,i #aaeth ,,congress #b;d ,session ,h4 ,r4 #gaif ,,in ,,the ,,house ,,of ,,representatives ,november #bi1 #bjah,mr4 ,reed 7for himself1 ,mr4 ,la,hood1 and ,mr4 ,paulsen7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide investment and production tax credits for emerging energy technologies1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,energy ,sector ,innovation ,credit ,act of #bjah4 #b4 ,investment credit for emerging energy technology 7a7 ,in general ,subpart ,e of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #dh;,c the following new section3 #dh;,d4 ,emerging energy technology credit 7a7 ,in general ,for purposes of section #df1 the emerging energy technology credit for any taxable year is an amount equal to #cj percent of the basis of any qualified emerging energy property placed in service by the taxpayer during such taxable year4 7b7 ,qualified emerging energy property ,for purposes of this section-- 7#a7 ,in general ,the term qualified emerging energy property means property which is constructed1 reconstructed1 erected1 or acquired by the taxpayer1 the original use of which commences with the taxpayer1 and which is-- 7,a7 a qualified production facility 7as defined in section #de,t7d71 determined without regard to paragraph 7#b7 thereof7 which is a tier #a facility 7as defined in section #de,t7b77#b77;,a771 or 7,b7 property which is placed in service at and used in connection with an existing electric generating facility which is a point source of air pollutants to retrofit such facility and which1 with respect to such facility-- 7i7 improves conversion efficiency 7as defined in section #de,t7e77#b77 or energy efficiency 7as defined in section #de,t7e77#c77 by at least #ej percent1 7ii7 decreases water consumption1 in the case of a type of facility which has significant water consumption1 by at least #ge percent1 or 7iii7 as recognized by the ,environmental ,protection ,agency pursuant to its enforcement of the ,clean ,air ,act 7#db ,u4,s4,c4 #gdja et seq47 or by administrative action1 reduces1 sequesters1 or controls by at least #ej percent the emission of air pollutants which can be reasonably anticipated to endanger public health or welfare4 7#b7 ,denial of double benefit ,such term shall not include-- 7,a7 any property which1 7,b7 property any portion of which1 or 7,c7 property placed in service at and used in connection with a facility which1 has been treated as a qualified facility for purposes of section #de7;d71 as an advanced nuclear power facility for purposes of section #de;,j1 as a qualified facility for purposes of section #de,q1 as a qualified production facility for purposes of section #de,t1 as energy property for purposes of section #dh1 or as a qualified investment for purposes of section #dh;,a1 #dh;,b1 or #dh;,c1 for any taxable year4 7#c7 ,point source ,for purposes of paragraph 7#a77;,b71 the term point source means a large1 stationary and non-mobile1 identifiable source of emissions that releases pollutants into the atmosphere4 7c7 ,first of its kind technology 7#a7 ,in general ,in the case of any qualified emerging energy property which is the first of its kind1 subsection 7a7 shall be applied by substituting #dj percent for #cj percent4 7#b7 ,first of its kind ,property shall be treated as the first of its kind if such property is #a of the first #c original demonstrations in the ,united ,states of an engineering design for megawatt-scale electric power generation which generates revenue from sales of electric power4 7#c7 ,determination 7,a7 ,in general ,the ,secretary1 in consultation with the ,secretary of ,energy1 shall develop a process to determine whether qualified emerging energy property is first of its kind4 ,such process shall include a certification1 at the request of the taxpayer before the commencement of construction1 that the property will be treated as first of its kind4 ,such process shall be designed to make a determination not later than #ij days after the submission of an application for determination4 7,b7 ,termination if construction does not proceed ,except as otherwise provided by the ,secretary1 a certification of any qualified emerging energy property under subparagraph 7,a7 shall cease to have any force or effect if construction of such property does not begin before the date which is #e years after the date of such certification or if the ,secretary makes a determination that such construction has been suspended indefinitely4 7d7 ,certain qualified progress expenditure rules made applicable ,rules similar to the rules of subsections 7c77#d7 and 7d7 of section #df 7as in effect on the day before the enactment of the ,revenue ,reconciliation ,act of #aiij7 shall apply for purposes of this section4 7e7 ,transfer of credit by certain public entities 7#a7 ,in general ,if1 with respect to a credit under subsection 7a7 for any taxable year-- 7,a7 a qualified public entity would be the taxpayer 7but for this paragraph71 and 7,b7 such entity elects the application of this paragraph for such taxable year with respect to all 7or any portion specified in such election7 of such credit1 the eligible project partner specified in such election1 and not the qualified public entity1 shall be treated as the taxpayer for purposes of this title with respect to such credit 7or such portion thereof74 7#b7 ,definitions ,for purposes of this subsection-- 7,a7 ,qualified public entity ,the term qualified public entity means-- 7i7 a ,federal1 ,state1 or local government entity1 or any political subdivision1 agency1 or instrumentality thereof1 7ii7 a mutual or cooperative electric company described in section #eja7;c77#ab7 or #acha7;a77#b71 or 7iii7 a not-for-profit electric utility which had or has received a loan or loan guarantee under the ,rural ,electrification ,act of #aicf4 7,b7 ,eligible project partner ,the term eligible project partner means any person who-- 7i7 is responsible for1 or participates in1 the design or construction of the qualified emerging energy property to which the credit under subsection 7a7 relates1 7ii7 is a financial institution providing financing for the construction or operation of such property1 or 7iii7 has an ownership interest in such property4 7#c7 ,special rules 7,a7 ,application to partnerships ,in the case of a credit under subsection 7a7 which is determined at the partnership level-- 7i7 for purposes of paragraph 7#a77;,a71 a qualified public entity shall be treated as the taxpayer with respect to such entity's distributive share of such credit1 and 7ii7 the term eligible project partner shall include any partner of the partnership4 7,b7 ,taxable year in which credit taken into account ,in the case of any credit 7or portion thereof7 with respect to which an election is made under paragraph 7#a71 such credit shall be taken into account in the first taxable year of the eligible project partner ending with1 or after1 the qualified public entity's taxable year with respect to which the credit was determined4 7,c7 ,treatment of transfer under private use rules ,for purposes of section #ada7;b77#a71 any benefit derived by an eligible project partner in connection with an election under this subsection shall not be taken into account as a private business use4 4 7b7 ,credit made part of investment credit ,section #df of such ,code is amended by striking and at the end of paragraph 7#e71 by striking the period at the end of paragraph 7#f7 and inserting 1 and1 and by adding at the end the following new paragraph3 7#g7 the emerging energy technology credit4 4 7c7 ,conforming amendments 7#a7 ,section #di7;a77#a77;,c7 of such ,code is amended by striking and at the end of clause 7iv71 by striking the period at the end of clause 7v7 and inserting 1 and1 and by adding at the end the following new clause3 7vi7 the basis of any qualified emerging energy property 7as defined in section #dh;,d7b774 4 7#b7 ,the table of sections for subpart ,e of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by inserting after the item relating to section #dh;,d the following new item3 ,sec4 #dh;,d4 ,emerging energy technology credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this ,act1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 #c4 ,production credit for emerging energy technology 7a7 ,in general ,subpart ,d of part ,,iv of subchapter ,a of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #de,t4 ,emerging energy technology production credit 7a7 ,in general ,for purposes of section #ch1 the emerging energy technology production credit determined under this section for any taxable year beginning in the credit period with respect to a qualified production facility of the taxpayer is an amount equal to the applicable percentage of the lesser of-- 7#a7 the annual gross receipts of the taxpayer from the sale of electricity generated at the qualified production facility to an unrelated person during such taxable year1 or 7#b7 the product of-- 7,a7 the national average wholesale price of a kilowatt hour of electricity in the taxable year1 as determined by the ,secretary in consultation with the ,administrator of the ,energy ,information ,administration1 multiplied by 7,b7 the number of kilowatt hours of electricity produced at the qualified production facility and sold to an unrelated person during the taxable year4 7b7 ,applicable percentage ,for purposes of this section-- 7#a7 ,in general ,the applicable percentage is-- 7,a7 in the case of a tier #a facility1 #fj percent1 7,b7 in the case of a tier #b facility1 #de percent1 7,c7 in the case of a tier #c facility1 #cj percent1 7,d7 in the case of a tier #d facility1 #ae percent1 and 7,e7 in the case of any other facility1 zero percent4 7#b7 ,facility ,tiers 7,a7 ,tier #a facility ,the term tier #a facility means1 with respect to any taxable year1 an electric generating facility using a type of technology which accounts for less than 4#e percent of annual domestic electricity production in the preceding taxable year1 as determined by the ,secretary on the basis of data reported by the ,energy ,information ,administration4 7,b7 ,tier #b facility ,the term tier #b facility means1 with respect to any taxable year1 an electric generating facility using a type of technology which accounts for at least 4#e percent but less than #a percent of annual domestic electricity production in the preceding taxable year1 as determined by the ,secretary on the basis of data reported by the ,energy ,information ,administration4 7,c7 ,tier #c facility ,the term tier #c facility means1 with respect to any taxable year1 an electric generating facility using a type of technology which accounts for at least #a percent but less than #a4e percent of annual domestic electricity production in the preceding taxable year1 as determined by the ,secretary on the basis of data reported by the ,energy ,information ,administration4 7,d7 ,tier #d facility ,the term tier #d facility means1 with respect to any taxable year1 an electric generating facility using a type of technology which accounts for at least #a4e percent but less than #b percent of annual domestic electricity production in the preceding taxable year1 as determined by the ,secretary on the basis of data reported by the ,energy ,information ,administration4 7c7 ,credit period ,for purposes of this section1 the credit period with respect to any qualified production facility is the #aj-year period beginning with the date the facility was originally placed in service4 7d7 ,qualified production facility ,for purposes of this section-- 7#a7 ,in general ,the term qualified production facility means any facility which-- 7,a7 was originally placed in service after the date of the enactment of this ,act1 7,b7 generates electricity1 7,c7 is located in the ,united ,states or a possession of the ,united ,states 7as such terms are used in section #fch71 7,d7 utilizes emerging technology1 and 7,e7 is certified by the ,secretary1 after consultation with the ,secretary of ,energy1 as a qualified production facility for purposes of this section4 7#b7 ,denial of double benefit ,such term shall not include any facility which has been treated as a qualified facility for purposes of section #de7;d71 as an advanced nuclear power facility for purposes of section #de;,j1 as a qualified facility for purposes of section #de,q1 as energy property for purposes of section #dh1 as a qualified investment for purposes of section #dh;,a1 #dh;,b1 or #dh;,c1 or as qualified emerging energy property for purposes of section #dh;,d1 for any taxable year4 7e7 ,emerging technology ,for purposes of this section-- 7#a7 ,in general ,the term emerging technology means-- 7,a7 any new or improved power conversion fuel-based technology-- 7i7 which-- 7,i7 reduces emission of air pollutants that can be reasonably anticipated to endanger public health or welfare to below the volume or rate required by the ,clean ,air ,act1 in the case of a type of facility which has significant emission of air pollutants1 or 7,,ii7 yields at least a #ej percent improvement in energy efficiency1 as compared to existing fuel-based electric generating commercial technology1 and 7ii7 which operates with a capacity factor of at least #ej percent1 7,b7 any new or improved reactor design licensed by the ,nuclear ,regulatory ,commission which produces electricity through nuclear fission or a fusion chain reaction and which 7when compared to existing nuclear commercial technologies7-- 7i7 reduces the high-level radioactive waste or spent nuclear fuel per unit of energy yield1 7ii7 improves fuel utilization1 7iii7 decreases core damage frequency or large early release frequency by at least a factor of #aj1 or 7iv7 increases thermal efficiency1 7,c7 any new technology or new improvement to technology which generates electricity from renewable energy 7as defined in section #bjc7;b77#b7 of the ,energy ,policy ,act of #bjje7 and which generates at least a #be percent increase in the conversion efficiency of the facility as compared with the commercial technology of the same type as such technology which is considered to be the best of its type in commercial use1 or 7,d7 technology which the ,secretary1 in consultation with the ,secretary of ,energy1 determines would improve energy efficiency or conversion efficiency of electric generating commercial technology by not less than #ae percent4 7#b7 ,conversion efficiency ,the term conversion efficiency means the fraction-- 7,a7 the numerator of which is the total useful electrical or thermal power produced by an electric generating facility at normal operating rates1 and expected to be consumed in its normal application1 and 7,b7 the denominator of which is the incident energy1 whether mechanical1 radiation1 or thermal energy1 which is measurable at the input of the electric generating facility4 7#c7 ,energy efficiency ,the term energy efficiency means the fraction-- 7,a7 the numerator of which is the total useful electrical1 thermal1 and mechanical power which is produced by the facility at normal operating rates and expected to be consumed in its normal operation1 and 7,b7 the denominator of which is the lower heating value of the energy sources for the facility4 7#d7 ,efficiency baseline ,not less frequently than every #aj years1 the ,secretary1 in consultation with the ,secretary of ,energy1 shall establish baseline levels with respect to the types of electric generating facilities and the measures of efficiency described in paragraph 7#a7 which a facility must exceed in order to meet the requirements of such paragraph4 7#e7 ,commercial technology ,the term commercial technology means a design that has been installed in and is being used in #c or more projects in the ,united ,states marketplace in the same general application as in the electric generating facility1 and has been in such use in at least #a of such projects for a period of at least #e years4 7#f7 ,core damage frequency ,the term core damage frequency means the likelihood that1 given the way a reactor is designed and operated1 an accident could cause the fuel in the reactor to be damaged4 7#g7 ,large early release frequency ,the term large early release frequency means the likelihood of a release into the environment of a sufficiently large quantity of fission products in an early enough time frame to have the potential for a prompt fatality4 7f7 ,transfer of credit by certain public entities 7#a7 ,in general ,if1 with respect to a credit under subsection 7a7 for any taxable year-- 7,a7 a qualified public entity would be the taxpayer 7but for this paragraph71 and 7,b7 such entity elects the application of this paragraph for such taxable year with respect to all 7or any portion specified in such election7 of such credit1 the eligible project partner specified in such election1 and not the qualified public entity1 shall be treated as the taxpayer for purposes of this title with respect to such credit 7or such portion thereof74 7#b7 ,definitions ,for purposes of this subsection-- 7,a7 ,qualified public entity ,the term qualified public entity means-- 7i7 a ,federal1 ,state1 or local government entity1 or any political subdivision1 agency1 or instrumentality thereof1 7ii7 a mutual or cooperative electric company described in section #eja7;c77#ab7 or #acha7;a77#b71 or 7iii7 a not-for-profit electric utility which had or has received a loan or loan guarantee under the ,rural ,electrification ,act of #aicf4 7,b7 ,eligible project partner ,the term eligible project partner means any person who-- 7i7 is responsible for1 or participates in1 the design or construction of the qualified production facility to which the credit under subsection 7a7 relates1 7ii7 is a financial institution providing financing for the construction or operation of such facility1 or 7iii7 has an ownership interest in such facility4 7#c7 ,special rules 7,a7 ,application to partnerships ,in the case of a credit under subsection 7a7 which is determined at the partnership level-- 7i7 for purposes of paragraph 7#a77;,a71 a qualified public entity shall be treated as the taxpayer with respect to such entity's distributive share of such credit1 and 7ii7 the term eligible project partner shall include any partner of the partnership4 7,b7 ,taxable year in which credit taken into account ,in the case of any credit 7or portion thereof7 with respect to which an election is made under paragraph 7#a71 such credit shall be taken into account in the first taxable year of the eligible project partner ending with1 or after1 the qualified public entity's taxable year with respect to which the credit was determined4 7,c7 ,treatment of transfer under private use rules ,for purposes of section #ada7;b77#a71 any benefit derived by an eligible project partner in connection with an election under this subsection shall not be taken into account as a private business use4 7g7 ,regulations ,not later than #a year after the date of the enactment of this section1 the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section4 ,such regulations shall include a process for making eligibility certifications described in subsection 7d77#a77;,e74 4 7b7 ,credit allowed as part of general business credit ,section #ch7;b7 of such ,code is amended by striking plus at the end of paragraph 7#ca71 by striking the period at the end of paragraph 7#cb7 and inserting 1 plus1 and by adding at the end the following new paragraph3 7#cc7 the emerging energy technology production credit determined under section #de,t7a74 4 7c7 ,clerical amendment ,the table of sections for subpart ,d of part ,,iv of subchapter ,a of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #de,t4 ,emerging energy technology production credit4 4 7d7 ,effective date ,the amendments made by this section shall apply to electricity produced and sold after the date of the enactment of this ,act4 #d4 ,modification of energy credit 7a7 ,energy credit for energy storage technologies 7#a7 ,in general ,section #dh7;a77#c77;,a7 of the ,internal ,revenue ,code of #aihf is amended by striking or at the end of clause 7vi71 by adding or at the end of clause 7vii71 and by adding at the end the following new clause3 7viii7 equipment which-- 7,i7 receives1 stores1 and delivers energy using batteries1 compressed air1 pumped hydropower1 hydrogen storage 7including hydrolysis71 thermal energy storage1 regenerative fuel cells1 flywheels1 capacitors1 superconducting magnets1 or other technologies identified by the ,secretary in consultation with the ,secretary of ,energy1 7,,ii7 has a capacity of not less than #e kilowatt hours1 and 7,,iii7 receives an allocation of national megawatt capacity from the ,secretary under paragraph 7#h7 equal to the capacity of such equipment4 4 7#b7 #cj-,percent credit ,section #dh7;a77#b77;,a77i77,,ii7 of such ,code is amended by striking paragraph 7#c77;,a77i7 and inserting clause 7i7 or 7viii7 of paragraph 7#c77;,a74 7#c7 ,national limitation relating to energy storage property ,section #dh7;a7 of such ,code is amended by adding at the end the following new paragraph3 7#h7 ,national limitation relating to energy storage property 7,a7 ,in general ,the aggregate amount of national megawatt capacity limitation allocated by the ,secretary to equipment described in paragraph 7#c77;,a77viii7 shall not exceed #aj1jjj megawatts4 7,b7 ,allocation of limitation ,the ,secretary shall allocate the national megawatt capacity limitation in such manner as the ,secretary may prescribe1 with a focus on diversity of technological design4 7,c7 ,regulations ,not later than #f months after the date of the enactment of this paragraph1 the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph4 ,such regulations shall provide a process under which the ,secretary1 after consultation with the ,secretary of ,energy1 shall allocate the national megawatt capacity limitation4 4 7b7 ,transfer of energy credit by certain public entities ,section #dh of such ,code is amended by adding at the end the following new subsection3 7f7 ,transfer of credit by certain public entities 7#a7 ,in general ,if1 with respect to a credit under subsection 7a7 for any taxable year-- 7,a7 a qualified public entity would be the taxpayer 7but for this paragraph71 and 7,b7 such entity elects the application of this paragraph for such taxable year with respect to all 7or any portion specified in such election7 of such credit1 the eligible project partner specified in such election1 and not the qualified public entity1 shall be treated as the taxpayer for purposes of this title with respect to such credit 7or such portion thereof74 7#b7 ,definitions ,for purposes of this subsection-- 7,a7 ,qualified public entity ,the term qualified public entity means-- 7i7 a ,federal1 ,state1 or local government entity1 or any political subdivision1 agency1 or instrumentality thereof1 7ii7 a mutual or cooperative electric company described in section #eja7;c77#ab7 or #acha7;a77#b71 or 7iii7 a not-for-profit electric utility which had or has received a loan or loan guarantee under the ,rural ,electrification ,act of #aicf4 7,b7 ,eligible project partner ,the term eligible project partner means any person who-- 7i7 is responsible for1 or participates in1 the design or construction of the energy property to which the credit under subsection 7a7 relates1 7ii7 is a financial institution providing financing for the construction or operation of such property1 or 7iii7 has an ownership interest in such property4 7#c7 ,special rules 7,a7 ,application to partnerships ,in the case of a credit under subsection 7a7 which is determined at the partnership level-- 7i7 for purposes of paragraph 7#a77;,a71 a qualified public entity shall be treated as the taxpayer with respect to such entity's distributive share of such credit1 and 7ii7 the term eligible project partner shall include any partner of the partnership4 7,b7 ,taxable year in which credit taken into account ,in the case of any credit 7or portion thereof7 with respect to which an election is made under paragraph 7#a71 such credit shall be taken into account in the first taxable year of the eligible project partner ending with1 or after1 the qualified public entity's taxable year with respect to which the credit was determined4 7,c7 ,treatment of transfer under private use rules ,for purposes of section #ada7;b77#a71 any benefit derived by an eligible project partner in connection with an election under this subsection shall not be taken into account as a private business use4 4 7c7 ,effective date 7#a7 ,in general ,except as otherwise provided in this subsection1 the amendments made by this section shall apply to periods after the date of the enactment of this ,act1 in taxable years ending after such date1 under rules similar to the rules of section #dh7m7 of the ,internal ,revenue ,code of #aihf 7as in effect on the day before the date of the enactment of the ,revenue ,reconciliation ,act of #aiij74 7#b7 ,transfer of energy credit by certain public entities ,the amendment made by subsection 7b7 shall apply to credits arising in taxable years ending after the date of the enactment of this ,act4