Short title

This Act may be cited as the

New Options Petroleum Energy Conservation Act of 2007

Climate neutral combustion credit

(a)

In general

Section 46 of the Internal Revenue Code of 1986 (relating to amount of credit) is amended by striking and at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting , and, and by adding at the end the following new paragraph:

(5)the climate neutral combustion credit.

(b)

Amount of credit

Subpart E of part IV of subchapter A of chapter 1 of such Code (relating to rules for computing investment credit) is amended by inserting after section 48B the following new section:

48C.

Climate neutral combustion credit

(a)

In general

For purposes of section 46, the climate neutral combustion credit for any taxable year is an amount equal to 20 percent of the qualified investment for such taxable year. (b)

Qualified investment

(1)

In general

For purposes of subsection (a), the qualified investment for any taxable year is the basis of any property placed in service by the taxpayer during such taxable year which is part of a climate neutral combustion facility— (A) (i)the construction, reconstruction, or erection of which is completed by the taxpayer, or (ii)which is acquired by the taxpayer if the original use of such property commences with the taxpayer, and (B)with respect to which depreciation (or amortization in lieu of depreciation) is allowable. (2)

Special rule for certain subsidized property

Rules similar to section 48(a)(4) shall apply for purposes of this section. (3)

Certain qualified progress expenditures rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of this section. (c)

Climate neutral combustion facility

For purposes of this section, the term climate neutral combustion facility means any facility which— (1)burns matter to produce electricity, (2)captures the carbon dioxide released during combustion and uses such carbon dioxide to recover hydrocarbon fuel from below ground, and (3)produces no atmospheric emissions of mercury or greenhouse gasses and no emissions that form fine particulate, smog, or acid rain. (d)

Denial of double benefit

A credit shall not be allowed under this section for any qualified investment for which a credit is allowed under section 48A or 48B.

(c)

Conforming amendments

(1)Section 49(a)(1)(C) of such Code is amended by striking and at the end of clause (iii), by striking the period at the end of clause (iv) and inserting , and, and by adding at the end the following new clause:

(v)the basis of any property which is part of a qualifying climate neutral combustion facility.

(2)The table of sections for subpart E of part IV of subchapter A of chapter 1 of such Code is amended by inserting after the item relating to section 48B the following new item:

Sec. 48C. Climate neutral combustion credit.

(d)

Effective date

The amendments made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Extension of energy credit for solar energy property

(a)

In General

Paragraph (2)(A)(i)(II) and paragraph (3)(A)(ii) of section 48(a) of the Internal Revenue Code of 1986 (relating to energy credit) are each amended by striking 2009 and inserting 2013. (b)

Effective Date

The amendments made by this section shall apply to periods after December 31, 2008, in taxable years ending after such date, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

Extension of credit for residential energy efficient property

(a)

In General

Subsection (g) of section 25D of the Internal Revenue Code of 1986 is amended by striking 2008 and inserting 2012. (b)

Effective Date

The amendment made by this section shall apply to property placed in service after December 31, 2008.

Prize program

The Secretary of Energy shall establish a program to award a prize in the amount of $1,000,000,000 to the first automobile manufacturer incorporated in the United States to manufacture and sell in the United States 60,000 midsized sedan automobiles which operate on gasoline and can travel 100 miles per gallon.

Lithium ion battery technology

There are authorized to be appropriated to the Secretary of Energy $30,000,000 for fiscal year 2007 for the development of advanced lithium ion battery technology.

Expensing of property used in the refining of ethanol, methanol, and biodiesel

(a)

In General

Part VI of subchapter B of chapter 1 of the Internal Revenue Code of 1986 (relating to itemized deductions for individuals and corporations) is amended by inserting after section 179E the following new section:

179F.

Election to expense certain property used in refining ethanol, methanol, and biodiesel

(a)

In general

A taxpayer may elect to treat the cost of any qualified biofuel property as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which the property is placed in service. (b)

Election

An election under this section for any taxable year shall be made on the taxpayer’s return of the tax imposed by this chapter for the taxable year. Such election shall be made in such manner as the Secretary may by regulations prescribe. Any election made under this section may not be revoked except with the consent of the Secretary. (c)

Qualified Biofuel Property

For purposes of this section— (1)

In general

The term qualified biofuel property means any property— (A)used for the refining of any biofuel, and (B)the original use of which commences with the taxpayer. (2)

Biofuel

The term biofuel means qualified methanol or ethanol fuel (as defined in section 4041(b)(2)(B)) and biodiesel (as defined in section 40A(d)). (d)

Dual use property

In the case of any property which is used for the refining of any biofuel and for any other use, the cost of such property taken into account under subsection (a) shall be reduced by an amount which bears the same ratio to the cost of such property as such other uses bears to all uses of such property. (e)

Coordination with 50 percent expensing of refineries

Section 179C shall not apply to any property taken into account under subsection (a). (f)

Recapture

Rules similar to the rules of section 179(d)(10) shall apply with respect to any property which ceases to be qualified biofuel property.

(b)

Conforming Amendments

(1)Section 1245(a) of such Code is amended by inserting 179F, after 179E, both places it appears in paragraphs (2)(C) and (3)(C). (2)Section 263(a)(1) of such Code 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.

(3)Section 312(k)(3)(B) of such Code is amended by striking or 179E each place it appears in the heading and text and inserting 179E, or 179F. (4)The table of sections for part VI of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 179E the following new item:

Sec. 179F. Election to expense certain property used in refining ethanol, methanol, and biodiesel.

(c)

Effective Date

The amendments made by this section shall apply to property placed in service after the date of the enactment of this Act.