[Congressional Record Volume 151, Number 77 (Monday, June 13, 2005)]
[Senate]
[Pages S6417-S6419]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. REID (for himself, Mrs. Feinstein, Ms. Cantwell, Ms. 
        Snowe, Mr. Jeffords, Mr. Lieberman, and Mr. Kerry):
  S. 1229. A bill to amend the Internal Revenue Code of 1986 to extend, 
modify, and expand the credit for electricity produced from renewable 
resources and waste products, and for other purposes; to the Committee 
on Finance.
  Mr. REID. Faced with uncertainties in electricity energy markets, 
turmoil in the Middle East, the need to cut back on the fossil fuel 
emissions linked to global warming, air pollution that contributes to 
high rates of asthma and fills even our national parks with smog, the 
United States must diversify its energy supply by promoting the growth 
of renewable energy.
  Since 1999, Las Vegas electricity rates have increased by 50 percent. 
In the same time period, natural gas prices across Nevada rose 45 
percent. We need to change the energy equation. We need to diversify 
the nation's energy supply to reduce volatility and ensure a stable 
supply of electricity. We must harness the brilliance of the sun, the 
strength of the wind, and the heat of the Earth to provide clean 
renewable energy for our Nation.
  Mr. President, I rise today to introduce a bill with Senators 
Feinstein, Cantwell, Snowe, Jeffords, Lieberman and Kerry that expands 
the existing Section 45 production tax credit for renewable energy 
resources to cover all renewable energy resources. Our legislation 
accomplishes this by ensuring that geothermal, incremental geothermal, 
solar, open-loop biomass, incremental hydropower, landfill gas, and 
animal waste to the list of renewable energy resources that would 
qualify for a production tax credit.
  Our legislation also makes the production tax credit permanent to 
signal America's longterm commitment to renewable energy resources. The 
existing production tax credit will expire at the end of the year. 
Since it inception in 1992, the production tax credit has expired and 
been renewed three times--in 1999, 2001, and 2004. Development of wind 
energy has closely mirrored these renewal cycles. Clearly, the private 
investment necessary to develop renewable energy resources requires the 
business certainty afforded by a long-term extension of the production 
tax credit. Our bill allows for co-production credits to encourage 
blending of renewable energy with traditional fuels and provides a 
credit for renewable facilities on Native American and Native Alaskan 
lands.
  In northern Nevada, the Pyramid Lake Paiute Tribe is working with 
Advanced Thermal Systems to develop geothermal resources on Indian 
lands that will spur economic development by creating business 
opportunities and jobs for tribal members.
  This legislation also provides production incentives to not-for-
profit public power utilities and rural electric cooperatives, which 
serve 25 percent of the Nation's power customers, by allowing them to 
transfer their credits to taxable entities. The good news is that the 
production tax credit for renewable energy resources really works to 
promote the growth of renewable energy.
  In 1990, the cost of wind energy was 22.5 cents per kilowatt hour 
and, today, with new technology and the help of a modest production tax 
credit, wind is a competitive energy source at approximately 5.5 cents 
per kilowatt hour. In the last 5 years, wind energy has experienced a 
30 percent growth rate. The production tax credit provides 1.8 cents 
for every kilowatt-hour of electricity produced. Similar to wind 
energy, this credit will allow geothermal energy, incremental 
hydropower, and landfill gas to immediately compete with fossil fuels, 
while biomass will follow closely behind. The Department of Energy 
estimates that we could increase our geothermal energy production 
almost tenfold, supplying ten percent of the energy needs of the West. 
As fantastic as it sounds, enough sunlight falls on 100 square miles of 
southern Nevada that--if covered with solar panels--could power the 
entire Nation.
  Let's never lose sight of the fact that renewable energy resources 
are domestic sources of energy, and using them instead of foreign 
sources contributes to our energy security. Renewables provide fuel 
diversify and price stability. After all, the fuel--from the wind, the 
sun, and heat from the core of the earth--cost nothing. And they 
provide jobs, especially in rural areas that have been largely left out 
of America's recent economic growth. The production tax credit for 
renewable energy resources is a powerful, fast-acting stimulus to the 
economy. According to the Western Governors Association, the Department 
of Energy's Initiative to deploy 1,000 Megawatts of concentrated solar 
power in the Southwestern area of the United States by the year 2006 
would create approximately 10,000 jobs and estimated expenditures of 
more than $3.7 billion over 14 years.
  Nevada has already developed 200 megawatts of geothermal power, with 
a longer-term potential of more than 2,500 megawatts; this development 
will provide billions of dollars in private investment and create 
thousands of jobs. Our production tax credit means immediate economic 
development and jobs.
  In the U.S. today, we get 2 percent of our electricity from renewable 
energy sources like wind, solar, geothermal, and biomass. But the 
potential for much greater supply is here. For example, Nevada could 
use geothermal energy to meet one-third of its electricity needs, but 
today this source of energy only supplies 2 percent. I am proud to say 
that Nevada has adopted one of the most aggressive Renewable Portfolio 
Standards in the Nation, requiring 15 percent of the State's 
electricity needs be met by renewable energy resources in 2013.
  After pouring billions of dollars into oil and gas, we need to invest 
in a clean energy future. Fossil fuel plants pump over 11 million tons 
of pollutants into our air each year. Federal energy policy must 
promote reductions in greenhouse gas emissions. By including landfill 
gas in this legislation, we systematically reduce the largest single 
human source of methane emissions in the United States, effectively 
eliminating the greenhouse gas equivalent of 233 million tons of carbon 
dioxide.
  Medical studies have revealed an alarming link between soot particles 
from power plants and motor vehicles and lung cancer and heart disease. 
The adverse health effects of power plant and vehicle emissions cost 
Americans billions of dollars in medical care, and our cost in human 
suffering is immeasurable. Simply put, the human cost of dirty air is 
staggering. If we factor in environmental and health effects, the real 
cost of energy becomes apparent, and renewable energy becomes the fuel 
of choice.
  America's abundant and untapped renewable resources can fuel our 
journey into a more prosperous and safer tomorrow without compromising 
air and water quality. Renewable energy is a critical component of a 
successful, forward-looking, and secure energy policy for the 21st 
Century.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1229

       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.

       (a) Short Title.--This Act may be cited as the ``Renewable 
     Energy Incentives Act''.
       (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

[[Page S6418]]

     section or other provision of the Internal Revenue Code of 
     1986.

     SEC. 2. EXTENSION, MODIFICATION, AND EXPANSION OF CREDIT FOR 
                   ELECTRICITY PRODUCED FROM RENEWABLE RESOURCES 
                   AND WASTE PRODUCTS.

       (a) Permanent Extension.--
       (1) Paragraphs (1) and (2)(A)(i) of section 45(d) are each 
     amended by striking ``, and before January 1, 2006''.
       (2) Section 45(d)(2)(A)(ii) is amended by striking ``before 
     January 1, 2006, is originally placed in service and'' and 
     insert ``is''.
       (3) Section 45(d)(3)(A) is amended_
       (A) by striking ``owned by the taxpayer'',
       (B) by inserting ``owned by the taxpayer and'' in clause 
     (i)(I) after ``is''
       (C) by striking ``and before January 1, 2006'' in clause 
     (i)(I), and
       (D) by striking ``originally placed in service before 
     January 1, 2006'' in clause (ii) and inserting ``owned by the 
     taxpayer''.
       (4) Paragraphs (4), (5), (6), and (7) of section 45(d) 
     (relating to qualified facilities) are amended by striking 
     ``and before January 1, 2006'' each place it appears.
       (b) Credit Rate.--
       (1) Increase in credit rate.--
       (A) In general.--Section 45(a)(1) is amended by striking 
     ``1.5 cents'' and inserting ``1.9 cents''.
       (B) Conforming amendments.--
       (i) Section 45(b)(2) is amended by striking ``1.5 cent'' 
     and inserting ``1.9 cent''.
       (ii) Section 45(e)(2)(B) is amended by inserting 
     ``(calendar year 2004 in the case of the 1.9 cent amount in 
     subsection (a))'' after ``1992''.
       (2) Full credit rate for all facilities placed in service 
     after date of enactment.--Section 45(b)(4)(A) (relating to 
     credit rate) is amended by inserting ``and placed in service 
     before the date of the enactment of the Renewable Energy 
     Incentives Act'' after ``subsection (d)''.
       (c) Full Credit Period for All Facilities Placed in Service 
     After Date of Enactment.--Section 45(b)(4)(B)(i) (relating to 
     credit period) is amended by inserting ``and placed in 
     service before the date of the enactment of the Renewable 
     Energy Incentives Act'' after ``subsection (d)''
       (d) Expansion of Qualified Resources.--
       (1) In general.--Section 45(c)(1) (defining qualified 
     energy resources) is amended by striking ``and'' at the end 
     of subparagraph (F), by striking the period at the end of 
     subparagraph (G) and inserting a comma, and by adding at the 
     end the following new subparagraphs:
       ``(H) incremental geothermal energy production, and
       ``(I) incremental hydropower production.''.
       (2) Definition of resources.--Section 45(c) (relating to 
     qualified energy resources and refined coal) is amended by 
     adding at the end the following new paragraphs:
       ``(8) Incremental geothermal production.--
       ``(A) In general.--The term `incremental geothermal 
     production' means for any taxable year the excess of--
       ``(i) the total kilowatt hours of electricity produced from 
     an incremental geothermal facility described in subsection 
     (d)(9), over
       ``(ii) the average annual kilowatt hours produced at such 
     facility for 5 of the previous 7 calendar years before the 
     date of the enactment of this paragraph after eliminating the 
     highest and the lowest kilowatt hour production years in such 
     7-year period.
       ``(B) Special rule.--A facility described in subsection 
     (d)(9) which was placed in service at least 7 years before 
     the date of the enactment of this paragraph shall commencing 
     with the year in which such date of enactment occurs, reduce 
     the amount calculated under subparagraph (A)(ii) each year, 
     on a cumulative basis, by the average percentage decrease in 
     the annual kilowatt hour production for the 7-year period 
     described in subparagraph (A)(ii) with such cumulative sum 
     not to exceed 30 percent.
       ``(9) Incremental hydropower production.--
       ``(A) In general.--The term `incremental hydropower 
     production' means for any taxable year an amount equal to the 
     percentage of total kilowatt hours of electricity produced 
     from an incremental hydropower facility described in 
     subsection (d)(10) attributable to efficiency improvements or 
     additions of capacity as determined under subparagraph (B).
       ``(B) Determination of incremental hydropower production.--
     For purposes of subparagraph (A), incremental hydropower 
     production for any incremental hydropower facility for any 
     taxable year shall be determined by establishing a percentage 
     of average annual hydropower production at the facility 
     attributable to the efficiency improvements or additions of 
     capacity using the same water flow information used to 
     determine an historic average annual hydropower production 
     baseline for such facility. Such percentage and baseline 
     shall be certified by the Federal Energy Regulatory 
     Commission. For purposes of the preceding sentence, the 
     determination of incremental hydropower production shall not 
     be based on any operational changes at such facility not 
     directly associated with the efficiency improvements or 
     additions of capacity.''.
       (3) Facilities.--Section 45(d) (relating to qualified 
     facilities) is amended by adding at the end the following new 
     paragraphs:
       ``(9) Incremental geothermal facility.--In the case of a 
     facility using incremental geothermal to produce electricity, 
     the term `qualified facility' means any facility owned by the 
     taxpayer which is originally placed in service before the 
     date of the enactment of this paragraph, but only to the 
     extent of its incremental geothermal production. In the case 
     of a qualified facility described in the preceding sentence, 
     the 10-year period referred to in subsection (a) shall be 
     treated as beginning not earlier than such date of enactment. 
     Such term shall not include any property described in section 
     48(a)(3) the basis of which is taken into account by the 
     taxpayer for purposes of determining the energy credit under 
     section 48.
       ``(10) Incremental hydropower facility.--In the case of a 
     facility using incremental hydropower to produce electricity, 
     the term `qualified facility' means any non-Federal 
     hydroelectric facility owned by the taxpayer which is 
     originally placed in service before the date of the enactment 
     of this paragraph, but only to the extent of its incremental 
     hydropower production. In the case of a qualified facility 
     described in the preceding sentence, the 10-year period 
     referred to in subsection (a) shall be treated as beginning 
     not earlier than such date of enactment.''.
       (e) Credit Eligibility for Lessees and Operators Extended 
     to All Facilities.--Paragraph (6) of section 45(d) is amended 
     to read as follows:
       ``(6) Credit eligibility for lessees and operators.--In the 
     case of any facility described in paragraph (1), (4), (5), 
     (6), (7), (9), or (10), if the owner of such facility is not 
     the producer of the electricity, the person eligible for the 
     credit allowable under subsection (a) shall be the lessee or 
     the operator of such facility.''.
       (f) Qualified Facilities With Co-production.--Section 45(b) 
     (relating to limitations and adjustments) is amended by 
     adding at the end the following:
       ``(5) Increased credit for co-production facilities.--
       ``(A) In general.--In the case of a qualified facility 
     described in any paragraph of subsection (d) (other than 
     paragraph (8)) which adds a co-production facility after the 
     date of the enactment of this paragraph, the amount in effect 
     under subsection (a)(1) for an eligible taxable year of a 
     taxpayer shall (after adjustment under paragraph (2) and 
     before adjustment under paragraphs (1) and (3)) be increased 
     by .25 cents.
       ``(B) Co-production facility.--For purposes of subparagraph 
     (A), the term `co-production facility' means a facility 
     which--
       ``(i) enables a qualified facility to produce heat, 
     mechanical power, chemicals, liquid fuels, or minerals from 
     qualified energy resources in addition to electricity, and
       ``(ii) produces such energy on a continuous basis.
       ``(C) Eligible taxable year.--For purposes of subparagraph 
     (A), the term `eligible taxable year' means any taxable year 
     in which the amount of gross receipts attributable to the co-
     production facility of a qualified facility are at least 10 
     percent of the amount of gross receipts attributable to 
     electricity produced by such facility.''.
       (g) Qualified Facilities Located Within Qualified Indian 
     Lands.--Section 45(b) (relating to limitations and 
     adjustments), as amended by subsection (f), is amended by 
     adding at the end the following:
       ``(6) Increased credit for qualified facility located 
     within qualified indian land.--In the case of a qualified 
     facility described in any paragraph of subsection (d) (other 
     than paragraphs (1), (2) and (8)) which--
       ``(A) is located within--
       ``(i) qualified Indian lands (as defined in section 
     7871(c)(3)), or
       ``(ii) lands which are held in trust by a Native 
     Corporation (as defined in section 3(m) of the Alaska Native 
     Claims Settlement Act (43 U.S.C. 1602(m)) for Alaska Natives, 
     and
       ``(B) is operated with the explicit written approval of the 
     Indian tribal government or Native Corporation (as so 
     defined) having jurisdiction over such lands, the amount in 
     effect under subsection (a)(1) for a taxable year shall 
     (after adjustment under paragraphs (2) and (5) and before 
     adjustment under paragraphs (1) and (3)) be increased by .25 
     cents.''.
       (h) Additional Modifications.--
       (1) Treatment of persons not able to use entire credit.--
     Section 45(e) (relating to additional definitions and special 
     rules), as amended by subsection (a)(2), is amended by adding 
     at the end the following new paragraph:
       ``(11) Treatment of persons not able to use entire 
     credit.--
       ``(A) Allowance of credit.--
       ``(i) In general.--Except as otherwise provided in this 
     subsection--

       ``(I) any credit allowable under subsection (a) with 
     respect to a qualified facility owned by a person described 
     in clause (ii) may be transferred or used as provided in this 
     paragraph, and
       ``(II) the determination as to whether the credit is 
     allowable shall be made without regard to the tax-exempt 
     status of the person.

       ``(ii) Persons described.--A person is described in this 
     clause if the person is--

       ``(I) an organization described in section 501(c)(12)(C) 
     and exempt from tax under section 501(a),
       ``(II) an organization described in section 1381(a)(2)(C),
       ``(III) a public utility (as defined in section 
     136(c)(2)(B)), which is exempt from income tax under this 
     subtitle,
       ``(IV) any State or political subdivision thereof, the 
     District of Columbia, any possession of the United States, or 
     any agency or instrumentality of any of the foregoing, or

[[Page S6419]]

       ``(V) any Indian tribal government (within the meaning of 
     section 7871) or any agency or instrumentality thereof.

       ``(B) Transfer of credit.--
       ``(i) In general.--A person described in subparagraph 
     (A)(ii) may transfer any credit to which subparagraph (A)(i) 
     applies through an assignment to any other person not 
     described in subparagraph (A)(ii). Such transfer may be 
     revoked only with the consent of the Secretary.
       ``(ii) Regulations.--The Secretary shall prescribe such 
     regulations as necessary to ensure that any credit described 
     in clause (i) is assigned once and not reassigned by such 
     other person.
       ``(iii) Transfer proceeds treated as arising from essential 
     government function.--Any proceeds derived by a person 
     described in subclause (III), (IV), or (V) of subparagraph 
     (A)(ii) from the transfer of any credit under clause (i) 
     shall be treated as arising from the exercise of an essential 
     government function.
       ``(C) Credit not income.--Any transfer under subparagraph 
     (B) of any credit to which subparagraph (A)(i) applies shall 
     not be treated as income for purposes of section 501(c)(12).
       ``(D) Treatment of unrelated persons.--For purposes of 
     subsection (a)(2)(B), sales among and between persons 
     described in subparagraph (A)(ii) shall be treated as sales 
     between unrelated parties.''.
       (2) Credits not reduced by tax-exempt bonds or certain 
     other subsidies.--Section 45(b)(3) (relating to credit 
     reduced for grants, tax-exempt bonds, subsidized energy 
     financing, and other credits) is amended--
       (A) by striking clause (ii),
       (B) by redesignating clauses (iii) and (iv) as clauses (ii) 
     and (iii),
       (C) by inserting ``(other than any loan, debt, or other 
     obligation incurred under subchapter I of chapter 31 of title 
     7 of the Rural Electrification Act of 1936 (7 U.S.C. 901 et 
     seq.), as in effect on the date of the enactment of the 
     Renewable Energy Incentives Act, or proceeds of an issue of 
     State or local government obligations the interest on which 
     is exempt from tax under section 103)'' after ``project'' in 
     clause (ii) (as so redesignated), and
       (D) by striking ``TAX-EXEMPT BONDS,'' in the heading and 
     inserting ``CERTAIN''.
       (3) Credit allowable against minimum tax without 
     limitation.--Clause (ii) of section 38(c)(4)(B) (defining 
     specified credits) is amended to read as follows:
       ``(ii) the credit determined under section 45 to the extent 
     that such credit is attributable to electricity or refined 
     coal produced at a facility which is originally placed in 
     service after October 22, 2004.''.
       (4) Treatment of qualified facilities not in compliance 
     with pollution laws.--Section 45(d) (relating to qualified 
     facilities), as amended by subsection (d)(3), is amended by 
     adding at the end the following:
       ``(11) Noncompliance with pollution laws.--For purposes of 
     this subsection, a facility which is not in compliance with 
     the applicable State and Federal pollution prevention, 
     control, and permit requirements for any period of time shall 
     not be considered to be a qualified facility during such 
     period.''.
       (i) Effective Date.--The amendments made by this section 
     shall apply to electricity and other energy produced and sold 
     after the date of the enactment of this Act, in taxable years 
     ending after such date.

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