[Congressional Record Volume 149, Number 52 (Tuesday, April 1, 2003)]
[Senate]
[Pages S4640-S4641]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LIEBERMAN (for himself, Ms. Snowe, Mr. Dodd, Mr. Allen, 
        Mrs. Clinton, Mr. Harkin, and Mr. Akaka):
  S. 758. A bill to amend the Internal Revenue Code of 1986 to allow a 
credit against income tax for certain energy-efficient property; to the 
Committee on Finance.
  (At the request of Mr. DODD, the following statement was ordered to 
be printed in the Record.)
 Mr. LIEBERMAN. Mr. President, I rise today to introduce a 
bill, with Senator Olympia Snowe, to encourage the use of fuel cells, a 
clean and cutting-edge energy technology. Specifically, the bill would 
give consumers a tax credit for purchasing residential and commercial 
fuel cell systems to power their electricity. The tax credit would 
apply to stationary and portable fuel cell systems, and would be 
applicable for 5 years.
  First used for space missions in the 1960s, fuel cells use an 
electrochemical reaction to convert energy from hydrogen-rich fuel 
sources into electricity. Because no combustion is involved, fuel cells 
produce virtually no air pollution and significantly reduce carbon 
dioxide emissions. Fuel cell units in operation today are capable of 
running 24 hours a day, 7 days a week, with only routine maintenance. 
They are installed around the world in power plants, hospitals, 
schools, banks, military installations, and manufacturing facilities. 
Smaller units for homeowners and small businesses will enter the 
commercial market shortly.
  Fuel cell technology offers a clean, secure, and dependable source of 
energy that should be part of our national energy strategy. With oil 
and gas prices now reaching record highs, fuel cells are one excellent 
answer to our heightened energy demand and dependence on foreign oil. 
This legislation will power fuel cell technology by speeding its market 
introduction and by increasing its uses in our everyday lives.
  Mr. President, I ask that the bill be printed in the Record.

                                 S. 758

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

     SECTION 1. CREDIT FOR CERTAIN ENERGY-EFFICIENT PROPERTY.

       (a) Business Property.--
       (1) In general.--Subparagraph (A) of section 48(a)(3) of 
     the Internal Revenue Code of 1986 (defining energy property) 
     is amended by striking ``or'' at the end of clause (i), by 
     adding ``or'' at the end of clause (ii), and by inserting 
     after clause (ii) the following new clause:
       ``(iii) energy-efficient building property,''.
       (2) Energy-efficient building property.--Subsection (a) of 
     section 48 of such Code is amended by redesignating 
     paragraphs (4) and (5) as paragraphs (5) and (6), 
     respectively, and by inserting after paragraph (3) the 
     following new paragraph:
       ``(4) Energy-efficient building property.--For purposes of 
     this subsection--
       ``(A) In general.--The term `energy-efficient building 
     property' means a fuel cell power plant that--
       ``(i) generates electricity using an electrochemical 
     process,
       ``(ii) has an electricity-only generation efficiency 
     greater than 30 percent, and
       ``(iii) generates at least 0.5 kilowatt of electricity 
     using an electrochemical process.
       ``(B) Limitation.--In the case of energy-efficient building 
     property placed in service during the taxable year, the 
     credit determined under paragraph (1) for such year with 
     respect to such property shall not exceed an amount equal to 
     the lesser of--
       ``(i) 30 percent of the basis of such property, including 
     expenditures for labor costs properly allocable to the onsite 
     preparation, assembly, or original installation of the 
     property and for piping or wiring to interconnect such 
     property, or
       ``(ii) $1,000 for each kilowatt of capacity of such 
     property.
       ``(C) Special rules.--For purposes of subparagraph 
     (A)(ii)--
       ``(i) Electricity-only generation efficiency.--The 
     electricity-only generation efficiency percentage of a fuel 
     cell power plant is the fraction--

       ``(I) the numerator of which is the total useful electrical 
     power produced by such plant at normal operating rates, and 
     expected to be consumed in its normal application, and
       ``(II) the denominator of which is the lower heating value 
     of the fuel source for such plant.

       ``(ii) Determinations made on btu basis.--The electricity-
     only generation efficiency percentage shall be determined on 
     a Btu basis.
       ``(D) Fuel cell power plant.--The term `fuel cell power 
     plant' means an integrated system comprised of a fuel cell 
     stack assembly and associated balance of plant components 
     that converts a fuel into electricity using electrochemical 
     means.
       ``(E) Termination.--Such term shall not include any 
     property placed in service after December 31, 2008.''.
       (3) Limitation.--Section 48(a)(2)(A) of such Code (relating 
     to energy percentage) is amended to read as follows:
       ``(A) In general.--The energy percentage is--
       ``(i) in the case of energy-efficient building property, 30 
     percent, and
       ``(ii) in the case of any other energy property, 10 
     percent.''.
       (4) Conforming amendments.--
       (A) Section 29(b)(3)(A)(i)(III) of such Code is amended by 
     striking ``section 48(a)(4)(C)'' and inserting ``section 
     48(a)(5)(C)''.
       (B) Section 48(a)(1) of such Code is amended by inserting 
     ``except as provided in paragraph (4)(B),'' before ``the 
     energy''.
       (5) Effective date.--The amendments made by this subsection 
     shall apply to property placed in service after December 31, 
     2003, 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).
       (b) Nonbusiness Property.--
       (1) In general.--Subpart A of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     nonrefundable personal credits) is amended by inserting after 
     section 25B the following new section:

     ``SEC. 25C. NONBUSINESS ENERGY-EFFICIENT BUILDING PROPERTY.

       ``(a) Credit Allowed.--
       ``(1) 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 
     nonbusiness energy-efficient building property expenditures 
     which are paid or incurred during such year.
       ``(2) Limitation.--The credit allowed under paragraph (1) 
     with respect to property placed in service by the taxpayer 
     during the taxable year shall not exceed an amount equal to 
     the lesser of--
       ``(A) 30 percent of the basis of such property, or
       ``(B) $1,000 for each kilowatt of capacity of such 
     property.
       ``(b) Nonbusiness Energy-Efficient Building Property 
     Expenditures.--For purposes of this section--
       ``(1) In general.--The term `nonbusiness energy-efficient 
     building property expenditures' means expenditures made by 
     the taxpayer for nonbusiness energy-efficient building 
     property installed on or in connection with a dwelling unit--
       ``(A) which is located in the United States, and
       ``(B) which is used by the taxpayer as a residence.

     Such term includes expenditures for labor costs properly 
     allocable to the onsite preparation, assembly, or original 
     installation of the property.
       ``(2) Nonbusiness energy-efficient building property.--The 
     term `nonbusiness energy-efficient building property' means 
     energy-efficient building property (as defined in section 
     48(a)(4)) if--
       ``(A) the original use of such property commences with the 
     taxpayer, and
       ``(B) such property meets the standards (if any) applicable 
     to such property under section 48(a)(3).
       ``(c) Special Rules.--For purposes of this section--
       ``(1) Dollar amounts in case of joint occupancy.--In the 
     case of any dwelling unit which is jointly occupied and used 
     during any calendar year as a residence by 2 or more 
     individuals the following shall apply:
       ``(A) The amount of the credit allowable, under subsection 
     (a) by reason of expenditures (as the case may be) made 
     during such

[[Page S4641]]

     calendar year by any of such individuals with respect to such 
     dwelling unit shall be determined by treating all of such 
     individuals as 1 taxpayer whose taxable year is such calendar 
     year.
       ``(B) There shall be allowable, with respect to such 
     expenditures to each of such individuals, a credit under 
     subsection (a) for the taxable year in which such calendar 
     year ends in an amount which bears the same ratio to the 
     amount determined under subparagraph (A) as the amount of 
     such expenditures made by such individual during such 
     calendar year bears to the aggregate of such expenditures 
     made by all of such individuals during such calendar year.
       ``(2) Tenant-stockholder in cooperative housing 
     corporation.--In the case of an individual who is a tenant-
     stockholder (as defined in section 216) in a cooperative 
     housing corporation (as defined in such section), such 
     individual shall be treated as having made his tenant-
     stockholder's proportionate share (as defined in section 
     216(b)(3)) of any expenditures of such corporation.
       ``(3) Condominiums.--
       ``(A) In general.--In the case of an individual who is a 
     member of a condominium management association with respect 
     to a condominium which the individual owns, such individual 
     shall be treated as having made his proportionate share of 
     any expenditures of such association.
       ``(B) Condominium management association.--For purposes of 
     this paragraph, the term `condominium management association' 
     means an organization which meets the requirements of 
     paragraph (1) of section 528(c) (other than subparagraph (E) 
     thereof) with respect to a condominium project substantially 
     all of the units of which are used as residences.
       ``(4) Allocation in certain cases.--If less than 80 percent 
     of the use of an item is for nonbusiness purposes, only that 
     portion of the expenditures for such item which is properly 
     allocable to use for nonbusiness purposes shall be taken into 
     account.
       ``(5) When expenditure made; amount of expenditure.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an expenditure with respect to an item shall be treated as 
     made when the original installation of the item is completed.
       ``(B) Expenditures part of building construction.--In the 
     case of an expenditure in connection with the construction or 
     reconstruction of a structure, such expenditure shall be 
     treated as made when the original use of the constructed or 
     reconstructed structure by the taxpayer begins.
       ``(C) Amount.--The amount of any expenditure shall be the 
     cost thereof.
       ``(6) Property financed by subsidized energy financing.--
     For purposes of determining the amount of nonbusiness energy-
     efficient building property expenditures made by any 
     individual with respect to any dwelling unit, there shall not 
     be taken into account expenditures which are made from 
     subsidized energy financing (as defined in section 
     48(a)(5)(C)).
       ``(d) Basis Adjustments.--For purposes of this subtitle, if 
     a credit is allowed under this section for 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.
       ``(e) Termination.--This section shall not apply to any 
     expenditure made after December 31, 2008.''.
       (2) Conforming amendments.--
       (A) Subsection (a) of section 1016 of such Code is amended 
     by striking ``and'' at the end of paragraph (27), by striking 
     the period at the end of paragraph (28) and inserting ``; 
     and'', and by adding at the end the following new paragraph:
       ``(29) to the extent provided in section 25C(d), in the 
     case of amounts with respect to which a credit has been 
     allowed under section 25C.''.
       (B) The table of sections for subpart A of part IV of 
     subchapter A of chapter 1 of such Code is amended by 
     inserting after the item relating to section 25B the 
     following new item:

``Sec. 25C. Nonbusiness energy-efficient building property.''.
       (3) Effective date.--The amendments made by this subsection 
     shall apply to expenditures made after December 31, 2003.

  Ms. SNOWE. Mr. President, I rise today with my colleague from 
Connecticut, Senator Lieberman, to introduce a bill that will promote 
the expanded use of an environmentally sound and efficient energy 
technology--fuel cell power.
  The United States has had a long, inseparable relationship with 
energy. The Americans of the 19th century would not have populated the 
West as they did without the railroad and its steam engines. New York's 
Pearl Street Station, designed by Thomas Edison in 1882, demonstrated 
the immense possibilities of large-scale electricity generation that 
would revolutionize our Nation and the world. And, of course, the 20th 
century is posted with landmark American innovations an inventions in 
oil use and production, nuclear power, and solar energy.
  As we begin our journey into the 21st century, we must begin a new 
chapter for energy use through fuel cell power. Fuel cells are not a 
futuristic dream, as every manned U.S. space mission has relied upon 
fuel cells for electricity and drinking water. From a New York City 
police station to a postal facility in Alaska to hospitals, schools, 
banks, military installations and manufacturing facilities around the 
world, fuel cell units are efficiently generating dependable power 24 
hours a day, 7 days a week for upwards of 2 years with only routine 
maintenance.
  Fuel cell technology offers a clean, secure, efficient, and 
dependable source of energy that should be part of our national energy 
strategy. Not only do fuel cells deliver the high quality, reliable 
power that is considered an absolute necessity for many portions of our 
society, they reduce grid demand while improving grid flexibility. Fuel 
cells are an ideal energy source to address the Nation's pressing 
energy needs.
  Using electro-chemical reaction to convert energy from hydrogen-rich 
fuel cell sources into electricity, fuel cells reduce the need for 
fossil fuel consumption. And, since no combustion is involved, fuel 
cells produce virtually no air pollution and significantly reduce 
carbon dioxide emissions, the major greenhouse gas thought to be 
responsible for climate change variability. In fact, a 200 kilowatt 
fuel power plant produces less than one ounce of pollutants for every 
1,000 kilowatt hours of electricity it yields. In comparison, the 
average fossil fuel plans produces nearly 25 pounds of pollutants to 
generate the same 1,000 kilowatt hours of electricity. That is 400 
times the amount of a fuel cell power plant.
  The current problem is that it is difficult for the consumer to take 
advantage of fuel cells because, as with any new technology, the 
introductory price is high. To create the market incentives necessary 
to speed the commercialization of this technology, the Lieberman-Snow 
legislation provides a property owner a five year, $1,000 per kilowatt 
stationary fuel cell tax credit, including labor and installation 
costs, for business and non business power plants--stationary and 
portable--that have an electrical generation efficiency greater than 30 
percent and generate at least 0.5 kilowatts of electricity using an 
electrochemical process. To put this electrical generation in 
perspective, a home uses approximately 1 to 2 kilowatts of power, on 
average.
  By lowering the initial price for consumers, market introduction and 
production volume of fuel cells will be accelerated with the end result 
being a significant reduction in manufacturing costs. The decrease in 
price would enable even more consumers to use one of the cleanest, most 
reliable and most efficient means to generate electricity. This 
tailored fuel cell tax credit for a stationary and portable fuel cells 
is designed to benefit the widest range of potential fuel cell 
customers and manufacturers with a meaningful incentive for the 
purchase of fuel cells for residential and commercial use.
  As summer approaches, power shortages and interruptions can be 
expected throughout the country. We must increase our investment and 
commitment to non-traditional energy sources such as fuel cells. This 
reliable, combustion-free power provided by fuel cells in a sensible 
alternative that is available today. I urge my colleagues to support us 
for a sensible fuel cell power tax credit.
                                 ______