[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3628 Introduced in Senate (IS)]








109th CONGRESS
  2d Session
                                S. 3628

   To amend the Internal Revenue Code of 1986 to improve and extend 
     certain energy-related tax provisions, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 29, 2006

 Ms. Snowe (for herself, Mrs. Feinstein, and Mr. Kerry) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
   To amend the Internal Revenue Code of 1986 to improve and extend 
     certain energy-related tax provisions, and for other purposes.

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

SECTION 1. SHORT TITLE; ETC.

    (a) Short Title.--This Act may be cited as the ``EXTEND the Energy 
Efficiency Incentives Act of 2006''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; etc.
               TITLE I--NON-BUSINESS ENERGY IMPROVEMENTS

Sec. 101. Performance based energy improvements for non-business 
                            property.
Sec. 102. Extension and modification of credit for nonbusiness energy 
                            property.
Sec. 103. Modification of credit for solar electric property and solar 
                            hot water property.
             TITLE II--BUSINESS-RELATED ENERGY IMPROVEMENTS

Sec. 201. Extension and clarification of new energy efficient home 
                            credit.
Sec. 202. Extension and modification of deduction for energy efficient 
                            commercial buildings.
Sec. 203. Deduction for energy efficient low-rise buildings.
Sec. 204. Energy efficient property deduction.
Sec. 205. Extension of investment tax credit with respect to solar 
                            energy property and qualified fuel cell 
                            property.
        TITLE III--INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS

Sec. 301. Credit for energy savings certifications.

               TITLE I--NON-BUSINESS ENERGY IMPROVEMENTS

SEC. 101. PERFORMANCE BASED ENERGY IMPROVEMENTS FOR NON-BUSINESS 
              PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1 
is amended by inserting after section 25D the following new section:

``SEC. 25E. PERFORMANCE BASED ENERGY IMPROVEMENTS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the amount of qualified energy 
efficiency expenditures paid or incurred by the taxpayer during the 
taxable year.
    ``(b) Limitations.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) shall not exceed--
                    ``(A) in the case of a principal residence that 
                achieves a qualified energy savings of 50 percent or 
                more, $2,000, and
                    ``(B) in the case of a principal residence which 
                achieves a qualified energy savings of less than 50 
                percent, the product of--
                            ``(i) the qualified energy savings 
                        achieved, and
                            ``(ii) $4,000.
            ``(2) Minimum amount of qualified energy savings.--No 
        credit shall be allowed under subsection (a) with respect to 
        any principal residence which achieves a qualified energy 
        savings of less than 20 percent.
    ``(c) Qualified Energy Efficiency Expenditures.--For purposes of 
this section:
            ``(1) In general.--The term `qualified energy efficiency 
        expenditures' means any amount paid or incurred which is 
        related to producing qualified energy savings in a principal 
        residence of the taxpayer which is located in the United 
        States.
            ``(2) No double benefit for certain expenditures.--The term 
        `qualified energy efficiency expenditures' shall not include 
        any expenditure for which a deduction or credit is otherwise 
        allowed to the taxpayer under this chapter.
            ``(3) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121, except that--
                    ``(A) no ownership requirement shall be imposed, 
                and
                    ``(B) the period for which a building is treated as 
                used as a principal residence shall also include the 
                60-day period ending on the 1st day on which it would 
                (but for this subparagraph) first be treated as used as 
                a principal residence.
    ``(d) Qualified Energy Savings.--For purposes of this section--
            ``(1) In general.--The term `qualified energy savings' 
        means, with respect to any principal residence, the amount 
        (measured as a percentage) by which--
                    ``(A) the annual energy use with respect to the 
                principal residence after qualified energy efficiency 
                expenditures are made, as certified under paragraph 
                (2), is less than
                    ``(B) the annual energy use with respect to the 
                principal residence before the qualified energy 
                efficiency expenditures were made, as certified under 
                paragraph (2).
        In determining annual energy use under subparagraph (B), any 
        energy efficiency improvements which are not attributable to 
        qualified energy efficiency expenditures shall be disregarded.
            ``(2) Certification.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Secretary of Energy, shall prescribe the 
                procedures and methods for the making of certifications 
                under this paragraph based on the Residential Energy 
                Services Network (RESNET) Technical Guidelines in 
                effect on the date of the enactment of this section.
                    ``(B) Qualified individuals.--Any certification 
                made under this paragraph may only be made by an 
                individual who is recognized by an organization 
                certified by the Secretary for such purposes.
    ``(e) Special Rules.--For purposes of this section rules similar to 
the rules under paragraphs (4), (5), (6), (7), (8), and (9) of section 
25D(e) and section 25C(e)(2) shall apply.
    ``(f) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any expenditure 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(g) Termination.--This section shall not apply with respect to 
any property placed in service after December 31, 2010.''.
    (b) Interim Guidance on Certification.--
            (1) In general.--Not later than 90 days after the date of 
        the enactment of this Act, the Secretary of the Treasury, in 
        consultation with the Secretary of Energy, shall issue interim 
        guidance on--
                    (A) the procedures and methods for making 
                certifications under sections 25E(d)(2)(A) and 
                179E(d)(2)(A) of the Internal Revenue Code of 1986, as 
                added by subsection (a) and section 203, respectively; 
                and
                    (B) the recognition of qualified individuals under 
                sections 25E(d)(2)(B) and 179E(d)(2)(B) of such Code 
                for the purpose of making such certifications.
            (2) Consultation with stakeholders.--
                    (A) In general.--The Secretary of the Treasury, in 
                issuing guidance pursuant to paragraph (1), shall 
                consider comments from energy efficiency experts and 
                other interested parties.
                    (B) Other considerations.--In the case of guidance 
                issued pursuant to paragraph (1)(B), the Secretary of 
                the Treasury shall also consider--
                            (i) the Residential Energy Services Network 
                        Technical Guidelines and other pertinent 
                        guidelines for evaluating energy savings;
                            (ii) energy modeling software, including 
                        software accredited through the Residential 
                        Energy Services Network; and
                            (iii) quality assurance procedures of the 
                        Building Performance Institute, Home 
                        Performance through Energy Star, and the 
                        Residential Energy Services Network.
    (c) Alternative Certification Methods.--
            (1) In general.--The Secretary of the Treasury shall 
        establish a procedure for individuals and businesses to 
        petition for the approval of alternative methods of 
        certification under sections 25E(d)(2)(A) and 179E(d)(2)(A) of 
        the Internal Revenue Code of 1986, as added by subsection (a) 
        and section 203, respectively.
            (2) Determination.--The Secretary of the Treasury shall 
        make a determination on the approval or disapproval of such 
        alternative methods of certification not later than 90 days 
        after receiving a petition under paragraph (1).
    (d) Conforming Amendments.--
            (1) Section 1016(a) is amended by striking ``and'' at the 
        end of paragraph (36), by striking the period at the end of 
        paragraph (37) and inserting ``, and'', and by adding at the 
        end the following new paragraph:
            ``(38) to the extent provided in section 25E(f).''.
            (2) The table of sections for subpart A of part IV of 
        subchapter A chapter 1 is amended by inserting after the item 
        relating to section 25D the following new item:

``Sec. 25E. Performance based energy improvements.''.
    (e) Effective Dates.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

SEC. 102. EXTENSION AND MODIFICATION OF CREDIT FOR NONBUSINESS ENERGY 
              PROPERTY.

    (a) Extension.--Subsection (g) of section 25C of the Internal 
Revenue Code of 1986 (relating to termination) is amended by striking 
``December 31, 2007'' and inserting ``December 31, 2010''.
    (b) Modifications for Residential Energy Efficiency Property 
Expenditures.--
            (1) Increased limitation for oil furnaces and natural gas, 
        propane, and oil hot water boilers.--
                    (A) In general.--Subparagraphs (B) and (C) of 
                section 25C(b)(3) are amended to read as follows:
                    ``(B) $150 for any qualified natural gas furnace or 
                qualified propane furnace, and
                    ``(C) $300 for--
                            ``(i) any item of energy-efficient building 
                        property, and
                            ``(ii) any qualified oil furnace, qualified 
                        natural gas hot water boiler, qualified propane 
                        hot water boiler, or qualified oil hot water 
                        boiler.''.
                    (B) Conforming amendment.--Clause (ii) of section 
                25C(d)(2)(A) is amended to read as follows:
                            ``(ii) any qualified natural gas furnace, 
                        qualified propane furnace, qualified oil 
                        furnace, qualified natural gas hot water 
                        boiler, qualified propane hot water boiler, or 
                        qualified oil hot water boiler, or''.
            (2) Modifications of standards for energy-efficient 
        building property.--
                    (A) Electric heat pumps.--Subparagraph (B) of 
                section 25C(d)(3) is amended to read as follows:
                    ``(A) an electric heat pump which achieves the 
                highest efficiency tier established by the Consortium 
                for Energy Efficiency, as in effect on January 1, 
                2007.''.
                    (B) Central air conditioners.--Section 25C(d)(3)(D) 
                is amended by striking ``2006'' and inserting ``2007''.
                    (C) Oil furnaces and hot water boilers.--Paragraph 
                (4) of section 25C(d) is amended to read as follows:
            ``(4) Qualified natural gas, propane, and oil furnaces and 
        hot water boilers.--
                    ``(A) Qualified natural gas furnace.--The term 
                `qualified natural gas furnace' means any natural gas 
                furnace which achieves an annual fuel utilization 
                efficiency rate of not less than 95.
                    ``(B) Qualified natural gas hot water boiler.--The 
                term `qualified natural gas hot water boiler' means any 
                natural gas hot water boiler which achieves an annual 
                fuel utilization efficiency rate of not less than 95.
                    ``(C) Qualified propane furnace.--The term 
                `qualified propane furnace' means any propane furnace 
                which achieves an annual fuel utilization efficiency 
                rate of not less than 95.
                    ``(D) Qualified propane hot water boiler.--The term 
                `qualified propane hot water boiler' means any propane 
                hot water boiler which achieves an annual fuel 
                utilization efficiency rate of not less than 95.
                    ``(E) Qualified oil furnaces.--The term `qualified 
                oil furnace' means any oil furnace which achieves an 
                annual fuel utilization efficiency rate of not less 
                than 90.
                    ``(F) Qualified oil hot water boiler.--The term 
                `qualified oil hot water boiler' means any oil hot 
                water boiler which achieves an annual fuel utilization 
                efficiency rate of not less than 90.''.
    (c) Modification of Qualified Energy Efficiency Improvements.--
            (1) In general.--Paragraph (1) of section 25C(c) is amended 
        by inserting ``, or an asphalt roof with appropriate cooling 
        granules,'' before ``which meet the Energy Star program 
        requirements''.
            (2) Building envelope component.--Subparagraph (D) of 
        section 25C(c)(2) is amended--
                    (A) by inserting ``or asphalt roof'' after ``metal 
                roof'', and
                    (B) by inserting ``or cooling granules'' after 
                ``pigmented coatings''.
    (d) Elimination of Credit for Qualified Energy Efficiency 
Improvements in 2010.--
            (1) In general.--Subsection (a) of section 25C of the 
        Internal Revenue Code of 1986 is amended to read as follows:
    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the amount of residential 
energy property expenditures paid or incurred by the taxpayer during 
the taxable year.''.
            (2) Conforming amendments.--
                    (A) Section 25C(b) of such Code, as amended by 
                subsection (b)(1), is amended by striking paragraphs 
                (1) and (2) and by redesignating paragraph (3) as 
                paragraph (1).
                    (B) Section 25C(b)(1) of such Code, as redesignated 
                by subparagraph (A), is amended by striking ``by reason 
                of subsection (a)(2)''.
                    (C) Section 25C of such Code is amended by striking 
                subsection (c).
    (e) Effective Dates.--
            (1) In general.--Except as provided in paragraphs (2) and 
        (3), the amendments made by this section shall apply to 
        property placed in service after the date of the enactment of 
        this Act.
            (2) Subsection (b).--The amendments made by subsection (b) 
        shall apply to property placed in service after December 31, 
        2006.
            (3) Subsection (d).--The amendments made by subsection (d) 
        shall apply to property placed in service after December 31, 
        2009.

SEC. 103. MODIFICATION OF CREDIT FOR SOLAR ELECTRIC PROPERTY AND SOLAR 
              HOT WATER PROPERTY.

    (a) In General.--Subsection (a) of section 25D (relating to 
allowance of credit) is amended by striking paragraphs (1) and (2) and 
inserting the following:
            ``(1) 100 percent of the qualified solar electric property 
        expenditures made by the taxpayer during such year,
            ``(2) 100 percent of the qualified solar hot water property 
        expenditures made by the taxpayer during such year, and''.
    (b) Limitations.--
            (1) In general.--Paragraph (1) of section 25D(b) is amended 
        by striking subparagraphs (A) and (B) and inserting the 
        following:
                    ``(A) $2 with respect to each peak watt of capacity 
                of qualified solar electric property for which 
                qualified solar electric property expenditures are 
                made,
                    ``(B) in the case of qualified solar water heating 
                property expenditures, an amount equal to--
                            ``(i) in the case of a dwelling unit which 
                        uses electricity to heat water, $0.35 with 
                        respect to each kilowatt per year of savings of 
                        qualified solar hot water property for which 
                        qualified solar water heating property 
                        expenditures are made, or
                            ``(ii) in the case of a dwelling unit which 
                        uses natural gas to heat water, $7 with respect 
                        to each annual Therm of natural gas savings of 
                        qualified solar hot water property for which 
                        qualified solar water heating property 
                        expenditures are made, and''.
            (2) Determination of savings.--Paragraph (1) of section 
        25D(b) is amended by adding at the end the following new flush 
        sentence:
        ``For purposes of subparagraph (B), savings shall be determined 
        under regulations prescribed by the Secretary based on the OG-
        300 Standard for the Annual Performance of OG-300 Certified 
        Systems of the Solar Rating and Certification Corporation.''.
    (c) Definitions.--
            (1) In general.--Section 25D(d) is amended--
                    (A) by redesignating paragraph (3) as paragraph 
                (5), and
                    (B) by striking paragraphs (1) and (2) and 
                inserting the following:
            ``(1) Qualified solar electric property expenditures.--The 
        term ` qualified solar electric property expenditures' means 
        any amount paid or incurred for qualified solar electric 
        property.
            ``(2) Qualified solar electric property.--The term 
        `qualified solar electric property' means solar electric 
        property (as defined in section 179F(c)(2)(B)) installed on or 
        in connection with a dwelling unit located in the United States 
        and used as a residence by the taxpayer.
            ``(3) Qualified solar water heating property 
        expenditures.--The term `qualified solar water heating property 
        expenditures' means any amount paid or incurred for qualified 
        solar hot water property.
            ``(4) Qualified solar hot water property.--The term 
        `qualified solar hot water property' means solar hot water 
        property (as defined in section 179F(c)(2)(C)) installed on or 
        in connection with a dwelling unit located in the United States 
        and used as a residence by the taxpayer.''.
            (2) Conforming amendments.--
                    (A) Section 25D(e)(2) is amended by striking 
                ``property described in paragraph (1) and (2) of 
                subsection (d)'' and inserting ``qualified solar 
                electric property or qualified solar hot water 
                property''.
                    (B) Section 25D(e)(4)(C) is amended by striking 
                ``paragraphs (1), (2), and (3)'' and inserting 
                ``paragraphs (1),(3), and (5)''.
    (d) Dollar Amounts in Case of Joint Occupancy.--Clauses (i) and 
(ii) of section 25D(e)(4)(A) are amended to read as follows:
                            ``(i) $2 in the case of each peak watt of 
                        capacity of qualified solar electric property 
                        for which qualified solar electric property 
                        expenditures are made,
                            ``(ii) in the case of qualified solar water 
                        heating property expenditures, an amount equal 
                        to--
                                    ``(I) in the case of a dwelling 
                                unit which uses electricity to heat 
                                water, $0.35 with respect to each 
                                kilowatt per year of savings of 
                                qualified solar hot water property for 
                                which qualified solar water heating 
                                property expenditures are made, or
                                    ``(II) in the case of a dwelling 
                                unit which uses natural gas to heat 
                                water, $7 with respect to each annual 
                                Therm of natural gas savings of 
                                qualified solar hot water property for 
                                which qualified solar water heating 
                                property expenditures are made, and''.
    (e) Extension of Credit.--Subsection (g) of section 25D is amended 
by striking ``2007'' and inserting ``2010''.
    (f) Effective Date.--The amendments made by this section shall 
apply to property placed in service after the date of the enactment of 
this Act.

             TITLE II--BUSINESS-RELATED ENERGY IMPROVEMENTS

SEC. 201. EXTENSION AND CLARIFICATION OF NEW ENERGY EFFICIENT HOME 
              CREDIT.

    (a) Extension.--Subsection (g) of section 45L (relating to 
termination) is amended by striking ``December 31, 2007'' and inserting 
``December 31, 2010''.
    (b) Clarification.--
            (1) In general.--Paragraph (1) of section 45L(a) is amended 
        by striking ``and'' at the end of subparagraph (A) and by 
        striking subparagraph (B) and inserting the following:
                    ``(B) acquired by a person from such eligible 
                contractor, and
                    ``(C) used by any person as a residence during the 
                taxable year.''.
            (2) Effective date.--The amendments made by this subsection 
        shall take effect as if included in section 1332 of the Energy 
        Policy Act of 2005.

SEC. 202. EXTENSION AND MODIFICATION OF DEDUCTION FOR ENERGY EFFICIENT 
              COMMERCIAL BUILDINGS.

    (a) Extension.--Subsection (h) of section 179D (relating to 
termination) is amended to read as follows:
    ``(h) Termination.--This section shall not apply with respect to 
property--
            ``(1) which is certified under subsection (d)(6) after 
        December 31, 2011, or
            ``(2) which is placed in service after December 31, 
        2013.''.
    (b) Increase in Maximum Amount of Deduction.--
            (1) In general.--Subparagraph (A) of section 179D(b)(1) is 
        amended by striking ``$1.80'' and inserting ``$2.25''.
            (2) Partial allowance.--Paragraph (1) of section 179D(d) is 
        amended--
                    (A) by striking ``$.60'' and inserting ``$0.75'', 
                and
                    (B) by striking ``$1.80'' and inserting ``$2.25''.
    (c) Modifications to Certain Special Rules.--
            (1) Requirements for computer software used in calculating 
        energy and power consumption costs.--Computer software used in 
        preparing a calculation under section 179D(d)(2) of the 
        Internal Revenue Code of 1986 shall automatically--
                    (A) generate the features, energy use, and energy 
                and power consumption costs of a reference building 
                that meets Standard 90.1-2001 (as defined under section 
                179D(c)(2) of such Code), and
                    (B) compare such features, energy use, and 
                consumption costs to the features, energy use, and 
                consumption costs of the building or system with 
                respect to which the calculation is being made.
            (2) Targets for partial allowance of credit.--The targets 
        established by the Secretary of Treasury under section 
        179D(b)(1)(B) of the Internal Revenue Code of 1986 shall be 
        based on prescriptive criteria that can be modeled explicitly.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning after 
the date of the enactment of this Act.

SEC. 203. DEDUCTION FOR ENERGY EFFICIENT LOW-RISE BUILDINGS.

    (a) In General.--Part VI of subchapter B of chapter 1 is amended by 
inserting after section 179D the following new section:

``SEC. 179E. ENERGY EFFICIENT LOW-RISE BUILDINGS DEDUCTION.

    ``(a) In General.--There shall be allowed as a deduction an amount 
equal to the amount of qualified energy efficiency expenditures paid or 
incurred by the taxpayer during the taxable year.
    ``(b) Limitations.--
            ``(1) In general.--The amount allowed as a credit under 
        subsection (a) shall not exceed--
                    ``(A) in the case of a qualified low-rise building 
                that achieves a qualified energy savings of 50 percent 
                or more, $6,000, and
                    ``(B) in the case of a qualified low-rise building 
                which achieves a qualified energy savings of less than 
                50 percent, the product of--
                            ``(i) the qualified energy savings 
                        achieved, and
                            ``(ii) $12,000.
            ``(2) Minimum amount of qualified energy savings.--No 
        credit shall be allowed under subsection (a) with respect to 
        any qualified low-rise building which achieves a qualified 
        energy savings of less than 20 percent.
    ``(c) Qualified Energy Efficiency Expenditures.--For purposes of 
this section:
            ``(1) In general.--The term `qualified energy efficiency 
        expenditures' means any amount paid or incurred which is 
        related to producing qualified energy savings in a qualified 
        low-rise building of the taxpayer which is located in the 
        United States.
            ``(2) No double benefit for certain expenditures.--The term 
        `qualified energy efficiency expenditures' shall not include 
        any expenditure for any property for which a deduction has been 
        allowed to the taxpayer under section 179F.
            ``(3) Qualified low-rise building.--The term `qualified 
        low-rise building' means a building--
                    ``(A) with respect to which depreciation is 
                allowable under section 167, and
                    ``(B) which is not within the scope of Standard 
                90.1-2001 (as defined under section 179D(c)(2)).
    ``(d) Qualified Energy Savings.--For purposes of this section--
            ``(1) In general.--The term `qualified energy savings' 
        means, with respect to any qualified low-rise building, the 
        amount (measured as a percentage) by which--
                    ``(A) the annual energy use with respect to the 
                qualified low-rise building after qualified energy 
                efficiency expenditures are made, as certified under 
                paragraph (2), is less than
                    ``(B) the annual energy use with respect to the 
                qualified low-rise building before the qualified energy 
                efficiency expenditures were made, as certified under 
                paragraph (2).
        In determining annual energy use under subparagraph (B), any 
        energy efficiency improvements which are not attributable to 
        qualified energy efficiency expenditures shall be disregarded.
            ``(2) Certification.--
                    ``(A) In general.--The Secretary, in consultation 
                with the Secretary of Energy, shall prescribe the 
                procedures and method for the making of certifications 
                under this paragraph based on the Residential Energy 
                Services Network (RESNET) Technical Guidelines in 
                effect on the date of the enactment of this Act.
                    ``(B) Qualified individuals.--Any certification 
                made under this paragraph may only be made by an 
                individual who is recognized by an organization 
                certified by the Secretary for such purposes.
    ``(e) Special Rules.--For purposes of this section, rules similar 
to the rules under paragraphs (8) and (9) of section 25D(e) shall 
apply.
    ``(f) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any expenditure 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(g) Termination.--This section shall not apply with respect to 
any property placed in service after December 31, 2010.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a), as amended by section 101, is amended 
        by striking ``and'' at the end of paragraph (37), by striking 
        the period at the end of paragraph (38) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(39) to the extent provided in section 179E(f).''.
            (2) Section 1245(a) is amended by inserting ``179E,'' after 
        ``179D,'' both places it appears in paragraphs (2)(C) and 
        (3)(C).
            (3) Section 1250(b)(3) is amended by inserting ``or 179E'' 
        after ``section 179D''.
            (4) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (J), by striking the period at the end of 
        subparagraph (K) and inserting ``, or'', and by inserting after 
        subparagraph (K) the following new subparagraph:
                    ``(L) expenditures for which a deduction is allowed 
                under section 179E.''.
            (5) Section 312(k)(3)(B) is amended by striking ``179, 
        179A, 179B, 179C, or 179D'' each place it appears in the 
        heading and text and inserting ``179, 179A, 179B, 179C, 179D, 
        or 179E''.
            (6) The table of sections for part VI of subchapter B is 
        amended by inserting after the item relating to section 179D 
        the following new item:

``Sec. 179E. Energy efficient low-rise buildings deduction.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

SEC. 204. ENERGY EFFICIENT PROPERTY DEDUCTION.

    (a) In General.--Part VI of subchapter B of chapter 1, as amended 
by section 203, is amended by inserting after section 179E the 
following new section:

``SEC. 179F. ENERGY EFFICIENT PROPERTY.

    ``(a) In General.--There shall be allowed as a deduction an amount 
equal to the energy efficient property expenditures paid or incurred by 
the taxpayer during the taxable year
    ``(b) Limitation.--The amount of the deduction allowed under 
subsection (a) for any taxable years shall not exceed--
            ``(1) $150 for any advanced main air circulating fan,
            ``(2) $450 for any qualified natural gas furnace or 
        qualified propane furnace,
            ``(3) $900 for--
                    ``(A) any item of energy-efficient building 
                property, and
                    ``(B) any qualified oil furnace, qualified natural 
                gas hot water boiler, qualified propane hot water 
                boiler, or qualified oil hot water boiler.
            ``(4) $9 with respect to each peak watt of capacity of 
        solar electric property,
            ``(5) in the case of solar hot water property, an amount 
        equal to--
                    ``(A) in the case of a dwelling unit which uses 
                electricity to heat water, $1 with respect to each 
                kilowatt per year of savings of such solar hot water 
                property, or
                    ``(B) in the case of a dwelling unit which uses 
                natural gas to heat water, $21 with respect to each 
                annual Therm of natural gas savings of such solar hot 
                water property.
For purposes of paragraph (5), savings shall be determined under 
regulations prescribed by the Secretary based on the OG-300 Standard 
for the Annual Performance of OG-300 Certified Systems of the Solar 
Rating and Certification Corporation.
    ``(c) Energy Efficient Property Expenditures.--For purposes of this 
section--
            ``(1) In general.--The term `energy efficient property 
        expenditures' means expenditures paid by the taxpayer for 
        qualified energy property which is--
                    ``(A) of a character subject to the allowance for 
                depreciation, and
                    ``(B) originally placed in service by the taxpayer.
            ``(2) Qualified energy property.--
                    ``(A) In general.--The term `qualified energy 
                property' has the meaning given such term by section 
                25C(d)(2), except that such term shall include solar 
                electric property and solar hot water property.
                    ``(B) Solar electric property.--The term `solar 
                electric property' means property which uses solar 
                energy to generate electricity.
                    ``(C) Solar hot water property.--The term `solar 
                hot water property' means property used to heat water 
                if at least half of the energy used by such property 
                for such purpose is derived from the sun.
    ``(d) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any expenditure 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(e) Termination.--This section shall not apply with respect to 
any property placed in service after December 31, 2010.''.
    (b) No Double Benefit.--Section 179D(c) is amended by adding at the 
end the following new paragraph:
            ``(3) Certain property excluded.--The term `energy 
        efficient commercial building property' does not include any 
        property with respect to which a credit has been allowed to the 
        taxpayer under section 179F.''.
    (c) Conforming Amendments.--
            (1) Section 1016(a), as amended by section 203, is amended 
        by striking ``and'' at the end of paragraph (38), by striking 
        the period at the end of paragraph (39) and inserting ``, 
        and'', and by adding at the end the following new paragraph:
            ``(40) to the extent provided in section 179E(e).''.
            (2) Section 1245(a), as amended by section 203 is amended 
        by inserting ``179F,'' after ``179E,'' both places it appears 
        in paragraphs (2)(C) and (3)(C).
            (3) Section 1250(b)(3), as amended by section 203, is 
        amended by inserting ``or 179F'' after ``section 179E''.
            (4) Section 263(a)(1), as amended by section 203, is 
        amended by striking ``or'' at the end of subparagraph (K), by 
        striking the period at the end of subparagraph (L) and 
        inserting ``, or'', and by inserting after subparagraph (L) the 
        following new subparagraph:
                    ``(M) expenditures for which a deduction is allowed 
                under section 179F.''.
            (5) Section 312(k)(3)(B), as amended by section 203, is 
        amended by striking ``179, 179A, 179B, 179C, 179D, or 179E'' 
        each place it appears in the heading and text and inserting 
        ``179, 179A, 179B, 179C, 179D, 179E, or 179F''.
            (6) The table of sections for part VI of subchapter B is 
        amended by inserting after the item relating to section 179E 
        the following new item:

``Sec. 179F. Energy efficient property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning after 
the date of the enactment of this Act.

SEC. 205. EXTENSION OF INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR 
              ENERGY PROPERTY AND QUALIFIED FUEL CELL PROPERTY.

    (a) Solar Energy Property.--Paragraphs (2)(A)(i)(II) and (3)(A)(ii) 
of section 48(a) are each amended by striking ``2008'' and inserting 
``2012''.
    (b) Eligible Fuel Cell Property.--Paragraph (1)(E) of section 48(c) 
is amended by striking ``2007'' and inserting ``2011''.

        TITLE III--INCENTIVES FOR ENERGY SAVINGS CERTIFICATIONS

SEC. 301. CREDIT FOR ENERGY SAVINGS CERTIFICATIONS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new section:

``SEC. 45N. ENERGY SAVINGS CERTIFICATION CREDIT.

    ``(a)  In General.--For purposes of section 38, the energy savings 
certification credit determined under this section for any taxable year 
is an amount equal to the sum of--
            ``(1) the qualified training and certification costs paid 
        or incurred by the taxpayer which may be taken into account for 
        such taxable year, plus
            ``(2) the qualified certification equipment expenditures 
        paid or incurred by the taxpayer which may be taken into 
        account for such taxable year.
    ``(b) Qualified Training and Certification Costs.--
            ``(1) In general.--The term `qualified training and 
        certification costs' means costs paid or incurred for training 
        which is required for the taxpayer or employees of the taxpayer 
        to be certified by the Secretary under section 25D(d)(2)(B) or 
        179E(d)(2)(B) for the purpose of certifying energy savings.
            ``(2) Limitation.--The qualified training and certification 
        costs taken into account under subsection (a)(1) for the 
        taxable year with respect to any individual shall not exceed 
        $500 reduced by the amount of the credit allowed under 
        subsection (a)(1) to the taxpayer (or any predecessor) with 
        respect to such individual for all prior taxable years.
            ``(3) Year costs taken into account.--Qualified training 
        and certifications costs with respect to any individual shall 
        not be taken into account under subsection (a)(1) before the 
        taxable year in which the individual with respect to whom such 
        costs are paid or incurred has performed 25 certifications 
        under sections 25E(d)(2)(A) and 179E(d)(2)(A).
    ``(c) Qualified Certification Equipment Expenditures.--
            ``(1) In general.--The term `qualified training equipment 
        expenditures' means costs paid or incurred for--
                    ``(A) blower doors,
                    ``(B) duct leakage testing equipment,
                    ``(C) flue gas combustion equipment, and
                    ``(D) digital manometers.
            ``(2) Limitation.--
                    ``(A) In general.--The qualified certification 
                equipment expenditures taken into account under 
                subsection (a)(2) with respect to any taxpayer for any 
                taxable year shall not exceed $1,000.
                    ``(B) Limitation on individual items.--The 
                qualified certification equipment expenditures taken 
                into account under subsection (a)(2) shall not exceed--
                            ``(i) $500 with respect to any blower door 
                        or duct leakage testing equipment, and
                            ``(ii) $100 with respect to any flue gas 
                        combustion equipment or digital manometer.
            ``(3) Year expenditures taken into account.--The qualified 
        certification equipment expenditures of any taxpayer shall not 
        be taken into account under subsection (a)(2) before the 
        taxable year in which the taxpayer has performed 25 
        certifications under sections 25E(d)(2)(A) and 179E(d)(2)(A).
    ``(d) Special Rules.--
            ``(1) Aggregation rules.--For purposes of this section, all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.
            ``(2) Basis reduction.--The basis of any property shall be 
        reduced by the portion of the cost of such property taken into 
        account under subsection (a).
            ``(3) Denial of double benefit.--
                    ``(A) In general.--No deduction shall be allowed 
                for that portion of the expenses otherwise allowable as 
                a deduction for the taxable year which is equal to the 
                amount taken into account under subsection (a) for such 
                taxable year.
                    ``(B) Amount previously deducted.--No credit shall 
                be allowed under subsection (a) with respect to any 
                amount for which a deduction has been allowed in any 
                preceding taxable year.''.
    (b) Credit Treated as Part of General Business Credit.--Section 
38(b) is amended by striking ``and'' at the end of paragraph (29), by 
striking the period at the end of paragraph (30) and inserting 
``plus'', and by adding at the end the following new paragraph:
            ``(31) the energy savings certification credit determined 
        under section 45N(a).''.
    (c) Conforming Amendments.--
            (1) Section 1016(a), as amended by this Act, is amended by 
        striking ``and'' at the end of paragraph (39), by striking the 
        period at the end of paragraph (40) and inserting ``and'', and 
        by adding at the end the following new paragraph:
            ``(41) to the extent provided in section 45N(d)(2).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 45M the following new item:

``Sec. 45N. Energy savings certification credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.
                                 <all>