[Congressional Record Volume 154, Number 124 (Saturday, July 26, 2008)]
[Senate]
[Pages S7531-S7537]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROCKEFELLER:
  S. 3345. A bill to promote the capture and sequestration of carbon 
dioxide, to promote the use of energy produced from coal, and for other 
purposes; to the Committee on Finance.
  Mr. ROCKEFELLER. Mr. President, today I introduce the Future Fuels 
Act of 2008. Put simply, I think coal--especially clean coal--is a 
critical part of the solution to America's energy independence and to 
our national security. The bill I will describe this morning presents 
several technological options that will help put us on a path toward 
achieving greater energy independence, while also tackling the grave 
threat to human health, property, and the world's economy that is 
global climate change.

[[Page S7532]]

  I know that there are some, in this chamber and around the country, 
who would demonize coal. But the reality is that coal is what we have--
in abundance. We just can't ignore this resource or the incredible 
potential that it has not just to generate electricity, but as a 
potential transportation fuel source. The challenges that we face 
today--and they are challenges which I firmly believe can be overcome 
with the right combination of resources and American know-how--is how 
to use coal to produce energy in cleaner ways than we do now, and to 
accelerate development of carbon capture and sequestration, CCS, 
technologies to see to it that we don't make our current climate 
problems worse.
  In addition to the bill I am introducing today, in West Virginia we 
have been working with major companies and our coal industry to promote 
some exciting next generation projects that will produce a range of 
value-added products out of coal--electricity, chemical feedstocks, 
fertilizer, diesel and aviation fuels. If we can pull off what we are 
trying to do, it will be, in a word, transformational.
  My colleagues know that from Maine to California, West Virginia to 
Washington State, our constituents are paying more at the gasoline 
pump, in the supermarket aisles, and for virtually everything else. 
American families are being crushed by the weight of the rising cost of 
living--especially our seniors, veterans, and low-income families, who 
often live on fixed incomes. They are looking for solutions, not 
lengthy and circular debates on how this energy crisis came about and 
who is to blame for not fixing it. They are looking for the people they 
sent to Washington to examine all the options, work together for the 
common good, and to stop playing partisan or parochial games.
  As a Senator from West Virginia, I can tell you that the people of my 
State know a thing or two about coal. They know that from small towns 
to major cities, from the Capitol building to the Vegas strip, coal 
generates nearly 50 percent of the Nation's electricity. It lights our 
homes, schools, and workplaces, and while the summer sun beats down, 
coal-burning power plants keep us cool. West Virginians, like so many 
others in this country who have considered our energy options, 
understand that coal also has the potential to run our cars and trucks 
and keep our planes flying. West Virginians--like the relatively few of 
us who are proud to call ourselves Coal State Senators--understand that 
the only thing keeping us from turning this promise into a reality is a 
laser-focused commitment from our government and the Nation's 
industries to unleash good old American ingenuity.
  The Future Fuels Act can be the foundation for our efforts. In a way 
not seen since the Manhattan Project helped us win World War II, and at 
least not since we fulfilled President Kennedy's promise to put a man 
on the Moon and bring him safely back to Earth, the Future Fuels Act 
would bring together the best minds in government and the private 
sector to figure out commercially viable solutions to carbon capture 
and sequestration. In achieving what is undoubtedly the greatest 
environmental challenge of this century, the best minds throughout the 
world, working together, will renew the promise of a better standard of 
living that coal showed the world at the dawn of the industrial age. 
For Americans blessed with abundant reserves of this resource, the 
Future Fuels Act can allow coal to be the source of most of the clean 
energy we must have in the coming decades.

  I understand there are those who believe that coal can never be part 
of the solution, because its detractors have made it such a poster 
child of the problem. Let's be honest. No energy policy choice can be 
made that does not have an environmental consequence. Oil drilling 
obviously does--and mining coal does, as well.
  But it is not just the use of fossil fuels that has consequences. 
Wind power probably has more than its fair share of detractors, due to 
perceived threats to migratory birds and bats, and what some consider 
an unacceptable disruption of scenic vistas. Ethanol has been blamed 
for rising food prices and for the minimal value of the energy it 
produces relative to its production costs. Nuclear energy is touted by 
its proponents as a carbon-free option that should have its share of 
the nation's electricity generation expanded. Yet we have never figured 
out what to do about the permanent storage of, and human health and 
safety concerns regarding, highly radioactive waste with a half-life 
measured in tens of thousands of years. It is clear to me, at least, 
that the fundamentally flawed Yucca Mountain plan is not the answer. 
Natural gas-powered plants emit somewhat less than coal-fired plants, 
but are still not clean. In any event, installing new gas pipelines or 
trying to open a liquefied natural gas terminal inevitably runs 
utilities into the classic problem of ``not in my backyard,'' or NIMBY. 
The point is we need to find energy alternatives that are accessible, 
can be used wisely, preserve our standard of living, and make positive 
strides to heal our broken world.
  Anyone who has watched the nightly news lately or who has read a 
newsmagazine in the last several years knows that global climate change 
is no longer cloaked in uncertainty or shrouded in doubt. The sheer 
repetition of major meteorological calamities renders discussion of 
``storms of the century'' mute. Meanwhile, all too frequently floods, 
hurricanes, and typhoons are characterized as ``500-year events.'' 
We've watched the floodwaters rise in the heartland of America, forest 
fires rage out West, and both our Atlantic and Pacific coastlines 
battered by more common storms. The permafrost in the Arctic Tundra is 
thawing and releasing methane, and the polar ice caps are melting. 
Growing seasons are changing, and temperate zones are shifting. The 
damaging effects of global climate change are not suffered only by 
humanity; an increasing number of plant and animal species are facing 
extinction.
  Whether you believe that climate change is happening or not; whether 
you accept the science of it all, or not, is beside the point. One 
thing is clear--we can't afford to be wrong, and doing nothing is not 
an option any longer. Our national policy can not be to merely clean up 
after more and more terrible weather affects more and more parts of the 
country--we'll go steadily more bankrupt if we do. We need to start 
addressing the root cause of it all--and that means fundamental changes 
in the ways we harness the immense power of fossil fuels, like coal, 
and permanent solutions for the carbon produced.
  To do this, my legislation will expand incentives for clean coal 
technologies, establish an incentive to capture a potent greenhouse gas 
currently being vented into the atmosphere, create a low-cost program 
to promote responsible conversion of coal to transportation fuels, help 
develop new pipeline networks connecting the coalfields to the gas 
pump, and devote substantial resources to enable government and private 
sector scientists to turn the corner on commercially viable CCS.
  The United States has more than a 250-year supply of coal stored 
beneath the hills of Appalachia and in several places around the 
country. To use this abundance in a responsible and environmentally 
appropriate way, the Future Fuels Act will do the following:
  It will expand tax incentive and clean coal energy bond programs in 
current law designed to defray costs incurred by investor-owned 
utilities and public power providers when they choose advanced clean 
coal technologies to replace and supplement our current fleet of 
electricity generating plants. We have provided money for this purpose 
over the last decade, but given the scope of the challenge, we have up 
until now provided pennies on the dollar. The Future Fuels Act will 
provide $10.3 billion--$8.3 billion in expanded clean coal tax 
incentives and an additional $2 billion for municipal and cooperative 
energy providers in clean coal energy bonds.
  It will establish a new incentive available to companies that mine 
coal underground to capture and sequester methane. Methane is more than 
20 times as potent a heat-trapping greenhouse gas as an equal volume of 
carbon dioxide. It is liberated as a natural byproduct of the 
excavation of coal, and is currently vented to prevent explosions and 
to purify the air coal miners breathe. This incentive would allow coal 
companies that voluntarily capture methane and prevent it from being

[[Page S7533]]

released into the atmosphere to offset some of the costs of that 
capture.
  It will create a ``stand-by'' loan program for development of 
environmentally responsible coal conversion facilities. Coal-based fuel 
developers would receive no Federal funds to build or operate their 
facilities, but would be able to tap into a loan program with strict 
repayment terms when the world price of oil drops below a figure to be 
set in statute. As a frustrating summer of high gasoline prices and 
airlines teetering on the edge of collapse because of high jet fuel 
costs makes clear, we need a new set of solutions to meet our energy 
demand. The Future Fuels Act will move us toward a time when we can run 
our cars, trucks, planes, and trains with domestic coal-derived fuel.
  It will establish a tax incentive for the construction of pipeline 
infrastructure to bring coal-based fuels to the marketplace. Because 
our current network of oil and gas pipelines serves, naturally, where 
oil and gas is found, it may not be adequate or geographically able to 
serve new sources of fuels in the coalfields of Appalachia and other 
regions of the country where coal conversion facilities might be built. 
This incentive would encourage pipeline companies to build out to new 
locations with untapped potential in coal reserves.
  But the Future Fuels Act is not just about using coal. It is about 
meeting the challenge of using coal in the carbon-constrained future we 
know is coming. The Future Fuels Act does this by harnessing the 
wisdom, scientific knowledge, and creativity of both government 
scientists and their private sector counterparts.
  First, it would put into motion the kind of massive research, 
development, demonstration, and technology deployment program we should 
have seen from the current Administration, which had promised to be a 
friend to coal, only to walk away from ongoing coal initiatives in our 
Federal laboratories. Instead of doing the work that would establish a 
sustainable future for coal, the Administration first denied climate 
change was a problem, and then cut the fossil fuel R&D. Consequently, 
we have lost eight years' worth of serious efforts to develop 
commercial-scale carbon capture and sequestration, or CCS, options. 
This is utterly inexcusable, but by increasing the size and investment 
in government CCS R&D, my legislation attempts to make up for that lost 
time. Our national labs have done groundbreaking work, especially West 
Virginia, but they have not been given the resources they need to truly 
accelerate their research and make it commercially available. In 
contrast, this legislation would authorize $650 million over the next 5 
fiscal years to develop commercial-scale carbon sequestration 
demonstrations in multiple geological and terrestrial formations, with 
the goal of storing 1 million tons of carbon dioxide annually.

  Finally, my bill would create the Future Fuels Corporation, FFC, a 
publicly funded but privately operated institution with two primary 
goals. First, the FFC accelerate research--and more importantly, 
commercial deployment--of CCS technologies. Without the combination of 
brainpower and private sector dedication to deadlines and results we 
may never get CCS technologies off the drawing board and on to power 
plants and other industrial emitting facilities.
  Second, the FFC will work to create new technologies and new 
production processes to enable the production of coal-based 
transportation fuels that are not only cleaner than petroleum-based 
fuels in use today, but which are made in plants that are cleaner, and 
which cause less environmental disruption than drilling for oil.
  Like so many of the other legislative responses to the current energy 
and economic crisis, my legislation is not a ``silver bullet.'' It is, 
however, a sincere attempt to offer American solutions to what is both 
an American and a global problem.
  We can never be truly energy ``independent,'' but we must resolve to 
be more energy ``resilient.'' We can do that when we tap into coal's 
still unbound potential. Likewise, we cannot expect the serious problem 
of global climate change to fix itself. The combination of our abundant 
coal and the innovative potential of the greatest scientists, 
technicians, and researchers in American business, academia, and 
government can make the energy resources of Saudi Arabia seem like a 
drop in the bucket. We need to foster policies to unleash these 
brilliant men and women to find and prove a range of carbon storage 
solutions, and then watch a waiting world beat a path to our doorstep.
  Known American coal reserves can produce electricity at current 
rates--and be converted to transportation fuels in sufficient amounts 
to supplant more than the petroleum we import from the Persian Gulf and 
elsewhere--for two centuries or more. No American president will have 
to call up the Guard and Reserve to secure the coalfields, and no 
American parent will have trouble falling asleep because they're 
concerned about the safety of their son or daughter in uniform because 
the people who own the energy don't much like the American presence 
near the energy.
  That is why the Future Fuels Act is so important, and why I commend 
it to my colleagues.
  Mr. President, I ask consent that the text of the bill be printed in 
the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 3345

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Future Fuels Act of 2008''.

     SEC. 2. FUTURE FUELS CORPORATION.

       Subtitle A of title XVI of the Energy Policy Act of 2005 
     (Public Law 109-58; 119 Stat. 1109) is amended by adding at 
     the end the following:

     ``SEC. 1602. FUTURE FUELS CORPORATION.

       ``(a) Establishment.--
       ``(1) In general.--The Future Fuels Corporation (referred 
     to in this section as the `Corporation') is established as a 
     government corporation.
       ``(2) Administration.--The Corporation shall be subject 
     to--
       ``(A) this section; and
       ``(B) chapter 91 of title 31, United States Code.
       ``(3) Board of directors.--
       ``(A) In general.--The Corporation shall be managed by a 
     board of directors composed of 7 individuals who are citizens 
     of the United States, appointed by the President, by and with 
     the advice and consent of the Senate.
       ``(B) Chairperson.--The board of directors shall annually 
     elect a Chairperson from among the members of the board of 
     directors.
       ``(C) Term.--The term of a member of the board of directors 
     shall be 4 years.
       ``(4) Transfers.--The Secretary shall transfer to the 
     Corporation, from amounts appropriated and allocated to it, 
     such sums as may be necessary to meet the requirements of 
     this section.
       ``(b) Use of Funds.--Beginning in fiscal year 2009, funds 
     transferred by the Secretary to the Corporation under 
     subsection (a)(4) shall be expended by the Corporation to--
       ``(1) promote and deploy coal and coal cofired 
     polygeneration technologies;
       ``(2) reduce--
       ``(A) the carbon footprint of coal consumption; and
       ``(B) the production of coal-based byproducts; and
       ``(3) conduct widespread carbon sequestration research, 
     development, and deployment activities.''.

     SEC. 3. CARBON CAPTURE AND STORAGE RESEARCH, DEVELOPMENT, AND 
                   DEMONSTRATION PROGRAM.

       Section 963 of the Energy Policy Act of 2005 (42 U.S.C. 
     16293) is amended--
       (1) in the section heading, by striking ``AND 
     SEQUESTRATION'' and inserting ``AND STORAGE'';
       (2) in subsection (a), by striking ``and sequestration'' 
     and inserting ``and storage''; and
       (3) by striking subsections (c) and (d) and inserting the 
     following:
       ``(c) Programmatic Activities.--
       ``(1) Goal.--The Secretary shall establish a program under 
     which the Secretary shall conduct activities necessary to 
     achieve the goal of annually sequestering at least 1,000,000 
     tons of carbon dioxide by January 1, 2015.
       ``(2) Review of existing data.--Not later than 180 days 
     after the date of enactment of the Future Fuels Act of 2008, 
     the Secretary shall--
       ``(A) verify and analyze the results of any assessment 
     conducted by any other Federal agency or a State relating to 
     geological storage capacity and the potential for carbon 
     injection rates, including a risk analysis of any potential 
     geologic storage areas assessed; and
       ``(B) submit to the appropriate committees of Congress a 
     report that describes the results of the verification and 
     analyses under subparagraph (A).
       ``(3) Recommendations.--As soon as practicable after the 
     date of enactment of the Future Fuels Act of 2008, the 
     Secretary shall submit to the appropriate committees of 
     Congress recommendations on appropriate regulatory and 
     advisory mechanisms for--

[[Page S7534]]

       ``(A) the determination of best technologies;
       ``(B) the identification and evaluation of state-of-the-art 
     research, development, and deployment strategies for carbon 
     capture and storage technologies;
       ``(C) the selection and operation of carbon dioxide 
     sequestration sites; and
       ``(D) the transfer of liability for the sites to the United 
     States.
       ``(4) Interstate compacts.--As soon as practicable after 
     the date of enactment of this Act, the Secretary shall 
     develop model interstate compacts to govern the 
     transportation, injection, and storage of carbon dioxide.
       ``(5) Demonstration project.--The Secretary shall conduct 
     geological sequestration demonstration projects involving 
     carbon dioxide sequestration operations in a variety of 
     candidate geological settings, including--
       ``(A) oil and gas reservoirs;
       ``(B) unmineable coal seams;
       ``(C) deep saline aquifers;
       ``(D) basalt and shale formations; and
       ``(E) terrestrial sequestration, including restoration 
     project sites provided assistance by the Abandoned Mine 
     Reclamation Fund established by section 401 of the Surface 
     Mining Control and Reclamation Act of 1977 (30 U.S.C. 1231) .
       ``(d) Authorization of Appropriations.--
       ``(1) In general.--There are authorized to be appropriated 
     to carry out this section--
       ``(A) $100,000,000 for each of fiscal years 2009 and 2010;
       ``(B) $105,000,000 for fiscal year 2011;
       ``(C) $110,000,000 for fiscal year 2012;
       ``(D) $115,000,000 for fiscal year 2013; and
       ``(E) $120,000,000 for fiscal year 2014.
       ``(2) Availability of funds.--Funds made available for a 
     fiscal year under paragraph (1)--
       ``(A) shall remain available until expended, but not later 
     than September 30, 2014; and
       ``(B) may be reprogrammed, at the discretion of the 
     Secretary, for expenditure for other demonstration projects 
     under this title only after--
       ``(i) September 30, 2010; and
       ``(ii) the Secretary provides notice of the proposed 
     reprogramming to the appropriate committees of Congress.''.

     SEC. 4. STANDBY LOANS FOR QUALIFYING COAL-TO-LIQUID PROJECTS.

       Section 1702 of the Energy Policy Act of 2005 (42 U.S.C. 
     16512) is amended by adding at the end the following:
       ``(k) Standby Loans for Qualifying Coal-to-Liquid 
     Projects.--
       ``(1) Definitions.--In this subsection:
       ``(A) Cap price.--The term `cap price' means the market 
     price specified in a standby loan agreement above which the 
     qualifying CTL project is required to make payments to the 
     United States.
       ``(B) Conventional baseline emissions.--The term 
     `conventional baseline emissions' means--
       ``(i) the lifecycle greenhouse gas emissions of a facility 
     that produces combustible end products, using petroleum as a 
     feedstock, that are equivalent to combustible end products 
     produced by a facility of comparable size through a 
     qualifying CTL project;
       ``(ii) in the case of noncombustible products produced 
     through a qualifying CTL project, the average lifecycle 
     greenhouse gas emissions emitted by projects that--

       ``(I) are of comparable size; and
       ``(II) produce equivalent products using conventional 
     feedstocks; and

       ``(iii) in the case of synthesized gas intended for use as 
     a combustible fuel in lieu of natural gas produced by a 
     qualifying CTL project, the lifecycle greenhouse gas 
     emissions that would result from equivalent use of natural 
     gas.
       ``(C) Direct loan.--The term `direct loan' has the meaning 
     given the term in section 502 of the Federal Credit Reform 
     Act of 1990 (2 U.S.C. 661a).
       ``(D) Eligible entity.--The term `eligible entity' means an 
     entity that conducts a qualifying CTL project.
       ``(E) Facility.--The term `facility' means a facility at 
     which the conversion of feedstocks to end products takes 
     place.
       ``(F) Full term.--The term `full term' means the full term 
     of a standby loan agreement, as specified in the standby loan 
     agreement under paragraph (2)(A)(ii)(III), which shall not be 
     more than the lesser of--
       ``(i) 30 years; or
       ``(ii) 90 percent of the projected useful life of the 
     qualifying CTL project, as determined by the Secretary.
       ``(G) Lifecycle greenhouse gas emissions.--The term 
     `lifecycle greenhouse gas emissions' means the difference 
     between--
       ``(i) the aggregate quantity of greenhouse gases 
     attributable to the production and transportation of end 
     products at a facility, including the production, extraction, 
     cultivation, distribution, marketing, and transportation of 
     feedstocks, and the subsequent distribution and use of any 
     combustible end products; and
       ``(ii)(I) any greenhouse gases captured at the facility and 
     sequestered;
       ``(II) the carbon content, expressed in units of carbon 
     dioxide equivalent, of any feedstock that is a renewable 
     biomass; and
       ``(III) the carbon content, expressed in units of carbon 
     dioxide equivalent, of any end products that do not result in 
     the release of carbon dioxide to the atmosphere.
       ``(H) Long-term storage.--The term `long-term storage' 
     means sequestration with an expected maximum rate of carbon 
     dioxide leakage over a specified period of time that is 
     consistent with the objective of reducing atmospheric 
     concentrations of carbon dioxide, subject to a permit issued 
     under any law in effect as of the date of the sequestration.
       ``(I) Market price.--The term `market price' means the 
     average quarterly price of a petroleum price index specified 
     in the standby loan agreement.
       ``(J) Minimum price.--The term `minimum price' means a 
     market price specified in the standby loan agreement below 
     which the United States is obligated to make disbursements to 
     the qualifying CTL project.
       ``(K) Output.--The term `output' means all or a portion of 
     the liquid or gaseous transportation fuels produced from the 
     qualifying CTL project, as specified in the standby loan 
     agreement.
       ``(L) Primary term.--The term `primary term' means the 
     initial term of a standby loan agreement, as specified in the 
     agreement under paragraph (2)(A)(ii)(II), which shall not be 
     more than the lesser of--
       ``(i) 20 years; or
       ``(ii) 75 percent of the projected useful life of the 
     qualifying CTL project, as determined by the Secretary.
       ``(M) Qualifying ctl project.--The term `qualifying CTL 
     project' means a commercial-scale project that converts coal 
     to industrial feedstocks or 1 or more liquid or gaseous fuels 
     for transportation or other uses or a project conducted at a 
     facility that converts petroleum refinery waste products 
     (including petroleum coke) into 1 or more liquid or gaseous 
     transportation fuels--
       ``(i) that demonstrates the capture, sequestration, 
     disposal, or use of the carbon dioxide produced in the 
     conversion process; and
       ``(ii) for which--

       ``(I) the annual lifecycle greenhouse gas emissions of the 
     project are at least 20 percent lower than conventional 
     baseline emissions;
       ``(II) at least 75 percent of the carbon dioxide that would 
     otherwise be released to the atmosphere at the facility in 
     the production of end products of the project is captured for 
     long-term storage; and
       ``(III) the eligible entity has entered into an enforceable 
     agreement with the Secretary to implement carbon capture at 
     the percentage that, by the end of the 5-year period after 
     commencement of commercial operation of the eligible 
     qualifying CTL project--

       ``(aa) represents the best available technology; and
       ``(bb) achieves a reduction in carbon emissions that is not 
     less than 75 percent.
       ``(N) Standby loan agreement.--The term `standby loan 
     agreement' means a loan agreement entered into under 
     paragraph (2)(A)(i).
       ``(2) Agreements.--
       ``(A) Standby loan agreement.--
       ``(i) In general.--The Secretary may enter into standby 
     loan agreements for the conduct of not more than 10 
     qualifying CTL projects, at least 1 of which may be a 
     qualifying CTL project primarily designed to produce 
     pipeline-quality natural gas from domestic coal.
       ``(ii) Requirements.--A standby loan agreement entered into 
     under clause (i) shall--

       ``(I) provide for a direct loan from the Secretary to the 
     eligible entity for the qualifying CTL project;
       ``(II) specify the primary term of the standby loan 
     agreement;
       ``(III) specify the full term of the standby loan 
     agreement; and
       ``(IV) establish a cap price and a minimum price for the 
     primary term of the standby loan agreement.

       ``(B) Profit-sharing agreement.--
       ``(i) In general.--Simultaneously with entering into a 
     standby loan agreement under subparagraph (A), the Secretary 
     may enter into a profit-sharing agreement with the eligible 
     entity.
       ``(ii) Requirements.--Under a profit-sharing agreement, if 
     the market price exceeds the cap price in a calendar quarter, 
     a profit-sharing payment shall be made for the calendar 
     quarter, in an amount equal to the difference between--

       ``(I) the amount that is equal to the product obtained by 
     multiplying--

       ``(aa) the amount that is equal to the difference between--

       ``(AA) the market price; and
       ``(BB) the cap price; and

       ``(bb) the output of the qualifying CTL project; and

       ``(II) the total amount of any loan repayments made for the 
     calendar quarter.

       ``(3) Loan disbursements.--
       ``(A) Disbursement.--A loan subject to a standby loan 
     agreement shall be disbursed during the primary term of the 
     standby loan agreement during any period in which the market 
     price falls below the minimum price.
       ``(B) Amount.--
       ``(i) In general.--Subject to subparagraph (B), the total 
     amount of disbursements in any calendar quarter under 
     subparagraph (A) shall be equal to the product obtained by 
     multiplying--

       ``(I) the difference between--

       ``(aa) the minimum price; and
       ``(bb) the market price; and

       ``(II) the output of the qualifying CTL project.

       ``(ii) Limitation.--Notwithstanding clause (i), the total 
     amount of disbursements in any calendar quarter shall be not 
     more than the total amount of disbursements specified in the 
     applicable standby loan agreement.
       ``(4) Loan repayments.--

[[Page S7535]]

       ``(A) In general.--Subject to subparagraph (B), the 
     Secretary shall establish terms and conditions, including 
     interest rates and amortization schedules, for the repayment 
     of a loan under this subsection within the full term of the 
     standby loan agreement.
       ``(B) Limitations.--In establishing the terms and 
     conditions under subparagraph (A), the Secretary shall 
     provide that--
       ``(i) if, in any calendar quarter during the primary term 
     of the standby loan agreement, the market price is less than 
     the cap price--

       ``(I) the qualifying CTL project may elect to defer some or 
     all of the repayment obligations due during the applicable 
     calendar quarter; and
       ``(II) if an election is made under subclause (I), any 
     unpaid obligations will continue to accrue interest during 
     the deferral period;

       ``(ii)(I) if, in any calendar quarter during the primary 
     term of the agreement, the market price is greater than the 
     cap price, the qualifying CTL project shall meet the 
     scheduled repayment obligation and any deferred repayment 
     obligations, but shall not be required to pay in the 
     applicable calendar quarter an amount that is more than the 
     product obtained by multiplying--

       ``(aa) the amount that is equal to the difference between--

       ``(AA) the market price; and
       ``(BB) the cap price; and

       ``(bb) the output of the qualifying CTL project; and
       ``(II) the qualifying CTL project may elect to defer any 
     repayment obligation in excess of the amount determined under 
     subclause (I); and

       ``(C) at the end of the primary term of the standby loan 
     agreement, the cumulative amount of any deferred repayment 
     obligations and any accrued interest shall be amortized (with 
     interest) over the remainder of the full term of the standby 
     loan agreement.
       ``(5) Compliance with federal credit reform act.--
       ``(A) Upfront payment of cost of loan.--No standby loan 
     agreement may be entered into under this subsection unless 
     the eligible entity, on execution of the standby loan 
     agreement, makes an upfront payment to the United States that 
     the Director of the Office of Management and Budget 
     determines is equal to the cost of the loan, as determined 
     under 502(5)(B) of the Federal Credit Reform Act of 1990 (2 
     U.S.C. 661a(5)(B)).
       ``(B) Minimization of risk to the government.--In making 
     the determination of the cost of the loan for purposes of 
     establishing the upfront payment under subparagraph (A), the 
     Secretary and the Director of the Office of Management and 
     Budget shall take into consideration the extent to which the 
     minimum price and the cap price reflect historical patterns 
     of volatility in actual oil prices relative to projections of 
     future oil prices, based on--
       ``(i) publicly available data from the Energy Information 
     Administration; and
       ``(ii) statistical methods and analyses that are 
     appropriate for the analysis of volatility in energy prices.
       ``(C) Treatment of payments.--
       ``(i) In general.--The value to the United States of an 
     upfront payment under subparagraph (A) and any profit-sharing 
     payments under paragraph (2)(B) shall be taken into account 
     for purposes of section 502(5)(B)(iii) of the Federal Credit 
     Reform Act of 1990 (2 U.S.C. 661a(5)(B)(iii)) in determining 
     the cost to the Federal Government of a loan under this 
     subsection.
       ``(ii) No cost.--If a loan under this subsection has no 
     cost to the Federal Government, the requirements of section 
     504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 
     661c(b)) shall be considered to be satisfied.
       ``(6) Applicable law.--
       ``(A) No double benefit.--A qualifying CTL project 
     receiving a loan under this subsection may not, during the 
     primary term of the standby loan agreement, receive a Federal 
     loan guarantee under--
       ``(i) subsection (a); or
       ``(ii) any other law.
       ``(B) Subrogation, fees, and full faith and credit.--
     Subsections (g)(2), (h), and (j) shall apply to standby loans 
     under this subsection to the same extent the provisions apply 
     to loan guarantees.''.

     SEC. 5. CREDIT FOR MULTI-PRODUCT PIPELINE CONSTRUCTION.

       (a) In General.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new section:

     ``SEC. 45Q. COAL-BASED TRANSPORTATION FUEL PIPELINE CREDIT.

       ``(a) In General.--For purposes of section 38, in the case 
     of an eligible taxpayer, the coal-based transportation fuel 
     pipeline credit for any taxable year is an amount equal to 
     the applicable amount for each gallon of qualified average 
     daily throughput with respect to an eligible pipeline during 
     the taxable year.
       ``(b) Applicable Amount.--For purposes of subsection (a), 
     the applicable amount is an amount equal to--
       ``(1) $0.02 per gallon for the first 1,000,000 gallons of 
     qualified average daily throughput, and
       ``(2) $0.01 per gallon for the number of gallons of 
     qualified average daily throughput in excess of 1,000,000 
     gallons.
       ``(c) Qualified Average Daily Throughput.--For purposes of 
     this section--
       ``(1) In general.--The term `qualified average daily 
     throughput' means the average of the amount of qualified fuel 
     which enters the eligible pipeline on each day during the 
     taxable year.
       ``(2) Termination.--
       ``(A) In general.--No amount of qualified fuel entering an 
     eligible pipeline shall be taken into account for any day 
     after December 31, 2015.
       ``(B) Special rule.--In the case of any taxable year which 
     includes December 31, 2015, any day in such taxable year 
     following such date shall not be taken into account in 
     determining the qualified average daily throughput for such 
     year.
       ``(d) Other Definitions.--For purposes of this section--
       ``(1) Eligible taxpayer.--The term `eligible taxpayer' 
     means any taxpayer who owns an eligible pipeline.
       ``(2) Eligible pipeline.--The term `eligible pipeline' 
     means a pipeline--
       ``(A) the original use of which commences with the 
     taxpayer,
       ``(B) which is placed in service by the taxpayer after the 
     date of the enactment of this Act and before December 31, 
     2012,
       ``(C) no written binding contract for the construction of 
     which was in effect on or before December 31, 2007, and
       ``(D) which is used for the transportation of fuels derived 
     from coal.
     Rules similar to the rules of section 179C(c)(2) shall apply 
     for purposes of this paragraph.
       ``(3) Qualified fuel.--The term `qualified fuel' means any 
     liquid fuel derived from coal, or coal and biomass (as 
     defined in section 45K(c)(3)) through the Fischer-Tropsch 
     processor another process converting coal into liquid 
     fuel.''.
       (b) Conforming Amendment.--Section 38(b) of such the 
     Internal Revenue Code of 1986 (relating to general business 
     credit) is amended by striking ``plus'' at the end of 
     paragraph (32), by striking the period at the end of 
     paragraph (33) and inserting ``, plus'', and by adding at the 
     end of following new paragraph:
       ``(34) the coal-based transportation fuel pipeline credit 
     under section 45Q(a).''.
       (c) Clerical Amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 of such Code 
     (relating to other credits) is amended by adding at the end 
     the following new section:

``Sec. 45Q. Coal-based transportation fuel pipeline credit.''.
       (d) Effective Date.--The amendments made by this subsection 
     shall apply to property placed in service after the date of 
     the enactment of this Act.

     SEC. 6. INCENTIVES TO CAPTURE COALMINE METHANE.

       (a) In General.--Section 45K of the Internal Revenue Code 
     of 1986 (relating to credit for producing fuel from a 
     nonconventional source) is amended by adding at the end the 
     following new subsection:
       ``(h) Application to Coalmine Methane Gas.--
       ``(1) In general.--This section shall apply to coalmine 
     methane gas--
       ``(A) captured or extracted by the taxpayer after the date 
     of the enactment of this subsection and before the date that 
     is 5 years after the date of the enactment of this 
     subsection, and
       ``(B) utilized as a fuel source or sold by or on behalf of 
     the taxpayer to an unrelated person after the date of the 
     enactment of this subsection and before the date that is 5 
     years after the date of the enactment of this subsection.
       ``(2) Coalmine methane gas.--For purposes of this 
     paragraph, the term `coalmine methane gas' means any methane 
     gas which is--
       ``(A) liberated during qualified coal mining operations, or
       ``(B) extracted up to 5 years in advance of qualified coal 
     mining operations as part of a specific plan to mine a coal 
     deposit.
       ``(3) Special rule for advanced extraction.--In the case of 
     coalmine methane gas which is captured in advance of 
     qualified coal mining operations, the credit under subsection 
     (a) shall be allowed only after the date the coal extraction 
     occurs in the immediate area where the coalmine methane gas 
     was removed.
       ``(4) Noncompliance with pollution laws.--For purposes of 
     subparagraphs (B) and (C), coal mining operations which are 
     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 qualified 
     coal mining operations during such period.''.
       (b) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 7. EXPANDED CLEAN COAL TECHNOLOGY INCENTIVES.

       (a) Expansion and Modification of Advanced Coal Project 
     Investment Credit.--
       (1) Credit rate parity among projects.--Section 48A(a) of 
     the Internal Revenue Code of 1986 (relating to qualifying 
     advanced coal project credit) is amended by striking ``equal 
     to'' and all that follows and inserting ``equal to 30 percent 
     of the qualified investment for such taxable year.''.
       (2) Expansion of aggregate credits.--Section 48A(d)(3)(A) 
     of such Code (relating to aggregate credits) is amended by 
     striking ``$1,300,000,000'' and inserting ``$8,300,000,000''.
       (3) Authorization of additional projects.--
       (A) In general.--Subparagraph (B) of section 48A(d)(3) of 
     such Code (relating to aggregate credits) is amended to read 
     as follows:
       ``(B) Particular projects.--Of the dollar amount in 
     subparagraph (A), the Secretary is authorized to certify--

[[Page S7536]]

       ``(i) $800,000,000 for integrated gasification combined 
     cycle projects the application for which is submitted during 
     the period described in paragraph (2)(A)(i),
       ``(ii) $500,000,000 for projects which use other advanced 
     coal-based generation technologies the application for which 
     is submitted during the period described in paragraph 
     (2)(A)(i),
       ``(iii) $4,200,000,000 for integrated gasification combined 
     cycle projects the application for which is submitted during 
     the period described in paragraph (2)(A)(ii), and
       ``(iv) $2,800,000,000 for other advanced coal-based 
     generation technology projects the application for which is 
     submitted during the period described in paragraph 
     (2)(A)(ii).''.
       (B) Application period for additional projects.--
     Subparagraph (A) of section 48A(d)(2) of such Code (relating 
     to certification) is amended to read as follows:
       ``(A) Application period.--Each applicant for certification 
     under this paragraph shall submit an application meeting the 
     requirements of subparagraph (B). An applicant may only 
     submit an application--
       ``(i) for an allocation from the dollar amount specified in 
     clause (i) or (ii) of paragraph (3)(A) during the 3-year 
     period beginning on the date the Secretary establishes the 
     program under paragraph (1), and
       ``(ii) for an allocation from the dollar amount specified 
     in clause (iii) or (iv) of paragraph (3)(A) during the 3-year 
     period beginning at the earlier of the termination of the 
     period described in clause (i) or the date prescribed by the 
     Secretary.''.
       (C) Capture and sequestration of carbon dioxide emissions 
     requirement.--Section 48A(e)(1) of such Code (relating to 
     requirements) is amended by striking ``and'' at the end of 
     subparagraph (E), by striking the period at the end of 
     subparagraph (F) and inserting ``, and'', and by adding at 
     the end the following new subparagraph:
       ``(G) in the case of any project the application for which 
     is submitted during the period described in paragraph 
     (2)(A)(ii), the project includes equipment to separate and 
     sequester 65 percent of such project's total carbon dioxide 
     emissions.''.
       (4) Nameplate capacity.--Paragraph (1) of section 48A(e) of 
     such Code is amended by adding at the end the following new 
     flush sentence:
     ``For purposes of subparagraph (C), in determining total 
     nameplate generating capacity, the Secretary shall use the 
     electric output that is guaranteed by the provider or 
     supplier of the advanced coal-based generation technology 
     based upon a certified heat and material heat balance.''.
       (5) Effective date.--The amendments made by this subsection 
     shall take effect on the date of the enactment of this Act.
       (b) Clean Coal Energy Bonds.--
       (1) In general.--Subpart I of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 is amended by 
     adding at the end the following new section:

     ``SEC. 54C. CLEAN COAL ENERGY BONDS.

       ``(a) Clean Coal Energy Bond.--For purposes of this 
     subchapter, the term `clean coal energy bond' means any bond 
     issued as part of an issue if--
       ``(1) the bond is issued by a qualified issuer pursuant to 
     an allocation by the Secretary to such issuer of a portion of 
     the national clean coal energy bond limitation under 
     subsection (c)(2),
       ``(2) 100 percent or more of the available project proceeds 
     from the sale of such issue are to be used for capital 
     expenditures incurred by qualified borrowers for 1 or more 
     qualified projects, and
       ``(3) the qualified issuer designates such bond for 
     purposes of this section and the bond is in registered form.
       ``(b) Qualified Project; Special Use Rules.--
       ``(1) In general.--The term `qualified project' means a 
     qualifying advanced coal project (as defined in section 
     48A(c)(1)) placed in service by a qualified borrower.
       ``(2) Refinancing rules.--For purposes of subsection 
     (a)(2), a qualified project may be refinanced with proceeds 
     of a clean coal energy bond only if the indebtedness being 
     refinanced (including any obligation directly or indirectly 
     refinanced by such indebtedness) was originally incurred by a 
     qualified borrower after the date of the enactment of this 
     section.
       ``(3) Reimbursement.--For purposes of subsection (a)(2), a 
     clean coal energy bond may be issued to reimburse a qualified 
     borrower for amounts paid after the date of the enactment of 
     this section with respect to a qualified project, but only 
     if--
       ``(A) prior to the payment of the original expenditure, the 
     qualified borrower declared its intent to reimburse such 
     expenditure with the proceeds of a clean coal energy bond,
       ``(B) not later than 60 days after payment of the original 
     expenditure, the qualified issuer adopts an official intent 
     to reimburse the original expenditure with such proceeds, and
       ``(C) the reimbursement is made not later than 18 months 
     after the date the original expenditure is paid.
       ``(4) Treatment of changes in use.--For purposes of 
     subsection (a)(2), the proceeds of an issue shall not be 
     treated as used for a qualified project to the extent that a 
     qualified borrower takes any action within its control which 
     causes such proceeds not to be used for a qualified project. 
     The Secretary shall prescribe regulations specifying remedial 
     actions that may be taken (including conditions to taking 
     such remedial actions) to prevent an action described in the 
     preceding sentence from causing a bond to fail to be a clean 
     coal energy bond.
       ``(c) Limitation on Amount of Bonds Designated.--
       ``(1) National limitation.--There is a national clean coal 
     energy bond limitation of $2,000,000,000.
       ``(2) Allocation by secretary.--The Secretary shall 
     allocate the amount described in paragraph (1) among 
     qualified projects in such manner as the Secretary determines 
     appropriate, except that the Secretary may not allocate more 
     than $1,250,000,000 of the national clean coal energy bond 
     limitation to finance qualified projects of qualified 
     borrowers which are governmental bodies.
       ``(d) Qualified Issuer; Qualified Borrower.--For purposes 
     of this section--
       ``(1) Qualified issuer.--The term `qualified issuer' 
     means--
       ``(A) a clean coal energy bond lender,
       ``(B) a cooperative electric company, or
       ``(C) a governmental body.
       ``(2) Qualified borrower.--The term `qualified borrower' 
     means--
       ``(A) a mutual or cooperative electric company described in 
     section 501(c)(12) or 1381(a)(2)(C), or
       ``(B) a governmental body.
       ``(3) Cooperative electric company.--The term `cooperative 
     electric company' means a mutual or cooperative electric 
     company described in section 501(c)(12) or section 
     1381(a)(2)(C), or a not-for-profit electric utility which has 
     received a loan or loan guarantee under the Rural 
     Electrification Act.
       ``(4) Clean coal energy bond lender.--The term `clean coal 
     energy bond lender' means a lender which is a cooperative 
     which is owned by, or has outstanding loans to, 100 or more 
     cooperative electric companies and is in existence on 
     February 1, 2002, and shall include any affiliated entity 
     which is controlled by such lender.
       ``(5) Governmental body.--The term `governmental body' 
     means any State, territory, possession of the United States, 
     the District of Columbia, Indian tribal government, and any 
     political subdivision thereof.
       ``(e) Special Rules Relating to Pool Bonds.--No portion of 
     a clean coal energy bond which is a pooled financing bond may 
     be allocable to any loan unless the borrower has entered into 
     a written loan commitment for such portion prior to the issue 
     date of such issue.
       ``(f) Other Definitions and Special Rules.--For purposes of 
     this section--
       ``(1) Pooled financing bond.--The term `pooled financing 
     bond' shall have the meaning given such term by section 
     149(f)(4)(A).
       ``(2) Ratable principal amortization required.--A bond 
     shall not be treated as a clean coal energy bond unless it is 
     part of an issue which provides for an equal amount principal 
     to be paid by the qualified issuer during each 12-month 
     period that the issue is outstanding (other than the first 
     12-month period).
       ``(g) Termination.--A bond shall not be treated as a clean 
     coal energy bond if such bond is issued after December 31, 
     2012.''.
       (2) Conforming amendments.--
       (A) Paragraph (1) of section 54A(d) is amended to read as 
     follows:
       ``(1) Qualified tax credit bond.--The term `qualified tax 
     credit bond' means--
       ``(A) a qualified forestry conservation bond, or
       ``(B) a clean coal energy bond,
     which is part of an issue that meets requirements of 
     paragraphs (2), (3), (4), (5), and (6).''.
       (B) Subparagraph (C) of section 54A(d)(2), as added by 
     section 106, is amended to read as follows:
       ``(C) Qualified purpose.--For purposes of this paragraph, 
     the term `qualified purpose' means--
       ``(i) in the case of a qualified forestry conservation 
     bond, a purpose specified in section 54B(e), and
       ``(ii) in the case of a clean coal energy bond, a qualified 
     project specified in section 54C(b).''.
       (C) The table of sections for subpart I of part IV of 
     subchapter A of chapter 1 is amended by adding at the end the 
     following new item:

``Sec. 54C. Clean coal energy bonds.''.

       (3) Issuance of regulations.--The Secretary of the Treasury 
     shall issues regulations required under section 54C of the 
     Internal Revenue Code of 1986 (as added by this section) not 
     later than 120 days after the date of the enactment of this 
     Act.
       (4) Effective date.--The amendments made by this subsection 
     shall apply to bonds issued after December 31, 2007.
       (c) Tax Credit for Carbon Dioxide Sequestration.--
       (1) In general.--Subpart D of part IV of subchapter A of 
     chapter 1 of the Internal Revenue Code of 1986 (relating to 
     business credits), as amended by this Act, is amended by 
     adding at the end the following new section:

     ``SEC. 45R. CREDIT FOR CARBON DIOXIDE SEQUESTRATION.

       ``(a) General Rule.--For purposes of section 38, the carbon 
     dioxide sequestration credit for any taxable year is an 
     amount equal to the sum of--
       ``(1) $20 per metric ton of qualified carbon dioxide which 
     is--
       ``(A) captured by the taxpayer at a qualified facility, and
       ``(B) disposed of by the taxpayer in secure geological 
     storage, and
       ``(2) $10 per metric ton of qualified carbon dioxide which 
     is--

[[Page S7537]]

       ``(A) captured by the taxpayer at a qualified facility, and
       ``(B) used by the taxpayer as a tertiary injectant in a 
     qualified enhanced oil or natural gas recovery project.
       ``(b) Qualified Carbon Dioxide.--For purposes of this 
     section--
       ``(1) In general.--The term `qualified carbon dioxide' 
     means carbon dioxide captured from an industrial source 
     which--
       ``(A) would otherwise be released into the atmosphere as 
     industrial emission of greenhouse gas, and
       ``(B) is measured at the source of capture and verified at 
     the point of disposal or injection.
       ``(2) Recycled carbon dioxide.--The term `qualified carbon 
     dioxide' includes the initial deposit of captured carbon 
     dioxide used as a tertiary injectant. Such term does not 
     include carbon dioxide that is re-captured, recycled, and re-
     injected as part of the enhanced oil and natural gas recovery 
     process.
       ``(c) Qualified Facility.--For purposes of this section, 
     the term `qualified facility' means any industrial facility--
       ``(1) which is owned by the taxpayer,
       ``(2) at which carbon capture equipment is placed in 
     service, and
       ``(3) which captures not less than 500,000 metric tons of 
     carbon dioxide during the taxable year.
       ``(d) Special Rules and Other Definitions.--For purposes of 
     this section--
       ``(1) Only carbon dioxide captured within the united states 
     taken into account.--The credit under this section shall 
     apply only with respect to qualified carbon dioxide the 
     capture of which is within--
       ``(A) the United States (within the meaning of section 
     638(1)), or
       ``(B) a possession of the United States (within the meaning 
     of section 638(2)).
       ``(2) Secure geological storage.--The Secretary, in 
     consultation with the Administrator of the Environmental 
     Protection Agency, shall establish regulations for 
     determining adequate security measures for the geological 
     storage of carbon dioxide under subsection (a)(1)(B) such 
     that the carbon dioxide does not escape into the atmosphere. 
     Such term shall include storage at deep saline formations and 
     unminable coal seems under such conditions as the Secretary 
     may determine under such regulations.
       ``(3) Tertiary injectant.--The term `tertiary injectant' 
     has the same meaning as when used within section 193(b)(1).
       ``(4) Qualified enhanced oil or natural gas recovery 
     project.--The term `qualified enhanced oil or natural gas 
     recovery project' has the meaning given the term `qualified 
     enhanced oil recovery project' by section 43(c)(2), by 
     substituting `crude oil or natural gas' for `crude oil' in 
     subparagraph (A)(i) thereof.
       ``(5) Credit attributable to taxpayer.--Any credit under 
     this section shall be attributable to the person that 
     captures and physically or contractually ensures the disposal 
     of or the use as a tertiary injectant of the qualified carbon 
     dioxide, except to the extent provided in regulations 
     prescribed by the Secretary.
       ``(6) Recapture.--The Secretary shall, by regulations, 
     provide for recapturing the benefit of any credit allowable 
     under subsection (a) with respect to any qualified carbon 
     dioxide which ceases to be captured, disposed of, or used as 
     a tertiary injectant in a manner consistent with the 
     requirements of this section.
       ``(7) Inflation adjustment.--In the case of any taxable 
     year beginning in a calendar year after 2008, there shall be 
     substituted for each dollar amount contained in subsection 
     (a) an amount equal to the product of--
       ``(A) such dollar amount, multiplied by
       ``(B) the inflation adjustment factor for such calendar 
     year determined under section 43(b)(3)(B) for such calendar 
     year, determined by substituting `2007' for `1990'.
       ``(e) Termination.--This section shall not apply to 
     qualified carbon dioxide after the date that is 5 years after 
     the date of the enactment of this Act.''.
       (2) Conforming amendment.--Section 38(b) of such Code 
     (relating to general business credit), as amended by this 
     Act, is amended by striking ``plus'' at the end of paragraph 
     (33), by striking the period at the end of paragraph (34) and 
     inserting ``, plus'', and by adding at the end of following 
     new paragraph:
       ``(35) the carbon dioxide sequestration credit determined 
     under section 45R(a).''.
       (3) Clerical amendment.--The table of sections for subpart 
     B of part IV of subchapter A of chapter 1 of such Code 
     (relating to other credits), as amended by this Act, is 
     amended by adding at the end the following new section:

``Sec. 45R. Credit for carbon dioxide sequestration.''.

       (4) Effective date.--The amendments made by this subsection 
     shall apply carbon dioxide captured after the date of the 
     enactment of this Act.

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