II 111th CONGRESS 1st Session S. 1094 IN THE SENATE OF THE UNITED STATES May 20, 2009 Mr. Wyden 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 for an energy carrier production tax credit, and for other purposes.

1.

Short title

This Act may be cited as the Renewable Energy Alternative Production Act or the REAP Act.

2.

Credit for production of renewable energy

(a)

In general

Section 45 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection: (f)

Credit allowed for production of non-electric energy

(1)

In general

The credit allowed under subsection (a) shall be increased by an amount equal to the product of— (A)the dollar amount determined under paragraph (2), and (B)each million British thermal units (mmBtu) of qualified fuel which is— (i)produced by the taxpayer— (I)from qualified energy resources, and (II)at any facility during the 10-year period beginning on the date such facility was placed in service, (ii)not used for the production of electricity, and (iii)sold by the taxpayer to an unrelated person during the taxable year. (2)

Dollar amount

The dollar amount determined under this paragraph shall be the amount determined by the Secretary to be the equivalent, expressed in British thermal units, of the credit allowed under subsection (a) for 1 kilowatt hour of electricity. (3)

Reduction for grants, tax exempt bonds, subsidized energy financing, and other credits

Rules similar to the rules of subsection (b)(3) shall apply for purposes of paragraph (1). (4)

Definitions and special rules

For purposes of this subsection— (A)

Qualified fuel

The term qualified fuel means an energy product which is produced, extracted, converted, or synthesized from a qualified energy resource through a controlled process, including pyrolysis, electrolysis, and anaerobic digestion, which results in a product consisting of methane, synthesis gas, hydrogen, steam, manufactured cellulosic fuels, or any other form of energy provided under regulations by the Secretary and which is used solely as a source of energy. (B)

Allocation of credit to patrons of agricultural cooperatives

Rules similar to the rules of subsection (e)(11) shall apply for purposes of paragraph (1). . (b)

Conforming amendments

(1)The heading for section 45 of the Internal Revenue Code of 1986 is amended by striking Electricity and inserting Energy. (2)The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by striking Electricity in the item relating to section 45 and inserting Energy. (c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.

3.

Energy credit for onsite renewable non-electric energy production facilities

(a)

Credit allowed

Clause (i) of section 48(a)(2)(A) of the Internal Revenue Code of 1986 is amended— (1)by striking and at the end of subclause (III), and (2)by adding at the end the following new subclause: (V)qualified onsite renewable non-electric energy production property, . (b)

Qualified onsite renewable non-electric energy production property

Subsection (c) of section 48 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (5)

Qualified onsite renewable non-electric energy production property

(A)

In general

The term qualified onsite renewable non-electric energy production property means property which produces qualified fuel— (i)from qualified energy resources, (ii)not used for the production of electricity, and (iii)used primarily on the same site where the production is located to replace an equivalent amount of non-renewable fuel (determined based on the number of British thermal units of non-renewable fuel consumed by the taxpayer in the prior taxable year) or to provide energy primarily on such site for a use that did not exist prior to the later of the date of the enactment of this paragraph or the date such property was placed in service. (B)

Definitions

For purposes of this paragraph— (i)

Qualified fuel

The term qualified fuel means an energy product which is produced, extracted, converted, or synthesized from a qualified energy resource through a controlled process, including pyrolysis, electrolysis, and anaerobic digestion, which results in a product consisting of methane, synthesis gas, hydrogen, steam, manufactured cellulosic fuels, or any other form of energy provided under regulations by the Secretary and which is used solely as a source of energy. (ii)

Qualified energy resources

The term qualified energy resources has the meaning given such term by paragraph (1) of section 45(c). (iii)

Termination

The term qualified onsite renewable non-electric energy production property shall not include any property for any period after the date which is 10 years after the date of the enactment of the Renewable Energy Alternative Production Act. . (c)

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).

4.

Renewable non-electric energy production facilities eligible for new clean renewable energy bonds

(a)

In general

Paragraph (1) of section 54C(d) of the Internal Revenue Code of 1986 is amended to read as follows: (1)

Qualified renewable energy facility

The term qualified renewable energy facility means a facility which is— (A)(i)a qualified facility (as determined under section 45(d) without regard to paragraphs (8) and (10) thereof and to any placed in service date), or (ii)a facility which produces qualified fuel (as defined in section 45(f)(4)(A)) which is derived from qualified energy resources (within the meaning of section 45(f)(4)(B)) and not used for the production of electricity, and (B)owned by a public power provider, a governmental body, or a cooperative electric company. . (b)

Effective date

The amendment made by this section shall apply to obligations issued after the date of the enactment of this Act.