[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 1531 Introduced in Senate (IS)]







110th CONGRESS
  1st Session
                                S. 1531

 To amend the Internal Revenue Code of 1986 to provide incentives and 
  extend existing incentives for the production and use of renewable 
               energy resources, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 25, 2007

  Mr. Reid (for himself, Mr. Allard, and Mr. Salazar) introduced the 
 following bill; which was read twice and referred to the Committee on 
                                Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide incentives and 
  extend existing incentives for the production and use of renewable 
               energy resources, 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; REFERENCES, TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Clean Renewable 
Energy and Economic Development Incentives Act of 2007''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this title an amendment or repeal is expressed in 
terms of an amendment to, or repeal of, a section or other provision, 
the reference shall be considered to be made to a section or other 
provision of the Internal Revenue Code of 1986.
    (c) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; references, table of contents.
    TITLE I--TAX INCENTIVES FOR ENERGY CONSERVATION AND EXPLORATION

Sec. 101. Extension of renewable electricity production credit.
Sec. 102. Extension and modification of clean renewable energy bond 
                            credit.
Sec. 103. Water conservation, reuse and efficiency bonds.
Sec. 104. Credit for geothermal exploration expenditures.
Sec. 105. Credit for wind energy systems.
Sec. 106. Extension and modification of new energy efficient home 
                            credit.
Sec. 107. Investment tax credit for advanced battery production.
Sec. 108. Qualified renewable school energy bonds.
Sec. 109. Treatment of bonds issued to finance renewable energy 
                            resource facilities.
 TITLE II--INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR ENERGY PROPERTY 
                           AND MANUFACTURING

                   Subtitle A--Solar Energy Property

Sec. 201. Energy credit with respect to solar energy property.
Sec. 202. Repeal of exclusion for solar and geothermal public utility 
                            property under energy credit.
Sec. 203. Permanent extension and modification of credit for 
                            residential energy efficient property.
Sec. 204. 3-year accelerated depreciation period for solar energy 
                            property.
   Subtitle B--Promotion of Solar Manufacturing in the United States

Sec. 211. Solar manufacturing credit.

    TITLE I--TAX INCENTIVES FOR ENERGY CONSERVATION AND EXPLORATION

SEC. 101. EXTENSION OF RENEWABLE ELECTRICITY PRODUCTION CREDIT.

    (a) In General.--Paragraphs (1), (2), (3), (4), (5), (6), (7), and 
(9) of section 45(d) (relating to qualified facilities) are amended by 
striking ``January 1, 2009'' each place it appears and inserting 
``January 1, 2019''.
    (b) Deemed Placed-In-Service Date for Renewable Electricity 
Facilities.--Section 45(e) (relating to definitions and special rules) 
is amended by adding at the end the following new paragraph:
            ``(12) Deemed placed-in-service date for certain 
        facilities.--
                    ``(A) In general.--In the case of any facility 
                described in paragraph (1), (2), (3), (4) (respect to 
                geothermal energy), (5), (6), (7), or (9), for purposes 
                of such paragraph, such facility shall be treated as 
                being placed in service before January 1, 2019, if such 
                facility is under construction before such date and is 
                producing and selling electricity within 2 years after 
                such date.
                    ``(B) Period of credit.--If a facility is treated 
                as placed in service pursuant to subparagraph (A), the 
                10-year period referred to in subsection (a) shall be 
                treated as beginning on January 1, 2019.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date of the enactment of this Act.

SEC. 102. EXTENSION AND MODIFICATION OF CLEAN RENEWABLE ENERGY BOND 
              CREDIT.

    (a) Extension.--Subsection 54(m) (relating to termination) is 
amended by striking ``2008'' and inserting ``2018''.
    (b) Annual Volume Cap for Bonds Issued During Extension Period.--
Paragraph (1) of subsection 54(f) (relating to national limitation) is 
amended to read as follows:
            ``National limitation.--
                    ``(A) Initial national limitation.--With respect to 
                bonds issued after December 31, 2005, and before 
                January 1, 2009, there is a national clean renewable 
                energy bond limitation of $1,200,000,000.
                    ``(B) Annual national limitation.--With respect to 
                bonds issued after December 31, 2008, and before 
                January 1, 2019, there is a national clean renewable 
                energy bond limitation for each calendar year of 
                $1,000,000,000.''.
    (c) Allocation by Secretary.--Paragraph (2) of subsection 54(f) 
(relating to allocation by Secretary) is amended by striking ``, except 
that the Secretary'' and inserting ``, except that, in the case of 
bonds issued under paragraph (1)(A), the Secretary''.
    (d) Publicity Regarding Allocation of Clean Renewable Energy 
Bonds.--
            (1) In general.--Section 54 is amended by redesignating 
        subsection (m) as subsection (n) and by inserting after 
        subsection (l) the following new subsection:
    ``(m) Publicity Regarding Allocation of Clean Renewable Energy 
Bonds.--The Secretary shall prepare a report not later than 1 year 
after each allocation under subsection (f) to Congress, and make such 
report publicly available, which with respect to such allocation 
identifies the name of each applicant for such allocation, the name of 
the borrower (if other than the applicant), the type and location of 
the project that is the subject of such application, and the amount of 
the allocation under subsection (f) for such project in the event the 
project receives such an allocation.''.
            (2) Effective date.--The amendments made by this subsection 
        shall apply to applications for allocations made after the date 
        of the enactment of this Act.
    (e) Effective Date.--Except as otherwise provided, the amendments 
made by this section shall apply to bonds issued after December 31, 
2007.

SEC. 103. WATER CONSERVATION, REUSE AND EFFICIENCY BONDS.

    (a) In General.--Subpart H of part IV of subchapter A of chapter 1 
(relating to credits against tax) is amended by adding at the end the 
following new section:

``SEC. 54A. CREDIT TO HOLDERS OF WATER CONSERVATION, REUSE AND 
              EFFICIENCY BONDS.

    ``(a) Allowance of Credit.--If a taxpayer holds a water 
conservation, reuse and efficiency bond on 1 or more credit allowance 
dates of the bond occurring during any taxable year, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the sum of the credits determined under 
subsection (b) with respect to such dates.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a water conservation, reuse and efficiency bond is 25 
        percent of the annual credit determined with respect to such 
        bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any water conservation, reuse and efficiency bond is 
        the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any water conservation, reuse and efficiency bond, 
        the Secretary shall determine daily or cause to be determined 
        daily a credit rate which shall apply to the first day on which 
        there is a binding, written contract for the sale or exchange 
        of the bond. The credit rate for any day is the credit rate 
        which the Secretary or the Secretary's designee estimates will 
        permit the issuance of water conservation, reuse and efficiency 
        bonds with a specified maturity or redemption date without 
        discount and without interest cost to the qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is 
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed or matures.
    ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over,
            ``(2) the sum of the credits allowable under this part 
        (other than subpart C, section 1400N(l), and this section).
    ``(d) Water Conservation, Reuse and Efficiency Bond.--For purposes 
of this section--
            ``(1) In general.--The term `water conservation, reuse and 
        efficiency bond' means any bond issued as part of an issue if--
                    ``(A) the bond is issued by a qualified issuer 
                pursuant to an allocation by the Secretary to such 
                issuer of a portion of the national water conservation, 
                reuse and efficiency bond limitation under subsection 
                (f)(2),
                    ``(B) 95 percent or more of the proceeds of such 
                issue are to be used for capital expenditures incurred 
                by qualified borrowers for 1 or more qualified 
                projects,
                    ``(C) the qualified issuer designates such bond for 
                purposes of this section and the bond is in registered 
                form, and
                    ``(D) the issue meets the requirements of 
                subsection (h).
            ``(2) Qualified project; special use rules.--
                    ``(A) In general.--The term `qualified project' 
                means any rural water supply project (as defined in 
                section 102(9) of the Rural Water Supply Act of 2006), 
                owned by a qualified borrower, and which may include 
                preparation and implementation of water conservation 
                plans, development and deployment of water efficient 
                products and processes, and xeriscaping projects 
                consistent with that section.
                    ``(B) Refinancing rules.--For purposes of paragraph 
                (1)(B), a qualified project may be refinanced with 
                proceeds of a water conservation, reuse and efficiency 
                bond only if the indebtedness being refinanced 
                (including any obligation directly or indirectly 
                refinanced by such indebtedness) was originally 
                incurred by a qualified borrower after the date of the 
                enactment of this section.
                    ``(C) Reimbursement.--For purposes of paragraph 
                (1)(B), a water conservation, reuse and efficiency bond 
                may be issued to reimburse a qualified borrower for 
                amounts paid after the date of the enactment of this 
                section with respect to a qualified project, but only 
                if--
                            ``(i) prior to the payment of the original 
                        expenditure, the qualified borrower declared 
                        its intent to reimburse such expenditure with 
                        the proceeds of a water conservation, reuse and 
                        efficiency bond,
                            ``(ii) not later than 60 days after payment 
                        of the original expenditure, the qualified 
                        issuer adopts an official intent to reimburse 
                        the original expenditure with such proceeds, 
                        and
                            ``(iii) the reimbursement is made not later 
                        than 18 months after the date the original 
                        expenditure is paid.
                    ``(D) Treatment of changes in use.--For purposes of 
                paragraph (1)(B), the proceeds of an issue shall not be 
                treated as used for a qualified project to the extent 
                that a qualified borrower or qualified issuer takes any 
                action within its control which causes such proceeds 
                not to be used for a qualified project. The Secretary 
                shall prescribe regulations specifying remedial actions 
                that may be taken (including conditions to taking such 
                remedial actions) to prevent an action described in the 
                preceding sentence from causing a bond to fail to be a 
                water conservation, reuse and efficiency bond.
    ``(e) Maturity Limitations.--
            ``(1) Duration of term.--A bond shall not be treated as a 
        water conservation, reuse and efficiency bond if the maturity 
        of such bond exceeds the maximum term determined by the 
        Secretary under paragraph (2) with respect to such bond.
            ``(2) Maximum term.--During each calendar month, the 
        Secretary shall determine the maximum term permitted under this 
        paragraph for bonds issued during the following calendar month. 
        Such maximum term shall be the term which the Secretary 
        estimates will result in the present value of the obligation to 
        repay the principal on the bond being equal to 50 percent of 
        the face amount of such bond. Such present value shall be 
        determined without regard to the requirements of subsection 
        (l)(6) and using as a discount rate the average annual interest 
        rate of tax-exempt obligations having a term of 10 years or 
        more which are issued during the month. If the term as so 
        determined is not a multiple of a whole year, such term shall 
        be rounded to the next highest whole year.
    ``(f) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national water 
        conservation, reuse and efficiency bond limitation of 
        $500,000,000 for each of the 10 calendar years beginning after 
        the date of enactment of this section.
            ``(2) Allocation by secretary.--The Secretary shall 
        allocate the amount described in paragraph (1) among qualified 
        projects in such manner as the Secretary determines 
        appropriate, except that the Secretary shall allocate the bond 
        limitation for the financing of qualified projects in as 
        geographically diverse a manner as practicable.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)), and the amount so 
included shall be treated as interest income.
    ``(h) Special Rules Relating to Expenditures.--
            ``(1) In general.--An issue shall be treated as meeting the 
        requirements of this subsection if, as of the date of issuance, 
        the qualified issuer reasonably expects--
                    ``(A) at least 95 percent of the proceeds of such 
                issue are to be spent for 1 or more qualified projects 
                within the 5-year period beginning on the date of 
                issuance of the water conservation, reuse and 
                efficiency bond,
                    ``(B) a binding commitment with a 3rd party to 
                spend at least 10 percent of the proceeds of such issue 
                will be incurred within the 6-month period beginning on 
                the date of issuance of the water conservation, reuse 
                and efficiency bond or, in the case of a water 
                conservation, reuse and efficiency bond the proceeds of 
                which are to be loaned to 2 or more qualified 
                borrowers, such binding commitment will be incurred 
                within the 6-month period beginning on the date of the 
                loan of such proceeds to a qualified borrower, and
                    ``(C) such projects will be completed with due 
                diligence and the proceeds of such issue will be spent 
                with due diligence.
            ``(2) Extension of period.--Upon submission of a request 
        prior to the expiration of the period described in paragraph 
        (1)(A), the Secretary may extend such period if the qualified 
        issuer establishes that the failure to satisfy the 5-year 
        requirement is due to reasonable cause and the related projects 
        will continue to proceed with due diligence.
            ``(3) Failure to spend required amount of bond proceeds 
        within 5 years.--To the extent that less than 95 percent of the 
        proceeds of such issue are expended by the close of the 5-year 
        period beginning on the date of issuance (or if an extension 
        has been obtained under paragraph (2), by the close of the 
        extended period), the qualified issuer shall redeem all of the 
        nonqualified bonds within 90 days after the end of such period. 
        For purposes of this paragraph, the amount of the nonqualified 
        bonds required to be redeemed shall be determined in the same 
        manner as under section 142.
    ``(i) Special Rules Relating to Arbitrage.--A bond which is part of 
an issue shall not be treated as a water conservation, reuse and 
efficiency bond unless, with respect to the issue of which the bond is 
a part, the qualified issuer satisfies the arbitrage requirements of 
section 148 with respect to proceeds of the issue.
    ``(j) Municipal Water District; Qualified Water Systems Tax Credit 
Bond Lender; Governmental Body; Qualified Borrower.--For purposes of 
this section--
            ``(1) Municipal water district.--The term `municipal water 
        district' shall mean a non-profit private or public entity 
        operated for the purpose of implementing rural water supply 
        projects (as defined in section 102(9) of the Rural Water 
        Supply Act of 2006).
            ``(2) Qualified water systems bond lender.--The term 
        `qualified water systems bond lender' means a lender which is a 
        municipal water district or a public water system which is 
        owned by a governmental body, and shall include any affiliated 
        entity which is controlled by such lender.
            ``(3) Governmental body.--The term `governmental body' 
        means any State, territory, or possession of the United States, 
        the District of Columbia, Indian tribal government, and any 
        political subdivision thereof.
            ``(4) Qualified issuer.--The term `qualified issuer' 
        means--
                    ``(A) a qualified water systems bond lender,
                    ``(B) a municipal water district, or
                    ``(C) a governmental body.
            ``(5) Qualified borrower.--The term `qualified borrower' 
        means--
                    ``(A) a municipal water district, or
                    ``(B) a governmental body.
    ``(k) Special Rules Relating to Pool Bonds.--No portion of a pooled 
financing bond may be allocable to any loan unless the borrower has 
entered into a written loan commitment for such portion prior to the 
issue date of such issue.
    ``(l) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Pooled financing bond.--The term `pooled financing 
        bond' shall have the meaning given such term by section 
        149(f)(4)(A).
            ``(3) Partnership; s corporation; and other pass-thru 
        entities.--
                    ``(A) In general.--Under regulations prescribed by 
                the Secretary, in the case of a partnership, trusts 
                corporation, or other pass-thru entity, rules similar 
                to the rules of section 41(g) shall apply with respect 
                to the credit allowable under subsection (a).
                    ``(B) No basis adjustment.--In the case of a bond 
                held by a partnership or and corporation, rules similar 
                to the rules under section 1397E(i) shall apply.
            ``(4) Bonds held by regulated investment companies.--If any 
        water conservation, reuse and efficiency bond is held by a 
        regulated investment company, the credit determined under 
        subsection (a) shall be allowed to shareholders of such company 
        under procedures prescribed by the Secretary.
            ``(5) Ratable principal amortization required.--A bond 
        shall not be treated as a water conservation, reuse and 
        efficiency bond unless it is part of an issue which provides 
        for an equal amount of principal to be paid by the qualified 
        issuer during each calendar year that the issue is outstanding.
            ``(6) Reporting.--Issuers of water conservation, reuse and 
        efficiency bonds shall submit reports similar to the reports 
        required under section 149(e).
    ``(m) Termination.--This section shall not apply with respect to 
any bond issued after the tenth calendar year beginning after the date 
of the enactment of this section.''.
    (b) Reporting.--Subsection (d) of section 6049 (relating to returns 
regarding payments of interest) is amended by adding at the end the 
following new paragraph:
            ``(9) Reporting of credit on water conservation, reuse and 
        efficiency bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54A(g) and such amounts 
                shall be treated as paid on the credit allowance date 
                (as defined in section 54A(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A), subsection 
                (b)(4) shall be applied without regard to subparagraphs 
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Conforming Amendment.--The table of sections for subpart H of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 54A. Credit to holders of water conservation, reuse and 
                            efficiency bonds.''.
    (d) Issuance of Regulations.--The Secretary of the Treasury shall 
issue regulations required under section 54A (as added by this section) 
not later than 120 days after the date of the enactment of this Act.
    (e) Report on Use of Bond Authority.--On April 1, 2008, and 
annually thereafter, the Secretary of Treasury shall submit a report to 
Congress including the number of applications for bonding authority 
received, granted and identifying the purposes and expected effects of 
projects supported by the bonding authority in the previous calendar 
year.
    (f) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 2007.

SEC. 104. CREDIT FOR GEOTHERMAL EXPLORATION EXPENDITURES.

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

``SEC. 45O. CREDIT FOR GEOTHERMAL EXPLORATION EXPENDITURES.

    ``(a) In General.--For purposes of section 38, the geothermal 
exploration expenditures credit for any taxable year is an amount equal 
to 10 percent of the qualifying geothermal exploration expenditures 
paid or incurred by the taxpayer during such taxable year.
    ``(b) Qualifying Geothermal Exploration Expenditures.--For purposes 
of this section--
            ``(1) In general.--The term `qualifying geothermal 
        exploration expenditures' means expenditures for drilling 
        exploratory wells for geothermal deposits (as defined by 
        section 613(e)(2)).
            ``(2) Exception.--Such term shall not include expenditures 
        for any equipment used to produce, distribute, or use energy 
        derived from a geothermal deposit (as so defined) for which a 
        credit is allowable under section 46 by reason of section 48.
    ``(c) Special Rules.--
            ``(1) Basis reduction.--For purposes of this subtitle, the 
        basis of any property for which a credit is allowed under this 
        section shall be reduced by the amount of the credit so 
        allowed.
            ``(2) Denial of double benefit.--No deduction or credit 
        (other than under section 45) shall be allowed under this 
        subtitle with respect to any expenditures for which a credit is 
        allowed under this section.''.
    (b) Credit Made Part of General Business Credit.--Section 38(b) 
(relating to current year business credit) is amended by striking 
``plus'' at the end of paragraph (30), by striking the period at the 
end of paragraph (31) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(32) the geothermal exploration expenditures credit 
        determined under section 45O(a).''.
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by inserting after the 
item relating to section 45N the following new item:

``Sec. 45O. Credit for geothermal exploration expenditures.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to expenditures made in taxable years beginning after the date of 
the enactment of this Act.

SEC. 105. CREDIT FOR WIND ENERGY SYSTEMS.

    (a) Residential.--
            (1) In general.--Section 25D(a) is amended by striking 
        ``and'' at the end of paragraph (2), by striking the period at 
        the end of paragraph (3) and inserting ``, and'', and by adding 
        at the end the following new paragraph:
            ``(4) 30 percent of the qualified small wind energy 
        property expenditures made by the taxpayer during such year.''.
            (2) Limitation.--Section 25D(b)(1) is amended by striking 
        ``and'' at the end of subparagraph (B), by striking the period 
        at the end of subparagraph (A) and inserting ``, and'', and by 
        adding at the end the following new subparagraph:
                    ``(D) $500 with respect to each half kilowatt of 
                capacity (not to exceed $5,000) of qualifying wind 
                turbines for which qualified small wind energy property 
                expenditures are made.''.
            (3) Qualified small wind energy property expenditures.--
        Section 25D(d) is amended by adding at the end the following 
        new paragraph:
            ``(4) Qualified small wind energy property expenditure.--
                    ``(A) In general.--The term `qualified wind energy 
                property expenditure' means an expenditure for property 
                which uses a qualifying wind turbine to generate 
                electricity for use in connection with a dwelling unit 
                located in the United States and used as a residence by 
                the taxpayer.
                    ``(B) Qualifying wind turbine.--The term 
                `qualifying wind turbine' means a wind turbine of 100 
                kilowatts of rated capacity or less which meets the 
                latest performance rating standards published by the 
                American Wind Energy Association and which is used to 
                generate electricity and carries at least a 5-year 
                limited warranty covering defects in design, material, 
                or workmanship, and, for property that is not installed 
                by the taxpayer, at least a 5-year limited warranty 
                covering defects in installation.''.
    (b) Business.--Section 48(a)(3)(A) (defining energy property) is 
amended by striking ``or'' at the end of clause (iii), by adding ``or'' 
at the end of clause (iv), and by inserting after clause (iv) the 
following new clause:
                            ``(v) qualifying wind turbine (as defined 
                        in section 25D(d)(B)),''.
    (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, in taxable years ending after such date.

SEC. 106. EXTENSION AND MODIFICATION OF NEW ENERGY EFFICIENT HOME 
              CREDIT.

    (a) Extension.--Subsection (g) of section 45L (relating to 
termination) is amended by striking ``2008'' and inserting ``2013''.
    (b) Increase of Credit.--Paragraph (2) of subsection 45L(a) 
(relating to applicable amount) is amended to read as follows:
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount is an amount equal to, in the case of a 
        dwelling unit described in--
                    ``(A) subsection (c)(1), $4,000,
                    ``(B) subsection (c)(2), $2,000, and
                    ``(C) subsection (c)(3), $1,000.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to qualified new energy efficient homes acquired after the date 
of the enactment of this Act, in taxable years ending after such date.

SEC. 107. INVESTMENT TAX CREDIT FOR ADVANCED BATTERY PRODUCTION.

    (a) In General.--Section 48(a)(3)(A) is amended--
            (1) by striking ``or'' at the end of clause (iii),
            (2) by inserting ``or'' at the end of clause (iv), and
            (3) by inserting after clause (iv) the following new 
        clause:
                            ``(v) equipment used to produce at least 75 
                        percent of any advanced battery and related 
                        power electronics intended for use in--
                                    ``(I) any qualified electric 
                                vehicle (as defined in section 
                                30(c)(1)(A)) or new qualified hybrid 
                                motor vehicle (as defined in section 
                                30B(d)(3)(A), without regard to clauses 
                                (v) and (vi) thereof), or
                                    ``(II) any grid-enabled or 
                                distributed residential or small 
                                commercial application,''.
    (b) Rate of Energy Percentage.--Section 48(a)(2)(A) is amended--
            (1) by striking ``and'' at the end of clause (i)(III),
            (2) by striking ``clause (i)'' in clause (ii) and inserting 
        ``clause (i) or clause (ii)'',
            (3) by redesignating clause (ii) as clause (iii), and
            (4) by inserting after clause (i) the following new clause:
                            ``(ii) 20 percent in the case of energy 
                        property described in paragraph (3)(A)(v), 
                        and''.
    (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.

SEC. 108. QUALIFIED RENEWABLE SCHOOL ENERGY BONDS.

    (a) In General.--Subchapter U of chapter 1 (relating to incentives 
for education zones) is amended by redesignating section 1397F as 
section 1397G and by adding at the end of part IV of such subchapter 
the following new section:

``SEC. 1397F. QUALIFIED RENEWABLE SCHOOL ENERGY BONDS.

    ``(a) Allowance of Credit.--If a taxpayer holds a qualified 
renewable school energy bond on 1 or more credit allowance dates of the 
bond occurring during any taxable year, there shall be allowed as a 
credit against the tax imposed by this chapter for the taxable year an 
amount equal to the sum of the credits determined under subsection (b) 
with respect to such dates.
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any credit allowance date 
        for a qualified renewable school energy bond is 25 percent of 
        the annual credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified renewable school energy bond is the 
        product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (3) for the day on which such bond was 
                sold, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Determination.--For purposes of paragraph (2), with 
        respect to any qualified renewable school energy bond, the 
        Secretary shall determine daily or cause to be determined daily 
        a credit rate which shall apply to the first day on which there 
        is a binding, written contract for the sale or exchange of the 
        bond. The credit rate for any day is the credit rate which the 
        Secretary or the Secretary's designee estimates will permit the 
        issuance of qualified renewable school energy bonds with a 
        specified maturity or redemption date without discount and 
        without interest cost to the qualified issuer.
            ``(4) Credit allowance date.--For purposes of this section, 
        the term `credit allowance date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term also includes the last day on which the bond is 
        outstanding.
            ``(5) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        date shall be a ratable portion of the credit otherwise 
        determined based on the portion of the 3-month period during 
        which the bond is outstanding. A similar rule shall apply when 
        the bond is redeemed or matures.
    ``(c) Limitation Based on Amount of Tax.--The credit allowed under 
subsection (a) for any taxable year shall not exceed the excess of--
            ``(1) the sum of the regular tax liability (as defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under part IV of 
        subchapter A (other than subpart C thereof, relating to 
        refundable credits, subpart H thereof, section 1400N(l), and 
        this section).
    ``(d) Qualified Renewable School Energy Bond.--For purposes of this 
section--
            ``(1) In general.--The term `renewable school energy bond' 
        means any bond issued as part of an issue if--
                    ``(A) 95 percent or more of the proceeds of such 
                issue are to be used for a qualified purpose with 
                respect to a qualified school operated by an eligible 
                local education agency,
                    ``(B) the bond is issued by a State or local 
                government of an eligible State within the jurisdiction 
                of which such school is located,
                    ``(C) the issuer--
                            ``(i) designates such bond for purposes of 
                        this section, and
                            ``(ii) certifies that it has the written 
                        approval of the eligible local education agency 
                        for such bond issuance, and
                    ``(D) the term of each bond which is part of such 
                issue is 20 years.
            ``(2) Qualified school.--The term `qualified school' means 
        any public school or public school system administrative 
        building which is owned by or operated by an eligible local 
        education agency.
            ``(3) Eligible local education agency.--The term `eligible 
        local education agency' means any local educational agency as 
        defined in section 9101 of the Elementary and Secondary 
        Education Act of 1965.
            ``(4) Eligible state.--The term `eligible State' means, 
        with respect to any calendar year, any State described in one 
        of the following:
                    ``(A) The 5 States within Region 4 of the United 
                States Census with the greatest percentage population 
                growth change between 2000 and 2006 as determined under 
                the Cumulative Estimates of Population Change for the 
                United States and States, and for Puerto Rico--April 1, 
                2000 to July 1, 2006, by the Bureau of the Census.
                    ``(B) The State with a total percentage population 
                growth change between 2000 and 2006 greater than 4.5 
                percent but less than 5.0 percent and a total 
                population 19 years of age and younger which is greater 
                than 200,000 but less than 250,000 as determined under 
                such Cumulative Estimates and the 2005 American 
                Community Survey by the Bureau of the Census.
            ``(5) Qualified purpose.--The term `qualified purpose' 
        means, with respect to any qualified school, the purchase and 
        installation of renewable energy products.
    ``(e) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national renewable 
        school energy bond limitation for each calendar year. Such 
        limitation is $50,000,000 for 2008, $100,000,000 for 2009, 
        $150,000,000 for 2010, and, except as provided in paragraph 
        (4), zero thereafter.
            ``(2) Allocation of limitation.--The national renewable 
        school energy bond limitation for a calendar year shall be 
        allocated by the Secretary--
                    ``(A) among the eligible States described in 
                subsection (d)(4)(A), 30 percent to the State with the 
                greatest percentage population growth, 20 percent to 
                each of second and third ranked States, and 10 percent 
                to each of the fourth and fifth ranked States, and
                    ``(B) to the State described in subsection 
                (d)(4)(B), 10 percent.
        The limitation amount allocated to an eligible State under the 
        preceding sentence shall be allocated by the State education 
        agency to qualified schools within such State.
            ``(3) Designation subject to limitation amount.--The 
        maximum aggregate face amount of bonds issued during any 
        calendar year which may be designated under subsection (d)(1) 
        with respect to any qualified school shall not exceed the 
        limitation amount allocated to such school under paragraph (2) 
        for such calendar year.
            ``(4) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the limitation amount for any eligible State, 
                exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (d)(1) with 
                respect to qualified schools within such State,
        the limitation amount for such State for the following calendar 
        year shall be increased by the amount of such excess. Any 
        carryforward of a limitation amount may be carried only to the 
        first 2 years following the unused limitation year. For 
        purposes of the preceding sentence, a limitation amount shall 
        be treated as used on a first-in first-out basis.
    ``(f) Other Definitions.--For purposes of this section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
    ``(g) Credit Included in Gross Income.--Gross income includes the 
amount of the credit allowed to the taxpayer under this section 
(determined without regard to subsection (c)).
    ``(h) Credits May Be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified renewable school 
        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 which, on the credit allowance date, holds the 
        instrument evidencing the entitlement to the credit and not to 
        the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified renewable school energy bond as if it 
        were a stripped bond and to the credit under this section as if 
        it were a stripped coupon.
    ``(i) Credit Treated as Nonrefundable Bondholder Credit.--For 
purposes of this title, the credit allowed by this section shall be 
treated as a credit allowable under subpart H of part IV of subchapter 
A of this chapter.
    ``(j) Special Rules.--For purposes of this section, rules similar 
to the rules under paragraphs (3) and (4) of section 54(l) shall 
apply.''.
    (b) Conforming Amendments.--The table of sections for part V of 
such subchapter is amended by redesignating section 1397F as section 
1397G and by adding at the end of the table of sections for part IV of 
such subchapter the following new item:

``Sec. 1397F. Credit for holders of qualified renewable school energy 
                            bonds.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to bonds issued after December 31, 2007.

SEC. 109. TREATMENT OF BONDS ISSUED TO FINANCE RENEWABLE ENERGY 
              RESOURCE FACILITIES.

    (a) In General.--Subsection (a) of section 142 (relating to exempt 
facility bond) is amended--
            (1) by striking ``or'' at the end of paragraph (14),
            (2) by striking the period at the end of paragraph (15) and 
        inserting ``, or'', and
            (3) by inserting at the end the following new paragraph:
            ``(16) renewable energy resource facilities.''.
    (b) Definition.--Section 142 is amended by inserting at the end the 
following new subsection:
    ``(n) Renewable Energy Resource Facilities.--For purposes of 
subsection (a)(16)--
            ``(1) In general.--The term `renewable energy resource 
        facility' means any facility used to produce electric or 
        thermal energy (including a distributed generation facility) 
        from--
                    ``(A) wind energy,
                    ``(B) closed-loop biomass (within the meaning of 
                section 45(c(2)),
                    ``(C) open-loop biomass (as defined in section 
                45(c)(3),
                    ``(D) geothermal energy (as defined in section 
                45(c)(4),
                    ``(E) solar energy,
                    ``(F) land fill gas derived from the biodegradation 
                of municipal solid waste (as defined in section 
                45(c)(6),
                    ``(G) incremental hydropower production (as 
                determined under section 45(c)(8)(B), or
                    ``(H) ocean energy.
            ``(2) Ocean energy.--The term `ocean energy' includes 
        current, wave, tidal, and thermal energy.''.
    (c) Coordination With Section 45.--Section 45(b)(3) is amended by 
adding at the end the following new sentence: ``For purposes of this 
paragraph, proceeds of an issue used to provide financing for any 
qualified facility by reason of section 142(a)(16) shall not be taken 
into account under subparagraph (A)(ii).''.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to bonds issued on or after the date of the 
enactment of this Act.

 TITLE II--INVESTMENT TAX CREDIT WITH RESPECT TO SOLAR ENERGY PROPERTY 
                           AND MANUFACTURING

                   Subtitle A--Solar Energy Property

SEC. 201. ENERGY CREDIT WITH RESPECT TO SOLAR ENERGY PROPERTY.

    (a) Permanent Extension of Credit for Solar Energy Property.--
Paragraphs (2)(A)(i)(II) and (3)(A)(ii) of section 48(a) (relating to 
the energy credit) are each amended by striking ``but only with respect 
to periods ending before January 1, 2009''.
    (b) Energy Property To Include Excess Energy Storage Device.--
Clause (i) of section 48(a)(3)(A) (relating to energy property) 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,''.
    (c) Additional Modifications.--
            (1) Solar electric energy property credit determined solely 
        by kilowatt capacity.--
                    (A) In general.--Subsection (a) of section 48 
                (relating to the energy credit) 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 electric 
        energy property.--
                    ``(A) In general.--For purposes of section 46, the 
                energy credit for any taxable year for solar electric 
                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 direct current of installed 
                capacity of such property. Paragraph (2)(A) 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 amendments.--Subsection (a) of 
                section 48 is amended--
                            (i) in paragraph (1), by inserting ``in 
                        paragraph (4) and'' after ``except as 
                        provided'', and
                            (ii) in paragraph (2)(A)(i)(II), 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''.
    (d) Credit Allowed Against the Alternative Minimum Tax.--Section 
38(c)(4)(B) (relating to specified credits) is amended by--
            (1) striking ``and'' at the end of clause (i),
            (2) striking the period at the end of clause (ii)(II) and 
        inserting ``, and'', and
            (3) adding at the end the following new clause:
                            ``(iii) the portion of the investment 
                        credit under section 46(2) which is determined 
                        under clauses (i) and (ii) of section 
                        48(a)(3)(A).''.
    (e) Effective Date.--The amendment made by subsection (a) shall 
apply to periods after December 31, 2007, in taxable years beginning 
after such date, under rules similar to the rules of section 48(m) (as 
in effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 202. REPEAL OF EXCLUSION FOR SOLAR AND GEOTHERMAL PUBLIC UTILITY 
              PROPERTY UNDER ENERGY CREDIT.

    (a) In General.--The second sentence of section 48(a)(3) is amended 
by inserting ``(other than property described in clause (i) or (iii) of 
subparagraph (A))'' after ``any property''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to periods after December 31, 2007, in taxable years beginning 
after such date, under rules similar to the rules of section 48(m) (as 
in effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).

SEC. 203. PERMANENT EXTENSION AND MODIFICATION OF CREDIT FOR 
              RESIDENTIAL ENERGY EFFICIENT PROPERTY.

    (a) Permanent Extension.--Section 25D is amended by striking 
subsection (g) (relating to termination).
    (b) Solar Electric Property.--Paragraph (1) of section 25D(a) 
(relating to allowance of credit) is amended by striking ``30 percent 
of''.
    (c) Modification of Maximum Credit.--Paragraph (1) of section 
25D(b) (relating to limitations) is amended to read as follows:
            ``(1) Maximum credit.--The credit allowed under subsection 
        (a) (determined without regard to subsection (c)) for any 
        taxable year shall not exceed--
                    ``(A) $1,500 with respect to each half kilowatt of 
                direct current 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 
                heating and cooling 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 Heating and Cooling Property 
Expenditure.--
            (1) In general.--Paragraph (1) of section 25D(d) (relating 
        to definitions) is amended to read as follows:
            ``(2) Qualified solar heating and cooling property 
        expenditure.--The term `qualified solar heating and cooling 
        property expenditure' means an expenditure for property to heat 
        or cool (or provide hot water for use in) a dwelling unit 
        located in the United States and used as a residence by the 
        taxpayer if at least half of the energy used by such property 
        for such purpose is derived from the sun. Such term shall not 
        include an expenditure which is a qualified solar electric 
        property expenditure.''.
            (2) Conforming amendments.--Section 25D (relating to 
        residential energy efficient property) is amended--
                    (A) by striking ``solar water heating'' in 
                subsections (a)(2) and (e)(4)(A)(ii) and inserting 
                ``solar heating and cooling'', and
                    (B) by striking the heading for subsection (b)(2) 
                and inserting the following new heading: ``(2) 
                Certification of solar heating and cooling property.''.
    (e) Credit Allowed Against Alternative Minimum Tax.--
            (1) In general.--Section 25D(b) (relating to limitations), 
        as amended by subsection (c), 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 (relating to 
                carryforward of unused credit) 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) (relating to limitation 
                based on amount of tax) is amended by inserting ``and 
                section 25D'' after ``this section''.
                    (C) Section 24(b)(3)(B) (relating to limitation 
                based on amount of tax) is amended by striking 
                ``sections 23 and 25B'' and inserting ``sections 23, 
                25B, and 25D''.
                    (D) Section 26(a)(1) (relating to limitation based 
                on amount of tax) is amended by striking ``and 25B'' 
                and inserting ``25B, and 25D''.
    (f) Effective Date.--The amendments made by this section shall 
apply to expenditures made in taxable years beginning after December 
31, 2007.

SEC. 204. 3-YEAR ACCELERATED DEPRECIATION PERIOD FOR SOLAR ENERGY 
              PROPERTY.

    (a) In General.--Subparagraph (A) of section 168(e)(3) (relating to 
3-year property) is amended--
            (1) by striking ``and'' at the end of clause (ii),
            (2) by striking the period at the end of clause (iii) and 
        inserting a comma, and
            (3) by inserting after clause (iii) the following new 
        clauses:
                            ``(iv) any property which is described in 
                        clause (i) or (ii) of section 48(a)(3)(A) (or 
                        would be so described if the last sentence of 
                        such section did not apply to such clause), and
                            ``(v) any property which is described in 
                        clause (iv) of section 48(a)(3)(A).''.
    (b) Conforming Amendment.--Subclause (I) of section 
168(e)(3)(B)(vi) (relating to 5-year property) is amended to read as 
follows:
                                    ``(I) would be described in 
                                subparagraph (A) of section 48(a)(3) if 
                                `wind energy' were substituted for 
                                `solar energy' in clause (i) thereof 
                                and the last sentence of such section 
                                did not apply to such subparagraph,''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2007.

   Subtitle B--Promotion of Solar Manufacturing in the United States

SEC. 211. SOLAR MANUFACTURING CREDIT.

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

``SEC. 48C. SOLAR MANUFACTURING CREDIT.

    ``(a) Credit Allowed.--For purposes of section 46, the solar 
manufacturing credit for any taxable year is an amount equal to 30 
percent of the qualified investment for such taxable year.
    ``(b) Qualified Investment.--For purposes of this section--
            ``(1) In general.--The qualified investment for any taxable 
        year is equal to the incremental costs incurred during such 
        taxable year to re-equip, expand, or establish an eligible 
        manufacturing facility--
                    ``(A) to produce polysilicon for use in solar 
                cells, wafers manufactured for solar cells, and solar 
                photovoltaic cells,
                    ``(B) to produce or assemble solar photovoltaic 
                modules,
                    ``(C) to produce or assemble solar thermal panels 
                and solar thermal storage tanks, or
                    ``(D) to produce concentrated solar power 
                equipment.
            ``(2) Exceptions.--The qualified investment for any taxable 
        year shall not include--
                    ``(A) assets utilized to produce the materials 
                consumed in the production of solar photovoltaic 
                modules, such as aluminum extrusions, glass, 
                encapsulants, inverters, and mounting hardware, and
                    ``(B) assets utilized to produce the materials 
                consumed in the production of solar thermal panels, 
                such as aluminum extrusions, glass, copper, and 
                mounting hardware.
            ``(3) Certain qualified progress expenditures made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Eligible manufacturing facility.--The term `eligible 
        manufacturing facility' means any manufacturing facility for 
        which more than 50 percent of the gross receipts for the 
        taxable year are derived from sales of solar equipment.
            ``(2) Solar photovoltaic cell.--The term `solar 
        photovoltaic cell' means the semiconductor device which 
        converts photons from light into electricity.
            ``(3) Solar photovoltaic module.--The term `solar 
        photovoltaic module' means an assembly of multiple 
        interconnected solar photovoltaic cells that are sized and 
        packaged for installation and deployment in a specific 
        application.''.
    (b) Credit Treated as Part of Investment Credit.--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 solar manufacturing credit.''.
    (c) Certain Nonrecourse Financing Excluded From Credit Base.--
Section 49(a)(1)(C) (defining credit base) is amended by striking 
``and'' at the end of clause (iii), by striking the period at the end 
of clause (iv) and inserting ``, and'', and by adding at the end the 
following new clause:
                            ``(v) the basis of any property which is 
                        part of the solar manufacturing credit under 
                        section 48C.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after December 31, 2007, in taxable years beginning 
after such date, under rules similar to the rules of section 48(m) (as 
in effect on the day before the date of the enactment of the Revenue 
Reconciliation Act of 1990).
                                 <all>