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S. 2118: Clean Energy for America Act


The text of the bill below is as of Jun 21, 2021 (Placed on Calendar in the Senate).


II

Calendar No. 78

117th CONGRESS

1st Session

S. 2118

IN THE SENATE OF THE UNITED STATES

June 17, 2021

(for himself, Ms. Stabenow, Mr. Menendez, Mr. Carper, Mr. Cardin, Mr. Brown, Mr. Bennet, Mr. Casey, Mr. Whitehouse, and Ms. Cortez Masto) introduced the following bill; which was read the first time

June 21, 2021

Read the second time and placed on the calendar

A BILL

To amend the Internal Revenue Code of 1986 to provide tax incentives for increased investment in clean energy, and for other purposes.

1.

Short title; etc

(a)

Short title

This Act may be cited as the Clean Energy for America 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 section or other provision of the Internal Revenue Code of 1986.

(c)

Table of contents

The table of contents of this Act is as follows:

Sec. 1. Short title; etc.

TITLE I—Incentives for Clean Electricity

Sec. 101. Clean electricity production credit.

Sec. 102. Clean electricity investment credit.

Sec. 103. Extensions, modifications, and terminations of various energy provisions.

TITLE II—Incentives for Clean Transportation

Sec. 201. Clean fuel production credit.

Sec. 202. Transportation electrification.

Sec. 203. Credit for production of clean hydrogen.

Sec. 204. Temporary extensions of existing fuel incentives.

TITLE III—Incentives for Energy Efficiency

Sec. 301. Credit for new energy efficient residential buildings.

Sec. 302. Energy efficient home improvement credit.

Sec. 303. Enhancement of energy efficient commercial buildings deduction.

Sec. 304. Enhancement of energy credit for geothermal heat pumps.

TITLE IV—Termination of certain fossil fuel provisions

Sec. 401. Termination of provisions relating to oil, gas, and other materials.

Sec. 402. Modification of certain provisions relating to oil, gas, and other fossil fuels.

TITLE V—Workforce development requirements

Sec. 501. Use of qualified apprentices.

TITLE VI—Miscellaneous

Sec. 601. Adjustment of qualifying advanced energy project credit.

Sec. 602. Issuance of exempt facility bonds for qualified carbon dioxide capture facilities.

Sec. 603. Limitation on importation of certain energy equipment and components.

Sec. 604. Elimination of negative effects on small businesses and certain individual taxpayers.

I

Incentives for Clean Electricity

101.

Clean electricity production credit

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new section:

45U.

Clean electricity production credit

(a)

Amount of credit

For purposes of section 38, the clean electricity production credit for any taxable year is an amount equal to the product of—

(1)

subject to subsection (g)(7), 1.5 cents, multiplied by

(2)

the kilowatt hours of electricity—

(A)

produced by the taxpayer at a qualified facility, and

(B)
(i)

sold by the taxpayer to an unrelated person during the taxable year, or

(ii)

in the case of a qualified facility which is equipped with a metering device which is owned and operated by an unrelated person, sold, consumed, or stored by the taxpayer during the taxable year.

(b)

Qualified facility

(1)

In general

(A)

Definition

Subject to subparagraphs (B), (C), and (D), the term qualified facility means a facility owned by the taxpayer—

(i)

which is used for the generation of electricity,

(ii)

which is originally placed in service after December 31, 2022,

(iii)

for which the greenhouse gas emissions rate (as determined under paragraph (2)) is not greater than zero, and

(iv)

in the case of any facility with a maximum net output equal to or greater than 1 megawatt, which—

(I)

subject to subparagraph (B) of paragraph (3), satisfies the requirements under subparagraph (A) of such paragraph, and

(II)

with respect to the construction of such facility, satisfies the requirements under section 501 of the Clean Energy for America Act.

(B)

10-year production credit

For purposes of this section, a facility shall only be treated as a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.

(C)

Expansion of facility; incremental production

The term qualified facility shall include either of the following in connection with a facility described in subparagraph (A) (without regard to clause (ii) of such subparagraph) that was placed in service before January 1, 2023, but only to the extent of the increased amount of electricity produced at the facility by reason of the following:

(i)

A new unit placed in service after December 31, 2022.

(ii)

Any efficiency improvements or additions of capacity placed in service after December 31, 2022.

(D)

Coordination with other credits

The term qualified facility shall not include any facility for which a credit determined under section 45, 45J, 45Q, 48, or 48D is allowed under section 38 for the taxable year or any prior taxable year.

(2)

Greenhouse gas emissions rate

(A)

In general

For purposes of this section, the term greenhouse gas emissions rate means the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO2e per KWh.

(B)

Fuel combustion and gasification

In the case of a facility which produces electricity through combustion or gasification, the greenhouse gas emissions rate for such facility shall be equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H))) in the production of electricity, expressed as grams of CO2e per KWh.

(C)

Establishment of emissions rates for facilities

(i)

In general

The Secretary and the Administrator of the Environmental Protection Agency shall establish greenhouse gas emissions rates for types or categories of facilities, which a taxpayer shall use for purposes of this section.

(ii)

Publishing emissions rates

The Secretary shall annually publish a table that sets forth the greenhouse gas emissions rates for similar types or categories of facilities.

(iii)

Provisional emissions rate

(I)

In general

In the case of any facility for which an emissions rate has not been established by the Secretary and the Administrator of the Environmental Protection Agency, a taxpayer which owns such facility may file a petition with the Secretary and the Administrator of the Environmental Protection Agency for determination of the emissions rate with respect to such facility.

(II)

Establishment of provisional and final emissions rate

In the case of a facility for which a petition described in subclause (I) has been filed, the Secretary and the Administrator of the Environmental Protection Agency shall—

(aa)

not later than 12 months after the date on which the petition was filed, provide a provisional emissions rate for such facility which a taxpayer shall use for purposes of this section, and

(bb)

not later than 24 months after the date on which the petition was filed, establish the emissions rate for such facility.

(D)

Carbon capture and sequestration equipment

For purposes of this subsection, the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity shall not include any qualified carbon dioxide that is captured by the taxpayer and—

(i)

pursuant to any regulations established under paragraph (2) of section 45Q(f), disposed of by the taxpayer in secure geological storage, or

(ii)

utilized by the taxpayer in a manner described in paragraph (5) of such section.

(3)

Wage requirements

(A)

In general

The requirements described in this subparagraph with respect to any facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(i)

the construction of such facility, or

(ii)

for any year during the period described in paragraph (1)(B), the alteration or repair of such facility,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(B)

Failure to satisfy wage requirements

(i)

In general

In the case of any taxpayer which fails to satisfy the requirement under subparagraph (A) with respect to any facility for any year during the period described in paragraph (1)(B), the amount of the credit which would (but for this subparagraph) be allowable under this section with respect to such facility for such year shall be reduced to zero.

(ii)

Correction and penalty

Clause (i) shall not apply with respect to any failure by the taxpayer to satisfy the requirement under subparagraph (A) with respect to any facility for any year if, with respect to any laborer or mechanic who was paid wages at a rate below the rate described in such subparagraph for any period during such year, such taxpayer—

(I)

makes payment to such laborer or mechanic in an amount equal to the sum of—

(aa)

an amount equal to the difference between—

(AA)

the amount of wages paid to such laborer or mechanic during such period, and

(BB)

the amount of wages required to be paid to such laborer or mechanic pursuant to such subparagraph during such period, plus

(bb)

interest on the amount determined under item (aa) at the underpayment rate established under section 6621 for the period described in such item, and

(II)

makes payment to the Secretary of a penalty in an amount equal to the product of—

(aa)

$5,000, multiplied by

(bb)

the total number of laborers and mechanics who were paid wages at a rate below the rate described in subparagraph (A) for any period during such year.

(c)

Inflation adjustment

(1)

In general

In the case of a calendar year beginning after 2021, the 1.5 cent amount in paragraph (1) of subsection (a) shall be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale or use of the electricity occurs. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

(2)

Annual computation

The Secretary shall, not later than April 1 of each calendar year, determine and publish in the Federal Register the inflation adjustment factor for such calendar year in accordance with this subsection.

(3)

Inflation adjustment factor

The term inflation adjustment factor means, with respect to a calendar year, a fraction the numerator of which is the GDP implicit price deflator for the preceding calendar year and the denominator of which is the GDP implicit price deflator for the calendar year 1992. The term GDP implicit price deflator means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year.

(d)

Credit phase-Out

(1)

In general

If the Secretary, the Secretary of Energy, and the Administrator of the Environmental Protection Agency determine that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2021, the amount of the clean electricity production credit under subsection (a) for any qualified facility the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for a facility the construction of which begins during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for a facility the construction of which begins during the second calendar year following such determination year, 75 percent,

(C)

for a facility the construction of which begins during the third calendar year following such determination year, 50 percent, and

(D)

for a facility the construction of which begins during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

(e)

Definitions

For purposes of this section:

(1)

CO2e per KWh

The term CO2e per KWh means, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on global warming potential) per kilowatt hour of electricity produced.

(2)

Greenhouse gas

The term greenhouse gas has the same meaning given such term under section 211(o)(1)(G) of the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on the date of the enactment of this section.

(3)

Qualified carbon dioxide

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,

(B)

is measured at the source of capture and verified at the point of disposal or utilization, and

(C)

is captured and disposed or utilized within the United States (within the meaning of section 638(1)) or a possession of the United States (within the meaning of section 638(2)).

(f)

Final guidance

Not later than January 1, 2023, the Secretary and the Administrator of the Environmental Protection Agency shall issue final guidance regarding implementation of this section, including calculation of greenhouse gas emission rates for qualified facilities and determination of clean electricity production credits under this section.

(g)

Special rules

(1)

Only production in the United States taken into account

Consumption or sales shall be taken into account under this section only with respect to electricity the production 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)

Combined heat and power system property

(A)

In general

For purposes of subsection (a)—

(i)

the kilowatt hours of electricity produced by a taxpayer at a qualified facility shall include any production in the form of useful thermal energy by any combined heat and power system property within such facility, and

(ii)

the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy shall be included for purposes of determining the greenhouse gas emissions rate for such facility.

(B)

Combined heat and power system property

For purposes of this paragraph, the term combined heat and power system property has the same meaning given such term by section 48(c)(3) (without regard to subparagraphs (A)(iv), (B), and (D) thereof).

(C)

Conversion from BTU to KWh

(i)

In general

For purposes of subparagraph (A)(i), the amount of kilowatt hours of electricity produced in the form of useful thermal energy shall be equal to the quotient of—

(I)

the total useful thermal energy produced by the combined heat and power system property within the qualified facility, divided by

(II)

the heat rate for such facility.

(ii)

Heat rate

For purposes of this subparagraph, the term heat rate means the amount of energy used by the qualified facility to generate 1 kilowatt hour of electricity, expressed as British thermal units per net kilowatt hour generated.

(3)

Production attributable to the taxpayer

In the case of a qualified facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.

(4)

Related persons

Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling electricity to an unrelated person if such electricity is sold to such a person by another member of such group.

(5)

Pass-thru in the case of estates and trusts

Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

(6)

Allocation of credit to patrons of agricultural cooperative

(A)

Election to allocate

(i)

In general

In the case of an eligible cooperative organization, any portion of the credit determined under subsection (a) for the taxable year may, at the election of the organization, be apportioned among patrons of the organization on the basis of the amount of business done by the patrons during the taxable year.

(ii)

Form and effect of election

An election under clause (i) for any taxable year shall be made on a timely filed return for such year. Such election, once made, shall be irrevocable for such taxable year. Such election shall not take effect unless the organization designates the apportionment as such in a written notice mailed to its patrons during the payment period described in section 1382(d).

(B)

Treatment of organizations and patrons

The amount of the credit apportioned to any patrons under subparagraph (A)—

(i)

shall not be included in the amount determined under subsection (a) with respect to the organization for the taxable year, and

(ii)

shall be included in the amount determined under subsection (a) for the first taxable year of each patron ending on or after the last day of the payment period (as defined in section 1382(d)) for the taxable year of the organization or, if earlier, for the taxable year of each patron ending on or after the date on which the patron receives notice from the cooperative of the apportionment.

(C)

Special rules for decrease in credits for taxable year

If the amount of the credit of a cooperative organization determined under subsection (a) for a taxable year is less than the amount of such credit shown on the return of the cooperative organization for such year, an amount equal to the excess of—

(i)

such reduction, over

(ii)

the amount not apportioned to such patrons under subparagraph (A) for the taxable year,

shall be treated as an increase in tax imposed by this chapter on the organization. Such increase shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter.
(D)

Eligible cooperative defined

For purposes of this section, the term eligible cooperative means a cooperative organization described in section 1381(a) which is owned more than 50 percent by agricultural producers or by entities owned by agricultural producers. For this purpose an entity owned by an agricultural producer is one that is more than 50 percent owned by agricultural producers.

(7)

Increase in credit in certain cases

(A)

Nascent clean energy technology

(i)

In general

In the case of any qualified facility which generates electricity using a nascent clean energy technology, for purposes of determining the amount of the credit under subsection (a) with respect to any electricity produced by the taxpayer at such facility using such technology during the taxable year, the amount under paragraph (1) of such subsection shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph (without application of subparagraph (B) or (C)).

(ii)

Definition

For purposes of this subparagraph, the term nascent clean energy technology means any technology or method used for the production of electricity which, in the calendar year preceding the calendar year in which construction of the qualified facility began, achieved a market penetration level of less than 3 percent.

(iii)

Market penetration level

For purposes of this subparagraph, the term market penetration level means, with respect to any calendar year, the amount equal to the greater of—

(I)

the amount (expressed as a percentage) equal to the quotient of—

(aa)

the sum of all electricity produced (expressed in terawatt hours) from the technology or method used for the production of electricity by all electricity generating facilities in the United States during such calendar year (as determined by the Secretary on the basis of data reported by the Energy Information Administration), divided by

(bb)

the total domestic power sector electricity production (expressed in terawatt hours) for such calendar year, or

(II)

the amount determined under this clause for the preceding calendar year with respect to such technology or method.

(B)

Energy communities

(i)

In general

In the case of any qualified facility which is located in an energy community, for purposes of determining the amount of the credit under subsection (a) with respect to any electricity produced by the taxpayer at such facility during the taxable year, the amount under paragraph (1) of such subsection shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph (without application of subparagraph (A) or (C)).

(ii)

Energy community

For purposes of this subparagraph, the term energy community means a census tract—

(I)

in which—

(aa)

for the calendar year in which construction of the qualified facility began—

(AA)

not less than 5 percent of the employment in such tract is within the oil and gas sector, or

(BB)

an industrial facility is located which is mandated to report emissions of greenhouse gases under the Greenhouse Gas Reporting Program established under part 98 of title 40, Code of Federal Regulations,

(bb)

after December 31, 1999, a coal mine has closed, or

(cc)

after December 31, 2009, a coal-fired electric generating unit has been retired, or

(II)

which is immediately adjacent to any census tract described in subclause (I).

(C)

Domestic content

(i)

In general

In the case of any qualified facility which satisfies the requirement under clause (ii)(I), for purposes of determining the amount of the credit under subsection (a) with respect to any electricity produced by the taxpayer at such facility during the taxable year, the amount under paragraph (1) of such subsection shall be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph (without application of subparagraph (A) or (B)).

(ii)

Requirement

(I)

In general

Subject to clause (iii), the requirement described in this subclause with respect to any qualified facility is that, prior to the end of the taxable year in which such facility is placed in service, the taxpayer shall certify to the Secretary that, any steel, iron, or manufactured product used in the construction of such facility was produced in the United States.

(II)

Steel and iron

In the case of steel or iron, subclause (I) shall be applied in a manner consistent with section 661.5(b) of title 49, Code of Federal Regulations.

(III)

Manufactured product

For purposes of subclause (I), a manufactured product shall be deemed to have been manufactured in the United States if not less than 55 percent of the total cost of the components of such product is attributable to components which are mined, produced, or manufactured in the United States.

(iii)

International agreements

This subparagraph shall be applied in a manner which is consistent with the obligations of the United States under international agreements.

(8)

Credit reduced for grants, tax-exempt bonds, subsidized energy financing, and other credits

Rules similar to the rules under section 45(b)(3) shall apply for purposes of this section.

(h)

Election for direct payment

(1)

In general

The applicable percentage of the amount of any credit determined under subsection (a) with respect to any qualified facility for any taxable year during the period described in subsection (b)(1)(B) shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year.

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made prior to the date on which the qualified facility is placed in service and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to such qualified facility for the period described in subsection (b)(1)(B), and

(ii)

for any taxable year during such period, reduce the amount of the credit which would (but for this subsection) be allowable under this section with respect to such qualified facility for such taxable year to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(3)

Application to partnerships and S corporations

In the case of a partnership or S corporation which makes an election under paragraph (1)—

(A)

such paragraph shall apply with respect to such partnership or corporation without regard to the fact that no tax is imposed by chapter 1 on such partnership or corporation, and

(B)
(i)

in the case of a partnership, each partner's distributive share of the credit determined under subsection (a) with respect to the qualified facility shall be deemed to be zero, and

(ii)

in the case of a S corporation, each shareholder's pro rata share of the credit determined under subsection (a) with respect to the qualified facility shall be deemed to be zero.

(4)

Certain entities treated as taxpayers

In the case of an election under this subsection—

(A)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(B)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(C)

an Indian tribal government (as defined in section 139E(c)(1)),

shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).
(5)

Excess payment

(A)

In general

In the case of any payment made to a taxpayer under this subsection which the Secretary determines constitutes an excessive payment, the tax imposed on such taxpayer by chapter 1 for the taxable year in which such determination is made shall be increased by an amount equal to the sum of—

(i)

the amount of the excessive payment, plus

(ii)

an amount equal to 20 percent of the excessive payment.

(B)

Reasonable cause

Subparagraph (A)(ii) shall not apply if the taxpayer demonstrates to the satisfaction of the Secretary that the excessive payment resulted from reasonable cause.

(C)

Definition

For purposes of this paragraph, the term excessive payment means, with respect to a qualified facility for any taxable year, an amount equal to the excess of—

(i)

the amount of the payment made to the taxpayer under this subsection with respect to such facility for such taxable year, over

(ii)

the amount of the credit which (without application of this subsection) is otherwise allowable under this section with respect to such facility for such taxable year.

(6)

Applicable percentage

For purposes of paragraph (1)—

(A)

In general

In the case of any qualified facility which satisfies the requirements under subsection (g)(7)(C)(ii) with respect to the construction of such facility, the applicable percentage shall be 100 percent.

(B)

Phased domestic content requirement

Subject to subparagraph (C), in the case of any qualified facility which fails to satisfy the requirements under such subsection with respect to the construction of such facility, the applicable percentage shall be—

(i)

if construction of such facility began before January 1, 2024, 100 percent,

(ii)

if construction of such facility began in calendar year 2024, 90 percent,

(iii)

if construction of such facility began in calendar year 2025, 85 percent, and

(iv)

if construction of such facility began after December 31, 2025, 0 percent.

(C)

Exception

If the Secretary determines that, for purposes of application of the requirements under subsection (g)(7)(C)(ii) with respect to the construction of the qualified facility—

(i)

their application would be inconsistent with the public interest,

(ii)

such materials and products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality, or

(iii)

inclusion of domestic material will increase the cost of the construction of the qualified facility by more than 25 percent,

the applicable percentage shall be 100 percent.

.

(b)

Conforming amendments

(1)

Section 38(b) is amended—

(A)

in paragraph (32), by striking plus at the end,

(B)

in paragraph (33), by striking the period at the end and inserting , plus, and

(C)

by adding at the end the following new paragraph:

(34)

the clean electricity production credit determined under section 45U(a).

.

(2)

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item:

Sec. 45U. Clean electricity production credit.

.

(c)

Effective date

The amendments made by this section shall apply to facilities placed in service after December 31, 2022.

102.

Clean electricity investment credit

(a)

Business credit

(1)

In general

Subpart E of part IV of subchapter A of chapter 1 is amended by inserting after section 48C the following new section:

48D.

Clean electricity investment credit

(a)

Investment credit for qualified property

(1)

In general

For purposes of section 46, the clean electricity investment credit for any taxable year is—

(A)

except as provided in subparagraph (B), an amount equal to 30 percent of the qualified investment for such taxable year with respect to—

(i)

any qualified facility, and

(ii)

any grid improvement property, and

(B)

in the case of a qualified facility which is a microgrid, an amount equal to the product of—

(i)

30 percent of the qualified investment for such taxable year with respect to such microgrid, and

(ii)

the relative avoided emissions rate with respect to such microgrid (as determined under subsection (b)(3)(C)(iv)).

(2)

Increase in credit rate in certain cases

(A)

Disadvantaged and energy communities

(i)

In general

In the case of—

(I)

any energy storage property or any qualified investment with respect to a qualified facility (with the exception of any such facility described in section 45U(b)(2)(B))—

(aa)

which is placed in service within a disadvantaged community or an energy community (as defined in section 45U(g)(7)(B)(ii)), and

(bb)

has a maximum net output of less than 5 megawatts, or

(II)

any qualified property which is not described in subclause (I) and is placed in service within an energy community,

for purposes applying paragraph (1) with respect to such property or investment, the percentage under subparagraph (A) of such paragraph (or, in the case of a microgrid, subparagraph (B)(i) of such paragraph), shall be increased by 10 percentage points.
(ii)

Disadvantaged community

For purposes of this subparagraph, the term disadvantaged community has the same meaning given the term low-income community in section 45D(e)(1), as applied by substituting 60 percent for 80 percent each place it appears in subparagraph (B) thereof.

(B)

Nascent clean energy technology

In the case of any qualified facility which generates electricity using a nascent clean energy technology (as defined in section 45U(g)(7)(A)(ii)), for purposes applying paragraph (1) with respect to any qualified investment with respect to such facility, the percentage under subparagraph (A) of such paragraph (or, in the case of a microgrid, subparagraph (B)(i) of such paragraph), shall be increased by 10 percentage points.

(C)

Domestic content

(i)

In general

In the case of any qualified investment with respect to a qualified facility or with respect to grid improvement property which satisfies the requirement under clause (ii)(I), for purposes of applying paragraph (1) with respect to such qualified investment, the percentage under subparagraph (A) of such paragraph (or, in the case of a qualified investment with respect to a microgrid, subparagraph (B)(i) of such paragraph), shall be increased by 10 percentage points.

(ii)

Requirements

(I)

In general

The requirement described in this subclause with respect to any qualified investment with respect to a qualified facility or with respect to grid improvement property is satisfied if the taxpayer certifies to the Secretary that—

(aa)

in the case of a qualified investment with respect to a qualified facility, any property used at such facility is composed of steel, iron, or manufactured products which were produced in the United States, and

(bb)

in the case of a qualified investment with respect to any grid improvement property, such property is composed of steel, iron, or manufactured products which were produced in the United States.

(II)

Steel and iron

In the case of steel or iron, subclause (I) shall be applied in a manner consistent with section 661.5(b) of title 49, Code of Federal Regulations.

(III)

Manufactured product

For purposes of subclause (I), a manufactured product shall be deemed to have been manufactured in the United States if not less than 55 percent of the total cost of the components of such product is attributable to components which are mined, produced, or manufactured in the United States.

(iii)

International agreements

This subparagraph shall be applied in a manner which is consistent with the obligations of the United States under international agreements.

(D)

Maximum credit rate

Notwithstanding any adjustment or increase pursuant to this paragraph, the percentage under subparagraph (A) or (B)(i) of paragraph (1) shall not exceed 50 percent.

(b)

Qualified investment with respect to any qualified facility

(1)

In general

For purposes of subsection (a), the qualified investment with respect to any qualified facility for any taxable year is the sum of—

(A)

the basis of any qualified property placed in service by the taxpayer during such taxable year which is part of a qualified facility, plus

(B)

the amount of any expenditures which are—

(i)

paid or incurred by the taxpayer for qualified interconnection property—

(I)

in connection with a qualified facility which has a maximum net output of not greater than 5 megawatts, and

(II)

placed in service during the taxable year of the taxpayer, and

(ii)

properly chargeable to capital account of the taxpayer.

(2)

Qualified property

The term qualified property means property—

(A)

which is—

(i)

tangible personal property, or

(ii)

other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility,

(B)

with respect to which depreciation (or amortization in lieu of depreciation) is allowable, and

(C)
(i)

the construction, reconstruction, or erection of which is completed by the taxpayer, or

(ii)

which is acquired by the taxpayer if the original use of such property commences with the taxpayer.

(3)

Qualified facility

(A)

In general

For purposes of this section, the term qualified facility means a facility—

(i)

which is used for the generation of electricity,

(ii)

which is originally placed in service after December 31, 2022,

(iii)

for which the anticipated greenhouse gas emissions rate (as determined under subparagraph (B)(ii)) is not greater than zero, and

(iv)

in the case of any facility with a maximum net output equal to or greater than 1 megawatt, which—

(I)

satisfies the requirements of subparagraph (B)(iii), and

(II)

with respect to the construction of such facility, satisfies the requirements under section 501 of the Clean Energy for America Act.

(B)

Additional rules

(i)

Expansion of facility; incremental production

Rules similar to the rules of section 45U(b)(1)(C) shall apply for purposes of this paragraph.

(ii)

Greenhouse gas emissions rate

Rules similar to the rules of section 45U(b)(2) shall apply for purposes of this paragraph.

(iii)

Wage requirements

(I)

In general

The requirements described in this subclause with respect to any facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(aa)

the construction of such facility, or

(bb)

for any year during the 5-year period beginning on the date the facility is originally placed in service, the alteration or repair of such facility,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(II)

Correction and penalty related to failure to satisfy wage requirements

For purposes of section 50(a), a taxpayer shall not be treated as failing to satisfy the requirements of this clause if such taxpayer meets requirements similar to the requirements of section 45U(b)(3)(B)(ii).

(C)

Microgrids

(i)

In general

For purposes of this section, the term qualified facility shall include any microgrid which satisfies the requirements under clauses (i), (ii), and (iv) of subparagraph (A).

(ii)

Microgrid

For purposes of this section, the term microgrid means an interconnected system of distributed energy resources used for the generation of electricity which—

(I)

is contained within a clearly defined electrical boundary and has the ability to operate as a single and controllable entity,

(II)

has the ability to be managed and isolated from the applicable grid region in order to withstand larger disturbances and maintain the supply of electricity to connected infrastructure, and

(III)

has a maximum net output of not greater than 20 megawatts.

(iii)

Applicable grid region

For purposes of this subparagraph, the term applicable grid region means a set of power plants and transmission lines which are—

(I)

under the control of a single grid operator, and

(II)

interconnected to the microgrid.

(iv)

Relative avoided emissions rate

(I)

In general

For purposes of subsection (a)(1)(B)(ii), the relative avoided emissions rate shall be the amount equal to the quotient of—

(aa)

the amount equal to the non-baseload output emissions rate for the applicable grid region minus the greenhouse gas emissions rate for the microgrid, divided by

(bb)

the non-baseload output emissions rate for the applicable grid region.

(II)

Non-baseload output emissions rate

(aa)

In general

For purposes of this subparagraph, the term non-baseload output emissions rate means the amount of greenhouse gases emitted into the atmosphere by the applicable grid region for the production of electricity (expressed as grams of CO2e per KWh) above baseload.

(bb)

Determination

The non-baseload output emissions rate for any applicable grid region shall be determined by the Administrator of the Environmental Protection Agency and the Secretary.

(D)

Exclusion

The term qualified facility shall not include any facility for which—

(i)

a renewable electricity production credit determined under section 45,

(ii)

an advanced nuclear power facility production credit determined under section 45J,

(iii)

a carbon oxide sequestration credit determined under section 45Q,

(iv)

a clean electricity production credit determined under section 45U, or

(v)

an energy credit determined under section 48,

is allowed under section 38 for the taxable year or any prior taxable year.
(4)

Qualified interconnection property

For purposes of this paragraph—

(A)

In general

The term qualified interconnection property means, with respect to a qualified facility which is not a microgrid, any tangible property—

(i)

which is part of an addition, modification, or upgrade to a transmission system which is required at or beyond the point at which the qualified facility interconnects to such transmission system in order to accommodate such interconnection,

(ii)
(I)

which is constructed, reconstructed, or erected by the taxpayer, or

(II)

for which the cost with respect to the construction, reconstruction, or erection of such property is paid or incurred by such taxpayer, and

(iii)

the original use of which, pursuant to an interconnection agreement, commences with the utility.

(B)

Interconnection agreement

The term interconnection agreement means an agreement entered into by a utility and the taxpayer for the purposes of interconnecting the qualified facility owned by such taxpayer to the transmission system of such utility.

(C)

Transmission system

The term transmission system means the facilities owned, controlled, or operated by a utility which are used to provide electric transmission service.

(D)

Utility

The term utility means the owner or operator of an electrical transmission or distribution system which is subject to the regulatory authority of—

(i)

the Federal Energy Regulatory Commission, or

(ii)

a State public utility commission or other appropriate State agency.

(5)

Coordination with rehabilitation credit

The qualified investment with respect to any qualified facility for any taxable year shall not include that portion of the basis of any property which is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2)).

(6)

Definitions

For purposes of this subsection, the terms CO2e per KWh and greenhouse gas emissions rate have the same meaning given such terms under section 45U(b).

(c)

Qualified investment with respect to grid improvement property

(1)

In general

(A)

Qualified investment

For purposes of subsection (a), the qualified investment with respect to grid improvement property for any taxable year is the basis of any grid improvement property placed in service by the taxpayer during such taxable year.

(B)

Grid improvement property

For purposes of this section, the term grid improvement property means any energy storage property or qualified transmission property which—

(i)

satisfies the requirements of paragraph (4), and

(ii)

with respect to the construction of such property, satisfies the requirements under section 501 of the Clean Energy for America Act.

(2)

Energy storage property

For purposes of this subsection, the term energy storage property means property—

(A)

which receives, stores, and delivers electricity, or energy for conversion to electricity, provided that such electricity is—

(i)

sold by the taxpayer to an unrelated person, or

(ii)

stored by the taxpayer for an unrelated person,

(B)

with respect to which depreciation (or amortization in lieu of depreciation) is allowable,

(C)
(i)

the construction, reconstruction, or erection of which is completed by the taxpayer, or

(ii)

which is acquired by the taxpayer if the original use of such property commences with the taxpayer,

(D)

which has a capacity of not less than 5 kilowatt hours, and

(E)

which is placed in service after December 31, 2021.

(3)

Qualified transmission property

(A)

In general

For purposes of this subsection, the term qualified transmission property means property—

(i)

which is—

(I)

an overhead, submarine, or underground transmission property which is capable of transmitting electricity at a voltage of not less than 275 kilovolts, and

(II)

other equipment necessary for the operation of property described in clause (i), including equipment listed as transmission plant in the Uniform System of Accounts for the Federal Energy Regulatory Commission under part 101 of subchapter C of chapter I of title 18, Code of Federal Regulations,

(ii)

which satisfies the requirements under subparagraphs (B), (C), and (E) of paragraph (2).

(B)

Exclusion

The term qualified transmission property shall not include any property used for distribution of electricity between substations and end-use customers.

(4)

Wage requirements

(A)

In general

The requirements described in this subparagraph with respect to any property are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(i)

the construction of such property, or

(ii)

for any year during the 5-year period beginning on the date the property is originally placed in service, the alteration or repair of such property,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(B)

Correction and penalty related to failure to satisfy wage requirements

For purposes of section 50(a), a taxpayer shall not be treated as failing to satisfy the requirements of this clause if such taxpayer meets requirements similar to the requirements of section 45U(b)(3)(B)(ii).

(d)

Special rules

(1)

Certain progress expenditure rules made applicable

Rules similar to the rules of subsections (c)(4) and (d) of section 46 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) shall apply for purposes of subsection (a).

(2)

Special rule for property financed by subsidized energy financing or industrial development bonds

Rules similar to the rules of section 48(a)(4) shall apply for purposes of this section.

(e)

Credit phase-Out

(1)

In general

If the Secretary, the Secretary of Energy, and the Administrator of the Environmental Protection Agency determine that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2021, the amount of the clean electricity investment credit under subsection (a) for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the second calendar year following such determination year, 75 percent,

(C)

for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during the third calendar year following such determination year, 50 percent, and

(D)

for any qualified investment with respect to any qualified facility or grid improvement property the construction of which begins during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

(f)

Greenhouse gas

In this section, the term greenhouse gas has the same meaning given such term under section 45U(e)(2).

(g)

Recapture of credit

For purposes of section 50, if the Secretary and the Administrator of the Environmental Protection Agency determine that the greenhouse gas emissions rate for a qualified facility is significantly higher than the anticipated greenhouse gas emissions rate claimed by the taxpayer for purposes of the clean electricity investment credit under this section, the facility or equipment shall cease to be investment credit property in the taxable year in which the determination is made.

(h)

Final guidance

Not later than January 1, 2023, the Secretary and the Administrator of the Environmental Protection Agency shall issue final guidance regarding implementation of this section.

(i)

Election for direct payment

(1)

In general

In the case of any qualified property or grid improvement property placed in service during any taxable year, the applicable percentage of the amount of any credit determined under subsection (a) with respect to such property for such taxable year shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year (regardless of whether such tax would have been on such taxpayer).

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made prior to the date on which the qualified property or grid improvement property is placed in service and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to the qualified property or grid improvement property to which such election applies, and

(ii)

reduce the amount of the credit which would (but for this subsection) be allowable under this section with respect to such property for the taxable year in which such property is placed in service to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(3)

Application to partnerships and S corporations; excess payments

Rules similar to the rules of paragraphs (3) and (5) of section 45U(h) shall apply for purposes of this subsection.

(4)

Special rules for certain entities

(A)

Eligibility of certain property

For purposes of this subsection, paragraphs (3) and (4) of section 50(b) shall not apply with respect to—

(i)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(ii)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(iii)

an Indian tribal government (as defined in section 139E(c)(1)).

(B)

Certain entities treated as taxpayers

In the case of an election under this subsection, any entity described in clause (i), (ii), or (iii) of subparagraph (A) shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).

(5)

Applicable percentage

For purposes of paragraph (1)—

(A)

In general

In the case of any property which satisfies the requirements under subsection (a)(2)(C)(ii) with respect to the construction of such property, the applicable percentage shall be 100 percent.

(B)

Phased domestic content requirement

Subject to subparagraph (C), in the case of any property which fails to satisfy the requirements under such subsection with respect to the construction of such property, the applicable percentage shall be—

(i)

if construction of such property began before January 1, 2024, 100 percent,

(ii)

if construction of such property began in calendar year 2024, 90 percent,

(iii)

if construction of such property began in calendar year 2025, 85 percent, and

(iv)

if construction of such property began after December 31, 2025, 0 percent.

(C)

Exception

If the Secretary determines that, for purposes of application of the requirements under subsection (a)(2)(C)(ii) with respect to the construction of such property—

(i)

their application would be inconsistent with the public interest,

(ii)

such materials and products are not produced in the United States in sufficient and reasonably available quantities and of a satisfactory quality, or

(iii)

inclusion of domestic material will increase the cost of the construction of the property by more than 25 percent,

the applicable percentage shall be 100 percent.

.

(2)

Public utility property

Section 50(d) is amended—

(A)

in paragraph (2)—

(i)

by adding after the first sentence the following new sentence: At the election of a taxpayer, this paragraph shall not apply to any grid improvement property (as defined in section 48D(c)(1)(B)), provided—, and

(ii)

by adding the following new subparagraphs:

(A)

no election under this paragraph shall be permitted if the making of such election is prohibited by a State or political subdivision thereof, by any agency or instrumentality of the United States, or by a public service or public utility commission or other similar body of any State or political subdivision that regulates public utilities as described in section 7701(a)(33)(A),

(B)

an election under this paragraph shall be made separately with respect to each grid improvement property by the due date (including extensions) of the Federal tax return for the taxable year in which such property is placed in service by the taxpayer, and once made, may be revoked only with the consent of the Secretary, and

(C)

an election shall not apply with respect to any energy storage property (as defined in section 48D(c)(2)) if such property has a maximum capacity equal to or less than 500 kilowatt hours.

, and

(B)

by adding at the end the following: Paragraphs (1)(B) and (2)(B) of the section 46(e) referred to in paragraph (1) of this subsection shall not apply to any qualified investment described in section 48D of a real estate investment trust.

(3)

Conforming amendments

(A)

Section 46 is amended—

(i)

by striking “and” at the end of paragraph (5),

(ii)

by striking the period at the end of paragraph (6) and inserting “, and”, and

(iii)

by adding at the end the following new paragraph:

(7)

the clean electricity investment credit.

.

(B)

Section 49(a)(1)(C) is amended—

(i)

by striking “and” at the end of clause (iv),

(ii)

by striking the period at the end of clause (v) and inserting a comma, and

(iii)

by adding at the end the following new clauses:

(vi)

the basis of any qualified property which is part of a qualified facility under section 48D, and

(vii)

the basis of any energy storage property under section 48D.

.

(C)

Section 50(a)(2)(E) is amended by striking or 48C(b)(2) and inserting 48C(b)(2), or 48D(e).

(D)

The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 48C the following new item:

48D. Clean electricity investment credit.

.

(4)

Effective date

The amendments made by this subsection shall apply to property placed in service after December 31, 2021, under rules similar to the rules of section 48(m) of the Internal Revenue Code of 1986 (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(b)

Individual credit

(1)

In general

Subpart A of part IV of subchapter A of chapter 1 is amended by inserting after section 25D the following:

25E.

Residential clean electricity credit

(a)

Allowance of credit

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 30 percent of the expenditures made by the taxpayer for any qualified property and any energy storage property which is—

(1)

for use in connection with a dwelling unit which is located in the United States and used as a residence by the taxpayer, and

(2)

placed in service during such taxable year.

(b)

Qualified property

(1)

In general

The term qualified property means property—

(A)

which is tangible personal property,

(B)

which is used for the generation of electricity,

(C)

which is constructed, reconstructed, erected, or acquired by the taxpayer,

(D)

the original use of which commences with the taxpayer,

(E)

which is originally placed in service after December 31, 2022, and

(F)

for which the anticipated greenhouse gas emissions rate (as determined under paragraph (2)) is not greater than zero.

(2)

Establishment of emissions rates for qualified property

(A)

In general

The Secretary and the Administrator of the Environmental Protection Agency, shall establish greenhouse gas emissions rates for types or categories of qualified property which are for use in a dwelling unit, which a taxpayer shall use for purposes of this section.

(B)

Publishing emissions rates

The Secretary shall publish a table that sets forth the greenhouse gas emissions rates for similar types or categories of qualified property.

(c)

Energy storage property

The term energy storage property means property which—

(1)

receives, stores, and delivers electricity or energy for conversion to electricity which is consumed or sold by the taxpayer,

(2)

is equipped with a metering device which is owned and operated by an unrelated person,

(3)

has a capacity of not less than 3 kilowatt hours, and

(4)

satisfies the requirements under subparagraphs (A), (C), (D), and (E) of subsection (b)(1).

(d)

Carryforward of unused credit

(1)

In general

If the credit allowable under subsection (a) exceeds the applicable tax limit, such excess shall be carried to each of the 3 succeeding taxable years and added to the credit allowable under subsection (a) for such succeeding taxable year.

(2)

Limitation

The amount of the unused credit which may be taken into account under paragraph (1) for any taxable year shall not exceed the amount (if any) by which the applicable tax limit for such taxable year exceeds the sum of—

(A)

the credit allowable under subsection (a) for which such taxable year determined without regard to this subsection, and

(B)

the amounts which, by reason of this subsection, are carried to such taxable year and are attributable to taxable years before the unused credit year.

(3)

Applicable tax limit

For purposes of this subsection, the term applicable tax limit means the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section).

(e)

Credit phase-Out

(1)

In general

If the Secretary, the Secretary of Energy, and the Administrator of the Environmental Protection Agency determine that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than the percentage specified in section 48D(e), the amount of the credit allowable under subsection (a) for any qualified property or energy storage property placed in service during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for property placed in service during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for property placed in service during the second calendar year following such determination year, 75 percent,

(C)

for property placed in service during the third calendar year following such determination year, 50 percent, and

(D)

for property placed in service during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

(f)

Special rules

For purposes of this section:

(1)

Labor costs

Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the qualified property or energy storage property and for piping or wiring to interconnect such property to the dwelling unit shall be taken into account for purposes of this section.

(2)

Tenant-stockholder in cooperative housing corporation

In the case of an individual who is a tenant-stockholder (as defined in section 216) in a cooperative housing corporation (as defined in such section), such individual shall be treated as having made his tenant-stockholder's proportionate share (as defined in section 216(b)(3)) of any expenditures of such corporation.

(3)

Condominiums

(A)

In general

In the case of an individual who is a member of a condominium management association with respect to a condominium which the individual owns, such individual shall be treated as having made the individual's proportionate share of any expenditures of such association.

(B)

Condominium management association

For purposes of this paragraph, the term condominium management association means an organization which meets the requirements of paragraph (1) of section 528(c) (other than subparagraph (E) thereof) with respect to a condominium project substantially all of the units of which are used as residences.

(4)

Allocation in certain cases

If less than 80 percent of the use of a property is for nonbusiness purposes, only that portion of the expenditures for such property which is properly allocable to use for nonbusiness purposes shall be taken into account.

(5)

Coordination with other credits

The terms qualified property and energy storage property shall not include any property for which a credit is allowed under section 25D for any expenditure with respect to such property.

(g)

Basis adjustment

For purposes of this subtitle, if a credit is allowed under this section for any expenditures with respect to any property, the increase in the basis of such property which would (but for this subsection) result from such expenditures shall be reduced by the amount of the credit so allowed.

(h)

Final guidance

Not later than January 1, 2023, the Secretary and the Administrator of the Environmental Protection Agency shall issue final guidance regarding implementation of this section, including calculation of greenhouse gas emission rates for qualified property and determination of residential clean electricity property credits under this section.

.

(2)

Conforming amendments

(A)

Section 23(c)(1) is amended by striking and section 25D and inserting , section 25D, and section 25E.

(B)

Section 25(e)(1)(C) is amended by striking and 25D and inserting 25D, and 25E.

(C)

Paragraph (1) of section 45(d) is amended by striking with respect to which and all that follows through the period and inserting the following:

with respect to which—

(A)

any qualified small wind energy property expenditure (as defined in subsection (d)(4) of section 25D) is taken into account in determining the credit under such section, or

(B)

any expenditures for qualified property (as defined in subsection (b) of section 25E) which uses wind to produce electricity is taken into account in determining the credit under such section.

.

(D)

Section 1016(a) is amended—

(i)

by redesignating paragraphs (35) through (38) as paragraphs (36) through (39), respectively, and

(ii)

by inserting after paragraph (34) the following:

(35)

to the extent provided in section 25E(g), in the case of amounts with respect to which a credit has been allowed under section 25E,

.

(E)

The table of contents for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 25D the following new item:

Sec. 25E. Residential clean electricity credit.

.

(3)

Effective date

The amendments made by this subsection shall apply to property placed in service after December 31, 2022.

103.

Extensions, modifications, and terminations of various energy provisions

(a)

Residential energy efficient property

(1)

Elimination of phaseout

Section 25D(g) is amended to read as follows:

(g)

Applicable percentage

For purposes of subsection (a), the applicable percentage shall be 30 percent.

.

(2)

Effective date

The amendments made by this subsection shall apply to property placed in service after December 31, 2020.

(b)

Renewable electricity production credit

(1)

Carryforward of credit

(A)

In general

Section 39(a) is amended by adding at the end the following:

(4)

25-year carryforward for renewable electricity production credit

In the case of the renewable electricity production credit—

(A)

this section shall be applied separately from the business credit (other than the renewable electricity production credit), and

(B)

paragraph (2) shall be applied—

(i)

by substituting 26 taxable years for 21 taxable years in subparagraph (A) thereof, and

(ii)

by substituting 25 taxable years for 20 taxable years in subparagraph (B) thereof.

.

(B)

Effective date

The amendment made by this paragraph shall apply to credit carryforwards carried to taxable years beginning after the date of enactment of this Act.

(2)

Election for direct payment for renewable electricity production credit

Section 45 is amended by adding at the end the following:

(f)

Election for direct payment

(1)

In general

The amount of any credit determined under subsection (a) with respect to any qualified facility for any taxable year during the period described in subsection (a)(2)(A)(ii) shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year.

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made prior to the applicable date on and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to such qualified facility for the period described in subsection (a)(2)(A)(ii), and

(ii)

for any taxable year during such period, reduce the amount of the credit which would (but for this paragraph) be allowable under this section with respect to such qualified facility for such taxable year to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(C)

Applicable date

For purposes of this paragraph, the term applicable date means—

(i)

in the case of any qualified facility which is placed in service after December 31, 2020, and before the date of enactment of the Clean Energy for America Act, the earlier of—

(I)

the date which is 180 days after the date of enactment of such Act, or

(II)

the end of the taxable year in which such facility is placed in service,

(ii)

in the case of any qualified facility the construction of which begins before the date of enactment of the Clean Energy for America Act and which is not placed in service before such date, the later of—

(I)

the date on which such facility is placed in service, or

(II)

the date which is 180 days after the date of enactment of such Act, or

(iii)

in the case of any qualified facility the construction of which begins on or after the date of enactment of the Clean Energy for America Act, the date on which such facility is placed in service.

(3)

Application to partnerships and S corporations; excess payment

Rules similar to the rules of paragraphs (3) and (5) of section 45U(h) shall apply for purposes of this subsection.

(4)

Certain entities treated as taxpayers

In the case of an election under this subsection—

(A)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(B)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(C)

an Indian tribal government (as defined in section 139E(c)(1)),

shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).

.

(c)

Termination of allocation of unutilized limitation for advanced nuclear power facilities

(1)

In general

Section 45J(b) is amended by striking paragraph (5).

(2)

Effective date

The amendment made by this subsection shall apply to facilities the construction of which begins after the date of enactment of this Act.

(d)

Modification of credit for carbon dioxide sequestration

(1)

In general

Section 45Q is amended—

(A)

in subsection (a)(4)(B)(i), by inserting subject to subsection (f)(8), before used by,

(B)

in subsection (b)(1)—

(i)

in subparagraph (A), by striking The applicable dollar amount and inserting Except as provided in subparagraph (B), the applicable dollar amount,

(ii)

by redesignating subparagraph (B) as subparagraph (C),

(iii)

by inserting after subparagraph (A) the following:

(B)

Applicable dollar amount for direct air capture facilities

In the case of any qualified facility described in subsection (d)(1)(A) for which construction begins after the date of enactment of the Clean Energy for America Act, the applicable dollar amount shall be an amount equal to—

(i)

for any taxable year beginning in a calendar year before 2027—

(I)

for purposes of paragraph (3) of subsection (a), $175, and

(II)

for purposes of paragraph (4) of such subsection, $150, and

(ii)

for any taxable year beginning in a calendar year after 2026—

(I)

for purposes of paragraph (3) of subsection (a), an amount equal to the product of $175 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting 2025 for 1990, and

(II)

for purposes of paragraph (4) of such subsection, an amount equal to the product of $150 and the inflation adjustment factor for such calendar year determined under section 43(b)(3)(B) for such calendar year, determined by substituting 2025 for 1990.

, and

(iv)

in subparagraph (C), as so redesignated, by inserting or (B) after subparagraph (A),

(C)

by striking subsection (d) and inserting the following:

(d)

Qualified facility

(1)

In general

For purposes of this section, the term qualified facility means—

(A)

any direct air capture facility, and

(B)

any industrial facility which captures—

(i)

in the case of an electricity generating facility, not less than 75 percent of the carbon oxide which would otherwise be released into the atmosphere, or

(ii)

in the case of an industrial facility which is not an electricity generating facility, not less than 50 percent of the carbon oxide which would otherwise be released into the atmosphere.

(2)

Coordination with other credits

The term qualified facility shall not include any facility for which a credit determined under section 45U or 48D is allowed under section 38 for the taxable year or any prior taxable year.

,

(D)

in subsection (f), by adding at the end the following:

(8)

Elimination of use of carbon oxide as tertiary injectant

In the case of any qualified facility the construction of which begins after December 31, 2026, subsection (a)(4)(B)(i) shall not apply.

,

(E)

by redesignating subsection (h) as subsection (i), and

(F)

by inserting after subsection (g) the following:

(h)

Credit phase-Out

(1)

In general

(A)

Reduction based on emissions from production of electricity

Subject to subparagraphs (B) and (C), if the Secretary and the Administrator of the Environmental Protection Agency determine that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2021, the amount of the carbon oxide sequestration credit under subsection (a) for any qualified facility the construction of which begins during a calendar year described in paragraph (2) shall be equal to the product of—

(i)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(ii)

the phase-out percentage under paragraph (2).

(B)

Other industrial facilities

In the case of any qualified facility described in subsection (d)(1)(B)(ii) the construction of which begins during a calendar year described in paragraph (2), subparagraph (A) shall be applied by substituting industrial sector for production of electricity each place it appears.

(C)

Direct air capture facilities

In the case of any qualified facility described in subsection (d)(1)(A), subparagraph (A) shall not apply.

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for a facility the construction of which begins during the first calendar year following the calendar year in which the determination described in paragraph (1)(A) is made, 100 percent,

(B)

for a facility the construction of which begins during the second calendar year following such determination year, 75 percent,

(C)

for a facility the construction of which begins during the third calendar year following such determination year, 50 percent, and

(D)

for a facility the construction of which begins during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

.

(2)

Wage requirements

Section 45Q(f), as amended by paragraph (1)(D), is amended by adding at the end the following:

(9)

Wage requirements

(A)

In general

The term qualified facility shall not include any facility which fails to satisfy—

(i)

subject to clause (ii) of subparagraph (B), the requirements under clause (i) of such subparagraph, and

(ii)

with respect to—

(I)

the construction of any facility the construction of which begins after the date of enactment of the Clean Energy for America Act, and

(II)

the construction of any carbon capture equipment,

the requirements under section 501 of the Clean Energy for America Act.
(B)

Requirements

(i)

In general

The requirements described in this clause with respect to any facility, and any carbon capture equipment placed in service at such facility, are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(I)

in the case of any facility the construction of which begins after the date of enactment of the Clean Energy for America Act, the construction of such facility, or

(II)

during the 12-year period beginning on the date on which carbon capture equipment is originally placed in service at any facility (as described in paragraphs (3)(A) and (4)(A) of subsection (a)), the alteration or repair of such facility or such equipment,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(ii)

Failure to satisfy wage requirements; correction and penalty

In the case of any taxpayer which fails to satisfy the requirement under clause (i) with respect to the construction of any facility or the alteration or repair of a facility or carbon capture equipment in any year during the period described in clause (i)(II), rules similar to the rules of clauses (i) and (ii) of section 45U(b)(3)(B) shall apply for purposes of this subparagraph.

.

(3)

Election for direct payment

Section 45Q, as amended by the preceding paragraphs of this subsection, is amended—

(A)

by redesignating subsection (i) as subsection (j), and

(B)

by inserting after subsection (h) the following:

(i)

Election for direct payment

(1)

In general

The amount of any credit determined under paragraph (3) or (4) of subsection (a) with respect to any qualified carbon oxide for any taxable year during the period described in paragraph (3)(A) or (4)(A) of such subsection, respectively, shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year.

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made prior to the applicable date and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to such carbon capture equipment for the period described in paragraph (3)(A) or (4)(A) of subsection (a), and

(ii)

for any taxable year during such period, reduce the amount of the credit which would (but for this paragraph) be allowable under this section with respect to such equipment for such taxable year to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(C)

Applicable date

For purposes of this paragraph, the term applicable date means—

(i)

in the case of any carbon capture equipment which is placed in service after December 31, 2020, and before the date of enactment of the Clean Energy for America Act, the earlier of—

(I)

the date which is 180 days after the date of enactment of such Act, or

(II)

the end of the taxable year in which such equipment is placed in service,

(ii)

in the case of any carbon capture equipment the construction of which began before the date of enactment of the Clean Energy for America Act and which has not placed in service before such date, the later of—

(I)

the date on which such equipment is placed in service, or

(II)

the date which is 180 days after the date of enactment of such Act, and

(iii)

in the case of any carbon capture equipment the construction of which begins on or after the date of enactment of the Clean Energy for America Act, the date on which such equipment is placed in service.

(3)

Application to partnerships and S corporations; excess payment

Rules similar to the rules of paragraphs (3) and (5) of section 45U(h) shall apply for purposes of this subsection.

(4)

Certain entities treated as taxpayers

In the case of an election under this subsection—

(A)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(B)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(C)

an Indian tribal government (as defined in section 139E(c)(1)),

shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).

.

(4)

Credit reduced for grants, tax-exempt bonds, subsidized energy financing, and other credits

Section 45Q(f), as amended by paragraphs (1)(D) and (2), is amended by adding at the end the following:

(10)

Credit reduced for grants, tax-exempt bonds, subsidized energy financing, and other credits

Rules similar to the rules under section 45(b)(3) shall apply for purposes of this section.

.

(5)

Effective dates

(A)

In general

The amendments made by paragraph (1) (with the exception of the amendment made under subparagraph (D) of such paragraph) shall apply to facilities the construction of which begins after the date of enactment of this Act.

(B)

Elimination of use of carbon oxide as tertiary injectant

The amendment made by paragraph (1)(D) shall apply to facilities the construction of which begins after December 31, 2026.

(C)

Wage requirements

The amendments made by paragraph (2) shall apply to facilities or equipment the construction of which begins after December 31, 2021.

(D)

Election for direct payment

The amendments made by paragraph (3) shall apply to carbon capture equipment which is placed in service after December 31, 2020.

(E)

Credit reduced for grants, tax-exempt bonds, subsidized energy financing, and other credits

The amendments made by paragraph (4) shall apply to taxable years beginning after the date of enactment of this Act.

(e)

Modification of credits for energy property

(1)

Termination

(A)

Solar energy property

Section 48(a)(3)(A)(i) is amended by inserting but only with respect to property the construction of which begins before January 1, 2024, after swimming pool,.

(B)

Geothermal energy property

Section 48(a)(3)(A)(iii) is amended by inserting with respect to property the construction of which begins before January 1, 2024, and after but only.

(C)

Qualified offshore wind facilities

Section 48(a)(5)(F) is amended by striking January 1, 2026 each place it appears and inserting January 1, 2024.

(2)

Elimination of phaseouts

(A)

In general

Section 48 is amended by striking paragraphs (6) and (7).

(B)

Effective date

The amendments made by this paragraph shall apply to property the construction of which begins after December 31, 2020.

(3)

Increase in credit rate for geothermal deposits

(A)

In general

Section 48(a)(2)(A)(i)(II) is amended by striking paragraph (3)(A)(i) and inserting clause (i) or (iii) of paragraph (3)(A).

(B)

Effective date

The amendments made by this paragraph shall apply to property the construction of which begins after December 31, 2020.

(4)

Election for direct payment

(A)

In general

Section 48, as amended by paragraph (1), is amended by adding at the end the following:

(e)

Election for direct payment

(1)

In general

In the case of any energy property placed in service during any taxable year, the amount of any credit determined under subsection (a) with respect to such property for such taxable year shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year (regardless of whether such tax would have been on such taxpayer).

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made prior to the applicable date and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to the energy property to which such election applies, and

(ii)

reduce the amount of the credit which would (but for this subsection) be allowable under this section with respect to such property for the taxable year in which such property is placed in service to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(C)

Applicable date

For purposes of this paragraph, the term applicable date means—

(i)

in the case of any energy property which is placed in service after December 31, 2020, and before the date of enactment of the Clean Energy for America Act, the earlier of—

(I)

the date which is 180 days after the date of enactment of such Act, or

(II)

the end of the taxable year in which such property is placed in service,

(ii)

in the case of any energy property the construction of which began before the date of enactment of the Clean Energy for America Act and which has not been placed in service before such date, the later of—

(I)

the date on which such property is placed in service, or

(II)

the date which is 180 days after the date of enactment of such Act, or

(iii)

in the case of any energy property the construction of which begins on or after the date of enactment of the Clean Energy for America Act, the date on which such property is placed in service.

(3)

Application to partnerships and S corporations; excess payment

Rules similar to the rules of paragraphs (3) and (5) of section 45U(h) shall apply for purposes of this subsection.

(4)

Special rules for certain entities

(A)

Eligibility of certain property

For purposes of this subsection, paragraphs (3) and (4) of section 50(b) shall not apply with respect to—

(i)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(ii)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(iii)

an Indian tribal government (as defined in section 139E(c)(1)).

(B)

Certain entities treated as taxpayers

In the case of an election under this subsection, any entity described in clause (i), (ii), or (iii) of subparagraph (A) shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).

.

(B)

Effective date

The amendment made by this paragraph shall apply to property placed in service after December 31, 2020.

(5)

Energy credit for qualified biogas property and qualified manure resource recovery property

(A)

In general

Section 48(a)(3)(A) is amended by striking or at the end of clause (vii) and by adding at the end the following new clauses:

(ix)

qualified biogas property, or

(x)

qualified manure resource recovery property,

.

(B)

30-Percent credit

Section 48(a)(2)(A)(i) is amended by striking and at the end of subclause (IV), by striking and at the end of subclause (V), and by adding at the end the following new subclauses:

(VI)

qualified biogas property, and

(VII)

qualified manure resource recovery property, and

.

(C)

Definitions

Section 48(c) is amended by adding at the end the following new paragraphs:

(6)

Qualified biogas property

(A)

In general

The term qualified biogas property means property comprising a system which—

(i)

uses anaerobic digesters, or other biological, chemical, thermal, or mechanical processes (alone or in combination), to convert biomass (as defined in section 45K(c)(3)) into a gas which consists of not less than 52 percent methane, and

(ii)

captures such gas for use as a fuel.

(B)

Inclusion of certain cleaning and conditioning equipment

Such term shall include any property which cleans and conditions the gas referred to in subparagraph (A) for use as a fuel.

(C)

Termination

No credit shall be determined under this section with respect to any qualified biogas property for any period after December 31, 2023.

(7)

Qualified manure resource recovery property

(A)

In general

The term qualified manure resource recovery property means property comprising a system which uses physical, biological, chemical, thermal, or mechanical processes to recover the nutrients nitrogen and phosphorus from a non-treated digestate or animal manure by reducing or separating at least 50 percent of the concentration of such nutrients, excluding any reductions during the incineration, storage, composting, or field application of the non-treated digestate or animal manure.

(B)

Inclusion of certain processing equipment

Such term shall include—

(i)

any property which is used to recover the nutrients referred to in subparagraph (A), such as—

(I)

biological reactors,

(II)

crystallizers,

(III)

water filtration membrane systems and other water purifiers,

(IV)

evaporators,

(V)

distillers,

(VI)

decanter centrifuges, and

(VII)

equipment that facilitates the process of removing and dewatering suspended and dissolved solids, ammonia stripping, gasification, or ozonation, and

(ii)

any thermal drier which treats the nutrients recovered by the processes referred to in subparagraph (A).

(C)

Termination

No credit shall be determined under this section with respect to any qualified manure resource recovery property for any period after December 31, 2023.

.

(D)

Denial of double benefit for qualified biogas property

Section 45(e) is amended by adding at the end the following new paragraph:

(12)

Coordination with energy credit for qualified biogas property

The term qualified facility shall not include any facility which produces electricity from gas produced by qualified biogas property (as defined in section 48(c)(6)) if a credit is determined under section 48 with respect to such property for the taxable year or any prior taxable year.

.

(E)

Effective date

The amendments made by this paragraph shall apply to property placed in service after December 31, 2020, under rules similar to the rules of section 48(m) of such Code (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990).

(6)

Expansion of energy credit to include clean hydrogen production facilities

(A)

In general

Section 48(a)(5) is amended—

(i)

in subparagraph (A)(ii), by inserting subject to subparagraph (G)(i), before the energy percentage,

(ii)

in subparagraph (B), by inserting or 45X after section 45,

(iii)

in subparagraph (C)—

(I)

in clause (i), by inserting or, subject to subparagraph (G)(ii), a qualified clean hydrogen production facility (as defined in section 45X(d)(3)) after section 45(d),

(II)

in clause (ii), by inserting (or, in the case of a qualified clean hydrogen production facility, which is placed in service after 2020 and the construction of which begins before January 1, 2030) after January 1, 2022, and

(III)

in clause (iii)(I), by inserting or 45X after section 45, and

(iv)

by adding at the end the following:

(G)

Qualified clean hydrogen production facilities

(i)

Energy percentage

(I)

In general

For purposes of subparagraph (A)(ii), in the case of a qualified investment credit facility which is a qualified clean hydrogen production facility, the energy percentage with respect to such facility shall be an amount (expressed as a percentage) equal to—

(aa)

in the case of a facility which is estimated to produce qualified clean hydrogen (as defined in described in section 45X(d)(2)) which is described in subparagraph (A) of section 45X(b)(2), 20 percent of the energy percentage otherwise applicable under subparagraph (A)(ii),

(bb)

in the case of a facility which is estimated to produce qualified clean hydrogen which is described in subparagraph (B) of section 45X(b)(2), 25 percent of the energy percentage otherwise applicable under subparagraph (A)(ii),

(cc)

in the case of a facility which is estimated to produce qualified clean hydrogen which is described in subparagraph (C) of section 45X(b)(2), 34 percent of the energy percentage otherwise applicable under subparagraph (A)(ii), and

(dd)

in the case of a facility which is estimated to produce qualified clean hydrogen which is described in subparagraph (D) of section 45X(b)(2), 100 percent of the energy percentage otherwise applicable under subparagraph (A)(ii).

(II)

Recapture

The Secretary shall, by regulations, provide for recapturing the benefit of any credit allowable under this section with respect to any qualified clean hydrogen production facility which fails to produce qualified clean hydrogen consistent with the applicable percentage reduction in lifecycle greenhouse gas emissions described in section 45X(b)(2) which were estimated for such facility pursuant to subclause (I).

(ii)

No double benefit

For purposes of this paragraph, the term qualified investment credit facility shall not include any qualified clean hydrogen production facility for which a credit is allowed under section 38 for the taxable year or any prior taxable year which is properly allocable to any credit determined under—

(I)

this section (other than pursuant to this paragraph), or

(II)

section 45, 45J, 45Q, 45U, 45V, or 48D.

.

(B)

Effective date

The amendments made by this paragraph shall apply to property placed in service after December 31, 2020.

(7)

Fuel cells using electromechanical processes

(A)

In general

Section 48(c)(1) is amended—

(i)

in subparagraph (A)(i)—

(I)

by inserting or electromechanical after electrochemical, and

(II)

by inserting (1 kilowatts in the case of a fuel cell power plant with a linear generator assembly) after 0.5 kilowatt, and

(ii)

in subparagraph (C)—

(I)

by inserting , or linear generator assembly, after a fuel cell stack assembly, and

(II)

by inserting or electromechanical after electrochemical.

(B)

Linear generator assembly limitation

Section 48(c)(1) is amended by redesignating subparagraph (D) as subparagraph (E) and by inserting after subparagraph (C) the following new subparagraph:

(D)

Linear generator assembly

The term linear generator assembly does not include any assembly which contains rotating parts.

.

(C)

Effective date

The amendments made by this paragraph shall apply to property the construction of which begins after December 31, 2020.

(f)

Cost recovery for qualified facilities, qualified property, and grid improvement property

(1)

In general

Section 168(e)(3)(B) is amended—

(A)

in clause (vi)(III), by striking and at the end,

(B)

in clause (vii), by striking the period at the end and inserting , and, and

(C)

by inserting after clause (vii) the following:

(viii)

any qualified facility (as defined in section 45U(b)(1)(A)), any qualified property (as defined in subsection (b)(2) of section 48D), or any grid improvement property (as defined in subsection (c)(1)(B) of such section).

.

(2)

Alternative system

The table contained in section 168(g)(3)(B) is amended by inserting after the item relating to subparagraph (B)(vii) the following new item:

(B)(viii)30

.

(3)

Effective date

The amendments made by this subsection shall apply to facilities and property placed in service after December 31, 2022.

II

Incentives for Clean Transportation

201.

Clean fuel production credit

(a)

In general

(1)

Allowance of credit

Subpart D of part IV of subchapter A of chapter 1, as amended by section 101, is amended by adding at the end the following new section:

45V.

Clean fuel production credit

(a)

Amount of credit

(1)

In general

For purposes of section 38, the clean fuel production credit for any taxable year is an amount equal to—

(A)

for any transportation fuel sold during any calendar year ending before January 1, 2030, an amount equal to the product of—

(i)

$1.00 per gallon (or gallon equivalent) with respect to any transportation fuel which is—

(I)

produced by the taxpayer at a qualified facility, and

(II)

sold by the taxpayer in a manner described in paragraph (4), and

(ii)

the emissions factor for such fuel (as determined under subsection (b)), and

(B)

for any transportation fuel which is sold during any calendar year beginning after December 31, 2029, and which has an emissions rate equal to or less than zero, an amount equal to the applicable amount (as determined under paragraph (2)) per gallon (or gallon equivalent) with respect to any transportation fuel which is—

(i)

produced by the taxpayer at a qualified facility, and

(ii)

sold by the taxpayer in a manner described in paragraph (4).

(2)

Applicable amount

For purposes of paragraph (1)(B), the applicable amount with respect to any transportation fuel shall be an amount equal to $1.00 increased by 10 cents for every kilogram of CO2e per mmBTU (or fraction thereof) for which the emissions rate for such fuel is below zero.

(3)

Special rate for sustainable aviation fuel

(A)

In general

In the case of an transportation fuel which is sustainable aviation fuel, paragraphs (1)(A)(i) and (2) shall each be applied by substituting $2.00 for $1.00.

(B)

Sustainable aviation fuel

For purposes of this subparagraph (A), the term sustainable aviation fuel means liquid fuel which is sold for use in, or used in, an aircraft and which—

(i)

consists of synthesized hydrocarbons,

(ii)

meets the requirements of—

(I)

ASTM International Standard D7566, or

(II)

the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1,

(iii)

is derived from—

(I)

biomass (as such term is defined in section 45K(c)(3)), or

(II)

electrolysis powered by renewable energy resources, or

(III)

carbon oxides captured from an industrial source or from the ambient air, and

(iv)

is not derived from palm fatty acid distillates.

(4)

Sale

For purposes of paragraph (1), the transportation fuel is sold in a manner described in this paragraph if such fuel is sold by the taxpayer to an unrelated person—

(A)

for use by such person in the production of a fuel mixture,

(B)

for use by such person in a trade or business, or

(C)

who sells such fuel at retail to another person and places such fuel in the fuel tank of such other person.

(5)

Rounding

If any amount determined under paragraph (1)(A) or (2) is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

(b)

Emissions factors

(1)

Emissions factor

(A)

Calculation

(i)

In general

The emissions factor of a transportation fuel shall be an amount equal to the quotient of—

(I)

an amount equal to—

(aa)

the baseline emissions rate, minus

(bb)

the emissions rate for such fuel, divided by

(II)

the baseline emissions rate.

(B)

Baseline emissions rate

For purposes of this paragraph, the term baseline emissions rate means—

(i)

for any calendar year ending before January 1, 2026, 75 kilograms of CO2e per mmBTU,

(ii)

for calendar years 2026 and 2027, 50 kilograms of CO2e per mmBTU, and

(iii)

for calendar years 2028 and 2029, 25 kilograms of CO2e per mmBTU.

(C)

Establishment of emissions rate

The Secretary and the Secretary of Energy shall establish the emissions rate for similar types and categories of transportation fuels based on the amount of lifecycle greenhouse gas emissions (as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H)), as in effect on the date of the enactment of this section) for such fuels, expressed as kilograms of CO2e per mmBTU, which a taxpayer shall use for purposes of this section.

(D)

Rounding of emissions rate

The Secretary may round the emissions rates under subparagraph (B) to the nearest multiple of 5 kilograms of CO2e per mmBTU, except that, in the case of an emissions rate that is less than 2.5 kilograms of CO2e per mmBTU, the Secretary may round such rate to zero.

(E)

Provisional emissions rate

(i)

In general

In the case of any transportation fuel for which an emissions rate has not been established by under subparagraph (C), a taxpayer producing such fuel may file a petition with the Secretary and the Secretary of Energy for determination of the emissions rate with respect to such fuel.

(ii)

Establishment of provisional and final emissions rate

In the case of a transportation fuel for which a petition described in clause (i) has been filed, the Secretary and the Secretary of Energy shall—

(I)

not later than 12 months after the date on which the petition was filed, provide a provisional emissions rate for such fuel which a taxpayer shall use for purposes of this section, and

(II)

not later than 24 months after the date on which the petition was filed, establish the emissions rate for such fuel.

(F)

Rounding

If any amount determined under subparagraph (A) is not a multiple of 0.1, such amount shall be rounded to the nearest multiple of 0.1.

(2)

Publishing emissions rate

The Secretary shall publish annually a table that sets forth the emissions rate (as established pursuant to paragraph (1)) for similar types and categories of transportation fuels.

(c)

Inflation adjustment

(1)

In general

In the case of calendar years beginning after 2023, the $1.00 amount in paragraphs (1)(A)(i) and (2) of subsection (a) and the $2.00 amount in subsection (a)(3) shall each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale or use of the transportation fuel occurs. If any amount as increased under the preceding sentence is not a multiple of 1 cent, such amount shall be rounded to the nearest multiple of 1 cent.

(2)

Inflation adjustment factor

For purposes of paragraph (1), the inflation adjustment factor shall be the inflation adjustment factor determined and published by the Secretary pursuant to section 45U(c), determined by substituting calendar year 2022 for calendar year 1992 in paragraph (3) thereof.

(d)

Credit phase-Out

(1)

In general

If the Secretary and the Administrator of the Environmental Protection Agency determine that the greenhouse gas emissions from the transportation of persons and goods annually in the United States are equal to or less than 25 percent of the greenhouse gas emissions from the transportation of persons and goods in the United States during calendar year 2021, the amount of the clean fuel production credit under this section shall be determined by substituting the applicable amount (as determined under paragraph (2)(A)) for the dollar amount applicable under paragraphs (1)(A)(i) and (2) of subsection (a).

(2)

Applicable dollar amount

(A)

In general

The applicable amount for any taxable year described in subparagraph (B) shall be an amount equal to the product of—

(i)

the dollar amount applicable under paragraphs (1)(A)(i) and (2) of subsection (a) (as adjusted by subsection (c)), multiplied by

(ii)

the phase-out percentage under subparagraph (B).

(B)

Phase-out percentage

The phase-out percentage under this subparagraph is equal to—

(i)

for any taxable year beginning in the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(ii)

for any taxable year beginning in the second calendar year following such determination year, 75 percent,

(iii)

for any taxable year beginning in the third calendar year following such determination year, 50 percent, and

(iv)

for any taxable year beginning in any calendar year subsequent to the year described in clause (iii), 0 percent.

(e)

Definitions

In this section:

(1)

mmBTU

The term mmBTU means 1,000,000 British thermal units.

(2)

CO2e

The term CO2e means, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on relative global warming potential).

(3)

Greenhouse gas

The term greenhouse gas has the same meaning given that term under section 211(o)(1)(G) of the Clean Air Act (42 U.S.C. 7545(o)(1)(G)), as in effect on the date of the enactment of this section.

(4)

Qualified facility

(A)

In general

The term qualified facility means a facility—

(i)

used for the production of transportation fuels, and

(ii)

which—

(I)

subject to clause (ii) of subparagraph (B), satisfies the requirements under clause (i) of such subparagraph, and

(II)

with respect to the construction of such facility, satisfies the requirements under section 501 of the Clean Energy for America Act.

Clause (ii)(II) shall not apply to any facility placed in service before January 1, 2023.
(B)

Wage requirements

(i)

In general

The requirements described in this subparagraph with respect to any facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(I)

the construction of such facility, or

(II)

for any year described in subsection (a)(1) for which the credit under this section is claimed, the alteration or repair of such facility,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(ii)

Failure to satisfy wage requirements; correction and penalty

In the case of any taxpayer which fails to satisfy the requirement under clause (i) with respect to the construction of any facility or the alteration or repair of such facility in any year during the period described in clause (i)(II), rules similar to the rules of clauses (i) and (ii) of section 45U(b)(3)(B) shall apply for purposes of this subparagraph.

(iii)

Special rule for facilities placed in service before January 1, 2023

In the case of any facility placed in service before January 1, 2023—

(I)

clause (i)(I) shall not apply, and

(II)

clause (ii) shall be applied without regard to the phrase the construction of any facility or.

(5)

Transportation fuel

The term transportation fuel means a fuel which is suitable for use as a fuel in a highway vehicle or aircraft.

(f)

Final guidance

Not later than January 1, 2023, the Secretary and the Secretary of Energy shall jointly issue final guidance regarding implementation of this section, including calculation of emissions factors for transportation fuel, the table described in subsection (b)(2), and the determination of clean fuel production credits under this section.

(g)

Special rules

(1)

Only registered production in the United States taken into account

(A)

In general

No clean fuel production credit shall be determined under subsection (a) with respect to any transportation fuel unless—

(i)

the taxpayer is registered as a producer of clean fuel under section 4101 at the time of production, and

(ii)

such fuel is produced in the United States.

(B)

United States

For purposes of this paragraph, the term United States includes any possession of the United States.

(2)

Production attributable to the taxpayer

In the case of a facility in which more than 1 person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility shall be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.

(3)

Related persons

Persons shall be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation which is a member of an affiliated group of corporations filing a consolidated return, such corporation shall be treated as selling fuel to an unrelated person if such fuel is sold to such a person by another member of such group.

(4)

Pass-thru in the case of estates and trusts

Under regulations prescribed by the Secretary, rules similar to the rules of subsection (d) of section 52 shall apply.

(5)

Allocation of credit to patrons of agricultural cooperative

(A)

Election to allocate

(i)

In general

In the case of an eligible cooperative organization, any portion of the credit determined under subsection (a) for the taxable year may, at the election of the organization, be apportioned among patrons of the organization on the basis of the amount of business done by the patrons during the taxable year.

(ii)

Form and effect of election

An election under clause (i) for any taxable year shall be made on a timely filed return for such year. Such election, once made, shall be irrevocable for such taxable year. Such election shall not take effect unless the organization designates the apportionment as such in a written notice mailed to its patrons during the payment period described in section 1382(d).

(B)

Treatment of organizations and patrons

The amount of the credit apportioned to any patrons under subparagraph (A)—

(i)

shall not be included in the amount determined under subsection (a) with respect to the organization for the taxable year, and

(ii)

shall be included in the amount determined under subsection (a) for the first taxable year of each patron ending on or after the last day of the payment period (as defined in section 1382(d)) for the taxable year of the organization or, if earlier, for the taxable year of each patron ending on or after the date on which the patron receives notice from the cooperative of the apportionment.

(C)

Special rules for decrease in credits for taxable year

If the amount of the credit of a cooperative organization determined under subsection (a) for a taxable year is less than the amount of such credit shown on the return of the cooperative organization for such year, an amount equal to the excess of—

(i)

such reduction, over

(ii)

the amount not apportioned to such patrons under subparagraph (A) for the taxable year,

shall be treated as an increase in tax imposed by this chapter on the organization. Such increase shall not be treated as tax imposed by this chapter for purposes of determining the amount of any credit under this chapter.
(D)

Eligible cooperative defined

For purposes of this section the term eligible cooperative means a cooperative organization described in section 1381(a) which is owned more than 50 percent by agricultural producers or by entities owned by agricultural producers. For this purpose an entity owned by an agricultural producer is one that is more than 50 percent owned by agricultural producers.

.

(2)

Conforming amendments

(A)

Section 38(b), as amended by section 101, is amended

(i)

in paragraph (33), by striking plus at the end,

(ii)

in paragraph (34), by striking the period at the end and inserting , plus, and

(iii)

by adding at the end the following new paragraph:

(35)

the clean fuel production credit determined under section 45V(a).

.

(B)

The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by section 101, is amended by adding at the end the following new item:

Sec. 45V. Clean fuel production credit.

.

(C)

Section 4101(a)(1) is amended by inserting every person producing a fuel eligible for the clean fuel production credit (pursuant to section 45V), after section 6426(b)(4)(A)),.

(3)

Effective date

The amendments made by this section shall apply to transportation fuel produced after December 31, 2022.

(b)

Sustainable aviation fuel credit

(1)

In general

Subpart D of part IV of subchapter A of chapter 1 is amended by inserting after section 40A the following new section:

40B.

Sustainable aviation fuel credit

(a)

In general

(1)

Credit amount

For purposes of section 38, the sustainable aviation fuel credit for the taxable year is, with respect to any sale or use of a qualified mixture which occurs during such taxable year, an amount equal to the product of—

(A)

the number of gallons of sustainable aviation fuel in such mixture, multiplied by

(B)

the sum of—

(i)

$1.50, plus

(ii)

the applicable supplementary credit amount with respect to the sustainable aviation fuel.

(2)

Applicable supplementary credit amount

(A)

In general

For purposes of this section, the applicable supplementary credit amount means, with respect to any sustainable aviation fuel, an amount equal to $0.01 for every percentage point by which the lifecycle greenhouse gas emissions reduction percentage with respect to such fuel exceeds 50 percent.

(B)

Limitation

In no event shall the applicable supplementary credit amount exceed $0.50.

(b)

Qualified mixture

For purposes of this section—

(1)

In general

The term qualified mixture means a mixture of sustainable aviation fuel and kerosene if—

(A)

such mixture is produced in the United States by a taxpayer, and

(B)

such mixture is—

(i)

sold for use in an aircraft, or

(ii)

used by the taxpayer in an aircraft.

(2)

Sale or use must be in trade or business, etc

Sustainable aviation fuel used in the production of a qualified mixture shall be taken into account—

(A)

only if the sale or use described in paragraph (1) is in a trade or business of the taxpayer, and

(B)

for the taxable year in which such sale or use occurs.

(3)

Fueling must be in the United States

A qualified mixture shall not be treated as used or sold for use in an aircraft unless the transfer of such mixture to the fuel tank of such aircraft occurs in the United States.

(4)

United States

For purposes of this subsection, the term United States includes any possession of the United States.

(c)

Sustainable aviation fuel

For purposes of this section, the term sustainable aviation fuel means liquid fuel—

(1)

which—

(A)

consists of synthesized hydrocarbons,

(B)

meets the requirements of—

(i)

ASTM International Standard D7566, or

(ii)

the Fischer Tropsch provisions of ASTM International Standard D1655, Annex A1,

(C)

is derived from—

(i)

biomass (as such term is defined in section 45K(c)(3)), or

(ii)

electrolysis powered by renewable energy resources, or

(iii)

carbon oxides captured from an industrial source or from the ambient air, and

(D)

is not derived from palm fatty acid distillates, and

(2)

which has been certified by the producer of such fuel in accordance with subsection (d) as having lifecycle greenhouse gas emissions that are equal to or less than 50 percent of the lifecycle greenhouse gas emissions for petroleum-based jet fuel.

(d)

Certification requirements

A certification meet the requirements of this subsection if such certification is based on a method which—

(1)

demonstrates that the fuel conforms with—

(A)

the sustainability criteria of the Carbon Offsetting and Reduction Scheme for International Aviation, and

(B)

the traceability and information transmission requirements approved by the International Civil Aviation Organization with the agreement of the United States,

(2)

takes into account all elements used to determine lifecycle emissions by the International Civil Aviation Organization, and

(3)

is approved by—

(A)

the International Civil Aviation Organization, or

(B)

the Secretary and Administrator of the Environmental Protection Agency.

(e)

Time limit for adoption of new sustainable aviation fuel emissions reduction test

For purposes of subparagraph (B) of subsection (d)(3), the Secretary and the Administrator of the Environmental Protection Agency shall, within 24 months after the date of the enactment of this section, adopt at least one method for testing lifecycle greenhouse gas emissions that meets the requirements of such subsection.

(f)

Certification of sustainable aviation fuel

No credit shall be allowed under this section with respect to any sustainable aviation fuel unless the taxpayer obtains a certification (in such form and manner as prescribed by the Secretary) from the producer or importer of the sustainable aviation fuel which identifies the product produced and the percentage of sustainable aviation fuel in the product.

(g)

Termination

This section shall not apply to any sale or use after December 31, 2022.

.

(2)

Credit made part of general business credit

Section 38(b), as amended by this Act, is amended—

(A)

in paragraph (34), by striking plus at the end,

(B)

in paragraph (35), by striking the period at the end and inserting , plus, and

(C)

by adding at the end the following new paragraph:

(36)

the sustainable aviation fuel credit determined under section 40B.

.

(3)

Coordination with renewable diesel

(A)

In general

Section 40A(f) is amended by striking paragraph (4).

(B)

Other coordination rules

(i)

The last sentence of section 40A(d)(1) is amended by inserting or 40B after 40.

(ii)

The second sentence of section 40A(f)(3) is amended by inserting or 40B after 40.

(C)

Regulations

Under rules prescribed by the Secretary of the Treasury (or the Secretary's delegate), the amount of the credit allowed under section 40B of the Internal Revenue Code of 1986 (as added by this subsection) shall be properly reduced to take into account any benefit provided with respect to sustainable aviation fuel (as defined in such section 40B) by reason of the application of section 6426 or section 6427(e).

(4)

Effective date

(A)

In general

The amendments made by this subsection shall apply to taxable years ending after the date of the enactment of this Act.

(B)

Special rule

The Secretary of the Treasury (or the Secretary's delegate) shall establish rules for the application of the amendments made by paragraph (3)(A) with respect to credits under section 6426 and payments under section 6427(e) for calendar quarters ending after the date of the enactment of this Act and before the last taxable year of a taxpayer which ends after such date of enactment.

202.

Transportation electrification

(a)

Alternative motor vehicle credit for fuel cell motor vehicles

(1)

In general

Section 30B(k) is amended—

(A)

by striking paragraph (1), and

(B)

by redesignating paragraphs (2) through (4) as paragraphs (1) through (3), respectively.

(2)

Phaseout

Section 30B is amended by adding at the end the following:

(l)

Credit phase-out for new qualified fuel cell motor vehicles

(1)

In general

Following a determination by the Secretary and the Secretary of Transportation that total annual sales of new qualified fuel cell motor vehicles and new qualified plug-in electric drive motor vehicles (as defined in section 30D(d)(1)) in the United States are greater than 50 percent of total annual sales of new passenger vehicles in the United States, the amount of the new qualified fuel cell motor vehicle credit under this section for any new qualified fuel cell motor vehicle purchased during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (b) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for a vehicle purchased during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for a vehicle purchased during the second calendar year following such determination year, 75 percent,

(C)

for a vehicle purchased during the third calendar year following such determination year, 50 percent, and

(D)

for a vehicle purchased during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

.

(3)

Effective date

The amendments made by this subsection shall apply to property purchased after December 31, 2021.

(b)

Alternative fuel vehicle refueling property credit

(1)

Credit phase-out

Section 30C is amended by striking subsection (g) and inserting the following:

(g)

Credit phase-out

(1)

In general

Following a determination by the Secretary, the Secretary of Transportation, and the Administrator of the Environmental Protection Agency under section 45V(d)(1) that the greenhouse gas emissions from the transportation of persons and goods annually in the United States are equal to or less than 25 percent of the greenhouse gas emissions from the transportation of persons and goods in the United States during calendar year 2021, the amount of the credit under this section for any qualified alternative fuel vehicle refueling property placed in service during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit allowed under subsection (a) (as determined without regard to this subsection), multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for any property placed in service during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for any property placed in service during the second calendar year following such determination year, 75 percent,

(C)

for any property placed in service during the third calendar year following such determination year, 50 percent, and

(D)

for any property placed in service during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

.

(2)

Modification

(A)

In general

Section 30C(b) is amended—

(i)

by striking with respect to all qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year at a location and inserting with respect to any single item of qualified alternative fuel vehicle refueling property placed in service by the taxpayer during the taxable year, and

(ii)

in paragraph (1), by striking $30,000 and inserting $200,000.

(B)

Effective date

The amendments made by this paragraph shall apply to property placed in service after December 31, 2021.

(3)

Additional modification

(A)

In general

Section 30C, as amended by paragraphs (1) and (2), is amended—

(i)

in subsection (c)(2)—

(I)

in subparagraph (A), by striking one or more and all that follows through the period and inserting the following: hydrogen or any transportation fuel for which the clean fuel production credit is allowed under section 45V with respect to the production and sale of such fuel., and

(II)

by striking subparagraph (B) and inserting the following:

(B)

Any mixture—

(i)

which consists of—

(I)

any transportation fuel—

(aa)

for which the clean fuel production credit is allowed under section 45V with respect to the production and sale of such fuel, and

(bb)

which is a liquid fuel, and

(II)

any taxable fuel (as defined in section 4083(a)(1)), and

(ii)

at least 20 percent of the volume of which consists of fuel described in clause (i)(I).

, and

(ii)

in subsection (e), by adding at the end the following:

(7)

Wage requirements

(A)

In general

The term qualified alternative fuel vehicle refueling property shall not include any property which fails to satisfy—

(i)

subject to clause (ii) of subparagraph (B), the requirements under clause (i) of such subparagraph, and

(ii)

with respect to the construction of such property, the requirements under section 501 of the Clean Energy for America Act.

(B)

Requirements

(i)

In general

The requirements described in this clause with respect to any property are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the construction of such property are to be paid wages at rates not less than the prevailing rates for construction of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

(ii)

Correction and penalty related to failure to satisfy wage requirements

In the case of any taxpayer which fails to satisfy the requirement under clause (i) with respect to any property, rules similar to the rules of section 45U(b)(3)(B)(ii) shall apply for purposes of this subparagraph.

.

(B)

Effective date

The amendments made by this paragraph shall apply to property placed in service after December 31, 2022.

(c)

Electric vehicles

(1)

2- and 3-wheeled plug-in electric vehicles

(A)

In general

Section 30D(g)(3)(E) is amended by striking clause (ii) and inserting the following:

(ii)

after December 31, 2014.

.

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2020.

(2)

Elimination on limitation on number of vehicles eligible for credit

(A)

In general

Section 30D is amended by striking subsection (e).

(B)

Effective date

The amendment made by this paragraph shall apply to vehicles sold after May 24, 2021.

(3)

Making new qualified plug-in electric drive motor vehicle credit refundable for individuals

(A)

In general

The Internal Revenue Code of 1986 is amended—

(i)

by redesignating section 30D as section 36C, and

(ii)

by moving section 36C (as so redesignated) from subpart A of part IV of subchapter A of chapter 1 to the location immediately before section 37 in subpart C of part IV of subchapter A of chapter 1.

(B)

Conforming amendments

(i)

Section 36C, as amended by paragraph (2) and as redesignated and moved by subparagraph (A), is amended—

(I)

in subsection (a), by striking There shall be allowed and inserting In the case of an individual, there shall be allowed,

(II)

by striking subsection (c),

(III)

by redesignating subsections (d), (f), and (g) as subsections (c), (d), and (e), respectively,

(IV)

in subsection (d), as so redesignated—

(aa)

by striking (determined without regard to subsection (c)) each place it appears, and

(bb)

by striking paragraph (3), and

(V)

in subsection (e)(3)(B), as so redesignated, by striking subsection (d)(1) and inserting subsection (c)(1).

(ii)

Subsection (l)(1) of section 30B, as added by subsection (a)(2), is amended by striking section 30D(d)(1) and inserting section 36C(c)(1).

(iii)

Paragraph (37) of section 1016(a) is amended by striking section 30D(f)(1) and inserting section 36C(d)(1).

(iv)

Section 6501(m) is amended by striking 30D(e)(4) and inserting 36C(d)(6).

(v)

Section 166(b)(5)(A)(ii) of title 23, United States Code, is amended by striking section 30D(d)(1) and inserting section 36C(c)(1).

(vi)

The table of sections for subpart C of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 36B the following new item:

Sec. 36C. New qualified plug-in electric drive motor vehicles.

.

(C)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(4)

VIN requirement

(A)

In general

Section 36C(c)(1), as redesignated and moved by paragraph (3), is amended—

(i)

in subparagraph (E), by striking and at the end,

(ii)

in subparagraph (F)(ii), by striking the period at the end and inserting , and, and

(iii)

by adding at the end the following:

(G)

for which the taxpayer has provided the vehicle identification number on the return of tax for the taxable year, unless, in accordance with applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number.

.

(B)

Mathematical or clerical error

Section 6213(g)(2) is amended—

(i)

in subparagraph (P), by striking and at the end,

(ii)

in subparagraph (Q), by striking the period at the end and inserting , and, and

(iii)

by adding at the end the following:

(R)

an omission of a correct vehicle identification number required under section 36C(c)(1)(G) (relating to credit for new qualified plug-in electric drive motor vehicles) to be included on a return, or the inclusion of any information with respect to the credit under section 36C which is inconsistent with the report provided under section 36C(g).

.

(C)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(5)

Phaseout

Section 36C, as redesignated, moved, and amended by the preceding paragraphs of this subsection, is amended by adding at the end the following:

(f)

Credit phase-out

(1)

In general

Following a determination by the Secretary and the Secretary of Transportation that total annual sales of new qualified fuel cell motor vehicles (as defined in section 30B(b)(3)) and new qualified plug-in electric drive motor vehicles in the United States are greater than 50 percent of total annual sales of new passenger vehicles in the United States, the amount of the credit allowed under this section for any new qualified plug-in electric drive motor vehicle sold or qualified 2- or 3-wheeled plug-in electric vehicle acquired during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for a vehicle sold or acquired during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for a vehicle sold or acquired during the second calendar year following such determination year, 75 percent,

(C)

for a vehicle sold or acquired during the third calendar year following such determination year, 50 percent, and

(D)

for a vehicle sold or acquired during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

.

(6)

Credit increase

(A)

In general

Subsection (b) of section 36C, as redesignated and moved by the preceding paragraphs of this subsection, is amended—

(i)

by adding at the end the following new paragraphs:

(4)

Vehicles produced by labor organization facility

In the case of a vehicle the final assembly of which is at a facility whose production workers are members of or represented by a labor organization, the amount determined under this paragraph is $2,500.

(5)

Assembly in United States

In the case of a vehicle—

(A)

the final assembly of which is at a facility which is located in the United States, and

(B)

which is acquired before January 1, 2026,

the amount determined under this paragraph is $2,500.

,

(ii)

by striking is $2,500. in paragraph (2) and inserting “is—

(i)

$2,500, in the case of a vehicle sold before January 1, 2026, and

(ii)

$5,000, in the case of a vehicle sold after December 31, 2025.

and

(iii)

by striking paragraphs (2) and (3) in paragraph (1) and inserting paragraphs (2), (3), (4), and (5).

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(7)

Limitation based on place of assembly

(A)

In general

Paragraph (1) of section 36C(c), as redesignated, moved, and amended by the preceding paragraphs of this subsection, is further amended—

(i)

by striking and at the end of subparagraph (F)(ii),

(ii)

by striking the period at the end of subparagraph (G) and inserting , and, and

(iii)

by adding at the end the following new subparagraph:

(H)

in the case of a vehicle sold after December 31, 2025, the final assembly of which is at a facility which is located in the United States.

.

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(8)

Limitation based on manufacturer's suggested retail price

(A)

In general

Paragraph (1) of section 36C(c), as redesignated, moved, and amended by the preceding paragraphs of this subsection, is further amended—

(i)

by striking and at the end of subparagraph (G),

(ii)

by striking the period at the end of subparagraph (H) and inserting , and, and

(iii)

by adding at the end the following new subparagraph:

(I)

the manufacturer's suggested retail price for which is not in excess of $80,000.

.

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(9)

Reporting requirement

(A)

In general

Section 36C, as redesignated, moved, and amended by the preceding paragraphs of this subsection, is further amended by adding at the end the following new subsection:

(g)

Reporting requirement

The person who sells or leases any new qualified plug-in electric drive motor vehicle to the taxpayer shall furnish a report to the taxpayer and to the Secretary, at such time and in such manner as the Secretary shall provide, containing—

(1)

the taxpayer’s name and taxpayer identification number,

(2)

the vehicle identification number of the vehicle, unless, in accordance with applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number,

(3)

the battery capacity of the vehicle,

(4)

verification that original use of the vehicle commences with the taxpayer, and

(5)

the maximum credit under this section allowable to the taxpayer with respect to the vehicle.

.

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(10)

Limitation to non-business vehicles

(A)

In general

Paragraph (1) of section 36C(c), as redesignated, moved, and amended by the preceding paragraphs of this subsection, is further amended—

(i)

by striking and at the end of subparagraph (H),

(ii)

by striking the period at the end of subparagraph (I) and inserting , and, and

(iii)

by adding at the end the following new subparagraph:

(J)

which is not of a character subject to the allowance for depreciation.

.

(B)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(11)

Qualified commercial electric vehicles

(A)

In general

Subpart D of part IV of subchapter A of chapter 1, as amended by sections 101 and 201, is amended by adding at the end the following new section:

45W.

Credit for qualified commercial electric vehicles

(a)

In general

For purposes of section 38, the qualified commercial electric vehicle credit for any taxable year is an amount equal to the sum of the credit amounts determined under subsection (b) with respect to each qualified commercial electric vehicle placed in service by the taxpayer during the taxable year.

(b)

Per vehicle amount

(1)

In general

The amount determined under this subsection with respect to any qualified commercial electric vehicle shall be equal to the lesser of—

(A)

30 percent of the basis of such vehicle, or

(B)

the incremental cost of such vehicle.

(2)

Incremental cost

(A)

In general

For purposes of paragraph (1)(B), the incremental cost of any qualified commercial electric vehicle is an amount equal to the excess of the purchase price for such vehicle over such price for a comparable vehicle.

(B)

Comparable vehicle

For purposes of this paragraph, the term comparable vehicle means, with respect to any qualified commercial electric vehicle, any vehicle which is powered solely by a gasoline or diesel internal combustion engine and which is comparable in weight, size, and use to such vehicle.

(C)

Comparative price

For purposes of subparagraph (A), the Secretary and the Secretary of Transportation shall publish an annual list of prices of various types and classes of commercial vehicles described in subparagraph (B).

(3)

Exclusion

For purposes of paragraph (1)(A), the basis of any qualified commercial electric vehicle which is a qualified electric transportation option shall not include any cost relating to any component or feature which—

(A)

is not integral to the vehicle, or

(B)

does not contribute to improving the efficiency or range of the electric propulsion of the vehicle.

(c)

Qualified commercial electric vehicle

For purposes of this section—

(1)

In general

The term qualified commercial electric vehicle means—

(A)

any vehicle which—

(i)

meets the requirements of subparagraphs (A), (B), (C), (D), and (G) of section 36C(c)(1),

(ii)

is primarily propelled by an electric motor which draws electricity from a battery which—

(I)

has a capacity of not less than 10 kilowatt hours, and

(II)

is capable of being recharged from an external source of electricity, and

(iii)

is of a character subject to the allowance for depreciation, and

(B)

any qualified electric transportation option.

(2)

Qualified electric transportation option

(A)

In general

The term qualified electric transportation option means any vehicle used in any manner of transportation—

(i)

the original use of which commences with the taxpayer,

(ii)

which is acquired for use or lease by the taxpayer and not for resale,

(iii)

which is capable of moving passengers, cargo, or property,

(iv)

which is powered by an integrated, on-board electric propulsion system which—

(I)

is the primary source of propulsion,

(II)

is capable of powering the vehicle (including any of its components and accessories) for not less than 2/3 of the maximum operating period between recharging or refueling of such vehicle, and

(III)

in the case of a vehicle which derives any of its power from the on-board combustion of a fuel, uses a renewable fuel,

(v)

which was manufactured for sale in commercial quantities with a reasonable expectation of profit,

(vi)

which is in compliance with any applicable safety or air quality standards, as determined by the Secretary, the Secretary of Transportation, the Secretary of Homeland Security, and the Administrator of the Environmental Protection Agency, and

(vii)

which is of a character subject to the allowance for depreciation.

(B)

On-board electric propulsion system

For purposes of this paragraph, the term on-board electric propulsion system means—

(i)

1 or more on-board traction batteries which—

(I)

are integrated or swappable, and

(II)

have an aggregate capacity (as defined in subsection (d)(4)) of not less than 10 kilowatt hours, or

(ii)

an on-board power source other than a battery with an electrical output capacity equivalent of not less than 10 kilowatt hours, as determined by the Secretary.

(C)

Renewable fuel

For purposes of this paragraph, the term renewable fuel means any fuel at least 85 percent of the volume of which consists of one or more of the following:

(i)

Ethanol.

(ii)

Biodiesel (as defined in section 40A(d)(1)).

(iii)

Advanced biofuel (as defined in section 211(o)(1)(B) of the Clean Air Act (42 U.S.C. 7545(o)(1)(B))).

(iv)

Renewable natural gas.

(v)

Hydrogen.

(d)

Special rules

(1)

In general

Rules similar to the rules under subsection (d) of section 36C shall apply for purposes of this section.

(2)

Property used by tax-exempt entity

In the case of a vehicle the use of which is described in paragraph (3) or (4) of section 50(b) and which is not subject to a lease, the person who sold such vehicle to the person or entity using such vehicle shall be treated as the taxpayer that placed such vehicle in service, but only if such person clearly discloses to such person or entity in a document the amount of any credit allowable under subsection (a) with respect to such vehicle.

(e)

Credit phase-out

(1)

In general

Following a determination by the Secretary and the Secretary of Transportation that total annual sales of qualified commercial electric vehicles in the United States are greater than 50 percent of total annual sales of new commercial vehicles in the United States, the amount of the credit allowed under this section for any qualified commercial electric vehicle acquired during a calendar year described in paragraph (2) shall be equal to the product of—

(A)

the amount of the credit determined under subsection (a) without regard to this subsection, multiplied by

(B)

the phase-out percentage under paragraph (2).

(2)

Phase-out percentage

The phase-out percentage under this paragraph is equal to—

(A)

for a vehicle acquired during the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(B)

for a vehicle acquired during the second calendar year following such determination year, 75 percent,

(C)

for a vehicle acquired during the third calendar year following such determination year, 50 percent, and

(D)

for a vehicle acquired during any calendar year subsequent to the year described in subparagraph (C), 0 percent.

(f)

Reporting requirement

The person who sells or leases any qualified commercial electric vehicle to the taxpayer shall furnish a report to the taxpayer and to the Secretary, at such time and in such manner as the Secretary shall provide, containing—

(1)

the taxpayer’s name and taxpayer identification number,

(2)

the vehicle identification number of the vehicle, unless, in accordance with applicable rules promulgated by the Secretary of Transportation, the vehicle is not assigned such a number,

(3)

the battery capacity of the vehicle,

(4)

verification that original use of the vehicle commences with the taxpayer, and

(5)

the maximum credit under this section allowable to the taxpayer with respect to the vehicle.

.

(B)

Mathematical or clerical error

Section 6213(g)(2), as amended by paragraph (4), is further amended—

(i)

in subparagraph (Q), by striking and at the end,

(ii)

in subparagraph (R), by striking the period at the end and inserting , and, and

(iii)

by adding at the end the following:

(S)

the inclusion of any information for purposes of the credit under section 45W which is inconsistent with the report provided under section 45W(f).

.

(C)

Conforming amendments

(i)

Section 38(b), as amended by section 201, is further amended by striking paragraph (30) and inserting the following:

(30)

the qualified commercial electric vehicle credit determined under section 45W,

.

(ii)

The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by sections 101 and 102, is amended by adding at the end the following new item:

Sec. 45W. Qualified commercial electric vehicle credit.

.

(D)

Effective date

The amendments made by this paragraph shall apply to vehicles acquired after December 31, 2021.

(12)

Certification by Secretary

No credit shall be allowed under section 36C or section 45W of the Internal Revenue Code of 1986 for any vehicle acquired after December 31, 2021, unless the Secretary of the Treasury certifies that no credit under either such section will be allowed with respect to any new qualified plug-in electric drive motor vehicle, any qualified 2- or 3-wheeled plug-in electric vehicle, or any qualified commercial electric vehicle the final assembly of which is in the People's Republic of China.

203.

Credit for production of clean hydrogen

(a)

In general

Subpart D of part IV of subchapter A of chapter 1, as amended by sections 101, 201, and 202, is amended by adding at the end the following new section:

45X.

Credit for production of clean hydrogen

(a)

Amount of credit

For purposes of section 38, the clean hydrogen production credit for any taxable year is an amount equal to the product of—

(1)

the applicable amount, multiplied by

(2)

the kilograms of qualified clean hydrogen—

(A)

produced by the taxpayer at a qualified clean hydrogen production facility during the 10-year period beginning on the date the facility was placed in service, and

(B)

sold by the taxpayer to an unrelated person, or used by the taxpayer, during the taxable year.

(b)

Applicable amount

(1)

In general

For purposes of subsection (a)(1), the applicable amount shall be an amount equal to the applicable percentage of $3.00. If any amount as determined under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

(2)

Applicable percentage

For purposes of paragraph (1), the term applicable percentage means—

(A)

in the case of any qualified clean hydrogen which is produced through a process that, as compared to hydrogen produced by steam-methane reforming, achieves a percentage reduction in lifecycle greenhouse gas emissions which is less than 75 percent, 20 percent,

(B)

in the case of any qualified clean hydrogen which is produced through a process that, as compared to hydrogen produced by steam-methane reforming, achieves a percentage reduction in lifecycle greenhouse gas emissions which is not less than 75 percent and less than 85 percent, 25 percent,

(C)

in the case of any qualified clean hydrogen which is produced through a process that, as compared to hydrogen produced by steam-methane reforming, achieves a percentage reduction in lifecycle greenhouse gas emissions which is not less than 85 percent and less than 95 percent, 34 percent, and

(D)

in the case of any qualified clean hydrogen which is produced through a process that, as compared to hydrogen produced by steam-methane reforming, achieves a percentage reduction in lifecycle greenhouse gas emissions which is not less than 95 percent, 100 percent.

(3)

Inflation adjustment

The $3.00 amount in paragraph (1) shall be adjusted by multiplying such amount by the inflation adjustment factor (as determined under section 45(e)(2), determined by substituting 2020 for 1992 in subparagraph (B) thereof) for the calendar year in which the sale or use of the qualified clean hydrogen occurs. If any amount as increased under the preceding sentence is not a multiple of 0.1 cent, such amount shall be rounded to the nearest multiple of 0.1 cent.

(c)

Credit reduced for grants, tax-exempt bonds, subsidized energy financing, and other credits

The amount of the credit determined under subsection (a) with respect to any qualified clean hydrogen production facility for any taxable year shall be reduced in a manner similar to the reduction applied under section 45(b)(3).

(d)

Definitions

For purposes of this section—

(1)

Lifecycle greenhouse gas emissions

For purposes of this section, the term lifecycle greenhouse gas emissions has the same meaning given such term under subparagraph (H) of section 211(o)(1) of the Clean Air Act (42 U.S.C. 7545(o)(1)), as in effect on the date of enactment of this section.

(2)

Qualified clean hydrogen

(A)

In general

The term qualified clean hydrogen means hydrogen which is produced through a process that, as compared to hydrogen produced by steam-methane reforming of non-renewable natural gas, achieves a percentage reduction in lifecycle greenhouse gas emissions which is not less than 50 percent.

(B)

Exclusion

The term qualified clean hydrogen shall not include any hydrogen for which a credit is allowed for the taxable year—

(i)

under section 38 which is properly allocable to any credit determined under this part (other than this section), or

(ii)

under subchapter B of chapter 65 of subtitle F.

(3)

Qualified clean hydrogen production facility

(A)

In general

The term qualified clean hydrogen production facility means—

(i)

a facility owned by the taxpayer—

(I)

which produces qualified clean hydrogen which, with respect to any taxable year, is sold by the taxpayer to an unrelated person or used by the taxpayer, and

(II)

which—

(aa)

subject to clause (ii) of subparagraph (B), satisfies the requirements under clause (i) of such subparagraph, and

(bb)

with respect to the construction of such facility, satisfies the requirements under section 501 of the Clean Energy for America Act, and

(ii)

in connection with any facility described in clause (i), any property used to convert feedstock to hydrogen, including any equipment or supporting facility which—

(I)

accepts or receives feedstock,

(II)

conditions or stores feedstock or hydrogen, or

(III)

distributes or redistributes hydrogen.

(B)

Wage requirements

(i)

In general

The requirements described in this subparagraph with respect to any facility are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in—

(I)

the construction of such facility, or

(II)

for any year described in subsection (a)(2)(A) for which the credit under this section is claimed, the alteration or repair of such facility,

shall be paid wages at rates not less than the prevailing rates for construction, alteration, or repair of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.
(ii)

Failure to satisfy wage requirements; correction and penalty

In the case of any taxpayer which fails to satisfy the requirement under clause (i) with respect to the construction of any facility or the alteration or repair of such facility in any year during the period described in clause (i)(II), rules similar to the rules of clauses (i) and (ii) of section 45U(b)(3)(B) shall apply for purposes of this subparagraph.

(4)

Steam-methane reforming

The term steam-methane reforming means a hydrogen production process in which high-temperature steam is used to produce hydrogen from natural gas, without carbon capture and sequestration.

(e)

Special rules

(1)

In general

Rules similar to the rules of paragraphs (3) and (4) of section 45(e) shall apply for purposes of this section.

(2)

Production in the United States

No credit shall be allowed under this section with respect to any qualified clean hydrogen which is produced outside of the United States (as defined in section 638(1) or any possession of the United States (as defined in section 638(2)).

(f)

Credit phase-Out

(1)

In general

If the Secretary and the Administrator of the Environmental Protection Agency determine that the greenhouse gas emissions from the transportation of persons and goods annually in the United States are equal to or less than 25 percent of the greenhouse gas emissions from the transportation of persons and goods in the United States during calendar year 2021, the amount of the clean hydrogen production credit under this section shall be determined by substituting the applicable amount (as determined under paragraph (2)(A)) for the dollar amount in subsection (b)(1).

(2)

Applicable dollar amount

(A)

In general

The applicable amount for any taxable year described in subparagraph (B) shall be an amount equal to the product of—

(i)

the dollar amount in paragraphs (1) of subsection (b) (as adjusted by paragraph (3) of such subsection), multiplied by

(ii)

the phase-out percentage under subparagraph (B).

(B)

Phase-out percentage

The phase-out percentage under this subparagraph is equal to—

(i)

for any taxable year beginning in the first calendar year following the calendar year in which the determination described in paragraph (1) is made, 100 percent,

(ii)

for any taxable year beginning in the second calendar year following such determination year, 75 percent,

(iii)

for any taxable year beginning in the third calendar year following such determination year, 50 percent, and

(iv)

for any taxable year beginning in any calendar year subsequent to the year described in clause (iii), 0 percent.

(g)

Guidance

Not later than 1 year after the date of enactment of this section, the Secretary, the Secretary of Energy, and Administrator of the Environmental Protection Agency shall publish guidance prescribing methods for determining the credit based on lifecycle greenhouse gas emissions.

.

(b)

Conforming amendments

(1)

Section 38(b) of the Internal Revenue Code of 1986, as amended by section 101, 201, and 202, is amended—

(A)

in paragraph (35), by striking plus at the end,

(B)

in paragraph (36), by striking the period at the end and inserting , plus, and

(C)

by adding at the end the following new paragraph:

(37)

the clean hydrogen production credit determined under section 45X(a).

.

(2)

The table of sections for subpart D of part IV of subchapter A of chapter 1, as amended by sections 101, 201, and 202, is amended by adding at the end the following new item:

Sec. 45X. Clean hydrogen production credit.

.

(c)

Effective date

The amendments made by this section shall apply to hydrogen used or sold after December 31, 2020.

204.

Temporary extensions of existing fuel incentives

(a)

Second generation biofuel producer credit

(1)

In general

Section 40(b)(6)(J)(i) is amended by striking 2022 and inserting 2023.

(2)

Effective date

The amendments made by this subsection shall apply to qualified second generation biofuel production after December 31, 2021.

(b)

Credit for alternative fuel mixtures

(1)

In general

Section 6426 is amended—

(A)

in subsection (d)—

(i)

in paragraph (2)(D), by striking liquefied, and

(ii)

in paragraph (5), by striking 2021 and inserting 2022, and

(B)

in subsection (e)—

(i)

in paragraph (2), by inserting nonliquid hydrogen or before a fuel described, and

(ii)

in paragraph (3), by striking 2021 and inserting 2022.

(2)

Effective date

The amendments made by this subsection shall apply to fuel sold or used after December 31, 2021.

(c)

Alternative fuels

(1)

In general

Section 6427(e)(6)(C) is amended by striking 2021 and inserting 2022.

(2)

Effective date

The amendments made by this subsection shall apply to fuel sold or used after December 31, 2021.

III

Incentives for Energy Efficiency

301.

Credit for new energy efficient residential buildings

(a)

In general

Section 45L is amended to read as follows:

45L.

New energy efficient home credit

(a)

Allowance of credit

For purposes of section 38, in the case of an eligible contractor, the new energy efficient home credit for the taxable year is the applicable amount for each qualified residence which is—

(1)

constructed by the eligible contractor, and

(2)

acquired by a person from such eligible contractor for use as a residence during the taxable year.

(b)

Applicable amount

(1)

In general

For purposes of subsection (a), the applicable amount shall be an amount equal to—

(A)

in the case of a qualified residence described in subclause (I) of subsection (c)(3)(A)(iii), $2,500, and

(B)

in the case of a qualified residence described in subclause (II) of such subsection, $5,000.

(2)

Adjustment for inflation

(A)

In general

In the case of a taxable year beginning after 2022, the dollar amounts in paragraph (1) shall each be increased by an amount equal to—

(i)

such dollar amount, multiplied by

(ii)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2021 for calendar year 2016 in subparagraph (A)(ii) thereof.

(B)

Rounding

If any amount as increased under subparagraph (A) is not a multiple of $100, such amount shall be rounded to the nearest multiple of $100.

(c)

Definitions

For purposes of this section:

(1)

Construction

The term construction does not include substantial reconstruction or rehabilitation.

(2)

Eligible contractor

The term eligible contractor means—

(A)

the person who constructed the qualified residence, or

(B)

in the case of a qualified residence which is a manufactured home, the manufactured home producer of such residence.

(3)

Qualified residence

(A)

In general

The term qualified residence means a dwelling unit—

(i)

located in the United States,

(ii)

the construction of which is substantially completed after the date of the enactment of this section,

(iii)

which is certified as satisfying the applicable national program requirements under—

(I)

the Energy Star Residential New Construction program (or any successor program, as determined by the Secretary), as in effect on January 1 of the year in which construction of the dwelling unit begins, or

(II)

the Zero Energy Ready Home program (or any successor program, as determined by the Secretary), as in effect on January 1 of the year in which construction of the dwelling unit begins, and

(iv)

in the case of a multifamily dwelling unit, subject to clause (ii) of subparagraph (B), which satisfies the requirements under clause (i) of such subparagraph.

(B)

Wage requirements

(i)

In general

The requirements described in this clause with respect to any dwelling unit are that the eligible contractor shall ensure that any laborers and mechanics employed by such contractor and subcontractors in the construction of such dwelling unit shall be paid wages at rates not less than the prevailing rates for construction of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

(ii)

Correction and penalty related to failure to satisfy wage requirements

In the case of any taxpayer which fails to satisfy the requirement under clause (i) with respect to any dwelling unit, rules similar to the rules of section 45U(b)(3)(B)(ii) shall apply for purposes of this subparagraph.

(C)

Denial of double benefit

The term qualified residence does not include any dwelling unit for which a deduction determined under section 179D is allowed for the taxable year in which the dwelling unit is acquired as provided in subsection (a)(2).

(d)

Certification

A certification described in this section shall be made—

(1)

by a third party which is accredited by a certification program approved by the Secretary and the Secretary of Energy, and

(2)

in accordance with—

(A)

any applicable rules under the national program requirements of the Energy Star Residential New Construction or Zero Energy Ready Home programs, as in effect on the date on which construction of the dwelling unit begins, and

(B)

guidance prescribed by the Secretary and the Secretary of Energy.

(e)

Basis adjustment

For purposes of this subtitle, if a credit is allowed under this section in connection with any expenditure for any property (other than a qualified low-income building, as described in section 42(c)(2)), the increase in the basis of such property which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so determined.

(f)

Coordination with investment credits

For purposes of this section, expenditures taken into account under section 25D or 47 shall not be taken into account under this section.

.

(b)

Effective date

The amendment made by this section shall apply to any qualified residence acquired after December 31, 2021.

302.

Energy efficient home improvement credit

(a)

In general

Section 25C is amended to read as follows:

25C.

Energy efficient home improvement credit

(a)

In general

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the lesser of—

(1)

the sum of the applicable qualified property amounts for any qualified property placed in service by the individual during such taxable year, or

(2)

$1,500.

(b)

Applicable qualified property amount

(1)

In general

For any qualified property, the applicable qualified property amount shall be equal to the lesser of—

(A)

30 percent of the amount paid or incurred by the individual for such qualified property (including any expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of such property), or

(B)

$600.

(2)

Adjustment for inflation

(A)

In general

In the case of a taxable year beginning after 2022, each of the dollar amounts in paragraph (1)(B) (after application of subsection (c)(2)) and subsections (a)(2), (c)(2)(A), and (c)(2)(B)(i)(I) shall be increased by an amount equal to—

(i)

such dollar amount, multiplied by

(ii)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting calendar year 2021 for calendar year 2016 in subparagraph (A)(ii) thereof.

(B)

Rounding

If any amount as increased under subparagraph (A) is not a multiple of $10, such amount shall be rounded to the nearest multiple of $10.

(c)

Qualified property

(1)

In general

The term qualified property means a furnace, boiler, condensing water heater, central air conditioning unit, heat pump, biomass property, or building envelope improvement which—

(A)

except as provided in subparagraph (B), meets or exceeds the requirements of—

(i)

the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which are in effect at the time that the property is placed in service, or

(ii)

if no standard established by the Consortium for Energy Efficiency applies to such property, an equivalent standard as established by the Secretary and the Administrator of the Environmental Protection Agency,

(B)

in the case of a building envelope improvement—

(i)

except as provided in clause (ii) or (iii), meets or exceeds the latest applicable requirements of the Energy Star program (or any successor program, as determined by the Secretary), as in effect on January 1 of the year in which the property is placed in service,

(ii)

in the case of a window treatment, meets or exceeds the applicable certification requirements for such product under the Attachments Energy Rating Council certification program, or

(iii)

in the case of insulation described in subsection (d)(2)(A), meets the prescriptive criteria for such material or system established by the International Energy Conservation Code, as such Code (including supplements) is in effect on January 1 of the calendar year in which such material or system is installed,

(C)

is installed according to applicable Air Conditioning Contractors of America Quality Installation standards which are in effect at the time that the property was placed in service,

(D)

is for use in a dwelling unit which is located in the United States and used as a residence by the individual, and

(E)

is reasonably expected to remain in service in such dwelling unit for not less than 5 years.

(2)

Special rules for certain heat pumps

(A)

Air-source heat pumps

In the case of any air-source heat pump which satisfies the requirements under paragraph (1), subsection (b)(1)(B) shall be applied by substituting $800 for $600.

(B)

Ground source heat pump

(i)

In general

In the case of any qualified geothermal heat pump property which satisfies the requirements under subparagraphs (C) through (E) of paragraph (1)—

(I)

subsection (b)(1)(B) shall be applied by substituting $10,000 for $600, and

(II)

subsection (a)(2) shall be applied without regard to the applicable qualified property amount for such property.

(ii)

Qualified geothermal heat pump property

For purposes of this subparagraph, the term qualified geothermal heat pump property means any equipment which—

(I)

uses the ground or ground water as a thermal energy source to heat a dwelling unit located in the United States and used as a residence by the taxpayer or as a thermal energy sink to cool such dwelling unit, and

(II)

meets the requirements of the Energy Star program which are in effect as of January 1 of the calendar year in which the expenditure for such equipment is made.

(3)

Special rule for insulation

In the case of any building envelope improvement described in subsection (d)(2)(A) which satisfies the applicable requirements under paragraph (1), subsection (b)(1) shall be applied without regard to the lesser of and without regard to subparagraph (B).

(d)

Other definitions

(1)

Biomass property

(A)

In general

For purposes of this section, the term biomass property means any property which—

(i)

uses the burning of biomass fuel to heat a dwelling unit or to heat water for use in a dwelling unit, and

(ii)

using the higher heating value, has a thermal efficiency of not less than 75 percent.

(B)

Biomass fuel

For purposes of subparagraph (A), the term biomass fuel means any plant-derived fuel which is available on a renewable or recurring basis, including any such fuel which has been subject to a densification process (such as wood pellets).

(2)

Building envelope improvement

For purposes of this section, the term building envelope improvement means—

(A)

any insulation material or system, including air barrier insulation, which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit, and

(B)

exterior doors and windows (including skylights).

(3)

Manufactured homes included

For purposes of this section, the term dwelling unit includes a manufactured home which conforms to Federal Manufactured Home Construction and Safety Standards (part 3280 of title 24, Code of Federal Regulations).

(e)

Denial of double benefit

No credit shall be allowed under subsection (a) for any amounts paid or incurred for which a deduction or credit is allowed under any other provision of this chapter.

.

(b)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 25C and inserting after the item relating to section 25B the following item:

25C. Energy efficient home improvement credit.

.

(c)

Effective date

The amendments made by this section shall apply to qualified property placed in service after December 31, 2021.

303.

Enhancement of energy efficient commercial buildings deduction

(a)

Maximum amount of deduction

(1)

In general

Section 179D is amended—

(A)

by striking subsection (b) and inserting the following:

(b)

Maximum amount of deduction

(1)

In general

The deduction under subsection (a) with respect to any building for any taxable year shall not exceed the excess (if any) of—

(A)

the product of—

(i)

the applicable dollar value, and

(ii)

the square footage of the building, over

(B)

the aggregate amount of the deductions under subsection (a) with respect to the building for the 3 years immediately preceding such taxable year.

(2)

Applicable dollar value

For purposes of paragraph (1)(A)(i), the applicable dollar value shall be an amount equal to $2.50 increased (but not above $5.00) by $0.10 for each percentage point by which the total annual energy and power costs for the building are certified to be reduced by a percentage greater than 25 percent.

, and

(B)

in subsection (d)(1)(A)—

(i)

by striking subsection (b) and inserting subsection (b)(2), and

(ii)

by striking $1.80 and inserting $2.50.

(2)

Inflation adjustment

Section 179D(g) is amended to read as follows:

(g)

Inflation adjustment

(1)

In general

In the case of a taxable year beginning after 2022, each dollar amount in subsection (b)(2) (and the $2.50 amount in subsection (d)(1)(A)) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2021 for calendar year 2016 in subparagraph (A)(ii) thereof.

Any increase determined under the preceding sentence which is not a multiple of 10 cents shall be rounded to the nearest multiple of 10 cents.
(2)

Partial allowance

In the case of a taxable year beginning after 2020, the $.60 amount in (d)(1)(A) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2019 for calendar year 2016 in subparagraph (A)(ii) thereof.

Any increase determined under the preceding sentence which is not a multiple of 1 cent shall be rounded to the nearest cent.

.

(b)

Definition of energy efficient building property

(1)

Energy reduction standard

Section 179D(c)(1)(D) is amended by striking 50 percent and inserting 25 percent.

(2)

Inclusion of multifamily buildings

(A)

In general

Subparagraph (B) of section 179D(c)(1) is amended to read as follows:

(B)

which is installed on or in any commercial building or multifamily building which is located within the United States,

.

(B)

Application of standards

Subparagraph (D) of section 179D(c) is amended—

(i)

by striking meets the minimum requirements of Reference Standard 90.1 using methods of calculation under subsection (d)(2) and inserting

meets—

(i)

in the case of any property within the scope of Reference Standard 90.1, the minimum requirements of Reference Standard 90.1 using methods of calculation under subsection (d)(2), and

(ii)

in the case of any other property, the minimum requirements of a comparable standard to Reference Standard 90.1 which shall be determined by the Secretary and the Secretary of Energy using methods of calculation under subsection (d)(2).

.

(C)

Definitions

Subsection (c) of section 179D is amended by adding at the end the following new paragraphs:

(3)

Commercial building

The term commercial building means a building with a primary use or purpose other than as residential housing.

(4)

Multifamily building

The term multifamily building means a structure of 5 or more dwelling units with a primary use as residential housing, and includes such buildings owned and operated as a condominium, cooperative, or other common interest community.

.

(3)

Wage and workforce requirements

(A)

In general

Section 179D(c)(1), as amended by paragraph (2), is amended—

(i)

in subparagraph (C)(iii), by striking and at the end,

(ii)

in subparagraph (D), by striking the period at the end and inserting , and, and

(iii)

by adding at the end the following:

(E)

which satisfies the requirements—

(i)

subject to subparagraph (B) of subsection (d)(7), under subparagraph (A) of such subsection, and

(ii)

with respect to the construction of such property, the requirements under section 501 of the Clean Energy for America Act.

.

(B)

Requirements

Section 179(d) is amended by adding at the end the following new paragraph:

(7)

Wage requirements

(A)

In general

The requirements described in this subparagraph with respect to any property are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the construction of such property shall be paid wages at rates not less than the prevailing rates for construction of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

(B)

Correction and penalty related to failure to satisfy wage requirements

In the case of any taxpayer which fails to satisfy the requirement under subparagraph (A) with respect to any property, rules similar to the rules of section 45U(b)(3)(B)(ii) shall apply for purposes of this paragraph.

.

(4)

Election to use different standards for retrofits

Section 179D is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:

(h)

Alternative method for energy efficient retrofit building property

(1)

In general

In the case of a taxpayer which elects (at such time and in such manner as the Secretary may provide) the application of this subsection with respect to any qualified building, the amount of the deduction allowed under subsection (a)—

(A)

shall be determined—

(i)

by substituting energy usage intensity for total annual energy and power costs in subsection (b)(2), and

(ii)

without regard to subsection (c)(1)(D), and

(B)

shall be allowed for the taxable year which includes the date of the qualifying final certification with respect to the qualified retrofit plan of such building in lieu of the taxable year in which the property is placed in service.

(2)

Qualified building

For purposes of this subsection, the term qualified building means a commercial building or multifamily building—

(A)

which is located in the United States,

(B)

with respect to which a qualified retrofit plan has been established, and

(C)

which was originally placed in service not less than 5 years before the establishment of the qualified retrofit plan with respect to such building.

(3)

Qualified retrofit plan

For purposes of this subsection, the term qualified retrofit plan means a written plan prepared by a qualified professional which specifies specific modifications to a building which, in the aggregate, are expected to reduce such building’s energy usage intensity by 25 percent or more in comparison to the baseline energy usage intensity of such building. Such plan shall provide for a qualified professional to—

(A)

as of any date during the 1-year period ending on the date of the first certification described in subparagraph (B), certify the energy usage intensity of such building as of such date,

(B)

certify the status of property installed pursuant to such plan as meeting the requirements of subparagraphs (B) and (C) of subsection (c)(1), and

(C)

as of any date following completion of the plan, certify—

(i)

the energy usage intensity of such building as of such date, and

(ii)

the portfolio manager score of such building as of such date.

(4)

Qualifying final certification

For purposes of this subsection, the term qualifying final certification means, with respect to any qualified retrofit plan, the certification described in paragraph (3)(C) if—

(A)

the energy usage intensity certified in such certification is not more than 75 percent of the baseline energy usage intensity of the building, and

(B)

the portfolio manager score certified in such certification is not less than 50.

(5)

Other definitions

For purposes of this subsection—

(A)

Baseline energy usage intensity

The term baseline energy usage intensity means the energy usage intensity certified under paragraph (3)(A).

(B)

Portfolio manager score

The term portfolio manager score means the score determined under the methodology (as in effect on the date of the enactment of this Act) developed by the Administrator of the Environmental Protection Agency for rating a building’s energy efficiency for purposes of the Energy Star program. Modifications after the date of the enactment of this paragraph to such methodology shall be taken into account under this paragraph as provided by the Secretary and such Administrator.

(C)

Energy usage intensity

The term energy usage intensity means energy usage intensity determined in accordance with such regulations or other guidance as the Secretary may provide and measured in British thermal units.

(D)

Qualified professional

The term qualified professional means an individual who is a licenced architect or a licenced engineer and meets such other requirements as the Secretary may provide.

(6)

Certain rules not applicable

Paragraphs (1), (5), and (6)(B) of subsection (d) shall not apply for purposes of this subsection.

.

(c)

Other rules

(1)

Allocation of deduction

Section 179D(d)(4) is amended to read as follows:

(4)

Allocation of deduction

(A)

In general

In the case of energy efficient commercial building property installed on or in property owned by an eligible entity, the Secretary shall promulgate regulations to allow the allocation of the deduction to the person primarily responsible for designing the property in lieu of the owner of such property, with such person to be treated as the taxpayer for purposes of this section.

(B)

Eligible entity

For purposes of this paragraph, the term eligible entity means—

(i)

a Federal, State, or local government or a political subdivision thereof,

(ii)

an Indian tribe (as defined in section 45A(c)(6)), or

(iii)

an organization described in section 501(c) and exempt from tax under section 501(a).

.

(2)

Elimination of interim rule for lighting systems

Section 179D, as amended by subsections (a)(2) and (b)(4), is amended by striking subsection (f) and by redesignating subsections (g), (h), and (i) as subsections (f), (g), and (h), respectively.

(3)

Application to real estate investment trust earnings and profits

Section 312(k)(3)(B) is amended—

(A)

by striking For purposes of computing the earnings and profits of a corporation and inserting the following:

(I)

In general

For purposes of computing the earnings and profits of a corporation, except as provided in clause (ii)

, and

(B)

by adding at the end the following new clause:

(II)

Special rule

In the case of a corporation that is a real estate investment trust, any amount deductible under section 179D shall be allowed in the year in which the property giving rise to such deduction is placed in service.

.

(d)

Effective date

The amendments made by this section shall apply to any property placed in service after December 31, 2021.

304.

Enhancement of energy credit for geothermal heat pumps

(a)

In general

Section 48(a) is amended—

(1)

in paragraph (2)(A)(i)(III), by striking paragraph (3)(A)(ii) and inserting clause (ii) or (vii) of paragraph (3)(A), and

(2)

in paragraph (3)(A)(vii), by striking but only with respect to property the construction of which begins before January 1, 2024,.

(b)

Effective date

The amendments made by this section shall apply to property the construction of which begins after December 31, 2021.

IV

Termination of certain fossil fuel provisions

401.

Termination of provisions relating to oil, gas, and other materials

(a)

Amortization of geological and geophysical expenditures

Section 167(h) is amended by adding at the end the following new paragraph:

(6)

Termination

This subsection shall not apply to any expenses paid or incurred during any taxable year beginning after the date of the enactment of the Clean Energy for America Act.

.

(b)

Alaska natural gas pipelines

Subparagraph (B) of section 168(i)(16) is amended to read as follows:

(B)

is—

(i)
(I)

placed in service after December 31, 2013, or

(II)

treated as placed in service on January 1, 2014, if the taxpayer who places such system in service before January 1, 2014, elects such treatment, and

(ii)

placed in service before the end of the calendar year in which the date of the enactment of the Clean Energy for America Act occurs.

.

(c)

Natural gas gathering line

Paragraph (17) of section 168(i) is amended—

(1)

in subparagraph (A), by inserting which are placed in service before the end of the calendar year in which the date of the enactment of the Clean Energy for America Act occurs and are after pipe, equipment, and appurtenances, and

(2)

in subparagraph (B), by inserting which are placed in service before the end of the calendar year in which the date of the enactment of the Clean Energy for America Act occurs and are after pipe, equipment, and appurtenances.

(d)

Repeal of deduction for tertiary injectants

Subsection (c) of section 193 is amended—

(1)

in paragraph (1), by striking or at the end,

(2)

in paragraph (2), by striking the period at the end and inserting , or, and

(3)

by inserting at the end the following:

(3)

which is paid or incurred during any taxable year beginning after the date of the enactment of the Clean Energy for America Act.

.

(e)

Intangible drilling and development costs

(1)

In general

Subsection (c) of section 263 is amended to read as follows:

(c)

Intangible drilling and development costs in the case of oil and gas wells and geothermal wells

(1)

In general

Notwithstanding subsection (a), and except as provided in subsection (i), regulations shall be prescribed by the Secretary under this subtitle corresponding to the regulations which granted the option to deduct as expenses intangible drilling and development costs in the case of oil and gas wells and which were recognized and approved by the Congress in House Concurrent Resolution 50, Seventy-ninth Congress. Such regulations shall also grant the option to deduct as expenses intangible drilling and development costs in the case of wells drilled for any geothermal deposit (as defined in section 613(e)(2)) to the same extent and in the same manner as such expenses are deductible in the case of oil and gas wells. This subsection shall not apply with respect to any costs to which any deduction is allowed under section 59(e) or 291.

(2)

Exclusion

(A)

In general

This subsection shall not apply to amounts paid or incurred by a taxpayer with regard to any oil or gas well in any taxable year beginning after the date of the enactment of the Clean Energy for America Act.

(B)

Amortization of excluded amounts

The amount not allowable as a deduction for any taxable year by reason of subparagraph (A) shall be allowable as a deduction ratably over the 60-month period beginning with the month in which the costs are paid or incurred. For purposes of section 1254, any deduction under this subparagraph shall be treated as a deduction under this subsection.

.

(2)

Conforming amendments

(A)

Section 291(b) is amended—

(i)

in paragraph (1), by striking without regard to this section) and all that follows and inserting without regard to this section) under section 616(a) or 617(a) shall be reduced by 30 percent.,

(ii)

in paragraph (2), by striking section 263(c), 616(a), or 617(a) and inserting section 616(a) or 617(a),

(iii)

by striking paragraph (4), and

(iv)

by redesignating paragraph (5) as paragraph (4).

(B)

Section 57(a) is amended by striking paragraph (2).

(f)

Percentage depletion

(1)

Percentage depletion of oil and gas wells, coal, lignite, and oil shale

(A)

In general

Section 613 is amended—

(i)

in subsection (a), by striking (100 percent in the case of oil and gas properties),

(ii)

in subsection (b)—

(I)

by striking paragraph (2) and inserting the following:

(2)

15 percent

If from deposits in the United States, gold, silver, copper, and iron ore.

,

(II)

in paragraph (4), by striking coal, lignite,,

(III)

in paragraph (5), by inserting (except oil shale) after clay and shale,

(IV)

in paragraph (6)(A), by striking (except shale described in paragraph (2)(B) or (5)) and inserting (except oil shale and shale described in paragraph (5)), and

(V)

in paragraph (7), by striking or at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ; or, and by adding at the end the following new subparagraph:

(D)

coal, lignite, and oil shale.

,

(iii)

in subsection (c)(1), striking other than an oil or gas well and,

(iv)

in subsection (c)(4)—

(I)

by striking subparagraphs (A) and (H),

(II)

by inserting and at the end of subparagraph (G),

(III)

by redesignating subparagraphs (B) through (G) as subparagraphs (A) through (F), respectively, and

(IV)

by redesignating subparagraph (I) as subparagraph (G),

(v)

in subsection (d), by striking Except as provided in section 613A, in the case of and inserting In the case of, and

(vi)

in subsection (e)(2), by striking or section 613A.

(B)

Conforming amendments

(i)

Section 291(a)(2) is amended by striking and coal (including lignite).

(ii)
(I)

Part I of subchapter I of chapter 1 is amended by striking section 613A (and the item relating to such section in the table of sections).

(II)

Section 45H(d) is amended by striking section 613A(d)(3) and inserting section 167(h)(5)(C).

(III)

Section 57(a)(1) is amended by striking the last sentence.

(IV)

Section 167(h)(5) is amended—

(aa)

by striking subparagraph (B)(iii) and inserting the following:

(iii)

which—

(I)

engages (by itself or with a related person) in the refining of crude oil, and

(II)

together with related persons, has average daily refinery runs for the taxable year (determined by dividing the aggregate refinery runs for the taxable year by the number of days in the taxable year) in excess of 75,000 barrels.

, and

(bb)

by adding at the end the following new subparagraph:

(C)

Related person

For purposes of subparagraph (B)(iii), a person is a related person with respect to the taxpayer if a significant ownership interest in either the taxpayer or such person is held by the other, or if a third person has a significant ownership interest in both the taxpayer and such person. For purposes of the preceding sentence, the term significant ownership interest means—

(i)

with respect to any corporation, 15 percent or more in value of the outstanding stock of such corporation,

(ii)

with respect to a partnership, 15 percent or more interest in the profits or capital of such partnership, and

(iii)

with respect to an estate or trust, 15 percent or more of the beneficial interests in such estate or trust.

For purposes of determining a significant ownership interest, an interest owned by or for a corporation, partnership, trust, or estate shall be considered as owned directly both by itself and proportionately by its shareholders, partners, or beneficiaries, as the case may be.

.

(V)

Section 703(a)(2) is amended by inserting and at the end of subparagraph (D), by striking , and at the end of subparagraph (E) and inserting a period, and by striking subparagraph (F).

(VI)

Section 705(a) is amended by inserting and at the end of paragraph (1)(C), by striking ; and at the end of paragraph (2)(B) and inserting a period, and by striking paragraph (3).

(VII)

Section 1202(e)(3)(D) is amended by striking or 613A.

(VIII)

Section 1367(a)(2) is amended by inserting and at the end of subparagraph (C), by striking , and at the end of subparagraph (D) and inserting a period, and by striking subparagraph (E).

(iii)

Section 993(c)(2)(C) is amended by striking (including oil, gas, coal, or uranium products) under section 613 or 613A and inserting (including uranium products) under section 613.

(iv)

Section 1446(c)(2) is amended by striking but the amount of such deduction shall be determined without regard to sections 613 and 613A.

(2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

(g)

Termination of capital gains treatment for royalties from coal

(1)

In general

Subsection (c) of section 631 is amended—

(A)

by striking coal (including lignite), or iron ore and inserting iron ore,

(B)

by striking coal or iron ore each place it appears and inserting iron ore,

(C)

by striking iron ore or coal each place it appears and inserting iron ore, and

(D)

by striking coal or in the heading.

(2)

Conforming amendments

(A)

Section 272 is amended by striking coal or each place it appears.

(B)

Section 1402(a)(3)(B) is amended by striking coal,.

(C)
(i)

The heading of section 631 is amended by striking , coal,.

(ii)

The item relating to section 631 in the table of sections for part III of subchapter I of chapter 1 is amended by striking , coal,.

(3)

Effective date

The amendments made by this subsection shall apply to dispositions after the date of the enactment of this Act.

(h)

Enhanced oil recovery credit

(1)

In general

Subpart D of part IV of subchapter A of chapter 1 is amended by striking section 43.

(2)

Conforming amendments

(A)

Section 38(b) is amended by striking paragraph (6).

(B)
(i)

Section 45Q(e) is amended by adding at the end the following new paragraph:

(4)

Inflation adjustment factor

The term inflation adjustment factor means, with respect to any calendar year, a fraction the numerator of which is the GNP implicit price deflator for the preceding calendar year and the denominator of which is the GNP implicit price deflator for 2008. For purposes of the preceding sentence, the term GNP implicit price deflator means the first revision of the implicit price deflator for the gross national product as computed and published by the Secretary of Commerce. Not later than April 1 of any calendar year, the Secretary shall publish the inflation adjustment factor for the preceding calendar year.

.

(ii)

Section 45Q, as amended by this Act, is amended in subsection (b)(1) by striking determined under section 43(b)(3)(B) for such calendar year, determined by substituting 2025 for 1990 each place it appears in subparagraph (A)(ii) and (B)(ii) and inserting determined under subsection (e)(4) by substituting 2025 for 2008.

(C)

Section 196(c) is amended—

(i)

by striking paragraph (5), and

(ii)

by redesignating paragraphs (6) through (14) as paragraphs (5) through (13), respectively.

(3)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 43.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

(i)

Credit for producing oil and gas from marginal wells

(1)

In general

Subpart D of part IV of subchapter A of chapter 1 is amended by striking section 45I.

(2)

Conforming amendment

Section 38(b) is amended by striking paragraph (19).

(3)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 45I.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

(j)

Qualifying advanced coal project credit

(1)

In general

Subpart E of part IV of subchapter A of chapter 1 is amended by striking section 48A.

(2)

Conforming amendments

(A)

Section 46, as amended by section 102 of this Act, is amended by striking paragraph (3) and redesignating paragraphs (4) through (7) as paragraphs (3) through (6), respectively.

(B)

Section 49(a)(1)(C), as amended by section 102 of this Act, is amended by striking clause (iii) and redesignating clauses (iv) through (vii) as clauses (iii) through (vi), respectively.

(C)

Section 50(a)(2)(E), as amended by section 102 of this Act, is amended by striking 48A(b)(3),.

(3)

Clerical amendment

The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 48A.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

(k)

Qualifying gasification project credit

(1)

In general

Subpart E of part IV of subchapter A of chapter 1 is amended by striking section 48B.

(2)

Conforming amendments

(A)

Section 46, as amended by this Act, is amended by striking paragraph (3) and by redesignating paragraphs (4), (5), and (6) as paragraphs (3), (4), and (5), respectively.

(B)

Section 49(a)(1)(C), as amended by this Act, is amended by striking clause (iii) and redesignating clauses (iv) through (vi) as clauses (iii) through (v).

(C)

Section 50(a)(2)(E), as amended by this Act, is amended by striking 48B(b)(3),.

(3)

Clerical amendment

The table of sections for subpart E of part IV of subchapter A of chapter 1 is amended by striking the item relating to section 48B.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

(l)

Repeal of passive loss exception for oil and gas interests

(1)

In general

Section 469(c)(3)(A) is amended—

(A)

by striking The term and inserting the following:

(i)

Exception

The term

.

(B)

by adding at the end the following new clause:

(ii)

Termination

Clause (i) shall not apply to any taxable year beginning after the date of the enactment of the Clean Energy for America Act.

.

(2)

Conforming amendment

Section 469(c)(4) is amended by striking Paragraphs (2) and (3) and inserting Paragraphs (2) and (3)(A)(i).

(m)

Repeal of corporate income tax exemption for publicly traded partnerships with qualifying income and gains from activities relating to fossil fuels

(1)

In general

Section 7704(d)(1) is amended—

(A)

in subparagraph (E), by striking (including pipelines transporting gas, oil, or products thereof), and

(B)

in the flush matter at the end, by inserting or any coal, gas, oil, or products thereof before the period.

(2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.

402.

Modification of certain provisions relating to oil, gas, and other fossil fuels

(a)

Modifications of foreign tax credit rules applicable to major integrated oil companies which are dual capacity taxpayers

(1)

In general

Section 901 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:

(n)

Special rules relating to major integrated oil companies which are dual capacity taxpayers

(1)

General rule

Notwithstanding any other provision of this chapter, any amount paid or accrued by a dual capacity taxpayer which is a major integrated oil company (within the meaning of section 167(h)(5)) to a foreign country or possession of the United States for any period shall not be considered a tax—

(A)

if, for such period, the foreign country or possession does not impose a generally applicable income tax, or

(B)

to the extent such amount exceeds the amount (determined in accordance with regulations) which—

(i)

is paid by such dual capacity taxpayer pursuant to the generally applicable income tax imposed by the country or possession, or

(ii)

would be paid if the generally applicable income tax imposed by the country or possession were applicable to such dual capacity taxpayer.

Nothing in this paragraph shall be construed to imply the proper treatment of any such amount not in excess of the amount determined under subparagraph (B).
(2)

Dual capacity taxpayer

For purposes of this subsection, the term dual capacity taxpayer means, with respect to any foreign country or possession of the United States, a person who—

(A)

is subject to a levy of such country or possession, and

(B)

receives (or will receive) directly or indirectly a specific economic benefit (as determined in accordance with regulations) from such country or possession.

(3)

Generally applicable income tax

For purposes of this subsection—

(A)

In general

The term generally applicable income tax means an income tax (or a series of income taxes) which is generally imposed under the laws of a foreign country or possession on income derived from the conduct of a trade or business within such country or possession.

(B)

Exceptions

Such term shall not include a tax unless it has substantial application, by its terms and in practice, to—

(i)

persons who are not dual capacity taxpayers, and

(ii)

persons who are citizens or residents of the foreign country or possession.

.

(2)

Effective Date

(A)

In general

The amendments made by this subsection shall apply to taxes paid or accrued in taxable years beginning after the date of the enactment of this Act.

(B)

Contrary treaty obligations upheld

The amendments made by this subsection shall not apply to the extent contrary to any treaty obligation of the United States.

(b)

Reinstatement of treatment of foreign base company oil related income as foreign base company income

(1)

In general

Section 954(a) is amended by striking and at the end of paragraph (2), by striking the period at the end of paragraph (3) and inserting , and, and by adding at the end the following new paragraph:

(4)

the foreign base company oil related income for the taxable year (determined under subsection (g) and reduced as provided in subsection (b)(5)).

.

(2)

Foreign base company oil related income

Section 954 is amended by inserting before subsection (h) the following new subsection:

(g)

Foreign base company oil related income

For purposes of this section—

(1)

In general

Except as otherwise provided in this subsection, the term foreign base company oil related income means foreign oil related income (within the meaning of paragraphs (2) and (3) of section 907(c)) other than income derived from a source within a foreign country in connection with—

(A)

oil or gas which was extracted from an oil or gas well located in such foreign country, or

(B)

oil, gas, or a primary product of oil or gas which is sold by the foreign corporation or a related person for use or consumption within such country or is loaded in such country on a vessel or aircraft as fuel for such vessel or aircraft.

Such term shall not include any foreign personal holding company income (as defined in subsection (c)).
(2)

Paragraph (1) applies only where corporation has produced 1,000 barrels per day or more

(A)

In general

The term foreign base company oil related income shall not include any income of a foreign corporation if such corporation is not a large oil producer for the taxable year.

(B)

Large oil producer

For purposes of subparagraph (A), the term large oil producer means any corporation if, for the taxable year or for the preceding taxable year, the average daily production of foreign crude oil and natural gas of the related group which includes such corporation equaled or exceeded 1,000 barrels.

(C)

Related group

The term related group means a group consisting of the foreign corporation and any other person who is a related person with respect to such corporation.

(D)

Average daily production of foreign crude oil and natural gas

For purposes of this paragraph, the average daily production of foreign crude oil or natural gas of any related group for any taxable year (and the conversion of cubic feet of natural gas into barrels) shall be determined under rules similar to the rules of section 613A (as in effect on the day before the date of enactment of the Clean Energy for America Act) except that only crude oil or natural gas from a well located outside the United States shall be taken into account.

.

(3)

Conforming amendments

(A)

Section 952(c)(1)(B)(iii) is amended by redesignating subclauses (I) through (IV) as subclauses (II) through (V), respectively, and by inserting before subclause (II) (as redesignated) the following new subclause:

(I)

foreign base company oil related income,

.

(B)

Section 954(b) is amended—

(i)

in paragraph (4), by inserting at the end the following new sentence: The preceding sentence shall not apply to foreign base company oil-related income described in subsection (a)(4).,

(ii)

in paragraph (5), by striking and the foreign base company services income and inserting the foreign base company services income, and the foreign base company oil related income, and

(iii)

by adding at the end the following new paragraph:

(6)

Foreign base company oil related income not treated as another kind of base company income

Income of a corporation which is foreign base company oil related income shall not be considered foreign base company income of such corporation under paragraph (2) or (3) of subsection (a).

.

(4)

Effective date

The amendments made by this subsection shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders with or within which such taxable years of foreign corporations end.

(c)

Inclusion of foreign oil and gas extraction income in tested income for purpose of determining global intangible low-taxed income

(1)

In general

Section 951A(c)(2)(A)(i) is amended by inserting and at the end of subclause (III), by striking and at the end of subclause (IV) and inserting over, and by striking subclause (V).

(2)

Effective date

The amendments made by this subsection shall apply to taxable years of foreign corporations beginning after the date of the enactment of this Act, and to taxable years of United States shareholders in which or with which such tax years of foreign corporations end.

(d)

Clarification of tar sands as crude oil for excise tax purposes

(1)

In general

Paragraph (1) of section 4612(a) is amended to read as follows:

(1)

Crude oil

The term crude oil includes crude oil condensates, natural gasoline, any bitumen or bituminous mixture, any oil derived from a bitumen or bituminous mixture (including oil derived from tar sands), and any oil derived from kerogen-bearing sources (including oil derived from oil shale).

.

(2)

Technical amendment

Paragraph (2) of section 4612(a) is amended by striking from a well located.

(3)

Effective date

The amendments made by this subsection shall apply to oil and petroleum products received, entered, used, or exported after December 31, 2021.

V

Workforce development requirements

501.

Use of qualified apprentices

(a)

In general

All contractors and subcontractors engaged in the performance of construction, alteration, or repair work on any applicable project shall, subject to subsection (b), ensure that not less than 15 percent of the total labor hours of such work be performed by qualified apprentices.

(b)

Apprentice-to-journeyworker ratio

The requirement under subsection (a) shall be subject to any applicable requirements for apprentice-to-journeyworker ratios of the Department of Labor or the applicable State apprenticeship agency.

(c)

Participation

Each contractor and subcontractor who employs 4 or more individuals to perform construction, alteration, or repair work on an applicable project shall employ 1 or more qualified apprentices to perform such work.

(d)

Exception

Notwithstanding any other provision in this section, this section shall not apply in the case of a taxpayer who—

(1)
(A)

demonstrates a lack of availability of qualified apprentices in the geographic area of the construction, alteration, or repair work; and

(B)

makes a good faith effort to comply with the requirements of this section; or

(2)

in the case of any failure by the taxpayer to satisfy the requirement under subsection (a) with respect to the construction, alteration, or repair work on any applicable project to which paragraph (1) does not apply, makes payment to the Secretary of the Treasury (or the Secretary's delegate) of a penalty in an amount equal to the product of—

(A)

$500, multiplied by

(B)

the total labor hours for which the requirement described in such subsection was not satisfied with respect to the construction, alteration, or repair work on such applicable project.

(e)

Definitions

In this section:

(1)

Applicable project

The term applicable project means, with respect to—

(A)

subsection (e)(7)(A)(ii) of section 30C of the Internal Revenue Code of 1986,

(B)

subsection (f)(9)(A)(ii) of section 45Q of such Code,

(C)

subsection (b)(1)(A)(iv)(II) of section 45U of such Code,

(D)

subsection (e)(4)(A)(ii)(II) of section 45V of such Code,

(E)

subsection (d)(3)(A)(i)(II)(bb) of section 45X of such Code,

(F)

subsection (d)(3)(A)(ii)(II) of section 48C of such Code,

(G)

subsections (b)(3)(A)(iv)(II) and (c)(1)(B)(ii) of section 48D of such Code, and

(H)

subsection (c)(1)(E)(ii) of section 179D of such Code,

any property, equipment, or facility for which a credit is allowed or determined under such sections.
(2)

Labor hours

The term labor hours

(A)

means the total number of hours devoted to the performance of construction, alteration, or repair work by employees of the contractor or subcontractor; and

(B)

excludes any hours worked by—

(i)

foremen;

(ii)

superintendents;

(iii)

owners; or

(iv)

persons employed in a bona fide executive, administrative, or professional capacity (within the meaning of those terms in part 541 of title 29, Code of Federal Regulations).

(3)

Qualified apprentice

The term qualified apprentice means an individual who is an employee of the contractor or subcontractor and who is participating in a registered apprenticeship program, as defined in section 3131(e)(3)(B) of the Internal Revenue Code of 1986.

VI

Miscellaneous

601.

Adjustment of qualifying advanced energy project credit

(a)

In general

Section 48C is amended—

(1)

in subsection (c)(1)—

(A)

in subparagraph (A)—

(i)

by inserting , any portion of the qualified investment of which is certified by the Secretary under subsection (d) as eligible for a credit under this section after means a project,

(ii)

in clause (i)—

(I)

by striking a manufacturing facility for the production of and inserting an industrial or manufacturing facility for the production or recycling of,

(II)

in clause (I), by inserting water, after sun,,

(III)

in clause (II), by striking an energy storage system for use with electric or hybrid-electric motor vehicles and inserting energy storage systems and components,

(IV)

in clause (III), by striking grids to support the transmission of intermittent sources of renewable energy, including storage of such energy and inserting grid modernization equipment or components,

(V)

in subclause (IV), by striking and sequester carbon dioxide emissions and inserting , remove, use, or sequester carbon oxide emissions,

(VI)

by striking subclause (V) and inserting the following:

(V)

equipment designed to refine, electrolyze, or blend any fuel, chemical, or product which is—

(aa)

renewable, or

(bb)

low-carbon and low-emission,

,

(VII)

by striking subclause (VI),

(VIII)

by redesignating subclause (VII) as subclause (IX),

(IX)

by inserting after subclause (V) the following new subclauses:

(VI)

property designed to produce energy conservation technologies (including residential, commercial, and industrial applications),

(VII)

light-, medium-, or heavy-duty electric or fuel cell vehicles, as well as—

(aa)

technologies, components, or materials for such vehicles, and

(bb)

associated charging or refueling infrastructure,

(VIII)

hybrid vehicles with a gross vehicle weight rating of not less than 14,000 pounds, as well as technologies, components, or materials for such vehicles, or

, and

(X)

in subclause (IX), as so redesignated, by striking and at the end and inserting or, and

(iii)

by striking clause (ii) and inserting the following:

(ii)

which re-equips an industrial or manufacturing facility with equipment designed to reduce its greenhouse gas emissions well below current best practices through the installation of—

(I)

low- or zero-carbon process heat systems,

(II)

carbon capture, transport, utilization and storage systems,

(III)

energy efficiency and reduction in waste from industrial processes, or

(IV)

any industrial technology which significantly reduces greenhouse gas emissions, as determined by the Secretary.

.

(B)

by redesignating subparagraph (B) as subparagraph (C), and

(C)

by inserting after subparagraph (A) the following new subparagraph:

(B)

Additional qualifying advanced energy projects

The term qualifying advanced energy project shall also include any project described in subparagraph (A) which is located in a census tract—

(i)

which, prior to the date of enactment of the Clean Energy for America Act, had no projects which received a certification and allocation of credits under subsection (d), and

(ii)
(I)

in which, after December 31, 1999, a coal mine has closed,

(II)

in which, after December 31, 2009, a coal-fired electric generating unit has been retired, or

(III)

which is immediately adjacent to a census tract described in subclause (I) or (II).

,

(2)

in subsection (d)—

(A)

in paragraph (1)—

(i)

in subparagraph (A), by striking this section and inserting the Clean Energy for America Act, and

(ii)

by striking subparagraph (B) and inserting the following:

(B)

Limitations

(i)

Initial allocation

The total amount of credits that may be allocated under the program prior to the date of enactment of the Clean Energy for America Act shall not exceed $2,300,000,000.

(ii)

Additional allocation

The total amount of credits that may be allocated under the program on or after to the date of enactment of the Clean Energy for America Act shall not exceed $8,000,000,000, of which not greater than $4,000,000,000 may be allocated to projects which are not located in a census tract described in subparagraph (B) of subsection (c)(1).

,

(B)

in paragraph (2)—

(i)

in subparagraph (A), by striking 2-year and inserting 3-year,

(ii)

in subparagraph (B)—

(I)

by striking 1 year and inserting 18 months, and

(II)

by adding at the end the following new sentence: Not later than 180 days after the date on which such evidence was provided by the applicant, the Secretary shall determine whether the requirements of the certification have been met., and

(iii)

by adding at the end the following new subparagraph:

(D)

Location of project

In the case of an applicant which receives a certification, if the Secretary determines that the project has been placed in service at a location which is materially different than the location specified in the application for such project, the certification shall no longer be valid.

,

(C)

in paragraph (3)—

(i)

by striking subparagraph (A) and inserting the following:

(A)

shall take into consideration only those projects—

(i)

for which there is a reasonable expectation of commercial viability, and

(ii)

which—

(I)

satisfies the requirements under paragraph (6), and

(II)

with respect to the re-equipping, expansion, or establishment of an industrial or manufacturing facility, satisfies the requirements under section 501 of the Clean Energy for America Act, and

, and

(ii)

in subparagraph (B)—

(I)

by striking clauses (i) and (ii) and inserting the following:

(i)

will provide the greatest net impact in avoiding or reducing anthropogenic emissions of greenhouse gases (or, in the case of a project described in subsection (c)(1)(A)(ii), will provide the greatest reduction of greenhouse gas emissions as compared to current best practices),

(ii)

will provide the greatest domestic job creation (both direct and indirect) during the credit period,

,

(II)

by redesignating clauses (iii) through (v) as clauses (iv) through (vi), respectively, and

(III)

by inserting after clause (ii) the following new clause:

(iii)

will provide the greatest job creation within the vicinity of the project, particularly with respect to—

(I)

low-income communities (as defined in section 45D(e)), and

(II)

dislocated workers who were previously employed in manufacturing, coal power plants, or coal mining,

,

(D)

in paragraph (4)—

(i)

by striking subparagraph (A) and inserting the following:

(A)

Review and report

Not later than 4 years after the date of enactment of the Clean Energy for America Act, the Secretary shall—

(i)

review the credits allocated under this section as of such date, and

(ii)

submit a report regarding the allocation of such credits to—

(I)

the Committee on Finance and the Committee on Energy and Natural Resources of the Senate, and

(II)

the Committee on Ways and Means and the Committee on Energy and Commerce of the House of Representatives.

, and

(ii)

by adding at the end the following new subparagraph:

(D)

Special rule

For purposes of reallocating credits pursuant to this paragraph, the limitation under paragraph (1)(B)(ii) with respect to allocation of credits to projects which are not located in a census tract described in subparagraph (B) of subsection (c)(1) shall not apply.

, and

(E)

by adding at the end the following:

(6)

Wage requirements

(A)

In general

The requirements described in this subparagraph with respect to any project are that the taxpayer shall ensure that any laborers and mechanics employed by contractors and subcontractors in the re-equipping, expansion, or establishment of an industrial or manufacturing facility shall be paid wages at rates not less than the prevailing rates for construction or alteration of a similar character in the locality as determined by the Secretary of Labor, in accordance with subchapter IV of chapter 31 of title 40, United States Code.

(B)

Correction and penalty related to failure to satisfy wage requirements

In the case of any taxpayer which fails to satisfy the requirement under subparagraph (A) with respect to any project—

(i)

rules similar to the rules of section 45U(b)(3)(B)(ii) shall apply for purposes of this paragraph, and

(ii)

if the failure to satisfy the requirement under subparagraph (A) is not corrected pursuant to the rules described in clause (i), the certification with respect to such project shall no longer be valid.

,

(3)

in subsection (e), by striking 48, 48A, or 48B and inserting 45Q, 48, 48A, 48B, or 48D, and

(4)

by adding at the end the following:

(f)

Special rule for property financed by subsidized energy financing or industrial development bonds

Rules similar to the rules in section 48(a)(4) shall apply for purposes of this section.

(g)

Technical assistance

For purposes of assisting with applications for certification under subsection (d), the Secretary of Energy shall provide technical assistance to any State (or political subdivision thereof), tribe, or economic development organization which, prior to the date of enactment of the Clean Energy for America Act

(1)

had no applicants for certification under such subsection, or

(2)

had less than 2 qualifying advanced energy projects which received an allocation of credits under such subsection.

(h)

Election for direct payment

(1)

In general

In the case of any eligible property placed in service during any taxable year which is part of a qualifying advanced energy project, the amount of any credit determined under subsection (a) with respect to such property for such taxable year shall, at the election of the taxpayer, be treated as a payment equal to such amount which is made by the taxpayer against the tax imposed by chapter 1 for such taxable year (regardless of whether such tax would have been on such taxpayer).

(2)

Form and effect of election

(A)

In general

An election under paragraph (1) shall be made as part of the application for certification under subsection (d)(2)(A) and in such manner as the Secretary may prescribe. Such election, once made, shall—

(i)

be irrevocable with respect to the eligible property to which such election applies, and

(ii)

reduce the amount of the credit which would (but for this subsection) be allowable under this section with respect to such property for the taxable year in which such property is placed in service to zero.

(B)

Additional information

For purposes of an election under paragraph (1), the Secretary may require such information as the Secretary deems necessary for purposes of preventing duplication, fraud, or any improper payments under this subsection.

(3)

Application to partnerships and S corporations; excess payments

Rules similar to the rules of paragraphs (3) and (5) of section 45U(h) shall apply for purposes of this subsection.

(4)

Special rules for certain entities

(A)

Eligibility of certain property

For purposes of this subsection, paragraphs (3) and (4) of section 50(b) shall not apply with respect to—

(i)

any State utility with a service obligation, as such terms are defined in section 217 of the Federal Power Act (as in effect on the date of the enactment of this subsection),

(ii)

any mutual or cooperative electric company described in section 501(c)(12) or section 1381(a)(2)(C), or

(iii)

an Indian tribal government (as defined in section 139E(c)(1)).

(B)

Certain entities treated as taxpayers

In the case of an election under this subsection, any entity described in clause (i), (ii), or (iii) of subparagraph (A) shall be treated as a taxpayer for purposes of this subsection and determining the amount of any credit under subsection (a).

.

(b)

Authorization of appropriations

To carry out subsection (f) of section 48C of the Internal Revenue Code of 1986 (as added by subsection (a)(4)), there is authorized to be appropriated to the State Energy Program of the Department of Energy, out of moneys in the Treasury not otherwise appropriated, $500,000, to remain available until expended.

(c)

Effective date

The amendments made by this section shall apply to property placed in service after December 31, 2021.

602.

Issuance of exempt facility bonds for qualified carbon dioxide capture facilities

(a)

In general

Section 142 is amended—

(1)

in subsection (a)—

(A)

in paragraph (14), by striking or at the end,

(B)

in paragraph (15), by striking the period at the end and inserting , or, and

(C)

by adding at the end the following new paragraph:

(16)

qualified carbon dioxide capture facilities.

, and

(2)

by adding at the end the following new subsection:

(n)

Qualified carbon dioxide capture facility

(1)

In general

For purposes of subsection (a)(16), the term qualified carbon dioxide capture facility means—

(A)

the eligible components of an industrial carbon dioxide facility, and

(B)

a direct air capture facility (as defined in section 45Q(e)(1)).

(2)

Definitions

In this subsection:

(A)

Eligible component

(i)

In general

The term eligible component means any equipment installed in an industrial carbon dioxide facility which is—

(I)

used for the purpose of capture, treatment and purification, compression, transportation, or on-site storage of carbon dioxide produced by the industrial carbon dioxide facility, or

(II)

integral or functionally related and subordinate to a process which converts a solid or liquid product from coal, petroleum residue, biomass, or other materials which are recovered for their energy or feedstock value into a synthesis gas composed primarily of carbon dioxide and hydrogen for direct use or subsequent chemical or physical conversion.

(ii)

Definitions

For purposes of this subparagraph—

(I)

Biomass

(aa)

In general

The term biomass means any—

(AA)

agricultural or plant waste,

(BB)

byproduct of wood or paper mill operations, including lignin in spent pulping liquors, and

(CC)

other products of forestry maintenance.

(bb)

Exclusion

The term biomass does not include paper which is commonly recycled.

(II)

Coal

The term coal means anthracite, bituminous coal, subbituminous coal, lignite, and peat.

(B)

Industrial carbon dioxide facility

(i)

In general

Except as provided in clause (ii), the term industrial carbon dioxide facility means a facility that emits carbon dioxide (including from any fugitive emissions source) that is created as a result of any of the following processes:

(I)

Fuel combustion.

(II)

Gasification.

(III)

Bioindustrial.

(IV)

Fermentation.

(V)

Any manufacturing industry relating to—

(aa)

chemicals,

(bb)

fertilizers,

(cc)

glass,

(dd)

steel,

(ee)

petroleum residues,

(ff)

forest products,

(gg)

agriculture, including feedlots and dairy operations, and

(hh)

transportation grade liquid fuels.

(ii)

Exceptions

For purposes of clause (i), an industrial carbon dioxide facility shall not include—

(I)

any geological gas facility, or

(II)

any air separation unit that—

(aa)

does not qualify as gasification equipment, or

(bb)

is not a necessary component of an oxy-fuel combustion process.

(iii)

Definitions

In this subparagraph—

(I)

Petroleum residue

The term petroleum residue means the carbonized product of high-boiling hydrocarbon fractions obtained in petroleum processing.

(II)

Geological gas facility

The term geological gas facility means a facility that—

(aa)

produces a raw product consisting of gas or mixed gas and liquid from a geological formation,

(bb)

transports or removes impurities from such product, or

(cc)

separates such product into its constituent parts.

(3)

Special rule for facilities with less than 65 percent capture and storage percentage

(A)

In general

An eligible component of an industrial carbon dioxide facility with a capture and storage percentage that is less than 65 percent shall only be treated as a qualified carbon dioxide facility with respect to the percentage of the costs attributable to such eligible component which is equal to the capture and storage percentage of such facility.

(B)

Capture and storage percentage

(i)

In general

Subject to clause (ii), the capture and storage percentage shall be an amount, expressed as a percentage, equal to the quotient of—

(I)

the total metric tons of carbon dioxide annually captured, transported, and injected into—

(aa)

a facility for geologic storage, or

(bb)

an enhanced oil or gas recovery well followed by geologic storage, divided by

(II)

the total metric tons of carbon dioxide which would otherwise be released into the atmosphere each year as industrial emission of greenhouse gas if the eligible components were not installed in the industrial carbon dioxide facility.

(ii)

Limited application of eligible components

In the case of eligible components that are designed to capture carbon dioxide solely from specific sources of emissions or portions thereof within an industrial carbon dioxide facility, the capture and storage percentage under this subparagraph shall be determined based only on such specific sources of emissions or portions thereof.

(4)

Regulations

The Secretary shall issue such regulations or other guidance as are necessary to carry out the provisions of this subsection, including methods for determining costs attributable to an eligible component for purposes of paragraph (3)(A).

.

(b)

Volume cap

Section 146(g)(4) is amended by striking paragraph (11) of section 142(a) (relating to high-speed intercity rail facilities) and inserting paragraph (11) or (16) of section 142(a).

(c)

Clarification of private business use

Section 141(b)(6) is amended by adding at the end the following new subparagraph:

(C)

Clarification relating to qualified carbon dioxide capture facilities

For purposes of this subsection, the sale of carbon dioxide produced by a qualified carbon dioxide capture facility (as defined in section 142(n)) which is owned by a governmental unit shall not constitute private business use.

.

(d)

Effective date

The amendments made by this section shall apply to obligations issued after December 31, 2021.

603.

Limitation on importation of certain energy equipment and components

(a)

In general

The importation of an article described in subsection (b) is prohibited unless the United Nations certifies that the article is not mined or otherwise produced using forced labor or child labor.

(b)

Articles described

An article described in this subsection is a solar cell, a wind turbine, energy storage equipment, or a component for such equipment.

604.

Elimination of negative effects on small businesses and certain individual taxpayers

(a)

In general

In the case of any taxable year beginning after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall pay to each applicable eligible taxpayer an amount equal to the excess (if any) of—

(1)

the tax imposed under chapter 1 of the Internal Revenue Code of 1986 (determined after the application of the amendments made by this Act which are in effect for such taxable year), over

(2)

the tax imposed under such chapter on such taxpayer for such taxable year (determined without regard to the amendments made by this Act).

(b)

Applicable eligible taxpayer

For purposes of this section—

(1)

In general

The term applicable eligible taxpayer means, with respect to any taxable year, any eligible taxpayer who establishes to the satisfaction of the Secretary of the Treasury (or the Secretary's delegate) that there is an excess described in subsection (a) with respect to such taxpayer.

(2)

Eligible taxpayer

(A)

In general

The term eligible taxpayer means, with respect to any taxable year—

(i)

an individual with an adjusted gross income of not more than $400,000, and

(ii)

any employer that has an average number of fewer than 500 employees for the taxable year.

(B)

Aggregation rules

For purposes of subparagraph (A)(ii), all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as one employer.

(C)

Special rule for pass-thru entities

In the case of a partnership, S corporation, or other pass-thru entity that is described in subparagraph (A)(ii)—

(i)

any partner, shareholder, or other applicable individual who is not described in subparagraph (A)(i) shall be treated as an eligible taxpayer, and

(ii)

the amount of the excess described under subsection (a) of such partner, shareholder, or other applicable individual shall be determined by only taking into account the income, gain, loss, deduction, or credit of such partnership, S corporation, or other pass-thru entity.

For purposes of the preceding sentence, the term applicable individual means, with respect to any pass-thru entity, any individual to whom the income, gain, loss, or deduction of such entity is attributed for tax purposes.
(c)

Treatment of payments

The amount of any payment under subsection (a) shall be treated as a refund of taxes due from a provision described in section 1324(b)(2) of title 31, United States Code.

(d)

Regulations

The Secretary of the Treasury (or the Secretary's delegate) shall issue such regulations or other guidance as are necessary to carry out the provisions of this section.

June 21, 2021

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