[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2652 Introduced in House (IH)]







110th CONGRESS
  1st Session
                                H. R. 2652

To amend the Internal Revenue Code of 1986 to generate renewable energy 
 and encourage novel technologies related to the production of energy, 
                        and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 11, 2007

 Mr. English of Pennsylvania introduced the following bill; which was 
              referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
To amend the Internal Revenue Code of 1986 to generate renewable energy 
 and encourage novel technologies related to the production of energy, 
                        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 ``Generating 
Renewable Energy and Encouraging Novel Technologies Act of 2007''.
    (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 for this Act is as 
follows:

Sec. 1. Short title, etc.
                     TITLE I--INVESTMENT INCENTIVES

Sec. 101. Expensing for certain energy property.
Sec. 102. Modifications relating to clean renewable energy bonds.
Sec. 103. Extension and modification of investment tax credit with 
                            respect to solar energy property and 
                            qualified fuel cell property.
Sec. 104. Extension and modification of credit for residential energy 
                            efficient property.
Sec. 105. 15-year recovery period for property used in the transmission 
                            or distribution of electricity for sale.
                    TITLE II--PRODUCTION INCENTIVES

Sec. 201. Extension of production credit for wind, solar, and 
                            geothermal.
Sec. 202. Electricity produced from ocean energy.
              TITLE III--INCENTIVES FOR ALTERNATIVE FUELS

Sec. 301. Technology neutral diesel credit.
Sec. 302. Extension of credit for alcohol used as fuel.
Sec. 303. Extension of credit for alternative fuels.
Sec. 304. Investment tax credit for cellulosic biomass ethanol plant 
                            property.
                TITLE IV--INCENTIVES TO CONSERVE ENERGY

Sec. 401. Extension of nonbusiness energy property.
Sec. 402. Modifications of energy efficient appliance credit for 
                            appliances produced after 2007.
Sec. 403. Increase and extension of energy efficient commercial 
                            buildings deduction.
              TITLE V--CREDIT FOR OIL SHALE RECOVERY COSTS

Sec. 501. Incentives for extraction and processing of oil shale.
   TITLE VI--PROVISIONS RELATING TO ADVANCED COAL AND NUCLEAR ENERGY

Sec. 601. Alternative method for satisfying certain requirements 
                            relating to production of refined coal.
Sec. 602. Advanced Nuclear Power Production.
                 TITLE VII--COAL TO LIQUIDS TECHNOLOGY

Sec. 701. Credit for investment in coal-to-liquid fuels projects.
Sec. 702. Temporary expensing for equipment used in coal-to-liquid 
                            fuels process.
Sec. 703. Extension of alternative fuel credit for fuel derived from 
                            coal through the Fischer-Tropsch process.
Sec. 704. Modifications to enhanced oil recovery credit.
Sec. 705. Allowance of enhanced oil, natural gas, and coalbed methane 
                            recovery, and capture and sequestration 
                            credit against the alternative minimum tax.

                     TITLE I--INVESTMENT INCENTIVES

SEC. 101. EXPENSING FOR CERTAIN ENERGY PROPERTY.

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

``SEC. 179F. ELECTION TO EXPENSE CERTAIN ENERGY PROPERTY.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
cost of any qualified energy 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 expense is incurred.
    ``(b) Election.--
            ``(1) In general.--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.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Energy Property.--For purposes of this section--
            ``(1) The term `qualified energy property' means any 
        property located in the United States--
                    ``(A) which--
                            ``(i) is described in subparagraph (A) of 
                        section 48(a)(3) (or would be so described if 
                        `solar or wind energy' were substituted for 
                        `solar energy' in clause (i) thereof and the 
                        last sentence of such section did not apply to 
                        such subparagraph),
                            ``(ii) is described in paragraph (15) of 
                        section 48(l) (as in effect on the day before 
                        the date of the enactment of the Revenue 
                        Reconciliation Act of 1990) and is a qualifying 
                        small power production facility within the 
                        meaning of section 3(17)(C) of the Federal 
                        Power Act (16 U.S.C. 796(17)(C)), as in effect 
                        on September 1, 1986,
                            ``(iii) is described in section 
                        48(l)(3)(A)(ix) (as in effect on the day before 
                        the date of the enactment of the Revenue 
                        Reconciliation Act of 1990), or
                            ``(iv) ocean energy property,
                    ``(B) the original use of which commences with the 
                taxpayer,
                    ``(C) the construction of which--
                            ``(i) except as provided in subparagraph 
                        (B), is subject to a binding construction 
                        contract entered into after the date of the 
                        enactment of this section and before January 1, 
                        2011, but only if there was no written binding 
                        construction contract entered into on or before 
                        such date of enactment, or
                            ``(ii) in the case of self-constructed 
                        property, began after the date of the enactment 
                        of this section and before January 1, 2011, and
                    ``(D) which is placed in service by the taxpayer 
                after the date of the enactment of this section and 
                before January 1, 2016.
            ``(2) Ocean energy property.--The term `ocean energy 
        property' means property--
                    ``(A) for hydro thermal energy generation through 
                closed-cycle, open-cycle and hybrid processes, or
                    ``(B) for hydro mechanical energy generation 
                through channel systems, float systems, and oscillating 
                water column systems.
            ``(3) Special rule.--Nothing in any provision of law shall 
        be construed to treat property as not being described in 
        paragraph (1)(A)(i) (or the corresponding provisions of prior 
        law) by reason of being public utility property (within the 
        meaning of section 48(a)(3)).
    ``(d) Election To Allocate Deduction to Cooperative Owner.--If--
            ``(1) a taxpayer to which subsection (a) applies is an 
        organization to which part I of subchapter T applies, and
            ``(2) one or more persons directly holding an ownership 
        interest in the taxpayer are organizations to which part I of 
        subchapter T apply,
the taxpayer may elect to allocate all or a portion of the deduction 
allowable under subsection (a) to such persons. Such allocation shall 
be equal to the person's ratable share of the total amount allocated, 
determined on the basis of the person's ownership interest in the 
taxpayer. The taxable income of the taxpayer shall not be reduced under 
section 1382 by reason of any amount to which the preceding sentence 
applies.
    ``(e) Basis Reduction.--
            ``(1) In general.--For purposes of this title, if a 
        deduction is allowed under this section with respect to any 
        qualified energy property, the basis of such property shall be 
        reduced by the amount of the deduction so allowed.
            ``(2) Ordinary income recapture.--For purposes of section 
        1245, the amount of the deduction allowable under subsection 
        (a) with respect to any property which is of a character 
        subject to the allowance for depreciation shall be treated as a 
        deduction allowed for depreciation under section 167.
    ``(f) Application With Other Deductions and Credits.--
            ``(1) Other deductions.--No deduction shall be allowed 
        under any other provision of this chapter with respect to any 
        expenditure with respect to which a deduction is allowed under 
        subsection (a) to the taxpayer.
            ``(2) Credits.--No credit shall be allowed under section 38 
        with respect to any amount for which a deduction is allowed 
        under subsection (a).
    ``(g) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless such taxpayer files 
with the Secretary a report containing such information with respect to 
the operation of the property of the taxpayer as the Secretary shall 
require.''.
    (b) 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 179F(e)(1).''.
            (2) Section 1245(a) is amended by inserting ``179F,'' after 
        ``179D,'' both places it appears in paragraphs (2)(C) and 
        (3)(C).
            (3) 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 179F.''.
            (4) Section 312(k)(3)(B) is amended by striking ``or 179E'' 
        each place it appears in the heading and text and inserting 
        ``179E, or 179F''.
            (5) Section 168(e)(B) is amended by inserting ``and'' after 
        clause (iv), by striking ``and'' at the end of clause (v) and 
        inserting a period, by striking clause (vi), and by striking 
        the last sentence at the end.
            (6) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179E the following new item:

``Sec. 179F. Election to expense certain energy property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to properties placed in service after the date of the enactment 
of this Act.

SEC. 102. MODIFICATIONS RELATING TO CLEAN RENEWABLE ENERGY BONDS.

    (a) Clean Renewable Energy Bond.--Paragraph (1) of section 54(d) 
(defining clean renewable energy bond) is amended--
            (1) in subparagraph (A) by striking ``pursuant'' and all 
        that follows through ``subsection (f)(2)'',
            (2) in subparagraph (B) by striking ``95 percent or more of 
        the proceeds'' and inserting ``90 percent or more of the net 
        proceeds'', and
            (3) in subparagraph (D) by striking ``subsection (h)'' and 
        inserting ``subsection (g)''.
    (b) Qualified Project.--Subparagraph (A) of section 54(d)(2) 
(defining qualified project) is amended to read as follows:
                    ``(A) In general.--The term `qualified project' 
                means any qualified facility (as determined under 
                section 45(d) without regard to paragraphs (8) and (10) 
                thereof and to any placed in service requirement) owned 
                by a qualified borrower and also without regard to the 
                following--
                            ``(i) in the case of a qualified facility 
                        described in section 45(d)(9) (regarding 
                        incremental hydropower production), any 
                        determination of incremental hydropower 
                        production and related calculations shall be 
                        determined by the qualified borrower based on a 
                        methodology that meets Federal Energy 
                        Regulatory Commission standards; and
                            ``(ii) in the case of a qualified facility 
                        described in section 45(d)(9) (regarding non-
                        hydropower production), the facility need not 
                        be licensed by the Federal Energy Regulation 
                        Commission if the facility, when constructed, 
                        will meet Federal Energy Regulatory Commission 
                        licensing requirements and other applicable 
                        environmental, licensing, and regulatory 
                        requirements.''.
    (c) Reimbursement.--Subparagraph (C) of section 54(d)(2) (relating 
to reimbursement) is amended to read as follows:
                    ``(C) Reimbursement.--For purposes of paragraph 
                (1)(B), proceeds of a clean renewable energy bond may 
                be issued to reimburse a qualified borrower for amounts 
                paid after the date of the enactment of this section in 
                the same manner as proceeds of State and local 
                government obligations the interest upon which is 
                exempt from tax under section 103.''.
    (d) Change in Use.--Subparagraph (D) of section 54(d)(2) (relating 
to treatment of changes in use) is amended by striking ``or qualified 
issuer''.
    (e) Maximum Term.--Paragraph (2) of section 54(e) (relating to 
maximum term) is amended by striking ``without regard to the 
requirements of subsection (1)(6) and''.
    (f) Repeal of Limitation on Amount of Bonds Designated.--Section 54 
is amended by striking subsection (f) (relating to repeal of limitation 
on amount of bonds designated).
    (g) Special Rules Relating to Expenditures.--Subsection (h) of 
section 54 (relating to special rules relating to expenditures) is 
amended--
            (1) in paragraph (1)(A) by striking ``95 percent of the 
        proceeds'' and inserting ``90 percent of the net proceeds'',
            (2) in paragraph (1)(B)--
                    (A) by striking ``10 percent of the proceeds'' and 
                inserting ``5 percent of the net proceeds'', and
                    (B) by striking ``the 6-month period beginning on'' 
                both places it appears and inserting ``1 year of'', and
            (3) in paragraph (1)(C) by inserting ``net'' before 
        ``proceeds'',
            (4) in paragraph (3) by striking ``95 percent of the 
        proceeds'' and inserting ``90 percent of the net proceeds''.
    (h) Repeal of Special Rules Relating to Arbitrage.--Section 54 is 
amended by striking subsection (i) (relating to repeal of special rules 
relating to arbitrage).
    (i) Public Power Entity.--Subsection (j) of section 54 (defining 
cooperative electric company; qualified energy tax credit bond lender; 
governmental body; qualified borrower) is amended--
            (1) by redesignating paragraphs (4) and (5) as paragraph 
        (5) and (6) and by inserting after paragraph (3) the following 
        new paragraph:
            ``(4) Public power entity.--The term `public power entity' 
        means a State utility with a service obligation, as such terms 
        are defined in section 217 of the Federal Power Act (as in 
        effect on the date of enactment of this paragraph).'',
            (2) in paragraph (5), as so redesignated, by striking 
        ``or'' at the end of subparagraph (B), by striking the period 
        at the end of subparagraph (C) and inserting ``, or'', and by 
        adding at the end the following:
                    ``(D) a public power entity.'', and
            (3) in paragraph (6), as so redesignated, by striking 
        ``or'' at the end of subparagraph (A), by striking the period 
        at the end of subparagraph (B) and inserting ``, or'', and by 
        adding at the end the following:
                    ``(C) a public power entity.''.
    (j) Repeal of Ratable Principal Amortization Requirement.--
Subsection (l) of section 54 (relating to other definitions and special 
rules) is amended by striking paragraph (5) and redesignating paragraph 
(6) as paragraph (5).
    (k) Net Proceeds.--Subsection (i) of section 54 (relating to other 
definitions and special rules), as amended by subsection (j), is 
amended by redesignating paragraphs (2), (3), (4), and (5) as 
paragraphs (4), (5), (6), and (7), respectively, and by inserting after 
paragraph (1) the following new paragraphs:
            ``(2) Net proceeds.--The term `net proceeds' means, with 
        respect to an issue, the proceeds of such issue reduced by 
        amounts in a reasonably required reserve or replacement fund.
            ``(3) Limitation on amount in reserve or replacement fund 
        which may be financed by issue.--A bond issued as part of an 
        issue shall not be treated as a clean renewable energy bond if 
        the amount of the proceeds from the sale of such issue which is 
        part of any reserve or replacement fund exceeds 10 percent of 
        the proceeds of the issue (or such higher amount which the 
        issuer establishes is necessary to the satisfaction of the 
        Secretary).''.
    (l) Other Special Rules.--Subsection (i) of section 54 ((relating 
to other definitions and special rules), as amended by subsections (j) 
and (k)) is amended by adding at the end the following new paragraphs:
            ``(8) Credits may be separated.--There may be a separation 
        (including at issuance) of the ownership of a clean renewable 
        energy bond and the entitlement to the credit under this 
        section with respect to such bond. In case of any such 
        separation, the credit under this section shall be allowed to 
        the person who on the credit allowance date holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(9) Treatment for estimated tax purposes.--Solely for the 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a qualified energy 
        tax credit bond on a credit allowance date (or the credit in 
        the case of a separation as provided in paragraph (8)) shall be 
        treated as if it were a payment of estimated tax made by the 
        taxpayer on such date.
            ``(10) Carryback and carryforward of unused credits.--If 
        the sum of the credit exceeds the limitation imposed by 
        subsection (c) for any taxable year, any credits may be applied 
        in a manner similar to the rules set forth in section 39.''.
    (m) Termination.--Subsection (m) of section 54 (relating to 
termination) is amended by striking ``2008'' and inserting ``2018''.
    (n) Clerical Redesignations.--Section 54, as amended by the 
preceding provisions of this section, is amended by redesignating 
subsections (g), (h), (j), (k), (l), and (m) as subsections (f), (g), 
(h), (i), (j), and (k), respectively.
    (o) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.

SEC. 103. EXTENSION AND MODIFICATION 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 
``2019''.
    (b) Eligible Fuel Cell Property.--Paragraph (1)(E) of section 48(c) 
is amended by striking ``2007'' and inserting ``2018''.
    (c) Energy Property To Include Excess Energy Storage Device.--
Clause (i) of section 48(a)(3)(A) is amended to read as follows:
                            ``(i) equipment which uses solar energy to 
                        generate electricity, to heat or cool (or 
                        provide hot water for use in) a structure, or 
                        to provide solar process heat, or advanced 
                        energy storage systems installed as an 
                        integrated component of the foregoing, 
                        excepting property used to generate energy for 
                        purposes of heating a swimming pool,''.
    (d) Solar Lighting Equipment To Include Solar Hybrid Lighting 
Systems.--Clause (ii) of section 48(a)(3)(A) is amended to read as 
follows:
                            ``(ii) equipment which uses solar energy to 
                        illuminate the inside of a structure using 
                        fiber-optic distributed sunlight,''.
    (e) Modifications.--
            (1) Solar photovoltaic energy property credit determined 
        solely by kilowatt capacity.--
                    (A) In general.--Subsection (a) of section 48 is 
                amended by redesignating paragraph (4) as paragraph (5) 
                and by inserting after paragraph (3) the following new 
                paragraph:
            ``(4) Special rule for energy credit for solar photovoltaic 
        energy property.--
                    ``(A) In general.--For purposes of section 46, the 
                energy credit for any taxable year for solar 
                photovoltaic energy property described in paragraph 
                (3)(A)(i) which is used to generate electricity and 
                which is placed in service during the taxable year is 
                $1,500 with respect to each half kilowatt of capacity 
                of such property. Paragraph (2)(A)(ii) shall not apply 
                to property to which the preceding sentence applies.
                    ``(B) Application of special rules for 
                rehabilitated or subsidized property.--Rules similar to 
                the rules of paragraphs (2)(B) and (5) shall apply to 
                property to which this paragraph applies.''.
                    (B) Conforming amendment.--Subclause (II) of 
                section 48(a)(2)(A)(i) is amended by striking 
                ``described in paragraph (3)(A)(i)'' and inserting 
                ``which is described in paragraph (3)(A)(i) and to 
                which paragraph (4) does not apply''.
    (f) Credits Allowed Against the Alternative Minimum Tax.--Section 
38(c)(4)(B) (defining specified credits) is amended by striking the 
period at the end of clause (ii)(II) and inserting ``, and'', and by 
adding at the end the following new clause:
                            ``(iii) the portion of the investment 
                        credit under section 46(2) as determined under 
                        clauses (i) and (ii) of section 48(a)(2)(A).''.
    (g) Effective Dates.--
            (1) Except as provided in paragraph (2), the amendments 
        made by this section shall take effect on January 1, 2007.
            (2) The amendments made by subsection (c) shall apply to 
        property placed in service after December 31, 2006.

SEC. 104. EXTENSION AND MODIFICATION OF CREDIT FOR RESIDENTIAL ENERGY 
              EFFICIENT PROPERTY.

    (a) Extension.--Subsection (g) of section 25D of the Internal 
Revenue Code of 1986 (relating to termination) is amended by striking 
``2008'' and inserting ``2016''.
    (b) Solar Electric Property.--Paragraph (1) of section 25D(a) of 
such Code (relating to allowance of credit) is amended by striking ``30 
percent of''.
    (c) Modification of Maximum Credit.--Paragraph (1) of section 
25D(b) of the Internal Revenue Code of 1986 (relating to limitations) 
is amended to read as follows:
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a) for any taxable year shall not exceed--
                    ``(A) $1,500 with respect to each half kilowatt of 
                installed capacity of qualified solar electric property 
                for which qualified solar electric property 
                expenditures are made,
                    ``(B) $2,000 with respect to any qualified solar 
                water heating property expenditures, and
                    ``(C) $500 with respect to each half kilowatt of 
                capacity of qualified fuel cell property (as defined in 
                section 48(c)(1)) for which qualified fuel cell 
                property expenditures are made.''.
    (d) Definition of Qualified Solar Water Heating Property 
Expenditure.--Paragraph (1) of section 25D(d) of such Code is amended 
by striking ``to heat water for use in'' and inserting ``to heat or 
cool (or provide hot water for use in)''.
    (e) Definition of Qualified Photovoltaic Property Expenditure.--
Paragraph (2) of section 25D(d) of such Code is amended by inserting 
``, including advanced energy storage systems installed as an 
integrated component of the foregoing'' after ``taxpayer''.
    (f) Credit Allowed Against Alternative Minimum Tax.--
            (1) In general.--Section 25D(b) of the Internal Revenue 
        Code of 1986 (as amended by subsection (b)) is amended by 
        adding at the end the following new paragraph:
            ``(3) Credit allowed against alternative minimum tax.--The 
        credit allowed under subsection (a) for the 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 
                subpart A of part IV of subchapter A (other than this 
                section) and section 27 for the taxable year.''.
            (2) Conforming amendments.--
                    (A) Subsection (c) of section 25D of such Code is 
                amended to read as follows:
    ``(c) Carryforward of Unused Credit.--If the credit allowable under 
subsection (a) for any taxable year exceeds the limitation imposed by 
subsection (b)(3) for such taxable year, such excess shall be carried 
to the succeeding taxable year and added to the credit allowable under 
subsection (a) for such succeeding taxable year.''.
                    (B) Section 23(b)(4)(B) of such Code is amended by 
                inserting ``and section 25D'' after ``this section''.
                    (C) Section 24(b)(3)(B) of such Code is amended by 
                striking ``sections 23 and 25B'' and inserting 
                ``sections 23, 25B, and 25D''.
                    (D) Section 26(a)(1) of such Code is amended by 
                striking ``and 25B'' and inserting ``25B, and 25D''.
    (g) Effective Date.--The amendments made by this section shall 
apply to expenditures made in taxable years beginning after December 
31, 2006.

SEC. 105. 15-YEAR RECOVERY PERIOD FOR PROPERTY USED IN THE TRANSMISSION 
              OR DISTRIBUTION OF ELECTRICITY FOR SALE.

    (a) In General.--Subparagraph (E) of section 168(e)(3) is amended 
by striking clause (vii), by redesignating clause (viii) as clause 
(ix), and by inserting after clause (vi) the following new clauses:
                            ``(vii) any section 1245 property (as 
                        defined in section 1245(a)(3))--
                                    ``(I) used in the transmission at 
                                69 or more kilovolts of electricity for 
                                sale and the original use of which 
                                commences with the taxpayer after April 
                                11, 2005, or
                                    ``(II) used in the transmission or 
                                distribution of electricity for sale 
                                and which is originally placed in 
                                service after the date of the enactment 
                                of this subclause,
                            ``(viii) initial clearing and grading land 
                        improvements with respect to any electric 
                        utility transmission and distribution plant, 
                        and''.
    (b) Conforming Amendments.--
            (1) Paragraph (3) of section 168(e) is amended by striking 
        subparagraph (F).
            (2) The table contained in section 168(g)(3)(B) is amended 
        by striking the items relating to subparagraphs (E)(viii) and 
        (F) and inserting the following new items:


 
 
 
``(E)(viii)........................  25
(E)(ix)............................  35''.
 

    (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.

                    TITLE II--PRODUCTION INCENTIVES

SEC. 201. EXTENSION OF PRODUCTION CREDIT FOR WIND, SOLAR, AND 
              GEOTHERMAL.

    Subsection (d) of section 45 is amended--
            (1) in paragraph (1) by striking ``January 1, 2009'' and 
        inserting ``January 1, 2018'', and
            (2) in paragraph (4) by striking ``January 1, 2009 (January 
        1, 2006, in the case of a facility using solar energy)'' and 
        inserting ``January 1, 2018''.

SEC. 202. ELECTRICITY PRODUCED FROM OCEAN ENERGY.

    (a) In General.--Section 45(c)(1) (defining qualified energy 
resources) is amended by striking ``and'' at the end of subparagraph 
(G), by striking the period at the end of subparagraph (H) and 
inserting ``, and'', and by adding at the end the following new 
subparagraph:
                    ``(I) ocean energy.''.
    (b) Definition of Resources.--Section 45(c) is amended by adding at 
the end the following new paragraph:
            ``(10) Ocean energy.--The term `ocean energy' means energy 
        derived--
                    ``(A) in the case of ocean thermal energy, 
                generation through closed-cycle, open-cycle and hybrid 
                processes, and
                    ``(B) in the case of ocean mechanical energy, 
                generation through channel systems, float systems, and 
                oscillating water column systems.''.
    (c) Facilities.--Section 45(d) is amended by adding at the end the 
following new paragraph:
            ``(11) Ocean energy facility.--In the case of a facility 
        using ocean energy to produce electricity, the term `qualified 
        facility' means any facility owned by the taxpayer which is 
        originally placed in service after the date of the enactment of 
        this paragraph and before January 1, 2018.''.
    (d) Credit Rate.--
            (1) In general.--Section 45(b) is amended by adding at the 
        end the following new paragraph:
            ``(5) Credit rate for electricity produced and sold from 
        ocean energy facility.--In the case of electricity produced and 
        sold in any calendar year after the date of the enactment of 
        this paragraph at any qualified facility described in 
        subsection (d)(11)--
                    ``(A) subsection (a)(1) shall be applied for such 
                calendar year by substituting `1.9 cents' for `1.5 
                cents', and
                    ``(B) paragraph (2) shall be applied by 
                substituting `2005' for `2002'.''.
            (2) Adjustment for inflation.--Section 45(b)(2) is amended 
        by inserting ``the 1.9 cent amount in paragraph (5)''.
    (e) Effective Date.--The amendments made by this section shall 
apply to electricity produced after the date of the enactment of this 
Act.

              TITLE III--INCENTIVES FOR ALTERNATIVE FUELS

SEC. 301. TECHNOLOGY NEUTRAL DIESEL CREDIT.

    (a) In General.--Section 40A is amended to read as follows:

``SEC. 40A. QUALIFIED DIESEL USED AS FUEL.

    ``(a) General Rule.--For purposes of section 38, the qualified 
diesel fuels credit determined under this section for the taxable year 
is an amount equal to the sum of--
            ``(1) the qualified diesel mixture credit, plus
            ``(2) the qualified diesel credit.
    ``(b) Definition of Qualified Diesel Mixture Credit and Qualified 
Diesel Credit.--For purposes of this section--
            ``(1) Qualified diesel mixture credit.--
                    ``(A) In general.--The qualified diesel mixture 
                credit of any taxpayer for any taxable year is $1.00 
                for each gallon of biodiesel used by the taxpayer in 
                the production of a qualified biodiesel mixture.
                    ``(B) Qualified diesel mixture.--The term 
                `qualified biodiesel mixture' means a mixture of 
                qualified diesel and diesel fuel (as defined in section 
                4083(a)(3)), determined without regard to any use of 
                kerosene, which--
                            ``(i) is sold by the taxpayer producing 
                        such mixture to any person for use as a fuel, 
                        or
                            ``(ii) is used as a fuel by the taxpayer 
                        producing such mixture.
                    ``(C) Sale or use must be in trade or business, 
                etc.--Biodiesel used in the production of a qualified 
                diesel mixture shall be taken into account--
                            ``(i) only if the sale or use described in 
                        subparagraph (B) is in a trade or business of 
                        the taxpayer, and
                            ``(ii) for the taxable year in which such 
                        sale or use occurs.
                    ``(D) Casual off-farm production not eligible.--No 
                credit shall be allowed under this section with respect 
                to any casual off-farm production of a qualified diesel 
                mixture.
            ``(2) Biodiesel credit.--
                    ``(A) In general.--The diesel credit of any 
                taxpayer for any taxable year is $1.00 for each gallon 
                of diesel which is not in a mixture with diesel fuel 
                and which during the taxable year--
                            ``(i) is used by the taxpayer as a fuel in 
                        a trade or business, or
                            ``(ii) is sold by the taxpayer at retail to 
                        a person and placed in the fuel tank of such 
                        person's vehicle.
                    ``(B) User credit not to apply to diesel sold at 
                retail.--No credit shall be allowed under subparagraph 
                (A)(i) with respect to any diesel which was sold in a 
                retail sale described in subparagraph (A)(ii).
            ``(3) Certification for diesel.--No credit shall be allowed 
        under paragraph (1) or (2) of subsection (a) unless the 
        taxpayer obtains a certification (in such form and manner as 
        prescribed by the Secretary) from the producer or importer of 
        the biodiesel which identifies the product produced and the 
        percentage of biodiesel and agri-biodiesel in the product.
            ``(4) Small qualified diesel producer credit.--
                    ``(A) In general.--The small qualified diesel 
                producer credit of any eligible small qualified diesel 
                producer for any taxable year is 10 cents for each 
                gallon of qualified diesel production of such producer.
                    ``(B) Qualified diesel production.--For purposes of 
                this paragraph, the term `qualified agri-biodiesel 
                production' means any qualified diesel which is 
                produced by an eligible small qualified diesel 
                producer, and which during the taxable year--
                            ``(i) is sold by such producer to another 
                        person--
                                    ``(I) for use by such other person 
                                in the production of a qualified diesel 
                                mixture in such other person's trade or 
                                business (other than casual off-farm 
                                production),
                                    ``(II) for use by such other person 
                                as a fuel in a trade or business, or
                                    ``(III) who sells such qualified 
                                diesel at retail to another person and 
                                places such qualified diesel in the 
                                fuel tank of such other person, or
                            ``(ii) is used or sold by such producer for 
                        any purpose described in clause (i).
                    ``(C) Limitation.--The qualified diesel production 
                of any producer for any taxable year shall not exceed 
                15,000,000 gallons.
    ``(c) Coordination With Credit Against Excise Tax.--The amount of 
the credit determined under this section with respect to any biodiesel 
shall be properly reduced to take into account any benefit provided 
with respect to such biodiesel solely by reason of the application of 
section 6426 or 6427(e).
    ``(d) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Qualified diesel.--
                    ``(A) In general.--The term `qualified diesel' 
                means any diesel made from a renewable source, as 
                certified by the Secretary of Energy.
                    ``(B) Procedure for certification.--For purposes of 
                subparagraph (A), not later than 90 days after the date 
                on which a request for certification is submitted to 
                the Secretary of Energy (in accordance with regulations 
                promulgated by the Secretary of Energy), the Secretary 
                of Energy shall make a determination on such request.
                    ``(C) Transitional rule.--Any diesel product 
                eligible for the credit under this section on the day 
                before the date of the enactment of the Generating 
                Renewable Energy and Encouraging Novel Technologies Act 
                of 2007 shall be deemed to be qualified diesel for 
                purposes of this section after such date.
            ``(2) Mixture or biodiesel not used as a fuel, etc.--
                    ``(A)  Mixtures.--If--
                            ``(i) any credit was determined under this 
                        section with respect to diesel used in the 
                        production of any qualified diesel mixture, and
                            ``(ii) any person--
                                    ``(I) separates the biodiesel from 
                                the mixture, or
                                    ``(II) without separation, uses the 
                                mixture other than as a fuel,
                        then there is hereby imposed on such person a 
                        tax equal to the product of the rate applicable 
                        under subsection (b)(1)(A) and the number of 
                        gallons of such diesel in such mixture.
                    ``(B) Diesel.--If--
                            ``(i) any credit was determined under this 
                        section with respect to the retail sale of any 
                        diesel, and
                            ``(ii) any person mixes such diesel or uses 
                        such diesel other than as a fuel,
                then there is hereby imposed on such person a tax equal 
                to the product of the rate applicable under subsection 
                (b)(2)(A) and the number of gallons of such diesel.
                    ``(C) Producer credit.--If--
                            ``(i) any credit was determined under 
                        subsection (a)(3), and
                            ``(ii) any person does not use such fuel 
                        for a purpose described in subsection 
                        (b)(5)(B),
                then there is hereby imposed on such person a tax equal 
                to 10 cents a gallon for each gallon of such diesel.
                    ``(D) Applicable laws.--All provisions of law, 
                including penalties, shall, insofar as applicable and 
                not inconsistent with this section, apply in respect of 
                any tax imposed under subparagraph (A) or (B) as if 
                such tax were imposed by section 4081 and not by this 
                chapter.
            ``(3) Pass-thru in the case of estates and trusts.--Under 
        regulations prescribed by the Secretary, rules similar to the 
        rules of subsection (d) of section 52 shall apply.
    ``(e) Definitions and Special Rules for Small Qualified Diesel 
Producer Credit.--For purposes of this section--
            ``(1) Eligible small qualified diesel producer.--The term 
        `eligible small qualified diesel producer' means a person who, 
        at all times during the taxable year, has a productive capacity 
        for qualified diesel not in excess of 60,000,000 gallons.
            ``(2) Aggregation rule.--For purposes of the 15,000,000 
        gallon limitation under subsection (b)(5)(C) and the 60,000,000 
        gallon limitation under paragraph (1), all members of the same 
        controlled group of corporations (within the meaning of section 
        267(f)) and all persons under common control (within the 
        meaning of section 52(b) but determined by treating an interest 
        of more than 50 percent as a controlling interest) shall be 
        treated as 1 person.
            ``(3) Partnership, s corporation, and other pass-thru 
        entities.--In the case of a partnership, trust, S corporation, 
        or other pass-thru entity, the limitations contained in 
        subsection (b)(5)(C) and paragraph (1) shall be applied at the 
        entity level and at the partner or similar level.
            ``(4) Allocation.--For purposes of this subsection, in the 
        case of a facility in which more than 1 person has an interest, 
        productive capacity shall be allocated among such persons in 
        such manner as the Secretary may prescribe.
            ``(5) Regulations.--The Secretary may prescribe such 
        regulations as may be necessary--
                    ``(A) to prevent the credit provided for in 
                subsection (a)(3) from directly or indirectly 
                benefitting any person with a direct or indirect 
                productive capacity of more than 60,000,000 gallons of 
                agri-biodiesel during the taxable year, or
                    ``(B) to prevent any person from directly or 
                indirectly benefitting with respect to more than 
                15,000,000 gallons during the taxable year.
            ``(6) Allocation of small qualified diesel credit to 
        patrons of cooperative.--
                    ``(A) Election to allocate.--
                            ``(i) In general.--In the case of a 
                        cooperative organization described in section 
                        1381(a), any portion of the credit determined 
                        under subsection (a)(3) for the taxable year 
                        may, at the election of the organization, be 
                        apportioned pro rata among patrons of the 
                        organization on the basis of the quantity or 
                        value of business done with or for such patrons 
                        for the taxable year.
                            ``(ii) Form and effect of election.--An 
                        election under clause (i) for any taxable year 
                        shall be made on a timely filed return for such 
                        year. Such election, once made, shall be 
                        irrevocable for such taxable year. Such 
                        election shall not take effect unless the 
                        organization designates the apportionment as 
                        such in a written notice mailed to its patrons 
                        during the payment period described in section 
                        1382(d).
                    ``(B) Treatment of organizations and patrons.--
                            ``(i) Organizations.--The amount of the 
                        credit not apportioned to patrons pursuant to 
                        subparagraph (A) shall be included in the 
                        amount determined under subsection (a)(3) for 
                        the taxable year of the organization.
                            ``(ii) Patrons.--The amount of the credit 
                        apportioned to patrons pursuant to subparagraph 
                        (A) shall be included in the amount determined 
                        under such subsection for the first taxable 
                        year of each patron ending on or after the last 
                        day of the payment period (as defined in 
                        section 1382(d)) for the taxable year of the 
                        organization or, if earlier, for the taxable 
                        year of each patron ending on or after the date 
                        on which the patron receives notice from the 
                        cooperative of the apportionment.
                            ``(iii) Special rules for decrease in 
                        credits for taxable year.--If the amount of the 
                        credit of the organization determined under 
                        such subsection for a taxable year is less than 
                        the amount of such credit shown on the return 
                        of the organization for such year, an amount 
                        equal to the excess of--
                                    ``(I) such reduction, over
                                    ``(II) the amount not apportioned 
                                to such patrons under subparagraph (A) 
                                for the taxable year,
                        shall be treated as an increase in tax imposed 
                        by this chapter on the organization. Such 
                        increase shall not be treated as tax imposed by 
                        this chapter for purposes of determining the 
                        amount of any credit under this chapter or for 
                        purposes of section 55.
    ``(f) Termination.--This section shall not apply to any sale or use 
after December 31, 2018.''.
    (b) Clerical Amendment.--The item relating to section 40A in the 
table of sections for subpart D of part IV of subchapter A of chapter 1 
is amended to read as follows:

``Sec. 40A. Qualified diesel used as fuel.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to fuel produced after the date of the enactment of this Act.

SEC. 302. EXTENSION OF CREDIT FOR ALCOHOL USED AS FUEL.

    (a) Income Tax Credit.--Paragraph (1) of section 40(e) is amended--
            (1) in subparagraph (A) by striking ``December 31, 2010'' 
        and inserting ``December 31, 2018'', and
            (2) in subparagraph (B) by striking ``January 1, 2011'' and 
        inserting ``January 1, 2019''.
    (b) Excise Tax Credit.--Section 6426(b)(5) is amended by striking 
``December 31, 2010'' and inserting ``December 31, 2018''.
    (c) Fuels Not Used for Taxable Purposes.--Section 6427(e)(5)(A) is 
amended by striking ``December 31, 2010'' and inserting ``December 31, 
2018''.

SEC. 303. EXTENSION OF CREDIT FOR ALTERNATIVE FUELS.

    (a) Alternative Fuel.--Paragraph (4) of section 6426(d) is amended 
to read as follows:
            ``(4) Termination.--This subsection shall not apply to any 
        sale or use for any period after December 31, 2018.''.
    (b) Alternative Fuel Mixture.--Paragraph (3) of section 6426(e) is 
amended to read as follows:
            ``(3) Termination.--This subsection shall not apply to any 
        sale or use for any period after December 31, 2018.''.
    (c) Fuels Not Used for Taxable Purposes.--Section 6427(e)(5)(C) is 
amended by striking ``September 30, 2009'' and inserting ``December 31, 
2018''.

SEC. 304. INVESTMENT TAX CREDIT FOR CELLULOSIC BIOMASS ETHANOL PLANT 
              PROPERTY.

    (a) Allowance of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 is amended by inserting after section 48B the following new 
section:

``SEC. 48C. CELLULOSIC BIOMASS ETHANOL PLANT FACILITY.

    ``(a) General Rule.--For purposes of section 46, the cellulosic 
biomass ethanol plant credit for any taxable year is 30 percent of the 
cost of any qualified cellulosic biomass ethanol plant property.
    ``(b) Qualified Cellulosic Biomass Ethanol Plant Property.--The 
term `qualified cellulosic biomass ethanol plant property' means 
property of a character subject to the allowance for depreciation--
            ``(1) which is used in the United States solely to produce 
        cellulosic biomass ethanol,
            ``(2) the original use of which commences with the taxpayer 
        after the date of the enactment of this section,
            ``(3) which is acquired by the taxpayer by purchase (as 
        defined in section 179(d)) after the date of the enactment of 
        this subsection, but only if no written binding contract for 
        the acquisition was in effect on or before the date of the 
        enactment of this subsection, and
            ``(4) which is placed in service by the taxpayer before 
        January 1, 2019.
    ``(c) Cellulosic Biomass Ethanol.--For purposes of this section, 
the term `cellulosic biomass ethanol' means ethanol produced from any 
lignocellulosic or hemicellulosic matter that is available on a 
renewable or recurring basis.
    ``(d) Special Rule for Certain Subsidized Property.--For purposes 
of this section, rules similar to the rules of section 48(a)(4) shall 
apply.
    ``(e) Denial of Double Benefit.--A deduction or credit shall not be 
allowed under any other provision of this chapter for the cost taken 
into account under subsection (a).''.
    (b) Credit Treated as Part of Investment Credit.--Section 46 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 cellulosic biomass ethanol plant credit.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C) 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 qualified cellulosic 
                        biomass ethanol plant property.''.
            (2) Section 168 is amended by striking subsection (l).
            (3) 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. Cellulosic biomass ethanol plant facility.''.

                TITLE IV--INCENTIVES TO CONSERVE ENERGY

SEC. 401. EXTENSION OF NONBUSINESS ENERGY PROPERTY.

    Subsection (g) of section 25C is amended by striking ``December 31, 
2007'' and inserting ``December 31, 2018''.

SEC. 402. MODIFICATIONS OF ENERGY EFFICIENT APPLIANCE CREDIT FOR 
              APPLIANCES PRODUCED AFTER 2007.

    (a) In General.--Subsection (b) of section 45M (relating to 
applicable amount) is amended to read as follows:
    ``(b) Applicable Amount.--For purposes of subsection (a)--
            ``(1) Dishwashers.--The applicable amount is--
                    ``(A) $45 in the case of a dishwasher which is 
                manufactured in calendar year 2008 or 2009 and which 
                uses no more than 324 kilowatt hours per year and 5.8 
                gallons per cycle, and
                    ``(B) $75 in the case of a dishwasher which is 
                manufactured in calendar year 2008, 2009, or 2010 and 
                which uses no more than 307 kilowatt hours per year and 
                5.0 gallons per cycle (5.5 gallons per cycle for 
                dishwashers designed for greater than 12 place 
                settings).
            ``(2) Clothes washers.--The applicable amount is--
                    ``(A) $75 in the case of a residential top-loading 
                clothes washer manufactured in calendar year 2008 which 
                meets or exceeds a 1.72 modified energy factor and does 
                not exceed a 8.0 water consumption factor,
                    ``(B) $125 in the case of a residential top-loading 
                clothes washer manufactured in calendar year 2008 or 
                2009 which meets or exceeds a 1.8 modified energy 
                factor and does not exceed a 7.5 water consumption 
                factor,
                    ``(C) $150 in the case of a residential or 
                commercial clothes washer manufactured in calendar year 
                2008, 2009 or 2010 which meets or exceeds 2.0 modified 
                energy factor and does not exceed a 6.0 water 
                consumption factor, and
                    ``(D) $250 in the case of a residential or 
                commercial clothes washer manufactured in calendar year 
                2008, 2009, or 2010 which meets or exceeds 2.2 modified 
                energy factor and does not exceed a 4.5 water 
                consumption factor.
            ``(3) Refrigerators.--The applicable amount is--
                    ``(A) $50 in the case of a refrigerator which is 
                manufactured in calendar year 2008, and consumes at 
                least 20 percent but not more than 22.9 percent less 
                kilowatt hours per year than the 2001 energy 
                conservation standards,
                    ``(B) $75 in the case of a refrigerator which is 
                manufactured in calendar year 2008 or 2009, and 
                consumes at least 23 percent but no more than 24.9 
                percent less kilowatt hours per year than the 2001 
                energy conservation standards,
                    ``(C) $100 in the case of a refrigerator which is 
                manufactured in calendar year 2008, 2009 or 2010, and 
                consumes at least 25 percent but not more than 29.9 
                percent less kilowatt hours per year than the 2001 
                energy conservation standards, and
                    ``(D) $200 in the case of a refrigerator 
                manufactured in calendar year 2008, 2009 or 2010 and 
                which consumes at least 30 percent less energy than the 
                2001 energy conservation standards.
            ``(4) Dehumidifiers.--The applicable amount is--
                    ``(A) $15 in the case of a dehumidifier 
                manufactured in calendar year 2008 that has a capacity 
                less than or equal to 45 pints per day and is 7.5 
                percent more efficient than the applicable Department 
                of Energy energy conservation standard effective 
                October 2012, and
                    ``(B) $25 in the case of a dehumidifier 
                manufactured in calendar year 2008 that has a capacity 
                greater than 45 pints per day and is 7.5 percent more 
                efficient than the applicable Department of Energy 
                energy conservation standard effective October 2012.''.
    (b) Eligible Production.--
            (1) Similar treatment for all appliances.--Subsection (c) 
        of section 45M (relating to eligible production) is amended--
                    (A) by striking paragraph (2),
                    (B) by striking ``(1) In general'' and all that 
                follows through ``the eligible'' and inserting ``The 
                eligible'', and
                    (C) by moving the text of such subsection in line 
                with the subsection heading and redesignating 
                subparagraphs (A) and (B) as paragraphs (1) and (2), 
                respectively.
            (2) Modification of base period.--Paragraph (2) of section 
        45M(c), as amended by paragraph (1) of this section, is amended 
        by striking ``3-calendar year'' and inserting ``2-calendar 
        year''.
    (c) Types of Energy Efficient Appliances.--Subsection (d) of 
section 45M (defining types of energy efficient appliances) is amended 
to read as follows:
    ``(d) Types of Energy Efficient Appliance.--For purposes of this 
section, the types of energy efficient appliances are--
            ``(1) dishwashers described in subsection (b)(1),
            ``(2) clothes washers described in subsection (b)(2),
            ``(3) refrigerators described in subsection (b)(3), and
            ``(4) dehumidifiers described in subsection (b)(4).''.
    (d) Aggregate Credit Amount Allowed.--
            (1) Increase in limit.--Paragraph (1) of section 45M(e) 
        (relating to aggregate credit amount allowed) is amended to 
        read as follows:
            ``(1) Aggregate credit amount allowed.--The aggregate 
        amount of credit allowed under subsection (a) with respect to a 
        taxpayer for any taxable year shall not exceed $100,000,000 
        reduced by the amount of the credit allowed under subsection 
        (a) to the taxpayer (or any predecessor) for all prior taxable 
        years beginning after December 31, 2007.''.
            (2) Exception for certain refrigerator and clothes 
        washers.--Paragraph (2) of section 45M(e) is amended to read as 
        follows:
            ``(2) Amount allowed for certain refrigerators and clothes 
        washers.--Refrigerators described in subsection (b)(3)(D) and 
        clothes washers described in subsection (b)(2)(D) shall not be 
        taken into account under paragraph (1).''.
    (e) Qualified Energy Efficient Appliances.--
            (1) In general.--Paragraph (1) of section 45M(f) (defining 
        qualified energy efficient appliance) is amended to read as 
        follows:
            ``(1) Qualified energy efficient appliance.--The term 
        `qualified energy efficient appliance' means--
                    ``(A) any dishwasher described in subsection 
                (b)(1),
                    ``(B) any clothes washer described in subsection 
                (b)(2),
                    ``(C) any refrigerator described in subsection 
                (b)(3), and
                    ``(D) any dehumidifier described in subsection 
                (b)(4).''.
            (2) Clothes washer.--Section 45M(f)(3) (defining clothes 
        washer) is amended by inserting ``commercial'' before 
        ``residential'' the second place it appears.
            (3) Top-loading clothes washer.--Subsection (f) of section 
        45M (relating to definitions) is amended by redesignating 
        paragraphs (4), (5), (6), and (7) as paragraphs (5), (6), (7), 
        and (8), respectively, and by inserting after paragraph (3) the 
        following new paragraph:
            ``(4) Top-loading clothes washer.--The term ``top-loading 
        clothes washer'' means a clothes washer which has the clothes 
        container compartment access located on the top of the machine 
        and which operates on a vertical axis.''.
            (4) Dehumidifier.--Subsection (f) of section 45M, as 
        amended by paragraph (3), is amended by redesignating 
        paragraphs (6), (7), and (8) as paragraphs (7), (8) and (9), 
        respectively, and by inserting after paragraph (5) the 
        following new paragraph:
            ``(6) Dehumidifier.--The term `dehumidifier' means a self-
        contained, electrically operated, and mechanically refrigerated 
        encased assembly consisting of--
                    ``(A) a refrigerated surface that condenses 
                moisture from the atmosphere,
                    ``(B) a refrigerating system, including an electric 
                motor,
                    ``(C) an air-circulating fan, and
                    ``(D) means for collecting or disposing of 
                condensate.''.
            (5) Replacement of energy factor.--Section 45M(f)(7), as 
        amended by paragraph (4), is amended to read as follows:
            ``(7) Modified energy factor.--The term `modified energy 
        factor' means the modified energy factor established by the 
        Department of Energy for compliance with the Federal energy 
        conservation standard.''.
            (6) Gallons per cycle; water consumption factor.--Section 
        45M(f) (relating to definitions) is amended by adding at the 
        end the following:
            ``(10) Gallons per cycle.--The term `gallons per cycle' 
        means, with respect to a dishwasher, the amount of water, 
        expressed in gallons, required to complete a normal cycle of a 
        dishwasher.
            ``(11) Water consumption factor.--The term `water 
        consumption factor' means, with respect to a clothes washer, 
        the quotient of the total weighted per-cycle water consumption 
        divided by the cubic foot (or liter) capacity of the clothes 
        washer.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to appliances produced after December 31, 2007.

SEC. 403. INCREASE AND EXTENSION OF ENERGY EFFICIENT COMMERCIAL 
              BUILDINGS DEDUCTION.

    (a) Increase in Amount of Deduction.--Section 179D (relating to 
energy efficient commercial buildings deduction) is amended--
            (1) in subsection (b)(1)(A) by striking ``$1.80'' and 
        inserting ``$2.25'', and
            (2) in subsection (d)(1)(A) by striking ``$.60 for $1.80'' 
        and inserting ``$.75 for $2.25''.
    (b) Extension.--Subsection (h) of section 179D (relating to 
termination) is amended by striking ``December 31, 2008'' and inserting 
``December 31, 2018''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning after 
December 31, 2006.

              TITLE V--CREDIT FOR OIL SHALE RECOVERY COSTS

SEC. 501. INCENTIVES FOR EXTRACTION AND PROCESSING OF OIL SHALE.

    (a) Investment Tax Credit for Extraction and Processing of Oil 
Shale Using In-Situ Conversion Technology.--
            (1) In general.--Subpart E of part IV of subchapter A of 
        chapter 1 is amended by inserting after section 48C the 
        following new section:

``SEC. 48D. OIL SHALE EXTRACTION AND PROCESSING FACILITY.

    ``(a) General Rule.--For purposes of section 46, the oil shale 
extraction and processing credit for any taxable year is 30 percent of 
the cost of any qualified oil shale extraction and processing property.
    ``(b) Qualified Oil Shale Extraction and Processing Property.--The 
term `qualified oil shale extraction and processing property' means 
property of a character subject to the allowance for depreciation--
            ``(1) which is used in the United States solely to extract 
        and process oil shale using in-situ conversion technology,
            ``(2) the original use of which commences with the taxpayer 
        after the date of the enactment of this section,
            ``(3) which is acquired by the taxpayer by purchase (as 
        defined in section 179(d)) after the date of the enactment of 
        this subsection, but only if no written binding contract for 
        the acquisition was in effect on or before the date of the 
        enactment of this subsection, and
            ``(4) which is placed in service by the taxpayer before 
        January 1, 2019.
    ``(c) Special Rule for Certain Subsidized Property.--For purposes 
of this section, rules similar to the rules of section 48(a)(4) shall 
apply.
    ``(d) Denial of Double Benefit.--A deduction or credit shall not be 
allowed under any other provision of this chapter for the cost taken 
into account under subsection (a).''.
            (2) Credit treated as part of investment credit.--Section 
        46 is amended by striking ``and'' at the end of paragraph (4), 
        by striking the period at the end of paragraph (5) and 
        inserting ``, and'', and by adding at the end the following new 
        paragraph:
            ``(6) the oil shale extraction and processing credit.''.
            (3) Conforming amendments.--
                    (A) Section 49(a)(1)(C) is amended by striking 
                ``and'' at the end of clause (iv), by striking the 
                period at the end of clause (v) and inserting ``, 
                and'', and by adding at the end the following new 
                clause:
                            ``(vi) the basis of any qualified oil shale 
                        extraction and processing property.''.
                    (B) The table of sections for subpart E of part IV 
                of subchapter A of chapter 1 is amended by inserting 
                after the item relating to section 48C the following 
                new item:

``Sec. 48D. Oil shale extraction and processing facility.''.
    (b) Expensing Oil Shale Extraction and Processing Property.--Part 
VI of subchapter B of chapter 1 of is amended by inserting after 
section 179F the following new section:

``SEC. 179G. ELECTION TO EXPENSE CERTAIN OIL SHALE EXTRACTION AND 
              PROCESSING PROPERTY.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
cost of any qualified oil shale extraction and processing 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 expense is incurred.
    ``(b) Election.--
            ``(1) In general.--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.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Oil Shale Extraction and Processing Property.--For 
purposes of this section--
            ``(1) The term `qualified oil shale extraction and 
        processing property' means any property located in the United 
        States--
                    ``(A) the original use of which commences with the 
                taxpayer and which original use is solely to extract or 
                process oil shale, and
                    ``(B) which is placed in service by the taxpayer 
                after the date of the enactment of this section and 
                before January 1, 2019.
    ``(d) Election To Allocate Deduction to Cooperative Owner.--If--
            ``(1) a taxpayer to which subsection (a) applies is an 
        organization to which part I of subchapter T applies, and
            ``(2) one or more persons directly holding an ownership 
        interest in the taxpayer are organizations to which part I of 
        subchapter T apply,
the taxpayer may elect to allocate all or a portion of the deduction 
allowable under subsection (a) to such persons. Such allocation shall 
be equal to the person's ratable share of the total amount allocated, 
determined on the basis of the person's ownership interest in the 
taxpayer. The taxable income of the taxpayer shall not be reduced under 
section 1382 by reason of any amount to which the preceding sentence 
applies.
    ``(e) Basis Reduction.--
            ``(1) In general.--For purposes of this title, if a 
        deduction is allowed under this section with respect to any 
        qualified oil shale extraction and processing property, the 
        basis of such property shall be reduced by the amount of the 
        deduction so allowed.
            ``(2) Ordinary income recapture.--For purposes of section 
        1245, the amount of the deduction allowable under subsection 
        (a) with respect to any property which is of a character 
        subject to the allowance for depreciation shall be treated as a 
        deduction allowed for depreciation under section 167.
    ``(f) Application With Other Deductions and Credits.--
            ``(1) Other deductions.--No deduction shall be allowed 
        under any other provision of this chapter with respect to any 
        expenditure with respect to which a deduction is allowed under 
        subsection (a) to the taxpayer.
            ``(2) Credits.--No credit shall be allowed under section 38 
        with respect to any amount for which a deduction is allowed 
        under subsection (a).
    ``(g) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless such taxpayer files 
with the Secretary a report containing such information with respect to 
the operation of the property of the taxpayer as the Secretary shall 
require.''.
    (c) Conforming Amendments.--
            (1) Section 1016(a) 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 179F(e)(1).''.
            (2) Section 1245(a) is amended by inserting ``179F,'' after 
        ``179E,'' both places it appears in paragraphs (2)(C) and 
        (3)(C).
            (3) Section 263(a)(1) 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.''.
            (4) Section 312(k)(3)(B) is amended by striking ``or 179E'' 
        each place it appears in the heading and text and inserting 
        ``179E, or 179F''.
            (5) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179F the following new item:

``Sec. 179F. Election to expense certain oil shale extraction and 
                            processing property.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to properties placed in service after the date of the enactment 
of this Act.

   TITLE VI--PROVISIONS RELATING TO ADVANCED COAL AND NUCLEAR ENERGY

SEC. 601. ALTERNATIVE METHOD FOR SATISFYING CERTAIN REQUIREMENTS 
              RELATING TO PRODUCTION OF REFINED COAL.

    (a) In General.--Subparagraph (A) of section 45(c)(7) is amended by 
inserting ``and'' at the end of clause (ii) and by amending clause 
(iii) to read as follows:
                            ``(iii)(I) is certified by the taxpayer as 
                        resulting (when used in the production of 
                        steam) in a qualified emission reduction and is 
                        produced in such a manner as to result in an 
                        increase of at least 50 percent in the market 
                        value of the refined coal (excluding any 
                        increase caused by materials combined or added 
                        during the production process), as compared to 
                        the value of feedstock coal, or
                            ``(II) is certified by the taxpayer as 
                        resulting (when used in the production of 
                        steam) in a double emission reduction.''.
    (b) Double Emission Reduction.--Paragraph (7) of section 45(c) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Double emission reduction.--The term `double 
                emission reduction' means an aggregate reduction 
                totaling at least 80 percent of the sum of the 
                individual emission reductions of nitrogen oxide, 
                sulfur dioxide and mercury released when burning the 
                refined coal (excluding any dilution caused by 
                materials combined or added during the production 
                process), as compared to the emissions released when 
                burning the feedstock coal or comparable coal 
                predominantly available in the marketplace as of 
                January 1, 2003.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to facilities placed in service after June 11, 2007.

SEC. 602. ADVANCED NUCLEAR POWER PRODUCTION.

    (a) Increase in Rate.--Section 45J(a)(1) is amended by striking 
``1.8 cents'' and inserting ``2.25 cents''.
    (b) Increase in National Limitation.--Section 45J(b)(2) is amended 
by striking ``6,000 megawatts'' and inserting ``12,000 megawatts''.
    (c) Increase in Annual Limitation.--Section 45J(c)(1) is amended by 
striking ``$125,000,000'' and inserting ``$160,000,000''.
    (d) Extension of Placed in Service Date.--Section 45J(d)(1)(B) is 
amended by striking ``January 1, 2021'' and inserting ``January 1, 
2041''.
    (e) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.

                 TITLE VII--COAL TO LIQUIDS TECHNOLOGY

SEC. 701. CREDIT FOR INVESTMENT IN COAL-TO-LIQUID FUELS PROJECTS.

    (a) In General.--Section 46 (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 qualifying coal-to-liquid fuels project 
        credit.''.
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 (relating to rules for computing investment credit) is 
amended by inserting after section 48D the following new section:

``SEC. 48E. QUALIFYING COAL-TO-LIQUID FUELS PROJECT CREDIT.

    ``(a) In General.--For purposes of section 46, the qualifying coal-
to-liquid fuels project 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 
        property placed in service by the taxpayer during such taxable 
        year which is part of a qualifying coal-to-liquid fuels 
        project--
                    ``(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) Applicable rules.--For purposes of this section, 
        rules similar to the rules of subsection (a)(4) and (b) of 
        section 48 shall apply.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualifying coal-to-liquid fuels project.--The term 
        `qualifying coal-to-liquid fuels project' means any domestic 
        project which--
                    ``(A) employs the class of reactions known as 
                Fischer-Tropsch to produce at least 10,000 barrels per 
                day of transportation grade liquid fuels from a 
                feedstock that is primarily domestic coal (including 
                any property which allows for the capture, 
                transportation, or sequestration of by-products 
                resulting from such process, including carbon 
                emissions), and
                    ``(B) any portion of the qualified investment in 
                which is certified under the qualifying coal-to-liquid 
                program as eligible for credit under this section in an 
                amount (not to exceed $200,000,000) determined by the 
                Secretary.
            ``(2) Coal.--The term `coal' means any carbonized or 
        semicarbonized matter, including peat.
    ``(d) Qualifying Coal-to-Liquid Fuels Project Program.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of Energy, shall establish a qualifying coal-to-
        liquid fuels project program to consider and award 
        certifications for qualified investment eligible for credits 
        under this section to 10 qualifying coal-to-liquid fuels 
        project sponsors under this section. The total qualified 
        investment which may be awarded eligibility for credit under 
        the program shall not exceed $2,000,000,000.
            ``(2) Period of issuance.--A certificate of eligibility 
        under paragraph (1) may be issued only during the 10-fiscal 
        year period beginning on October 1, 2007.
            ``(3) Selection criteria.--The Secretary shall not make a 
        competitive certification award for qualified investment for 
        credit eligibility under this section unless the recipient has 
        documented to the satisfaction of the Secretary that--
                    ``(A) the proposal of the award recipient is 
                financially viable,
                    ``(B) the recipient will provide sufficient 
                information to the Secretary for the Secretary to 
                ensure that the qualified investment is spent 
                efficiently and effectively,
                    ``(C) the fuels identified with respect to the 
                gasification technology for such project will comprise 
                at least 90 percent of the fuels required by the 
                project for the production of transportation grade 
                liquid fuels,
                    ``(D) the award recipient's project team is 
                competent in the planning and construction of coal 
                gasification facilities and familiar with operation of 
                the Fischer-Tropsch process, with preference given to 
                those recipients with experience which demonstrates 
                successful and reliable operations of such process, and
                    ``(E) the award recipient has met other criteria 
                established and published by the Secretary.
    ``(e) Denial of Double Benefit.--No deduction or other credit shall 
be allowed with respect to the basis of any property taken into account 
in determining the credit allowed under this section.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C) is amended by striking ``and'' at 
        the end of clause (v), by striking the period at the end of 
        clause (vi) and inserting ``, and'', and by adding after clause 
        (vi) the following new clause:
                            ``(vii) the basis of any property which is 
                        part of a qualifying coal-to-liquid fuels 
                        project under section 48E.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1 is amended by inserting after the 
        item relating to section 48D the following new item:

``Sec. 48E. Qualifying coal-to-liquid fuels project 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).

SEC. 702. TEMPORARY EXPENSING FOR EQUIPMENT USED IN COAL-TO-LIQUID 
              FUELS PROCESS.

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

``SEC. 179G. ELECTION TO EXPENSE CERTAIN COAL-TO-LIQUID FUELS 
              FACILITIES.

    ``(a) Treatment as Expenses.--A taxpayer may elect to treat the 
cost of any qualified coal-to-liquid fuels process 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 
expense is incurred.
    ``(b) Election.--
            ``(1) In general.--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.
            ``(2) Election irrevocable.--Any election made under this 
        section may not be revoked except with the consent of the 
        Secretary.
    ``(c) Qualified Coal-to-Liquid Fuels Process Property.--The term 
`qualified coal-to-liquid fuels process property' means any property 
located in the United States--
            ``(1) which employs the Fischer-Tropsch process to produce 
        transportation grade liquid fuels from a feedstock that is 
        primarily domestic coal (including any property which allows 
        for the capture, transportation, or sequestration of by-
        products resulting from such process, including carbon 
        emissions),
            ``(2) the original use of which commences with the 
        taxpayer,
            ``(3) the construction of which--
                    ``(A) except as provided in subparagraph (B), is 
                subject to a binding construction contract entered into 
                after the date of the enactment of this section and 
                before January 1, 2011, but only if there was no 
                written binding construction contract entered into on 
                or before such date of enactment, or
                    ``(B) in the case of self-constructed property, 
                began after the date of the enactment of this section 
                and before January 1, 2011, and
            ``(4) which is placed in service by the taxpayer after the 
        date of the enactment of this section and before January 1, 
        2016.
    ``(d) Election To Allocate Deduction to Cooperative Owner.--If--
            ``(1) a taxpayer to which subsection (a) applies is an 
        organization to which part I of subchapter T applies, and
            ``(2) one or more persons directly holding an ownership 
        interest in the taxpayer are organizations to which part I of 
        subchapter T apply,
the taxpayer may elect to allocate all or a portion of the deduction 
allowable under subsection (a) to such persons. Such allocation shall 
be equal to the person's ratable share of the total amount allocated, 
determined on the basis of the person's ownership interest in the 
taxpayer. The taxable income of the taxpayer shall not be reduced under 
section 1382 by reason of any amount to which the preceding sentence 
applies.
    ``(e) Basis Reduction.--
            ``(1) In general.--For purposes of this title, if a 
        deduction is allowed under this section with respect to any 
        qualified coal-to-liquid fuels process property, the basis of 
        such property shall be reduced by the amount of the deduction 
        so allowed.
            ``(2) Ordinary income recapture.--For purposes of section 
        1245, the amount of the deduction allowable under subsection 
        (a) with respect to any property which is of a character 
        subject to the allowance for depreciation shall be treated as a 
        deduction allowed for depreciation under section 167.
    ``(f) Application With Other Deductions and Credits.--
            ``(1) Other deductions.--No deduction shall be allowed 
        under any other provision of this chapter with respect to any 
        expenditure with respect to which a deduction is allowed under 
        subsection (a) to the taxpayer.
            ``(2) Credits.--No credit shall be allowed under section 38 
        with respect to any amount for which a deduction is allowed 
        under subsection (a).
    ``(g) Reporting.--No deduction shall be allowed under subsection 
(a) to any taxpayer for any taxable year unless such taxpayer files 
with the Secretary a report containing such information with respect to 
the operation of the property of the taxpayer as the Secretary shall 
require.''.
    (b) Conforming Amendments.--
            (1) Section 1016(a) 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 179G(e)(1).''.
            (2) Section 1245(a) is amended by inserting ``179G,'' after 
        ``179F,'' both places it appears in paragraphs (2)(C) and 
        (3)(C).
            (3) Section 263(a)(1) is amended by striking ``or'' at the 
        end of subparagraph (L), by striking the period at the end of 
        subparagraph (M) and inserting ``, or'', and by inserting after 
        subparagraph (M) the following new subparagraph:
                    ``(N) expenditures for which a deduction is allowed 
                under section 179G.''.
            (4) Section 312(k)(3)(B) is amended by striking ``or 179G'' 
        each place it appears in the heading and text and inserting 
        ``179F, or 179G''.
            (5) The table of sections for part VI of subchapter B of 
        chapter 1 is amended by inserting after the item relating to 
        section 179F the following new item:

``Sec. 179G. Election to expense certain coal-to-liquid fuels 
                            facilities.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to properties placed in service after the date of the enactment 
of this Act.

SEC. 703. EXTENSION OF ALTERNATIVE FUEL CREDIT FOR FUEL DERIVED FROM 
              COAL THROUGH THE FISCHER-TROPSCH PROCESS.

    (a) Alternative Fuel Credit.--Paragraph (4) of section 6426(d) is 
amended to read as follows:
            ``(4) Termination.--This subsection shall not apply to--
                    ``(A) any sale or use involving liquid fuel derived 
                from a feedstock that is primarily domestic coal 
                (including peat) through the Fischer-Tropsch process 
                for any period after September 30, 2020,
                    ``(B) any sale or use involving liquified hydrogen 
                for any period after September 30, 2014, and
                    ``(C) any other sale or use for any period after 
                September 30, 2009.''.
    (b) Payments.--
            (1) In general.--Paragraph (5) of section 6427(e) is 
        amended by striking ``and'' and the end of subparagraph (C), by 
        striking the period at the end of subparagraph (D) and 
        inserting ``, and'', and by adding at the end the following new 
        subparagraph:
                    ``(E) any alternative fuel or alternative fuel 
                mixture (as so defined) involving liquid fuel derived 
                from coal (including peat) through the Fischer-Tropsch 
                process sold or used after September 30, 2020.''.
            (2) Conforming amendment.--Section 6427(e)(5)(C) is amended 
        by striking ``subparagraph (D)'' and inserting ``subparagraphs 
        (D) and (E)''.

SEC. 704. MODIFICATIONS TO ENHANCED OIL RECOVERY CREDIT.

    (a) Enhanced Credit for Carbon Dioxide Injections.--Section 43 is 
amended by adding at the end the following new subsection:
    ``(f) Enhanced Credit for Projects Using Qualified Carbon 
Dioxide.--
            ``(1) In general.--For purposes of this section--
                    ``(A) the term `qualified project' includes a 
                project described in paragraph (2), and
                    ``(B) in the case of a project described in 
                paragraph (2), subsection (a) shall be applied by 
                substituting `50 percent' for `15 percent'.
            ``(2) Projects described.--A project is described in this 
        paragraph if it begins or is substantially expanded after 
        December 31, 2007, and
                    ``(A) uses qualified carbon dioxide in an enhanced 
                oil, natural gas, or coalbed methane recovery method, 
                which involves flooding or injection, or
                    ``(B) enables the capture or sequestration of 
                qualified carbon dioxide.
            ``(3) Definitions.--For purposes of this subsection--
                    ``(A) Enhanced oil recovery.--The term `enhanced 
                oil recovery' means recovery of oil by injecting or 
                flooding with qualified carbon dioxide.
                    ``(B) Enhanced natural gas recovery.--The term 
                `enhanced natural gas recovery' means recovery of 
                natural gas by injecting or flooding with qualified 
                carbon dioxide.
                    ``(C) Enhanced coalbed methane recovery.--The term 
                `enhanced coalbed methane recovery' means recovery of 
                coalbed methane by injecting or flooding with qualified 
                carbon dioxide.
                    ``(D) Qualified carbon dioxide.--The term 
                `qualified carbon dioxide' means carbon dioxide which 
                is produced from the gasification and subsequent 
                refinement of a feedstock which is primarily domestic 
                coal, at a facility which produces coal-to-liquid fuel.
                    ``(E) Capture or sequestration.--The term `capture 
                or sequestration' means any equipment or facility 
                necessary to--
                            ``(i) capture or separate qualified carbon 
                        dioxide from other emissions,
                            ``(ii) transport qualified carbon dioxide, 
                        or
                            ``(iii) process and use qualified carbon 
                        dioxide in a qualified project.
            ``(4) Termination.--This subsection shall not apply to 
        costs paid or incurred for any qualified project after December 
        31, 2020.''.
    (b) Conforming Amendments.--
            (1) Section 43 is amended--
                    (A) by striking ``enhanced oil recovery credit'' in 
                subsection (a) and inserting ``enhanced oil, natural 
                gas, and coalbed methane recovery, and capture and 
                sequestration credit'',
                    (B) by striking ``qualified enhanced oil recovery 
                costs'' each place it appears and inserting ``qualified 
                costs'',
                    (C) by striking ``qualified enhanced oil recovery 
                project'' each place it appears and inserting 
                ``qualified project'', and
                    (D) by striking the heading and inserting:

``SEC. 43. ENHANCED OIL, NATURAL GAS, AND COALBED METHANE RECOVERY, AND 
              CAPTURE AND SEQUESTRATION CREDIT.''.

            (2) The item in the table of sections for subpart D of part 
        IV of subchapter A of chapter 1 relating to section 43 is 
        amended to read as follows:

``Sec. 43. Enhanced oil, natural gas, and coalbed methane recovery, and 
                            capture and sequestration credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to costs paid or incurred in taxable years ending after December 
31, 2007.

SEC. 705. ALLOWANCE OF ENHANCED OIL, NATURAL GAS, AND COALBED METHANE 
              RECOVERY, AND CAPTURE AND SEQUESTRATION CREDIT AGAINST 
              THE ALTERNATIVE MINIMUM TAX.

    (a) In General.--Subsection (c) of section 38 (relating to 
limitation based on amount of tax) is amended by redesignating 
paragraphs (4) and (5) as paragraphs (5) and (6), respectively, and by 
inserting after paragraph (3) the following new paragraph:
            ``(4) Special rules for enhanced oil, natural gas, and 
        coalbed methane recovery, and capture and sequestration 
        credit.--In the case of the enhanced oil, natural gas, and 
        coalbed methane recovery, and capture and sequestration credit 
        determined under section 43--
                    ``(A) this section and section 39 shall be applied 
                separately with respect to such credit, and
                    ``(B) in applying paragraph (1) to such credit--
                            ``(i) the tentative minimum tax shall be 
                        treated as being zero, and
                            ``(ii) the limitation under paragraph (1) 
                        (as modified by clause (i)) shall be reduced by 
                        the credit allowed under subsection (a) for the 
                        taxable year (other than the enhanced oil, 
                        natural gas, and coalbed methane recovery, and 
                        capture and sequestration credit and the 
                        specified credits).''.
    (b) Conforming Amendments.--
            (1) Section 38(c)(2)(A)(ii)(II) is amended by inserting 
        ``the enhanced oil, natural gas, and coalbed methane recovery, 
        and capture and sequestration credit,'' after ``employee 
        credit,''.
            (2) Section 38(c)(3)(A)(ii)(II) is amended by inserting ``, 
        the enhanced oil, natural gas, coalbed methane recovery, 
        capture and sequestration credit,'' after ``employee credit''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2007.
                                 <all>