified in section 202(6) will comprise at 
        least 90 percent of the fuels required by the project for the 
        production of chemical feedstocks, liquid transportation fuels, 
        or coproduction of electricity;
            (5) the award recipient's project team is competent in the 
        construction and operation of the gasification technology 
        proposed, with preference given to those recipients with 
        experience that demonstrates successful and reliable operations 
        of the technology on domestic fuels identified in section 
        202(6); and
            (6) the award recipient has met other criteria established 
        and published by the Secretary.
    (e) Combined Limit for the Use of More Than One Federal Credit, 
Loan or Loan Guarantee.--The allowable combined value of all credits, 
loans or loan guarantees claimed in association with any single 
certified industrial gasification property is limited to the project 
total credit limit associated with the project's year of certification 
or deemed year of certification as determined under section 221 of the 
Clean Coal Research, Development, Demonstration, and Deployment Act of 
2005.

SEC. 222. CREDIT FOR PRODUCTION FROM CERTIFIED INDUSTRIAL GASIFICATION 
              PROJECTS.

    (a) In General.--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. 45J. CREDIT FOR PRODUCTION FROM CERTIFIED INDUSTRIAL 
              GASIFICATION PROJECTS.

    ``(a) In General.--For purposes of section 38, the synthesis gas 
production tax credit for any taxable year is determined by the year in 
which the taxpayer's industrial gasification project is certified or 
deemed certified in accordance with the provisions of section 221 of 
the Clean Coal Research, Development, Demonstration, and Deployment Act 
of 2005.
    ``(b) Determination of Credit Amount.--
            ``(1) In general.--
                    ``(A) In general.--With respect to each industrial 
                gasification project sponsor, the synthesis gas 
                production tax credit for all taxable years shall not 
                exceed the credit value per-million-Btu's and project 
                total credit limitation associated with the project's 
                year of certification or deemed year of certification 
                as specified in the following table:

 
----------------------------------------------------------------------------------------------------------------
                                               Number of project       Credit value per million    Project total
          Year of certification                 certifications                   Btu's             credit limit
----------------------------------------------------------------------------------------------------------------
2006....................................  3.........................  $.62......................    $174,000,000
2008....................................  3.........................  $.496.....................    $116,725,000
2010....................................  4.........................  $.397.....................     $77,855,575
2012....................................  7.........................  $.317.....................     $51,929.669
2014....................................  10........................  $.254.....................     $34,637,089
2016....................................  14........................  $.203.....................     $23,102,938
----------------------------------------------------------------------------------------------------------------

                    ``(B) Inflation adjustment.--
                            ``(i) In general.--For calendar years after 
                        2006, each amount in the third and fourth 
                        columns of the table contained in subparagraph 
                        (A) 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 in such third column 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. 
                        If any amount in such fourth column is 
                        increased under the preceding sentence is not a 
                        multiple of $50, such amount shall be rounded 
                        to the nearest multiple of $50.
                            ``(ii) Inflation adjustment factor.--For 
                        purposes of clause (i)--
                                    ``(I) 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 2005.
                                    ``(II) GDP implicit price 
                                deflator.--The term `GDP implicit price 
                                deflator' means, for any calendar year, 
                                the most recent revision of the 
                                implicit price deflator for the gross 
                                domestic product as of June 30 of such 
                                calendar year as computed by the 
                                Department of Commerce before October 1 
                                of such calendar year.
            ``(2) Limitations.--
                    ``(A) Credit limited by project investment.--The 
                credit amount for any industrial gasification project 
                otherwise determined under this section shall not 
                exceed an amount equal to 20 percent of the total plant 
                investment made in such project.
                    ``(B) Credit limited by btu's consumed in 
                production of electricity.--Not more than 60 percent of 
                the credit amount for any industrial gasification 
                project otherwise determined under this section for any 
                taxable year may be attributable to Btu's consumed in 
                the production of electricity.
            ``(3) Additional credit amount.--The credit amount and 
        project total credit limit for any industrial gasification 
        project otherwise determined under this section (determined 
        without regard to paragraph (2)) shall be increased by 30 
        percent for any synthises gas produced and used for purposes 
        other than coproduced power (as defined in section 202(4) of 
        the Clean Coal Research, Development, Demonstration, and 
        Deployment Act of 2005.
    ``(c) Exception for Deployment of New Technologies.--
Notwithstanding subsection (b), the Secretary may during a competitive 
certification process assign credit values and total project credit 
value limitations associated with certification periods not to exceed 4 
years prior to the current year of awards to not more than 2 industrial 
gasification projects which the Secretary determines are particularly 
consistent with the program purposes in section 201(b) of the Clean 
Coal Research, Development, Demonstration, and Deployment Act of 2005 
and which utilize a technology that has not previously been deployed.
    ``(d) Treatment of Person Not Able to Use Entire Credit.--
            ``(1) Allowance of credits.--
                    ``(A) In general.--Any credit allowable under this 
                section or section 46(2) by reason of section 
                48(a)(3)(A)(iv) 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 ensure 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.
                    ``(D) Credit not income.--Any transfer under 
                subparagraph (A) of any credit to which paragraph 
                (1)(A) applies shall not be treated as income for 
                purposes of section 501(c)(12).
            ``(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) Treatment of unrelated persons.--For purposes of this 
        subsection, transfers among and between persons described in 
        clauses (i), (ii), (iii), (iv), and (v) of paragraph (1)(B) 
        shall be treated as transfers between unrelated parties.
    ``(e) Applicable Rules.--For purposes of this section, the rules of 
paragraphs (3), (4), and (5) of section 45(e) shall apply.''.
    (b) Credit Treated as Business Credit.--Section 38(b) of the 
Internal Revenue Code of 1986 (relating to current year business 
credit) is amended by striking ``plus'' at the end of paragraph (18), 
by striking the period at the end of paragraph (19) and inserting ``, 
plus'', and by adding at the end the following new paragraph:
            ``(20) the synthesis gas production tax credit determined 
        under section 45J(a).''.
    (c) Denial of Double Benefit.--Section 29(d) of the Internal 
Revenue Code of 1986 (relating to other definitions and special rules) 
is amended by adding at the end the following new paragraph:
            ``(9) Denial of double benefit.--This section shall not 
        apply with respect to any qualified fuel the production of 
        which may be taken into account for purposes of determining the 
        credit under section 45J.''.
    (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 new item:

``Sec. 45J. Credit for production from certified industrial 
                            gasification projects.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to production after the date of the enactment of this Act, in 
taxable years ending after such date.

SEC. 223. INVESTMENT TAX CREDIT FOR CERTIFIED INDUSTRIAL GASIFICATION 
              PROJECTS.

    (a) In General.--Section 48 (a)(3)(A) of the Internal Revenue Code 
of 1986 (relating to energy property), as amended by this Act, is 
amended--
            (1) by striking ``or'' at the end of clause (ii),
            (2) by inserting ``or'' at the end of clause (iii), and
            (3) by adding at the end the following new clause:
                            ``(iv) certified industrial gasification 
                        property,''.
    (b) Credit Rate.--Section 48(a)(2)(A) of the Internal Revenue Code 
of 1986 (relating to energy percentage), as amended by this Act, is 
amended by inserting ``or a certified industrial gasification 
property'' after ``certified coal property'' both places it appears.
    (c) Definitions.--Section 48 of the Internal Revenue Code of 1986 
(relating to energy credit), as amended by this Act, is amended by 
adding the following new subsection:
    ``(d) Certified Industrial Gasification Property.--For purposes of 
this section--
            ``(1) In general.--The term `certified industrial 
        gasification property' means any property that is part of an 
        industrial gasification project as defined in section 202(7) of 
        the Clean Coal Research, Development, Demonstration, and 
        Deployment Act of 2005 and that has been certified by the 
        Secretary of Energy under section 221 of that Act.
            ``(2) Limit on use of credits.--Any credit claimed by a 
        taxpayer under section 46(2) by reason of subsection 
        (a)(3)(A)(iv) shall be limited to the project total credit 
        limit associated with the project's year of certification or 
        deemed year of certification as determined under section 221 of 
        the Clean Coal Research, Development, Demonstration, and 
        Deployment Act of 2005.''.
                                 <all>