[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3935 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3935

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


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 29, 2010

Mr. Bingaman (for himself and Ms. Snowe) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


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

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

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Advanced Energy 
Tax Incentives Act of 2010''.
    (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; amendment of 1986 Code; table of contents.
           TITLE I--INDUSTRIAL AND BUILDING ENERGY EFFICIENCY

        Subtitle A--Expansion of Building Efficiency Incentives

Sec. 101. Increase in, and extension of, new energy efficient home 
                            credit.
Sec. 102. Modification of deduction for energy efficient commercial 
                            buildings.
Sec. 103. Energy ratings of non-business property.
Sec. 104. Credit for home performance auditor certifications.
Sec. 105. Performance based energy improvements for non-business 
                            property.
    Subtitle B--Expansion of Industrial Energy Efficiency Incentives

Sec. 111. Qualifying efficient industrial process water use project 
                            credit.
Sec. 112. Motor energy efficiency improvement tax credit.
Sec. 113. Credit for replacement of CFC refrigerant chiller.
Sec. 114. Modifications in credit for combined heat and power system 
                            property.
                 Subtitle C--Thermal Energy Efficiency

Sec. 121. Bonus depreciation for qualifying energy property.
Sec. 122. Extension of reduced depreciation period for natural gas 
                            distribution facilities.
                      TITLE II--VEHICLE EFFICIENCY

Sec. 201. Idling reduction tax credit.
             TITLE III--PROMOTION OF DOMESTIC MANUFACTURING

Sec. 301. Expansion and modification of qualifying advanced energy 
                            project credit.
Sec. 302. Qualifying industrial energy efficiency project credit.
               TITLE IV--GRID EFFICIENCY AND RELIABILITY

Sec. 401. Energy investment credit for energy storage property 
                            connected to the grid.
Sec. 402. Energy storage property connected to the grid eligible for 
                            new clean renewable energy bonds.
Sec. 403. Energy investment credit for onsite energy storage.
Sec. 404. Credit for residential energy storage equipment.
Sec. 405. Clarification of types of energy conservation subsidies 
                            provided by public utilities eligible for 
                            income exclusion.
Sec. 406. Extension of credits related to the production of electricity 
                            from offshore wind.
               TITLE V--CARBON CAPTURE AND SEQUESTRATION

Sec. 501. Improved availability of the credit for carbon dioxide 
                            sequestration.
              TITLE VI--PROMOTION OF CLEAN DOMESTIC FUELS

Sec. 601. Algae treated as a qualified feedstock for purposes of the 
                            cellulosic biofuel producer credit, etc.

           TITLE I--INDUSTRIAL AND BUILDING ENERGY EFFICIENCY

        Subtitle A--Expansion of Building Efficiency Incentives

SEC. 101. INCREASE IN, AND EXTENSION OF, NEW ENERGY EFFICIENT HOME 
              CREDIT.

    (a) New Tier; Credit Amount for New Tier.--
            (1) New tier.--Subsection (c) of section 45L is amended to 
        read as follows:
    ``(c) Energy Savings Requirements.--
            ``(1) In general.--A dwelling unit meets the energy saving 
        requirements of this subsection if such unit is--
                    ``(A) described in paragraph (2),
                    ``(B) described in paragraph (3),
                    ``(C) a manufactured home described in paragraph 
                (4), or
                    ``(D) a manufactured home described in paragraph 
                (5).
            ``(2) Dwelling unit described in paragraph (2).--A dwelling 
        unit is described in this paragraph if such unit is certified--
                    ``(A) to have a level of annual heating and cooling 
                energy consumption which is at least 50 percent below 
                the annual level of heating and cooling energy 
                consumption of a comparable dwelling unit--
                            ``(i) which is constructed in accordance 
                        with the standards of chapter 4 of the 2003 
                        International Energy Conservation Code, as such 
                        Code (including supplements) is in effect on 
                        the date of the enactment of the Energy Tax 
                        Incentives Act of 2005, and
                            ``(ii) for which the heating and cooling 
                        equipment efficiencies correspond to the 
                        minimum allowed under the regulations 
                        established by the Department of Energy 
                        pursuant to the National Appliance Energy 
                        Conservation Act of 1987 and in effect at the 
                        time of completion of construction, and
                    ``(B) to have building envelope component 
                improvements account for at least \1/5\ of such 50 
                percent.
        The Secretary, in consultation with the Secretary of Energy 
        shall provide by regulation for the application of this 
        paragraph in the case of a dwelling unit in a multifamily 
        building that is more than 3 stories above grade, or in any 
        other building that is not within the scope of such chapter 4. 
        If, upon the acquisition of such unit by any person described 
        in subsection (a)(1)(A)(ii)(I), the amount of the credit 
        allowed under this section with respect to such unit shall be 
        disclosed to such person.
            ``(3) Dwelling unit described in paragraph (3).--A dwelling 
        unit is described in this paragraph if such unit is certified--
                    ``(A) to have a level of annual total energy 
                consumption (including heating, cooling, water heating, 
                lighting, and appliance energy use) which is at least 
                50 percent below the annual level of total energy 
                consumption of a comparable dwelling unit which is 
                constructed in accordance with the 2004 Supplement of 
                the 2003 International Energy Conservation Code, and
                    ``(B) to have building envelope component 
                improvements account for at least \1/5\ of such 50 
                percent.
            ``(4) Manufactured home described in paragraph (4).--A 
        manufactured home is described in this paragraph if such 
        manufactured home conforms to Federal Manufactured Home 
        Construction and Safety Standards (part 3280 of title 24, Code 
        of Federal Regulations) and meets the requirements of a 
        dwelling unit described in paragraph (2).
            ``(5) Manufactured home described in paragraph (5).--A 
        manufactured home is described in this paragraph if such 
        manufactured home conforms to Federal Manufactured Home 
        Construction and Safety Standards (part 3280 of title 24, Code 
        of Federal Regulations) and--
                    ``(A) meets the requirements of--
                            ``(i) a dwelling unit described in 
                        paragraph (2), applied by substituting `30 
                        percent' for `50 percent' both places it 
                        appears therein and by substituting `\1/3\' for 
                        `\1/5\' in subparagraph (B) thereof, or
                            ``(ii) a dwelling unit described in 
                        paragraph (3), or
                    ``(B) meets the requirements established by the 
                Administrator of the Environmental Protection Agency 
                under the Energy Star Labeled Homes program as in 
                effect on the date of the enactment of the Advanced 
                Energy Tax Incentives Act of 2010, or
                    ``(C) meets the requirements under the Energy Star 
                Labeled Homes program established after the date of the 
                enactment of the Advanced Energy Tax Incentives Act of 
                2010.''.
            (2) Credit amount for new tier.--Paragraph (2) of section 
        45L(a) is amended to read as follows:
            ``(2) Applicable amount.--For purposes of paragraph (1), 
        the applicable amount is an amount equal to--
                    ``(A) in the case of a dwelling unit described in 
                paragraph (2) or (4) of subsection (c), $2,000,
                    ``(B) in the case of a dwelling unit described in 
                paragraph (3) of subsection (c), $5,000,
                    ``(C) in the case of a manufactured home described 
                in paragraph (5)(A)(i) or (5)(B) of subsection (c), 
                $1,500, and
                    ``(D) in the case of a manufactured home described 
                in paragraph (5)(A)(ii) or (5)(C) of subsection (c), 
                $2,500.
        Nothing in this section shall permit the same dwelling unit or 
        manufactured home to qualify for more than one applicable 
        amount.''.
    (b) Credit Available for Rental Units, Owner-Builders, and 
Qualified Low-Income Buildings; Credit Amount for Qualified Low-Income 
Buildings.--
            (1) In general.--Paragraph (1) of section 45L(a) is amended 
        to read as follows:
            ``(1) In general.--For purposes of section 38--
                    ``(A) in the case of an eligible contractor, the 
                new energy efficient home credit for the taxable year 
                is the applicable amount for each qualified new energy 
                efficient home which is--
                            ``(i) constructed by the eligible 
                        contractor, and
                            ``(ii)(I) acquired by a person from such 
                        eligible contractor and used by any person as a 
                        residence during the taxable year, or
                            ``(II) used by such eligible contractor as 
                        a residence during the taxable year, and
                    ``(B) in the case of a taxpayer, the new energy 
                efficient home credit for the taxable year is the 
                applicable amount for each qualified new energy 
                efficient home which is in a qualified low-income 
                building (as defined in section 42(c)(2))--
                            ``(i) placed in service by the taxpayer 
                        during the taxable year, and
                            ``(ii) for which such taxpayer is allowed a 
                        credit under section 42 or a subaward under 
                        section 1602(c) of the American Recovery and 
                        Reinvestment Tax Act of 2009.''.
            (2) Credit amount.--Paragraph (2) of section 45L(a), as 
        amended by this section, is amended by adding at the end the 
        following new flush sentence:
        ``In the case of a dwelling unit in a qualified low-income 
        building (as so defined), the applicable dollar amount for such 
        a dwelling unit described in 1 of the preceding subparagraphs 
        shall be equal to 150 percent of the dollar amount otherwise 
        specified in such preceding subparagraph, except that if the 
        credit under section 42 with respect to such unit is determined 
        by applying section 42(d)(5)(B), then the applicable dollar 
        amount shall be 115 percent of such dollar amount so 
        specified.''.
            (3) No basis adjustment.--Section 45L(e) is amended by 
        inserting ``(other than a qualified low-income building)'' 
        after ``any property''.
    (c) Certification Method for High Rise Multifamily and Mixed Use 
Buildings.--Section 45L(d)(1) is amended by inserting ``, and in the 
case of high rise multifamily and mixed use buildings, after examining 
the methods required for such buildings under section 179D'' after 
``the Secretary of Energy''.
    (d) Credit Allowed Against Alternative Minimum Tax.--Subparagraph 
(B) of section 38(c)(4) is amended--
            (1) by redesignating clauses (vi), (vii), and (viii) as 
        clauses (vii), (viii), and (ix), respectively, and
            (2) by inserting after clause (v) the following new clause:
                            ``(vi) the credit determined under section 
                        45L,''.
    (e) Extension.--Subsection (g) of section 45L is amended to read as 
follows:
    ``(g) Termination.--This section shall not apply to the acquisition 
of any qualified new energy efficient home--
            ``(1) described in subsection (a)(2)(A) after December 31, 
        2012,
            ``(2) described in subsection (a)(2)(B) after December 31, 
        2013,
            ``(3) described in subsection (a)(2)(C) after December 31, 
        2010, and
            ``(4) described in subsection (a)(2)(D) after December 31, 
        2013.''.
    (f) Effective Dates.--
            (1) In general.--The amendments made by this section shall 
        apply to homes constructed and acquired or placed in service 
        after December 31, 2008.
            (2) AMT.--The amendments made by subsection (d) shall apply 
        to credits determined under section 45L of the Internal Revenue 
        Code of 1986 in taxable years beginning after December 31, 
        2008, and to carrybacks of such credits.

SEC. 102. MODIFICATION OF DEDUCTION FOR ENERGY EFFICIENT COMMERCIAL 
              BUILDINGS.

    (a) Increase in Maximum Amount of Deduction.--
            (1) In general.--Subparagraph (A) of section 179D(b)(1) is 
        amended by striking ``$1.80'' and inserting ``$3.00''.
            (2) Partial allowance.--Paragraph (1) of section 179D(d) is 
        amended to read as follows:
            ``(1) Partial allowance.--
                    ``(A) In general.--Except as provided in subsection 
                (f), if--
                            ``(i) the requirement of subsection 
                        (c)(1)(D) is not met, but
                            ``(ii) there is a certification in 
                        accordance with paragraph (6) that--
                                    ``(I) any system referred to in 
                                subsection (c)(1)(C) satisfies the 
                                energy-savings targets established by 
                                the Secretary under subparagraph (B) 
                                with respect to such system, or
                                    ``(II) the systems referred to in 
                                subsection (c)(1)(C)(ii) and subsection 
                                (c)(1)(C)(iii) together satisfy the 
                                energy-savings targets established by 
                                the Secretary under subparagraph (B) 
                                with respect to such systems,
                then the requirement of subsection (c)(1)(D) shall be 
                treated as met with respect to such system or systems, 
                and the deduction under subsection (a) shall be allowed 
                with respect to energy efficient commercial building 
                property installed as part of such system and as part 
                of a plan to meet such targets, except that subsection 
                (b) shall be applied to such property described in 
                clause (ii)(I) by substituting `$1.00' for `$3.00' and 
                to such property described in clause (ii)(II) by 
                substituting `$2.20' for `$3.00'.
                    ``(B) Regulations.--
                            ``(i) In general.--The Secretary, after 
                        consultation with the Secretary of Energy, 
                        shall establish a target for each system 
                        described in subsection (c)(1)(C) which, if 
                        such targets were met for all such systems, the 
                        building would meet the requirements of 
                        subsection (c)(1)(D).
                            ``(ii) Combined systems.--The Secretary, 
                        after consultation with the Secretary of 
                        Energy, shall establish not later than 6 months 
                        after the date of the enactment of the Advanced 
                        Energy Tax Incentives Act of 2010 a 
                        prescriptive partial compliance pathway for 
                        combined envelope and mechanical system 
                        performance that details the appropriate 
                        components, efficiency levels, or other 
                        relevant information for which the required 
                        level of combined savings in both categories 
                        can be deemed to have been achieved.''.
    (b) Denial of Double Benefit.--Section 179D is amended by 
redesignating subsections (g) and (h) as subsections (h) and (i), 
respectively, and by inserting after subsection (f) the following new 
subsection:
    ``(g) Coordination With New Energy Efficient Home Credit.--No 
deduction shall be allowed under this section with respect to any 
building or dwelling unit with respect to which a credit under section 
45L was allowed.''.
    (c) Earnings and Profits Conformity for Real Estate Investment 
Trusts.--Subparagraph (B) of section 312(k)(3) is amended--
            (1) by striking ``.--For purposes of'' and inserting ``.--
            ``(1) In general.--Except as provided in paragraph (2), for 
        purposes of'', and
            (2) by adding at the end the following new paragraph:
            ``(2) Exception.--
                    ``(A) In general.--For purposes of computing the 
                earnings and profits of a real estate investment trust 
                (other than a captive real estate investment trust), 
                the entire amount deductible under section 179D shall 
                be allowed as a deduction in the taxable year for which 
                such amount is deductible under section 179D.
                    ``(B) Captive real estate investment trust.--
                            ``(i) In general.--For purposes of 
                        subparagraph (A), the term `captive real estate 
                        investment trust' means any real estate 
                        investment trust more than 50 percent of the 
                        voting power or value of the beneficial 
                        interests or shares of which are owned or 
                        controlled by a single entity that is treated 
                        as an association taxable as a corporation.
                            ``(ii) Association taxable as a 
                        corporation.--For purposes of clause (i), the 
                        term `association taxable as a corporation' 
                        shall not include a real estate investment 
                        trust.
                            ``(iii) Attribution rules.--For purposes of 
                        clause (i), the attribution rules of section 
                        856(d)(5) shall apply in determining 
                        ownership.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to property placed in service in taxable years beginning after 
the date of the enactment of this Act.

SEC. 103. ENERGY RATINGS OF NON-BUSINESS PROPERTY.

    (a) In General.--Subpart A of part IV of subchapter A of chapter 1, 
as amended by section 105, is amended by inserting after section 25E 
the following new section:

``SEC. 25F. ENERGY RATINGS OF NON-BUSINESS PROPERTY.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to the amount paid or incurred by the 
taxpayer for a qualified home energy rating conducted during such 
taxable year.
    ``(b) Limitation.--The amount allowed as a credit under subsection 
(a) with respect to any taxpayer for any taxable year shall not exceed 
$200.
    ``(c) Qualified Home Energy Rating.--For purposes of this section, 
the term `qualified home energy rating' means a home energy rating 
conducted with respect to any residence of the taxpayer by a home 
performance auditor certified by a provider accredited by the Building 
Performance Institute (BPI), the Residential Energy Services Network 
(RESNET), or equivalent rating system as determined by the Secretary of 
Energy.
    ``(d) Termination.--This section shall not apply with respect to 
any rating conducted after December 31, 2011.''.
    (b) Clerical Amendment.--The table of sections for subpart A of 
part IV of subchapter A chapter 1, as amended by section 105, is 
amended by inserting after the item relating to section 25E the 
following new item:

``Sec. 25F. Energy ratings of non-business property.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning after the 
date of the enactment of this Act.

SEC. 104. CREDIT FOR HOME PERFORMANCE AUDITOR CERTIFICATIONS.

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

``SEC. 45S. HOME PERFORMANCE AUDITOR CERTIFICATION CREDIT.

    ``(a)  In General.--For purposes of section 38, the home 
performance auditor certification credit determined under this section 
for any taxable year is an amount equal to the qualified training and 
certification costs paid or incurred by the taxpayer which may be taken 
into account for such taxable year.
    ``(b) Qualified Training and Certification Costs.--
            ``(1) In general.--The term `qualified training and 
        certification costs' means costs paid or incurred for training 
        which is required for the taxpayer or employees of the taxpayer 
        to be certified as home performance auditors for purposes of 
        providing qualified home energy ratings under section 25F(c).
            ``(2) Limitation.--The qualified training and certification 
        costs taken into account under subsection (a)(1) for the 
        taxable year with respect to any individual shall not exceed 
        $500 reduced by the amount of the credit allowed under 
        subsection (a)(1) to the taxpayer (or any predecessor) with 
        respect to such individual for all prior taxable years.
            ``(3) Year costs taken into account.--Qualified training 
        and certifications costs with respect to any individual shall 
        not be taken into account under subsection (a)(1) before the 
        taxable year in which the individual with respect to whom such 
        costs are paid or incurred has performed 25 qualified home 
        energy ratings under section 25F(c).
    ``(c) Special Rules.--
            ``(1) Aggregation rules.--For purposes of this section, all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 person.
            ``(2) Denial of double benefit.--
                    ``(A) In general.--No deduction shall be allowed 
                for that portion of the expenses otherwise allowable as 
                a deduction for the taxable year which is equal to the 
                amount taken into account under subsection (a) for such 
                taxable year.
                    ``(B) Amount previously deducted.--No credit shall 
                be allowed under subsection (a) with respect to any 
                amount for which a deduction has been allowed in any 
                preceding taxable year.''.
    (b) Credit Treated as Part of General Business Credit.--Section 
38(b) is amended by striking ``plus'' at the end of paragraph (35), by 
striking the period at the end of paragraph (36) and inserting 
``plus'', and by adding at the end the following new paragraph:
            ``(37) the home performance auditor certification credit 
        determined under section 45S(a).''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 is amended by adding at the end 
the following new item:

``Sec. 45S. Home performance auditor certification credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

SEC. 105. PERFORMANCE BASED ENERGY IMPROVEMENTS FOR NON-BUSINESS 
              PROPERTY.

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

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

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a credit against the tax imposed by this chapter for the 
taxable year an amount equal to 50 percent of the amount of qualified 
home energy efficiency expenditures paid or incurred by the taxpayer 
during the taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--
                    ``(A) In general.--The amount of the credit allowed 
                under subsection (a) with respect to any individual for 
                any taxable year shall not exceed the amount determined 
                under subparagraph (B) with respect to the principal 
                residence of such individual.
                    ``(B) Amount determined.--
                            ``(i) In general.--Subject to clause (iv), 
                        the amount determined under this subparagraph 
                        is the base amount increased by the amount 
                        determined under clause (iii).
                            ``(ii) Base amount.--For purposes of this 
                        subparagraph, the base amount is--
                                    ``(I) $3,000, in the case of a 
                                residence the construction of which is 
                                completed before January 1, 1940, and
                                    ``(II) $2,000, in the case of a 
                                residence the construction of which is 
                                completed after December 31, 1939.
                            ``(iii) Increase amount.--The amount 
                        determined under this clause is--
                                    ``(I) in the case of a residence 
                                described in clause (ii)(I) which has a 
                                rating system score lower than or equal 
                                to the rating system score which 
                                corresponds to the IECC Standard 
                                Reference Design for a home of the size 
                                and in the climate zone of such 
                                residence, $1,000, and
                                    ``(II) in the case of any residence 
                                with a rating system score which is 
                                lower than that which corresponds to 
                                such IECC Standard Reference Design by 
                                not less than 5 points, $500 for each 5 
                                points by which the rating system score 
                                which corresponds to such IECC Standard 
                                Reference Design exceeds the rating 
                                system score of such residence (in 
                                addition to the amount provided under 
                                clause (i), if applicable).
                            ``(iv) Limitation.--In no event shall the 
                        amount determined under this subparagraph 
                        exceed $8,000 with respect to any individual.
            ``(2) Limitation based on amount of tax.--In the case of 
        taxable years to which section 26(a)(2) does not apply, the 
        credit allowed under subsection (a) for any 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 this 
                subpart (other than this section and sections 23, 24, 
                and 25B) and section 27 for the taxable year.
    ``(c) Qualified Home Energy Efficiency Expenditures.--For purposes 
of this section--
            ``(1) In general.--The term `qualified home energy 
        efficiency expenditures' means any amount paid or incurred for 
        a qualified whole home energy efficiency retrofit, including 
        the cost of audit diagnostic procedures, of a principal 
        residence of the taxpayer which is located in the United 
        States.
            ``(2) Qualified whole home energy efficiency retrofit.--
                    ``(A) In general.--The term `qualified whole home 
                energy efficiency retrofit' means a retrofit of an 
                existing residence if, after such retrofit, such 
                residence--
                            ``(i) has a rating system score of not 
                        greater than--
                                    ``(I) 100, determined under the 
                                HERS Index, in the case of a residence 
                                the construction of which is completed 
                                before January 1, 1940, and
                                    ``(II) the rating system score 
                                which corresponds to the most current 
                                IECC Standard Reference Design for a 
                                home of the size and in the climate 
                                zone of such residence, in the case of 
                                a residence the construction of which 
                                is completed after December 31, 1939, 
                                or
                            ``(ii) achieves an energy efficiency level 
                        which is equivalent to the standard applicable 
                        to such residence under clause (i), as 
                        determined by--
                                    ``(I) a State-certified equivalent 
                                rating network, as specified by IRS 
                                Notice 2008-35, which is also a HERS 
                                rating system required by State law, or
                                    ``(II) the Secretary.
                For purposes of the preceding sentence, the HERS Index 
                is the HERS Index established by the Residential Energy 
                Services Network, as in effect on January 1, 2011.
                    ``(B) Accreditation rule.--A retrofit shall not be 
                treated as a qualified whole home energy efficiency 
                retrofit unless such retrofit is conducted by a company 
                which is accredited by the Building Performance 
                Institute, or which fulfills an equivalent standard as 
                determined by the Secretary.
                    ``(C) Determination of rating system score or 
                equivalent.--
                            ``(i) In general.--Subject to clause (ii), 
                        the rating system score of a residence, or the 
                        equivalent described in subparagraph (A)(ii), 
                        shall be determined by an auditor or rater 
                        certified by--
                                    ``(I) the Residential Energy 
                                Services Network,
                                    ``(II) the Building Performance 
                                Institute, or
                                    ``(III) a State-certified 
                                equivalent rating network, as specified 
                                by IRS Notice 2008-35, which is also a 
                                HERS rating system required by State 
                                law.
                            ``(ii) Secretarial determination.--At the 
                        discretion of the Secretary, the Secretary may, 
                        in consultation with the Secretary of Energy, 
                        determine an alternative standard for 
                        certification of an auditor or rater for 
                        purposes of determining the rating system score 
                        (or equivalent described in subparagraph 
                        (A)(ii)) of a residence. If the Secretary 
                        establishes such an alternative standard, 
                        clause (i) shall cease to apply unless the 
                        Secretary determines otherwise.
                    ``(D) Regulations.--
                            ``(i) Costs.--Not later than December 31, 
                        2011, in consultation with the Secretary, the 
                        Secretary of Energy shall prescribe regulations 
                        which specify the costs with respect to energy 
                        improvements which may be taken into account 
                        under this paragraph as part of a qualified 
                        whole home energy efficiency retrofit.
                            ``(ii) Documentation.--The Secretary of the 
                        Treasury may prescribe regulations directing 
                        what specific documentation is required for 
                        claiming the credit under this section, which 
                        may include a certified form completed by the 
                        qualified whole home energy efficiency retrofit 
                        and signed by the individual taxpayer.
            ``(3) Expansion of building envelope ineligible.--The term 
        `qualified home energy efficiency expenditures' shall not 
        include any amount which is paid or incurred in connection with 
        any expansion of the building envelope of a principal 
        residence.
            ``(4) Special rule for expenditures relating to renewable 
        energy systems.--In the case of any qualified home energy 
        efficiency expenditures relating to a renewable energy system, 
        subsection (a) shall be applied with respect to the 
        expenditures relating to such system by substituting `30 
        percent' for `50 percent'.
            ``(5) No double benefit.--
                    ``(A) In general.--No credit shall be allowed under 
                this section for any taxable year in which the taxpayer 
                elects the credit under section 25C.
                    ``(B) No double benefit for certain expenditures.--
                The term `qualified home energy efficiency 
                expenditures' shall not include any expenditure for 
                which a deduction or credit is otherwise allowed to the 
                taxpayer under this chapter for the taxable year or 
                with respect to which the taxpayer receives any Federal 
                rebate.
            ``(6) Principal residence.--The term `principal residence' 
        has the same meaning as when used in section 121, except that--
                    ``(A) no ownership requirement shall be imposed, 
                and
                    ``(B) the period for which a building is treated as 
                used as a principal residence shall also include the 
                60-day period ending on the 1st day on which it would 
                (but for this subparagraph) first be treated as used as 
                a principal residence.
    ``(d) Rating System Score.--For purposes of this section--
            ``(1) In general.--Subject to paragraph (2), the rating 
        system score shall be the score assigned under--
                    ``(A) the HERS Index established by the Residential 
                Energy Services Network, or
                    ``(B) an equivalent described in subparagraph 
                (c)(2)(A)(ii) by a State-certified equivalent rating 
                network, as specified by IRS Notice 2008-35, which is 
                also a HERS rating system required by State law.
            ``(2) Secretarial determination.--At the discretion of the 
        Secretary, the Secretary may, in consultation with the 
        Secretary of Energy, determine an alternative rating system 
        (including an alternative system based on the HERS Index 
        established by the Residential Energy Services Network). If the 
        Secretary establishes such an alternative rating system, the 
        rating system score with respect to any residence shall be the 
        score assigned under such alternative rating system.
    ``(e) IECC Standard Reference Design.--
            ``(1) In general.--The term `IECC Standard Reference 
        Design' means the Standard Reference Design determined under 
        the International Energy Conservation Code in effect for the 
        taxable year in which the credit under this section is 
        determined.
            ``(2) Limitation to residences constructed after effective 
        date of most recent code.--No credit shall be allowed under 
        this section with respect to a principal residence the 
        construction of which is completed after the effective date of 
        the International Energy Conservation Code in effect for the 
        taxable year for which such credit would otherwise be 
        determined.
    ``(f) Special Rules.--For purposes of this section, rules similar 
to the rules under paragraphs (4), (5), (6), (7), and (8) of section 
25D(e) and section 25C(e)(2) shall apply.
    ``(g) Basis Adjustments.--For purposes of this subtitle, if a 
credit is allowed under this section with respect to any expenditure 
with respect to any property, the increase in the basis of such 
property which would (but for this subsection) result from such 
expenditure shall be reduced by the amount of the credit so allowed.
    ``(h) Election Not To Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.
    ``(i) Termination.--This section shall not apply with respect to 
any costs paid or incurred after December 31, 2013.''.
    (b) Conforming Amendments.--
            (1) Section 26(a)(1) is amended by inserting ``25E,'' after 
        ``25D,''.
            (2) Section 1016(a) is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (36),
                    (B) by striking the period at the end of paragraph 
                (37) and inserting ``, and'', and
                    (C) by adding at the end the following new 
                paragraph:
            ``(38) to the extent provided in section 25E(g), in the 
        case of amounts with respect to which a credit has been allowed 
        under section 25E.''.
            (3) Section 6501(m) is amended by inserting ``25E(h),'' 
        after ``section''.
            (4) The table of sections for subpart A of part IV of 
        subchapter A chapter 1 is amended by inserting after the item 
        relating to section 25D the following new item:

``Sec. 25E. Performance based energy improvements.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred in taxable years beginning on or 
after January 1, 2011.

    Subtitle B--Expansion of Industrial Energy Efficiency Incentives

SEC. 111. QUALIFYING EFFICIENT INDUSTRIAL PROCESS WATER USE PROJECT 
              CREDIT.

    (a) In General.--Section 46 is amended by striking ``and'' at the 
end of paragraph (5), by striking the period at the end of paragraph 
(6), and by adding at the end the following new paragraph:
            ``(7) the qualifying efficient industrial process water use 
        project credit.''.
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1 is amended by inserting after section 48D the following new 
section:

``SEC. 48E. QUALIFYING EFFICIENT INDUSTRIAL PROCESS WATER USE PROJECT 
              CREDIT.

    ``(a) In General.--
            ``(1) Allowance of credit.--For purposes of section 46, the 
        qualifying efficient industrial process water use project 
        credit for any taxable year is an amount equal to the 
        applicable percentage of the qualified investment for such 
        taxable year with respect to any qualifying efficient 
        industrial process water use project of the taxpayer.
            ``(2) Applicable percentage.--For purposes of subsection 
        (a), the applicable percentage is--
                    ``(A) 10 percent in the case of a qualifying 
                efficient industrial process water use project which 
                achieves a net energy consumption of less than 3,000 
                kilowatt hours per million gallons of water, and is 
                placed in service before January 1, 2013,
                    ``(B) 20 percent in the case of a qualifying 
                efficient industrial process water use project which 
                achieves a net energy consumption of less than 2,000 
                kilowatt hours per million gallons of water, and
                    ``(C) 30 percent in the case of a qualifying 
                efficient industrial process water use project which 
                achieves a net energy consumption of less than 1,000 
                kilowatt hours per million gallons of water.
    ``(b) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the 
        qualified investment for any taxable year is the basis of 
        eligible property placed in service by the taxpayer during such 
        taxable year which is part of a qualifying efficient industrial 
        process water use project.
            ``(2) Exceptions.--Such term shall not include any portion 
        of the basis related to--
                    ``(A) permitting,
                    ``(B) land acquisition, or
                    ``(C) infrastructure associated with sourcing or 
                water discharge.
            ``(3) Certain qualified progress expenditures rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(4) Special rule for subsidized energy financing.--Rules 
        similar to the rules of section 48(a)(4) (without regard to 
        subparagraph (D) thereof) shall apply for purposes of this 
        section.
            ``(5) Limitation.--The amount which is treated for all 
        taxable years with respect to any qualifying efficient 
        industrial process water use project with respect to any site 
        shall not exceed $10,000,000.
    ``(c) Definitions.--
            ``(1) Qualifying efficient industrial process water use 
        project.--The term `qualifying efficient industrial process 
        water use project' means, with respect to any site, a project--
                    ``(A) which replaces or modifies a system for the 
                use of water or steam in the production of goods in the 
                trade or business of manufacturing (including any 
                system for the use of water derived from blow-down from 
                cooling towers and steam systems in the generation of 
                electric power at a site also used for the production 
                of goods in the trade or business of manufacturing), 
                and
                    ``(B) which is designed to achieve--
                            ``(i) a reduction of not less than 20 
                        percent in water withdrawal and a reduction of 
                        not less than 10 percent of water discharge 
                        when compared to the existing water use at the 
                        site, or
                            ``(ii) a reduction of not less than 10 
                        percent in water withdrawal and a reduction of 
                        not less than 20 percent of water discharge 
                        when compared to the existing water use at the 
                        site.
            ``(2) Eligible property.--The term `eligible property' 
        means any property--
                    ``(A) which is part of a qualifying efficient 
                industrial process water use project and which is 
                necessary for the reduction in withdrawals or discharge 
                described in paragraph (1)(B),
                    ``(B)(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
                    ``(C) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
            ``(3) Net energy consumption.--The term `net energy 
        consumption' means the energy consumed, both on-site and off-
        site, with respect to the water described in paragraph (1)(A). 
        Net energy consumption shall be normalized per unit of 
        industrial output and measured under rules and procedures 
        established by the Secretary, in consultation with the 
        Administrator of the Environmental Protection Agency.
            ``(4) Water discharge.--The term `water discharge' means 
        all water leaving the site via permitted or unpermitted surface 
        water discharges, discharges to publicly owned treatment works, 
        and shallow- or deep-injection (whether on-site or off-site).
            ``(5) Water withdrawal.--The term `water withdrawal' means 
        all water taken for use at the site from on-site ground and 
        surface water sources together with any water supplied to the 
        site by a public water system.
    ``(d) Termination.--This section shall not apply to periods after 
December 31, 2014, 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).''.
    (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 efficient industrial use 
                        water 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 efficient industrial process water use project 
                            credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to periods after January 1, 2011, 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. 112. MOTOR ENERGY EFFICIENCY IMPROVEMENT TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1, 
as amended by section 104, is amended by adding at the end the 
following new section:

``SEC. 45T. MOTOR ENERGY EFFICIENCY IMPROVEMENT TAX CREDIT.

    ``(a) In General.--For purposes of section 38, the motor energy 
efficiency improvement tax credit determined under this section for the 
taxable year is an amount equal to $120 multiplied by the motor 
horsepower of an appliance, machine, or equipment--
            ``(1) manufactured in such taxable year by a manufacturer 
        which incorporates an advanced motor system into a newly 
        designed appliance, machine, or equipment or into a redesigned 
        appliance, machine, or equipment which did not previously make 
        use of the advanced motor system, or
            ``(2) placed back into service in such taxable year by an 
        end user which upgrades an existing appliance, machine, or 
        equipment with an advanced motor system.
For any advanced motor system with a total horsepower of less than 10, 
such motor energy efficiency improvement tax credit is an amount which 
bears the same ratio to $120 as such total horsepower bears to 1 
horsepower.
    ``(b) Advanced Motor System.--For purposes of this section, the 
term `advanced motor system' means a motor and any required associated 
electronic control which--
            ``(1) offers variable or multiple speed operation, and
            ``(2) uses permanent magnet technology, electronically 
        commutated motor technology, switched reluctance motor 
        technology, or such other motor systems technologies as 
        determined by the Secretary of Energy.
    ``(c) Aggregate Per Taxpayer Limitation.--
            ``(1) In general.--The amount of the credit determined 
        under this section for any taxpayer for any taxable year shall 
        not exceed the excess (if any) of $2,000,000 over the aggregate 
        credits allowed under this section with respect to such 
        taxpayer for all prior taxable years.
            ``(2) Aggregation rules.--For purposes of this section, all 
        persons treated as a single employer under subsections (a) and 
        (b) of section 52 shall be treated as 1 taxpayer.
    ``(d) Special Rules.--
            ``(1) Basis reduction.--For purposes of this subtitle, the 
        basis of any property for which a credit is allowable under 
        subsection (a) shall be reduced by the amount of such credit so 
        allowed.
            ``(2) No double benefit.--No other credit shall be 
        allowable under this chapter for property with respect to which 
        a credit is allowed under this section.
            ``(3) Property used outside united states not qualified.--
        No credit shall be allowable under subsection (a) with respect 
        to any property referred to in section 50(b)(1).
    ``(e) Application.--This section shall not apply to property 
manufactured or placed back into service before the date which is 6 
months after the date of the enactment of this section or after 
December 31, 2013.''.
    (b) Conforming Amendments.--
            (1) Section 38(b), as amended by section 104, is amended by 
        striking ``plus'' at the end of paragraph (36), by striking the 
        period at the end of paragraph (37) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(38) the motor energy efficiency improvement tax credit 
        determined under section 45T.''.
            (2) Section 1016(a), as amended by section 105, 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 45T(d)(1).''.
            (3) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by section 104, is 
        amended by adding at the end the following new item:

``Sec. 45T. Motor energy efficiency improvement tax credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to property manufactured or placed back into service after the 
date which is 6 months after the date of the enactment of this Act.

SEC. 113. CREDIT FOR REPLACEMENT OF CFC REFRIGERANT CHILLER.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1, 
as amended by section 112, is amended by adding at the end the 
following new section:

``SEC. 45U. CFC CHILLER REPLACEMENT CREDIT.

    ``(a) In General.--For purposes of section 38, the CFC chiller 
replacement credit determined under this section for the taxable year 
is an amount equal to--
            ``(1) $150 multiplied by the tonnage rating of a CFC 
        chiller replaced with a new efficient chiller that is placed in 
        service by the taxpayer during the taxable year, plus
            ``(2) if all chilled water distribution pumps connected to 
        the new efficient chiller include variable frequency drives, 
        $100 multiplied by any tonnage downsizing.
    ``(b) CFC Chiller.--For purposes of this section, the term `CFC 
chiller' includes property which--
            ``(1) was installed after 1980 and before 1993,
            ``(2) utilizes chlorofluorocarbon refrigerant, and
            ``(3) until replaced by a new efficient chiller, has 
        remained in operation and utilized for cooling a commercial 
        building.
    ``(c) New Efficient Chiller.--For purposes of this section, the 
term `new efficient chiller' includes a water-cooled chiller which is 
certified to meet efficiency standards effective on January 1, 2010, as 
defined in table 6.8.1c in Addendum M to Standard 90.1-2007 of the 
American Society of Heating, Refrigerating, and Air Conditioning 
Engineers.
    ``(d) Tonnage Downsizing.--For purposes of this section, the term 
`tonnage downsizing' means the amount by which the tonnage rating of 
the CFC chiller exceeds the tonnage rating of the new efficient 
chiller.
    ``(e) Energy Audit.--As a condition of receiving a tax credit under 
this section, an energy audit shall be performed on the building prior 
to installation of the new efficient chiller, identifying cost-
effective energy-saving measures, particularly measures that could 
contribute to chiller downsizing. The audit shall satisfy criteria that 
shall be issued by the Secretary of Energy.
    ``(f) Property Used by Tax-Exempt Entity.--In the case of a CFC 
chiller replaced by a new efficient chiller the use of which is 
described in paragraph (3) or (4) of section 50(b), the person who sold 
such new efficient chiller to the entity shall be treated as the 
taxpayer that placed in service the new efficient chiller that replaced 
the CFC chiller, but only if such person clearly discloses to such 
entity in a document the amount of any credit allowable under 
subsection (a) and the person certifies to the Secretary that the 
person reduced the price the entity paid for such new efficient chiller 
by the entire amount of such credit.
    ``(g) Termination.--This section shall not apply to replacements 
made after December 31, 2012.''.
    (b) Conforming Amendments.--
            (1) Section 38(b), as amended by section 112, is amended by 
        striking ``plus'' at the end of paragraph (37), by striking the 
        period at the end of paragraph (38) and inserting ``, plus'', 
        and by adding at the end the following new paragraph:
            ``(39) the CFC chiller replacement credit determined under 
        section 45U.''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by section 112, is 
        amended by adding at the end the following new item:

``Sec. 45U. CFC chiller replacement credit.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to replacements made after the date of the enactment of this Act.

SEC. 114. MODIFICATIONS IN CREDIT FOR COMBINED HEAT AND POWER SYSTEM 
              PROPERTY.

    (a) Modification of Certain Capacity Limitations.--Section 
48(c)(3)(B) is amended--
            (1) by striking ``15 megawatts'' in clause (ii) and 
        inserting ``25 megawatts'',
            (2) by striking ``20,000 horsepower'' in clause (ii) and 
        inserting ``34,000 horsepower'', and
            (3) by striking clause (iii).
    (b) Nonapplication of Certain Rules.--Section 48(c)(3)(C) is 
amended by adding at the end the following new clause:
                            ``(iv) Nonapplication of certain rules.--
                        For purposes of determining if the term 
                        `combined heat and power system property' 
                        includes technologies which generate 
                        electricity or mechanical power using back-
                        pressure steam turbines in place of existing 
                        pressure-reducing valves or which make use of 
                        waste heat from industrial processes such as by 
                        using organic rankine, stirling, or kalina heat 
                        engine systems, subparagraph (A) shall be 
                        applied without regard to clause (ii).''.
    (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).

                 Subtitle C--Thermal Energy Efficiency

SEC. 121. BONUS DEPRECIATION FOR QUALIFYING ENERGY PROPERTY.

    (a) In General.--Section 168 is amended by adding at the end the 
following new subsection:
    ``(o) Special Allowance for Qualifying Energy Property.--
            ``(1) In general.--In the case of any efficient commercial 
        energy property--
                    ``(A) the depreciation deduction provided by 
                section 167(a) for the taxable year in which such 
                property is placed in service shall include an 
                allowance equal to 50 percent of the adjusted basis of 
                the efficient commercial energy property, and
                    ``(B) the adjusted basis of the efficient 
                commercial energy property shall be reduced by the 
                amount of such deduction before computing the amount 
                otherwise allowable as a depreciation deduction under 
                this chapter for such taxable year and any subsequent 
                taxable year.
            ``(2) Efficient commercial energy property.--For purposes 
        of this subsection--
                    ``(A) In general.--The term `efficient commercial 
                energy property' means any property placed in service 
                before January 1, 2012, which is used in a qualifying 
                heating conversion.
                    ``(B) Treatment of certain expenditures.--Such term 
                shall include fuel service connection installation 
                costs specifically related to fuel service to the 
                qualified energy property described in clause (ii) of 
                subparagraph (C) used in such conversion, but does not 
                include expenditures for soil cleanup.
                    ``(C) Qualifying heating conversion.--
                            ``(i) In general.--The term `qualifying 
                        heating conversion' means the use of qualified 
                        energy property described in clause (ii) to 
                        eliminate the reliance on fuel oil for a 
                        heating system and the removal of the fuel oil 
                        equipment (including any storage tank).
                            ``(ii) Qualified energy property.--
                        Qualified energy property is described in this 
                        clause if such property is--
                                    ``(I) a qualified natural gas hot 
                                water boiler as defined in section 
                                25C(d)(4)(B) by substituting `85 
                                percent' for `90 percent',
                                    ``(II) a qualified natural gas 
                                furnace as defined in section 
                                25C(d)(4)(A) by substituting `92 
                                percent' for `95 percent',
                                    ``(III) a biomass heating appliance 
                                described in section 25C(d)(3)(E), or
                                    ``(IV) a commercial natural gas hot 
                                water boiler or commercial natural gas 
                                furnace the efficiency of which is not 
                                measured based on an annual fuel 
                                utilization efficiency rate but which 
                                has a combustion efficiency comparable 
                                to the efficiency rate specified under 
                                subclause (I) or (II) as the Secretary 
                                shall determine (in consultation with 
                                the Department of Energy).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to property placed in service after the date of the enactment of this 
Act.

SEC. 122. EXTENSION OF REDUCED DEPRECIATION PERIOD FOR NATURAL GAS 
              DISTRIBUTION FACILITIES.

    (a) In General.--Clause (viii) of section 168(e)(3)(E) is amended 
to read as follows:
                            ``(viii) any natural gas distribution 
                        facility the original use of which commences 
                        with the taxpayer after April 11, 2005, and 
                        which is placed in service before January 1, 
                        2013, and''.
    (b) Effective Date.--The amendment made by this section shall take 
effect as if included in the amendments made section 1325(a) of the 
Energy Tax Incentives Act of 2005.

                      TITLE II--VEHICLE EFFICIENCY

SEC. 201. IDLING REDUCTION TAX CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1, 
as amended by section 113, is amended by adding at the end the 
following new section:

``SEC. 45V. IDLING REDUCTION CREDIT.

    ``(a) General Rule.--For purposes of section 38, the idling 
reduction tax credit determined under this section for the taxable year 
is an amount equal to the applicable percentage of the amount paid or 
incurred for each qualifying idling reduction device placed in service 
by the taxpayer during the taxable year.
    ``(b) Limitation.--The maximum amount allowed as a credit under 
subsection (a) for each qualifying idling reduction device shall not 
exceed the applicable credit amount for such device.
    ``(c) Applicable Percentage; Applicable Credit Amount.--
            ``(1) Devices with cooling capability.--In the case of any 
        qualifying idling reduction device with cooling capability for 
        the vehicle passenger compartment, the applicable percentage 
        and applicable credit amount shall be determined in accordance 
        with the following table:


----------------------------------------------------------------------------------------------------------------
   ``Device consumption of diesel gallon      Applicable
            equivalent per hour               percentage                 Applicable credit amount
----------------------------------------------------------------------------------------------------------------
Not more than 0.10.........................           50  $5,000
More than 0.10 but not more than 0.15......           40  $4,000
More than 0.15 but not more than 0.25......           30  $3,000
More than 0.25.............................            0  $0.
----------------------------------------------------------------------------------------------------------------

            ``(2) Devices with no cooling capability.--In the case of 
        any qualifying idling reduction device without any cooling 
        capability, the applicable percentage and applicable credit 
        amount shall be determined in accordance with the following 
        table:


----------------------------------------------------------------------------------------------------------------
   ``Device consumption of diesel gallon      Applicable
            equivalent per hour               percentage                 Applicable credit amount
----------------------------------------------------------------------------------------------------------------
Not more than 0.04.........................           50  $1,000
More than 0.04 but not more than 0.06......           50  $800
More than 0.06.............................            0  $0.
----------------------------------------------------------------------------------------------------------------

            ``(3) Modification authority.--The Administrator of the 
        Environmental Protection Agency, in consultation with the 
        Secretary, may modify the consumption thresholds categories 
        specified in the tables under paragraphs (1) and (2) by not 
        more than 0.05 diesel gallon equivalent per hour, but only if 
        testing procedures do not prove accurate enough to discern 
        between such specified categories.
    ``(d) Qualifying Idling Reduction Device.--For purposes of this 
section--
            ``(1) In general.--The term `qualifying idling reduction 
        device' means any on-board device or system of devices which--
                    ``(A) is installed on a heavy-duty diesel-powered 
                on-highway vehicle in conformance with safety 
                regulations under section 393 of title 49 of the Code 
                of Federal Regulations,
                    ``(B) is designed to provide to such vehicle those 
                services (such as heat, air conditioning, or 
                electricity) that would otherwise require the operation 
                of the main drive engine while the vehicle is 
                temporarily parked or remains stationary,
                    ``(C) is capable of providing power continuously 
                for such services for at least 8 consecutive hours,
                    ``(D) emits fewer oxides of nitrogen (NOx) and 
                particulate matter (PM) on a cumulative basis than 
                would be emitted by a 2010-compliant engine running for 
                the same amount of time (as determined under 
                Environmental Protection Agency emission standards and 
                supplemental requirements for 2007 and later model year 
                diesel heavy-duty engines and vehicles (40 C.F.R. 
                86.007-11)),
                    ``(E) the original use of which commences with the 
                taxpayer,
                    ``(F) is acquired for use by the taxpayer and not 
                for resale, and
                    ``(G) has had its average hourly fuel consumption 
                in diesel equivalent gallons verified by the Secretary, 
                in  consultation with the Administrator of the 
                Environmental Protection Agency.
            ``(2) Heavy-duty diesel-powered on-highway vehicle.--The 
        term `heavy-duty diesel-powered on-highway vehicle' means any 
        diesel-powered commercial motor vehicle with a gross vehicle 
        registered weight of at least 26,000 pounds (as defined by the 
        Secretary of Transportation) which is propelled or drawn by 
        mechanical power and used upon the highways in the 
        transportation of passengers or property.
            ``(3) Determination of verification standards.--The 
        Secretary, in consultation with the Administrator of the 
        Environmental Protection Agency, shall establish testing 
        methodology and standards for verifying qualifying idling 
        reduction devices.
    ``(e) No Double Benefit.--For purposes of this section--
            ``(1) Reduction in basis.--If a credit is determined under 
        this section with respect to any property by reason of 
        expenditures described in subsection (a), the basis of such 
        property shall be reduced by the amount of the credit so 
        determined.
            ``(2) Other deductions and credits.--No deduction or credit 
        shall be allowed under any other provision of this chapter with 
        respect to the amount of the credit determined under this 
        section.
    ``(f) Election Not To Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.
    ``(g) Termination.--This section shall not apply to any device 
placed in service after December 31, 2014.''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38, as amended by section 201, is amended by striking 
``plus'' at the end of paragraph (39), by striking the period at the 
end of paragraph (40) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
            ``(41) the idling reduction tax credit determined under 
        section 45V(a).''.
    (c) Conforming Amendments.--
            (1) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1, as amended by section 113, is 
        amended by adding at the end the following new item:

``Sec. 45V. Idling reduction credit.''.
            (2) Section 1016(a), as amended by section 201, is amended 
        by striking ``and'' at the end of paragraph (39), by striking 
        the period at the end of paragraph (40) and inserting ``, 
        and'', and by adding at the end the following:
            ``(41) in the case of a facility with respect to which a 
        credit was allowed under section 45V, to the extent provided in 
        section 45V(e)(A).''.
            (3) Section 6501(m), as amended by section 201, is amended 
        by inserting ``45V(f)'' after ``45H(g)''.
    (d) Effective Date.--The amendments made by this section shall 
apply to devices placed in service after the date of the enactment of 
this Act.

             TITLE III--PROMOTION OF DOMESTIC MANUFACTURING

SEC. 301. EXPANSION AND MODIFICATION OF QUALIFYING ADVANCED ENERGY 
              PROJECT CREDIT.

    (a) Credit Rate.--Section 48C(a) is amended by striking ``equal to 
30 percent'' and inserting ``the percentage determined by the Secretary 
(not to exceed 30 percent)''.
    (b) Dollar Limitation.--Section 48C(d)(1)(B) is amended by striking 
``$2,300,000,000'' and inserting ``$4,800,000,000''.
    (c) Effective Date.--The amendment made by this section shall apply 
to allocations for applications submitted after December 31, 2009.

SEC. 302. QUALIFYING INDUSTRIAL ENERGY EFFICIENCY PROJECT CREDIT.

    (a) In General.--Section 46 of the Internal Revenue Code of 1986, 
as amended by section 111, is amended by striking ``and'' at the end of 
paragraph (6), by striking the period at the end of paragraph (7), and 
by adding at the end the following new paragraph:
            ``(8) the qualifying industrial energy efficiency project 
        credit.''.
    (b) Amount of Credit.--Subpart E of part IV of subchapter A of 
chapter 1, as amended by section 111, is amended by inserting after 
section 48E the following new section:

``SEC. 48F. CREDIT FOR INDUSTRIAL ENERGY EFFICIENCY PROJECTS.

    ``(a) In General.--For purposes of section 46, the qualifying 
industrial energy efficiency project credit for any taxable year is an 
amount equal to 30 percent of the qualified investment for such taxable 
year with respect to any qualifying industrial energy efficiency 
project of an eligible taxpayer.
    ``(b) Eligible Taxpayer.--For purposes of this section--
            ``(1) In general.--The term `eligible taxpayer' means, with 
        respect to any taxable year, any taxpayer which is an 
        industrial source.
            ``(2) Industrial source.--The term `industrial source' 
        means any stationary source which--
                    ``(A) is not primarily an electricity source, and
                    ``(B) is in--
                            ``(i) the manufacturing sector (as defined 
                        in North American Industrial Classification 
                        System codes 31, 32, and 33), or
                            ``(ii) the natural gas processing or 
                        natural gas pipeline transportation sector (as 
                        defined in North American Industrial 
                        Classification System code 211112 or 486210).
    ``(c) Qualified Investment.--
            ``(1) In general.--For purposes of subsection (a), the 
        qualified investment for any taxable year is the basis of 
        eligible property placed in service by the taxpayer during such 
        taxable year which is part of a qualifying industrial energy 
        efficiency project.
            ``(2) Certain qualified progress expenditures rules made 
        applicable.--Rules similar to the rules of subsections (c)(4) 
        and (d) of section 46 (as in effect on the day before the 
        enactment of the Revenue Reconciliation Act of 1990) shall 
        apply for purposes of this section.
            ``(3) Limitation.--The amount which is treated for all 
        taxable years with respect to any qualifying industrial energy 
        efficiency project shall not exceed the amount designated by 
        the Secretary as eligible for the credit under this section.
    ``(d) Definitions.--
            ``(1) Qualifying industrial energy efficiency project.--The 
        term `qualifying industrial energy efficiency project' means a 
        project which reduces energy inputs for a given level of 
        production by capital expenditures.
            ``(2) Eligible property.--The term `eligible property' 
        means any property--
                    ``(A) which is necessary for the energy efficiency 
                improvement described in paragraph (1),
                    ``(B) which is--
                            ``(i) tangible personal property, or
                            ``(ii) other tangible property (not 
                        including a building or its structural 
                        components), but only if such property is used 
                        as an integral part of the qualifying 
                        industrial energy efficiency project, and
                    ``(C) with respect to which depreciation (or 
                amortization in lieu of depreciation) is allowable.
    ``(e) Qualifying Credit for Industrial Energy Efficiency Program.--
            ``(1) Establishment.--
                    ``(A) In general.--Not later than 180 days after 
                the date of the enactment of this section, the 
                Secretary, in consultation with the Secretary of 
                Energy, shall establish a qualifying credit for 
                industrial energy efficiency program to consider and 
                award certifications for qualified investments eligible 
                for credits under this section to qualifying industrial 
                energy efficiency project sponsors.
                    ``(B) Limitation.--The total amount of credits that 
                may be allocated under the program shall not exceed 
                $1,000,000,000.
            ``(2) Certification.--
                    ``(A) Application period.--Each applicant for 
                certification under this paragraph shall submit an 
                application containing such information as the 
                Secretary may require during the 2-year period 
                beginning on the date the Secretary establishes the 
                program under paragraph (1).
                    ``(B) Time to meet criteria for certification.--
                Each applicant for certification shall have 1 year from 
                the date of acceptance by the Secretary of the 
                application during which to provide to the Secretary 
                evidence that the requirements of the certification 
                have been met.
                    ``(C) Period of issuance.--An applicant which 
                receives a certification shall have 3 years from the 
                date of issuance of the certification in order to place 
                the project in service and if such project is not 
                placed in service by that time period, then the 
                certification shall no longer be valid.
            ``(3) Selection criteria.--In determining which qualifying 
        industrial energy efficiency projects to certify under this 
        section, the Secretary--
                    ``(A) shall take into consideration which 
                projects--
                            ``(i) will provide the greatest domestic 
                        job retention and creation (both direct and 
                        indirect) during the credit period,
                            ``(ii) will provide the greatest net impact 
                        in avoiding or reducing greenhouse gas 
                        emissions, and
                            ``(iii) will provide the greatest net 
                        reduction of pollutants.
            ``(4) Review and redistribution.--
                    ``(A) Review.--Not later than 4 years after the 
                date of the enactment of this section, the Secretary 
                shall review the credits allocated under this section 
                as of such date.
                    ``(B) Redistribution.--The Secretary may reallocate 
                credits awarded under this section if the Secretary 
                determines that--
                            ``(i) there is an insufficient quantity of 
                        qualifying applications for certification 
                        pending at the time of the review, or
                            ``(ii) any certification made pursuant to 
                        paragraph (2) has been revoked pursuant to 
                        paragraph (2)(B) because the project subject to 
                        the certification has been delayed as a result 
                        of third party opposition or litigation to the 
                        proposed project.
                    ``(C) Reallocation.--If the Secretary determines 
                that credits under this section are available for 
                reallocation pursuant to the requirements set forth in 
                paragraph (2), the Secretary is authorized to conduct 
                an additional program for applications for 
                certification.
            ``(5) Disclosure of allocations.--The Secretary shall, upon 
        making a certification under this subsection, publicly disclose 
        the identity of the applicant, the location of the project 
        which is the subject of the application, and the amount of the 
        credit with respect to such applicant.
    ``(f) Denial of Double Benefit.--A credit shall not be allowed 
under this section for any qualified investment for which a credit is 
allowed under section 48, 48A, 48B, or 48C.''.
    (c) Conforming Amendments.--
            (1) Section 49(a)(1)(C), as amended by section 111, is 
        amended--
                    (A) by striking ``and'' at the end of clause (vi),
                    (B) by striking the period at the end of clause 
                (vii) and inserting ``, and''; and
                    (C) by adding after clause (vii) the following new 
                clause:
                            ``(viii) the basis of any property which is 
                        part of a qualifying industrial energy 
                        efficiency project under section 48F.''.
            (2) The table of sections for subpart E of part IV of 
        subchapter A of chapter 1, as amended by section 111, is 
        amended by inserting after the item relating to section 48E the 
        following new item:

``48F. Credit for industrial energy efficiency projects.''.
    (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).

               TITLE IV--GRID EFFICIENCY AND RELIABILITY

SEC. 401. ENERGY INVESTMENT CREDIT FOR ENERGY STORAGE PROPERTY 
              CONNECTED TO THE GRID.

    (a) Up to 20 Percent Credit Allowed.--Subparagraph (A) of section 
48(a)(2) is amended--
            (1) by striking ``and'' at the end of subclause (IV) of 
        clause (i),
            (2) by striking ``clause (i)'' in clause (ii) and inserting 
        ``clause (i) or (ii)'',
            (3) by redesignating clause (ii) as clause (iii), and
            (4) by inserting after clause (i) the following new clause:
                            ``(ii) as provided in subsection (c)(5)(D), 
                        the percentage determined by the Secretary (not 
                        to excced 20 percent) in the case of qualified 
                        energy storage property, and''.
    (b) Qualified Energy Storage Property.--Subsection (c) of section 
48 is amended by adding at the end the following new paragraph:
            ``(5) Qualified energy storage property.--
                    ``(A) In general.--The term `qualified energy 
                storage property' means property--
                            ``(i) which is directly connected to the 
                        electrical grid, and
                            ``(ii) which is designed to receive 
                        electrical energy, to store such energy, and--
                                    ``(I) to convert such energy to 
                                electricity and deliver such 
                                electricity for sale, or
                                    ``(II) to use such energy to 
                                provide improved reliability or 
                                economic benefits to the grid.
                Such term may include hydroelectric pumped storage and 
                compressed air energy storage, regenerative fuel cells, 
                batteries, superconducting magnetic energy storage, 
                flywheels, thermal energy storage systems, and hydrogen 
                storage, or combination thereof, or any other 
                technologies as the Secretary, in consultation with the 
                Secretary of Energy, shall determine.
                    ``(B) Minimum capacity.--The term `qualified energy 
                storage property' shall not include any property unless 
                such property in aggregate has the ability to sustain a 
                power rating of at least 1 megawatt for a minimum of 1 
                hour.
                    ``(C) Electrical grid.--The term `electrical grid' 
                means the system of generators, transmission lines, and 
                distribution facilities which--
                            ``(i) are under the jurisdiction of the 
                        Federal Energy Regulatory Commission or State 
                        public utility commissions, or
                            ``(ii) are owned by--
                                    ``(I) the Federal government,
                                    ``(II) a State or any political 
                                subdivision of a State,
                                    ``(III) an electric cooperative 
                                that receives financing under the Rural 
                                Electrification Act of 1936 (7 U.S.C. 
                                901 et seq.) or that sells less than 
                                4,000,000 megawatt hours of electricity 
                                per year, or
                                    ``(IV) any agency, authority, or 
                                instrumentality of any one or more of 
                                the entities described in subclause (I) 
                                or (II), or any corporation which is 
                                wholly owned, directly or indirectly, 
                                by any one or more of such entities.
                    ``(D) Allocation of credits.--
                            ``(i) In general.--In the case of qualified 
                        energy storage property placed in service 
                        during the taxable year, the credit otherwise 
                        determined under subsection (a) for such year 
                        with respect to such property shall not exceed 
                        the amount allocated to such project under 
                        clause (ii).
                            ``(ii) National limitation and 
                        allocation.--There is a qualified energy 
                        storage property investment credit limitation 
                        of $1,500,000,000. Such limitation shall be 
                        allocated by the Secretary among qualified 
                        energy storage property projects selected by 
                        the Secretary, in consultation with the 
                        Secretary of Energy, for taxable years 
                        beginning after the date of the enactment of 
                        the Advanced Energy Tax Incentives Act of 2010, 
                        except that not more than $30,000,000 shall be 
                        allocated to any project for all such taxable 
                        years.
                            ``(iii) Selection criteria.--In making 
                        allocations under clause (ii), the Secretary, 
                        in consultation with the Secretary of Energy, 
                        shall select only those projects which have a 
                        reasonable expectation of commercial viability, 
                        select projects representing a variety of 
                        technologies, applications, and project sizes, 
                        and give priority to projects which--
                                    ``(I) provide the greatest increase 
                                in reliability or the greatest economic 
                                benefit,
                                    ``(II) enable the greatest 
                                improvement in integration of renewable 
                                resources into the grid, or
                                    ``(III) enable the greatest 
                                increase in efficiency in operation of 
                                the grid.
                            ``(iv) Deadlines.--
                                    ``(I) In general.--If a project 
                                which receives an allocation under 
                                clause (ii) is not placed in service 
                                within 2 years after the date of such 
                                allocation, such allocation shall be 
                                invalid.
                                    ``(II) Special rule for 
                                hydroelectric pumped storage.--
                                Notwithstanding subclause (I), in the 
                                case of a hydroelectric pumped storage 
                                project, if such project has not 
                                received such permits or licenses as 
                                are determined necessary by the 
                                Secretary, in consultation with the 
                                Secretary of Energy, within 3 years 
                                after the date of such allocation, 
                                begun construction within 5 years after 
                                the date of such allocation, and been 
                                placed in service within 8 years after 
                                the date of such allocation, such 
                                allocation shall be invalid.
                                    ``(III) Special rule for compressed 
                                air energy storage.--Notwithstanding 
                                subclause (I), in the case of a 
                                compressed air energy storage project, 
                                if such project has not begun 
                                construction within 3 years after the 
                                date of the allocation and been placed 
                                in service within 5 years after the 
                                date of such allocation, such 
                                allocation shall be invalid.
                                    ``(IV) Exceptions.--The Secretary 
                                may extend the 2-year period in 
                                subclause (I) or the periods described 
                                in subclauses (II) and (III) on a 
                                project-by-project basis if the 
                                Secretary, in consultation with the 
                                Secretary of Energy, determines that 
                                there has been a good faith effort to 
                                begin construction or to place the 
                                project in service, whichever is 
                                applicable, and that any delay is 
                                caused by factors not in the taxpayer's 
                                control.
                    ``(E) Review and redistribution.--
                            ``(i) Review.--Not later than 4 years after 
                        the date of the enactment of the Advanced 
                        Energy Tax Incentives Act of 2010, the 
                        Secretary shall review the credits allocated 
                        under subparagraph (D) as of the date of such 
                        review.
                            ``(ii) Redistribution.--Upon the review 
                        described in clause (i), the Secretary may 
                        reallocate credits allocated under subparagraph 
                        (D) if the Secretary determines that--
                                    ``(I) there is an insufficient 
                                quantity of qualifying applications for 
                                certification pending at the time of 
                                the review, or
                                    ``(II) any allocation made under 
                                subparagraph (D)(ii) has been revoked 
                                pursuant to subparagraph (D)(iv) 
                                because the project subject to such 
                                allocation has been delayed.
                    ``(F) Disclosure of allocations.--The Secretary 
                shall, upon making an allocation under subparagraph 
                (D)(ii), publicly disclose the identity of the 
                applicant, the location of the project, and the amount 
                of the credit with respect to such applicant.
                    ``(G) Termination.--No credit shall be allocated 
                under subparagraph (D) for any period ending after 
                December 31, 2020.''.
    (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).

SEC. 402. ENERGY STORAGE PROPERTY CONNECTED TO THE GRID ELIGIBLE FOR 
              NEW CLEAN RENEWABLE ENERGY BONDS.

    (a) In General.--Paragraph (1) of section 54C(d) 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 qualified energy storage property (as 
                defined in section 48(c)(5)), 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.

SEC. 403. ENERGY INVESTMENT CREDIT FOR ONSITE ENERGY STORAGE.

    (a) Credit Allowed.--Clause (i) of section 48(a)(2)(A), as amended 
by section 401, is amended--
            (1) by striking ``and'' at the end of subclause (III),
            (2) by inserting ``and'' at the end of subclause (IV), and
            (3) by adding at the end the following new subclause:
                                    ``(V) qualified onsite energy 
                                storage property,''.
    (b) Qualified Onsite Energy Storage Property.--Subsection (c) of 
section 48, as amended by section 401, is amended by adding at the end 
the following new paragraph:
            ``(6) Qualified onsite energy storage property.--
                    ``(A) In general.--The term `qualified onsite 
                energy storage property' means property which--
                            ``(i) provides supplemental energy to 
                        reduce peak energy requirements primarily on 
                        the same site where the storage is located, or
                            ``(ii) is designed and used primarily to 
                        receive and store intermittent renewable energy 
                        generated onsite and to deliver such energy 
                        primarily for onsite consumption.
                Such term may include thermal energy storage systems 
                and property used to charge plug-in and hybrid electric 
                vehicles if such property or vehicles are equipped with 
                smart grid services which control time-of-day charging 
                and discharging of such vehicles. Such term shall not 
                include any property for which any other credit is 
                allowed under this chapter.
                    ``(B) Minimum capacity.--The term `qualified onsite 
                energy storage property' shall not include any property 
                unless such property in aggregate--
                            ``(i) has the ability to store the energy 
                        equivalent of at least 20 kilowatt hours of 
                        energy,
                            ``(ii) has the ability to have an output of 
                        the energy equivalent of 5 kilowatts of 
                        electricity for a period of 4 hours, and
                            ``(iii) has a roundtrip energy storage 
                        efficiency of not less than 70 percent.
                    ``(C) Limitation.--In the case of qualified onsite 
                energy storage property placed in service during the 
                taxable year, the credit otherwise determined under 
                subsection (a) for such year with respect to such 
                property shall not exceed $1,000,000.''.
    (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).

SEC. 404. CREDIT FOR RESIDENTIAL ENERGY STORAGE EQUIPMENT.

    (a) Credit Allowed.--Subsection (a) of section 25C is amended--
            (1) by redesignating paragraphs (2) and (3) as paragraphs 
        (3) and (4), respectively, and
            (2) by inserting after paragraph (1) the following new 
        paragraph:
            ``(2) 30 percent of the amount paid or incurred by the 
        taxpayer for qualified residential energy storage equipment 
        installed during such taxable year,''.
    (b) Qualified Residential Energy Storage Equipment.--
            (1) In general.--Section 25C is amended--
                    (A) by redesignating subsections (e), (f), and (g) 
                subsections (f), (g), and (h), respectively, and
                    (B) by inserting after subsection (d) the following 
                new subsection:
    ``(d) Qualified Residential Energy Storage Equipment.--For purposes 
of this section, the term `qualified residential energy storage 
equipment' means property--
            ``(1) which is installed in or on a dwelling unit located 
        in the United States and owned and used by the taxpayer as the 
        taxpayer's principal residence (within the meaning of section 
        121), or on property owned by the taxpayer on which such a 
        dwelling unit is located,
            ``(2) which--
                    ``(A) provides supplemental energy to reduce peak 
                energy requirements primarily on the same site where 
                the storage is located, or
                    ``(B) is designed and used primarily to receive and 
                store intermittent renewable energy generated onsite 
                and to deliver such energy primarily for onsite 
                consumption,
            ``(3) which has a roundtrip energy storage efficiency of 
        not less than 70 percent, and
            ``(4) which--
                    ``(A) has the ability to store the energy 
                equivalent of at least 2 kilowatt hours of energy, and
                    ``(B) has the ability to have an output of the 
                energy equivalent of 500 watts of electricity for a 
                period of 4 hours.
Such term may include thermal energy storage systems and property used 
to charge plug-in and hybrid electric vehicles if such property or 
vehicles are equipped with smart grid services which control time-of-
day charging and discharging of such vehicles. Such term shall not 
include any property for which any other credit is allowed under this 
chapter.''.
            (2) Conforming amendment.--Section 1016(a)(33) is amended 
        by striking ``section 25C(f)'' and inserting ``section 
        25C(g)''.
    (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. 405. CLARIFICATION OF TYPES OF ENERGY CONSERVATION SUBSIDIES 
              PROVIDED BY PUBLIC UTILITIES ELIGIBLE FOR INCOME 
              EXCLUSION.

    (a) In General.--Section 136 is amended by redesignating subsection 
(d) as subsection (e) and by inserting after subsection (c) the 
following new subsection:
    ``(d) Net Metering or Net Billing Programs; Renewable Energy 
Credits.--
            ``(1) In general.--For purposes of this section, the term 
        `subsidy' includes amounts received by a customer from a public 
        utility--
                    ``(A) to pay for electricity generated from an 
                energy conservation measure under a net metering or net 
                billing program, or
                    ``(B) to pay for renewable energy credits 
                attributable to an energy conservation measure.
            ``(2) Limitation.--The amount treated as a subsidy for any 
        taxable year by reason of paragraph (1)(B) shall not exceed an 
        amount equal to--
                    ``(A) $2,000, multiplied by
                    ``(B) the whole number of years worth of renewable 
                energy credits that are sold by the customer.
            ``(3) No basis reduction.--Subsection (b) shall not apply 
        with respect to property any portion of the basis of which is 
        attributable to an amount described in paragraph (1).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to amounts received after the date of the enactment of this Act.

SEC. 406. EXTENSION OF CREDITS RELATED TO THE PRODUCTION OF ELECTRICITY 
              FROM OFFSHORE WIND.

    (a) Extension for Production Credit.--
            (1) In general.--Paragraph (1) of section 45(d) is amended 
        by inserting ``(January 1, 2016, in the case of any offshore 
        facility)'' after ``and before January 1, 2013''.
            (2) Offshore facility.--Section 45(e) is amended by adding 
        at the end the following new paragraph:
            ``(12) Offshore facility.--The term `offshore facility' 
        means any facility located in the inland navigable waters of 
        the United States, including the Great Lakes, or in the coastal 
        waters of the United States, including the territorial seas of 
        the United States, the exclusive economic zone of the United 
        States, and the outer Continental Shelf of the United 
        States.''.
    (b) Extension for Investment Credit.--Clause (i) of section 
48(a)(5)(C) is amended--
            (1) by striking ``is placed in service in'' and inserting 
        ``is--
                                    ``(I) except as provided in 
                                subclause (II), placed in service in'',
            (2) by striking the period at the end and inserting ``, 
        and'', and
            (3) by adding at the end the following new subclause:
                                    ``(II) in the case of an offshore 
                                facility (as defined in section 
                                45(e)(12)), such facility is placed in 
                                service after 2008 and before 2016.''.
    (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 V--CARBON CAPTURE AND SEQUESTRATION

SEC. 501. IMPROVED AVAILABILITY OF THE CREDIT FOR CARBON DIOXIDE 
              SEQUESTRATION.

    (a) Increase in Total Credit Available.--Section 45Q(e) is amended 
by striking ``75,000,000 metric tons'' and inserting ``100,000,000 
metric tons''.
    (b) Amount of Credit Per Project.--Section 45Q(a) is amended by 
adding at the end the following new flush sentence:
``The amount which is treated as a carbon dioxide sequestration credit 
for all taxable years with respect to any qualified facility shall not 
exceed the amount designated by the Secretary, in consultation with the 
Secretary of Energy, as eligible for the credit under this section, but 
in no event shall such designated credit result in more than 10,000,000 
metric tons of qualified carbon dioxide being taken into account under 
this subsection.''.
    (c) Increase in Credit Amount for Permanent Sequestration.--Section 
45Q(a)(1) is amended by striking ``$20'' and inserting ``$35''.
    (d) Modification of Qualified Facility Eligibility.--Section 45Q(c) 
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) with respect to which such taxpayer shows contractual 
        intent to inject and permanently sequester the full amount of 
        captured carbon dioxide.''.
    (e) Credit Allocation Program.--Section 45Q is amended by adding at 
the end the following new subsection:
    ``(f) Carbon Dioxide Sequestration Program.--
            ``(1) Establishment.--Not later than 180 days after the 
        date of enactment of this section, the Secretary, in 
        consultation with the Secretary of Energy, shall establish a 
        carbon dioxide sequestration program to consider and award 
        certifications for carbon dioxide sequestration credits under 
        this section to qualified facility sponsors.
            ``(2) Certification.--
                    ``(A) Application period.--Each applicant for 
                certification under this paragraph shall submit an 
                application containing such information as the 
                Secretary, in consultation with the Secretary of 
                Energy, may require during 1 or more application 
                periods. Each application period shall be announced at 
                least 6 months in advance of the application due dates, 
                along with the evaluation criteria that will be used to 
                assess applications.
                    ``(B) Scope and review of applications.--Applicants 
                may apply to the Secretary for an allocation of tax 
                credits under this section for a period of 10 years 
                based on expected carbon dioxide injection rates once 
                the sponsor of the qualified facility has received air 
                permits necessary to commence construction under the 
                Clean Air Act. The Secretary, in consultation with the 
                Secretary of Energy, shall notify each qualified 
                applicant for such credits that the applicant has met 
                the requirements for an allocation of the anticipated 
                metric tons of carbon dioxide injected from the 
                qualified facility within 180 days of receipt of an 
                application.
                    ``(C) Contents of application.--Each application 
                shall include the following:
                            ``(i) Identification of facility, location, 
                        and ownership.
                            ``(ii) Status and outlook for any State or 
                        Federal regulatory approvals required.
                            ``(iii) The total amount of metric tons of 
                        carbon dioxide requested for a tax credit under 
                        this section.
                            ``(iv) The total dollar value of the 
                        requested tax credit under this section.
                    ``(D) Period of issuance; reallocation.--An 
                applicant which receives a certification shall have 18 
                months from the date of issuance of the certification 
                in order to commence construction of the qualified 
                facility within the meaning of the Clean Air Act. If 
                such construction is not begun within such time period, 
                or if the sponsor fails as determined by the Secretary, 
                in consultation with the Secretary of Energy, to 
                commence operation within the meaning of the Clean Air 
                Act or establish carbon dioxide injection of at least 
                50 percent of the annualized pre-certified carbon 
                dioxide injection metric tons for such facility within 
                72 months of such issuance, the certification shall no 
                longer be valid and the credits shall be forfeited and 
                reallocated by the Secretary, in consultation with the 
                Secretary of Energy.
            ``(3) Selection criteria.--
                    ``(A) In general.--In determining which facilities 
                to certify under this section, the Secretary, in 
                consultation with the Secretary of Energy, shall take 
                into consideration--
                            ``(i) which facilities--
                                    ``(I) participate in a public-
                                private partnership,
                                    ``(II) achieve commercial scale and 
                                a reasonable expectation of economic 
                                viability, and
                                    ``(III) achieve the highest 
                                percentage of carbon dioxide captured 
                                and sequestered from the facility's 
                                nameplate capacity, and
                            ``(ii) to the extent that it does not 
                        compromise facility quality or environmental 
                        benefits of the total program, awarding credits 
                        to facilities in a variety of geographic 
                        locations and geologic sequestration 
                        formations.
                    ``(B) Public-private partnership.--For purposes of 
                subparagraph (A)(i)(I), the term `public-private 
                partnership' means a contract between a public sector 
                authority and a private party, in which the private 
                party provides a public service or facility and assumes 
                substantial financial, technical, and operational risk 
                in the facility. The public sector authority may also 
                bear financial, technical, or operational risk in the 
                form of grants, loans, or tax incentives.
            ``(4) Disclosure of allocations.--The Secretary shall, upon 
        making a certification under this subsection, publicly disclose 
        the identity of the applicant, the location of the relevant 
        project, and the amount of the credit with respect to such 
        applicant.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to allocations after the date of the enactment of this Act.

              TITLE VI--PROMOTION OF CLEAN DOMESTIC FUELS

SEC. 601. ALGAE TREATED AS A QUALIFIED FEEDSTOCK FOR PURPOSES OF THE 
              CELLULOSIC BIOFUEL PRODUCER CREDIT, ETC.

    (a) In General.--Subclause (I) of section 40(b)(6)(E)(i) is amended 
to read as follows:
                                    ``(I) is derived solely from 
                                qualified feedstocks, and''.
    (b) Qualified Feedstock; Special Rules for Algae.--Paragraph (6) of 
section 40(b) is amended by redesignating subparagraphs (F), (G), and 
(H) as subparagraphs (H), (I), and (J), respectively, and by inserting 
after subparagraph (E) the following new subparagraphs:
                    ``(F) Qualified feedstock.--For purposes of this 
                paragraph, the term `qualified feedstock' means--
                            ``(i) any lignocellulosic or hemicellulosic 
                        matter that is available on a renewable or 
                        recurring basis, and
                            ``(ii) any cultivated algae, cyanobacteria, 
                        or lemna.
                    ``(G) Special rules for algae.--In the case of fuel 
                which is derived from feedstock described in 
                subparagraph (F)(ii) and which is sold by the taxpayer 
                to another person for refining by such other person 
                into a fuel which meets the requirements of 
                subparagraph (E)(i)(II)--
                            ``(i) such sale shall be treated as 
                        described in subparagraph (C)(i),
                            ``(ii) such fuel shall be treated as 
                        meeting the requirements of subparagraph 
                        (E)(i)(II) in the hands of such taxpayer, and
                            ``(iii) except as provided in this 
                        subparagraph, such fuel (and any fuel derived 
                        from such fuel) shall not be taken into account 
                        under subparagraph (C) with respect to the 
                        taxpayer or any other person.''.
    (c) Algae Treated as a Qualified Feedstock for Purposes of Bonus 
Depreciation for Biofuel Plant Property.--
            (1) In general.--Subparagraph (A) of section 168(l)(2) is 
        amended by striking ``solely to produce cellulosic biofuel'' 
        and inserting ``solely to produce second generation biofuel (as 
        defined in section 40(b)(6)(E))''.
            (2) Conforming amendments.--Subsection (l) of section 168 
        is amended--
                    (A) by striking ``cellulosic biofuel'' each place 
                it appears in the text thereof and inserting ``second 
                generation biofuel'',
                    (B) by striking paragraph (3) and redesignating 
                paragraphs (4) through (8) as paragraphs (3) through 
                (7), respectively,
                    (C) by striking ``Cellulosic'' in the heading of 
                such subsection and inserting ``Second Generation'', 
                and
                    (D) by striking ``cellulosic'' in the heading of 
                paragraph (2) and inserting ``second generation''.
    (d) Conforming Amendments.--
            (1) Section 40, as amended by subsection (b), is amended--
                    (A) by striking ``cellulosic biofuel'' each place 
                it appears in the text thereof and inserting ``second 
                generation biofuel'',
                    (B) by striking ``Cellulosic'' in the headings of 
                subsections (b)(6), (b)(6)(E), and (d)(3)(D) and 
                inserting ``Second generation'', and
                    (C) by striking ``cellulosic'' in the headings of 
                subsections (b)(6)(C), (b)(6)(D), (b)(6)(H), (d)(6), 
                and (e)(3) and inserting ``second generation''.
            (2) Clause (ii) of section 40(b)(6)(E) is amended by 
        striking ``Such term shall not'' and inserting ``The term 
        `second generation biofuel' shall not''.
            (3) Paragraph (1) of section 4101(a) is amended by striking 
        ``cellulosic biofuel'' and inserting ``second generation 
        biofuel''.
    (e) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), the 
        amendments made by this section shall apply to fuels sold or 
        used after the date of the enactment of this Act.
            (2) Application to bonus depreciation.--The amendments made 
        by subsection (c) shall apply to property placed in service 
        after the date of the enactment of this Act.
                                 <all>