[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5523 Introduced in House (IH)]
<DOC>
116th CONGRESS
1st Session
H. R. 5523
To amend the Internal Revenue Code of 1986 to provide investment and
production tax credits for emerging energy technologies, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 19, 2019
Mr. Reed (for himself, Mr. Panetta, Mr. LaHood, Mr. Suozzi, Mr.
Gottheimer, and Mr. Schweikert) introduced the following bill; which
was referred to the Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide investment and
production tax credits for emerging energy technologies, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Energy Sector Innovation Credit Act
of 2019''.
SEC. 2. PURPOSES.
The energy sector innovation credit is a technology-neutral
approach that would leverage new private investment in nascent clean
technologies, help cutting-edge technologies break into the market, and
then naturally phasedown as each technology proves commercial
viability. It could bring about the new technologies needed to quickly
and cheaply reduce global emissions. The innovation ESIC incentivizes
is key to a strong energy supply plus will help address the climate and
environmental challenge of this generation. The United States must lead
on clean energy technology development.
SEC. 3. INVESTMENT CREDIT FOR EMERGING ENERGY TECHNOLOGY.
(a) In General.--Subpart E of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 48C the following new section:
``SEC. 48D. EMERGING ENERGY TECHNOLOGY CREDIT.
``(a) In General.--For purposes of section 46, the emerging energy
technology credit for any taxable year is an amount equal to 30 percent
of the basis of any qualified emerging energy property placed in
service by the taxpayer during such taxable year.
``(b) Certain Qualified 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 enactment of the
Revenue Reconciliation Act of 1990) shall apply for purposes of this
section.
``(c) Qualified Emerging Energy Property.--For purposes of this
section--
``(1) In general.--The term `qualified emerging energy
property' means property which is constructed, reconstructed,
erected, or acquired by the taxpayer, and the original use of
which commences with the taxpayer, which is--
``(A) a qualified production facility (as defined
in section 45T(d), determined without regard to
paragraph (2) thereof) which is a tier 1 facility (as
defined in section 45T(e)(1)), or
``(B) property which is placed in service at and
used in connection with an existing electric generating
facility which is a point source of air pollutants and
which, with respect to such facility--
``(i) contains equipment which can separate
and sequester--
``(I) not less than 60 percent of
such facility's maximum hourly carbon
oxide emission rate, and
``(II) not less than 100,000 metric
tons of qualified carbon oxide (as
defined in section 45Q(c)) annually,
and
``(ii) places such carbon oxide in secure
geological storage (as determined under section
45Q(f)(2)).
``(2) Denial of double benefit.--Such term shall not
include--
``(A) any property which,
``(B) property any portion of which, or
``(C) property placed in service at and used in
connection with a facility which,
has been treated as a qualified facility for purposes of
section 45(d), as an advanced nuclear power facility for
purposes of section 45J, as a qualified facility for purposes
of section 45Q, as a qualified production facility for purposes
of section 45T, as energy property for purposes of section 48,
or as a qualified investment for purposes of section 48A, 48B,
or 48C, for any taxable year.
``(3) Point source.--For purposes of paragraph (1)(B), the
term `point source' means a megawatt-scale, stationary and non-
mobile, identifiable source of emissions that releases
pollutants into the atmosphere.
``(d) First of Its Kind Technology.--
``(1) In general.--In the case of any qualified emerging
energy property which is the first of its kind, subsection (a)
shall be applied by substituting `40' for `30'.
``(2) First of its kind.--Property shall be treated as the
first of its kind if such property is 1 of the first 3 original
demonstrations in the United States of a megawatt-scale
electric power generation facility which generates revenue from
sales of electric power to an unrelated person (within the
meaning of section 45(e)(4)).
``(3) Determination.--
``(A) In general.--The Secretary, in consultation
with the Secretary of Energy, shall develop a process
to determine whether qualified emerging energy property
is first of its kind. Such process shall include a
certification, at the request of the taxpayer before
the commencement of construction, that the property
will be treated as first of its kind.
``(B) Effective period of certification.--Except as
provided by the Secretary, a certification granted
under subparagraph (A) with respect to any property
shall be in effect for the period, not to exceed 5
years, beginning on the date of the certification and
ending on the date construction commences with respect
to the property. If construction does not commence
within the 5-year period beginning on the date of the
certification, the property shall not be treated as
first of its kind unless the certification is renewed.
``(e) Transfer of Credit by Certain Public Entities.--
``(1) In general.--If, with respect to a credit under
subsection (a) for any taxable year--
``(A) a qualified public entity would be the
taxpayer (but for this paragraph), and
``(B) such entity elects the application of this
paragraph for such taxable year with respect to all (or
any portion specified in such election) of such credit,
the eligible project partner specified in such
election, and not the qualified public entity, shall be
treated as the taxpayer for purposes of this title with
respect to such credit (or such portion thereof).
``(2) Definitions.--For purposes of this subsection--
``(A) Qualified public entity.--The term `qualified
public entity' means--
``(i) a Federal, State, or local government
entity, or any political subdivision, agency,
or instrumentality thereof,
``(ii) a mutual or cooperative electric
company described in section 501(c)(12) or
1381(a)(2), or
``(iii) a not-for-profit electric utility
which had or has received a loan or loan
guarantee under the Rural Electrification Act
of 1936.
``(B) Eligible project partner.--The term `eligible
project partner' means any person who--
``(i) is responsible for, or participates
in, the design or construction of the qualified
emerging energy property to which the credit
under subsection (a) relates,
``(ii) is a financial institution providing
financing for the construction or operation of
such property (other than financing provided in
connection with becoming eligible for the
credit under this section by reason of this
subsection), or
``(iii) has an ownership interest in such
property.
``(3) Special rules.--
``(A) Application to partnerships.--In the case of
a credit under subsection (a) which is determined at
the partnership level--
``(i) for purposes of paragraph (1)(A), a
qualified public entity shall be treated as the
taxpayer with respect to such entity's
distributive share of such credit, and
``(ii) the term `eligible project partner'
shall include any partner of the partnership.
``(B) Taxable year in which credit taken into
account.--In the case of any credit (or portion
thereof) with respect to which an election is made
under paragraph (1), such credit shall be taken into
account in the first taxable year of the eligible
project partner ending with, or after, the qualified
public entity's taxable year with respect to which the
credit was determined.
``(C) Treatment of transfer under private use
rules.--For purposes of section 141(b)(1), any benefit
derived by an eligible project partner in connection
with an election under this subsection shall not be
taken into account as a private business use.
``(f) Certain Rules Not Applicable.--Paragraphs (3) and (4) of
section 50(d) shall not apply for purposes of this section.''.
(b) Special Rule for Proceeds of Transfers for Mutual or
Cooperative Electric Companies.--Section 501(c)(12)(I) of such Code is
amended by inserting ``or 48D(e)'' after ``section 45J(e)(1)''.
(c) Conforming Amendments.--
(1) Section 46 of such Code is amended by striking ``and''
at the end of paragraph (5), by striking the period at the end
of paragraph (6) and inserting ``, and'', and by adding at the
end the following new paragraph:
``(7) the emerging energy technology credit.''.
(2) Section 49(a)(1)(C) of such Code is amended by striking
``and'' at the end of clause (iv), by striking the period at
the end of clause (v) and inserting ``, and'', and by adding at
the end the following new clause:
``(vi) the basis of any qualified emerging
energy property (as defined in section
48D(c)(1)).''.
(3) The table of sections for subpart E of part IV of
subchapter A of chapter 1 of such Code is amended by inserting
after the item relating to section 48C the following new item:
``Sec. 48D. Emerging energy technology credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
the date of the enactment of this Act, 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).
SEC. 4. PRODUCTION CREDIT FOR EMERGING ENERGY TECHNOLOGY.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 45T. ELECTRICITY PRODUCED FROM EMERGING ENERGY TECHNOLOGY.
``(a) General Rule.--For purposes of section 38, the emerging
energy technology production credit determined under this section for
any taxable year beginning in the credit period with respect to a
qualified production facility of the taxpayer is an amount equal to the
applicable percentage of the lesser of--
``(1) the annual gross receipts of the taxpayer from the
sale of electricity generated at the qualified production
facility to an unrelated person (within the meaning of section
45(e)(4)) during such taxable year, or
``(2) the product of--
``(A) the national average wholesale price of a
kilowatt hour of electricity in the preceding taxable
year, as determined by the Secretary in consultation
with the Administrator of the Energy Information
Administration, and
``(B) the number of kilowatt hours of electricity
produced at the qualified production facility and sold
to an unrelated person (within the meaning of section
45(e)(4)) during the taxable year.
``(b) Applicable Percentage.--For purposes of subsection (a), the
applicable percentage is--
``(1) in the case of a tier 1 facility, 60 percent,
``(2) in the case of a tier 2 facility, 45 percent,
``(3) in the case of a tier 3 facility, 30 percent, and
``(4) in the case of any other facility, zero percent.
``(c) Credit Period.--For purposes of this section, the credit
period with respect to any qualified production facility is the 10-year
period beginning with the date the facility was originally placed in
service.
``(d) Qualified Production Facility.--For purposes of this
section--
``(1) In general.--The term `qualified production facility'
means any electric generating facility which is certified by
the Secretary, which is located in the United States or a
possession of the United States (as such terms are used in
section 638), and which utilizes--
``(A) any power conversion fuel-based technology
which captures and sequesters at least 60 percent of
the produced carbon oxide,
``(B) any reactor design licensed by the Nuclear
Regulatory Commission which produces electricity
through nuclear fission or a fusion chain reaction and
which--
``(i) reduces the high-level radioactive
waste or spent nuclear fuel per unit of energy
yield,
``(ii) improves fuel utilization by not
less than 20 percent,
``(iii) decreases core damage frequency or
large early release frequency by at least a
factor of 10, or
``(iv) increases thermal efficiency by not
less than 20 percent, as compared to existing
nuclear commercial technologies,
``(C) any new technology or new improvement to
technology which generates electricity from renewable
energy, as defined in section 203(b)(2) of the Energy
Policy Act of 2005, and which generates at least a 20-
percent increase in the conversion efficiency or a 20-
percent increase in the capacity factor of the facility
as compared with the commercial technology of the same
type as such technology which is considered to be the
best of its type in commercial use,
``(D) technology which the Secretary, in
consultation with the Secretary of Energy, determines
would increase the technical resource potential for
renewable energy development in the United States by at
least 500 terawatt hours per year, or
``(E) technology which the Secretary, in
consultation with the Secretary of Energy, determines
could produce electricity with an emissions rate less
than 150g Co2-e per kWh with a 75-percent capacity
factor.
``(2) Denial of double benefit.--Such term shall not
include any facility which has been treated as a qualified
facility for purposes of section 45(d), as an advanced nuclear
power facility for purposes of section 45J, as a qualified
facility for purposes of section 45Q, as energy property for
purposes of section 48, as a qualified investment for purposes
of section 48A, 48B, or 48C, or as qualified emerging energy
property for purposes of section 48D, for any taxable year.
``(3) Co2-e.--The term `Co2-e' means the quantity of a
greenhouse gas that has a global warming potential equivalent
to 1 metric ton of carbon dioxide, as determined under table A-
1 of subpart A of part 98 of title 40, Code of Federal
Regulations, as in effect on the date of enactment of this
section.
``(4) Conversion efficiency.--The term `conversion
efficiency' means the fraction--
``(A) the numerator of which is the total useful
electrical or thermal power produced by an electric
generating facility at normal operating rates, and
expected to be consumed in its normal application, and
``(B) the denominator of which is the incident
energy, whether mechanical, radiation, or thermal
energy, which is measurable at the input of the
electric generating facility.
``(5) Energy efficiency.--The efficiency of an electric
generating facility is the fraction--
``(A) the numerator of which is the total useful
electrical, thermal, and mechanical power which is
produced by the facility at normal operating rates and
expected to be consumed in its normal operation, and
``(B) the denominator of which is the lower heating
value of the energy sources for the facility.
``(6) Performance baseline.--Not less frequently than every
10 years, the Secretary, in consultation with the Secretary of
Energy, shall establish baseline levels with respect to the
types of electric generating facilities and the measures of
performance described in paragraph (1) which a facility must
exceed in order to meet the requirements of such paragraph.
``(7) Commercial technology.--The term `commercial
technology' means a design that has been installed in and is
being used in 3 or more projects in the United States
marketplace in the same general application as in the electric
generating facility, and has been in such use in at least 1 of
such projects for a period of at least 5 years.
``(8) Core damage frequency.--The term `core damage
frequency' means the likelihood that, given the way a reactor
is designed and operated, an accident could cause the fuel in
the reactor to be damaged.
``(9) Large early release frequency.--The term `large early
release frequency' means the likelihood of a release into the
environment of a sufficiently large quantity of fission
products in an early enough time frame to have the potential
for a prompt fatality.
``(10) Gross recoverable resource potential.--The term
`gross recoverable resource potential' means the subset of
total resource potential for any given renewable energy
resource within the boundaries of the United States economic
exclusion zone that can be considered theoretically recoverable
without allowing for common technological constraints that
exist as of the most recent date on which the Secretary has
established baseline levels described in paragraph (6).
``(11) Technical resource potential.--The term `technical
resource potential' means the subset of gross recoverable
resource potential for any given renewable energy resource that
can be considered recoverable under available technological
performance conditions as of the date of the enactment of this
section while considering land-use and environmental siting
constraints.
``(e) Facility Tiers.--
``(1) Tier 1 facility.--The term `tier 1 facility' means an
electric generating facility using a type of technology which
accounts for less than 1 percent of annual domestic electricity
production in the preceding taxable year, as determined by the
Secretary on the basis of data reported by the Energy
Information Administration.
``(2) Tier 2 facility.--The term `tier 2 facility' means an
electric generating facility using a type of technology which
accounts for at least 1 percent but less than 2 percent of
annual domestic electricity production in the preceding taxable
year, as determined by the Secretary on the basis of data
reported by the Energy Information Administration.
``(3) Tier 3 facility.--The term `tier 3 facility' means an
electric generating facility using a type of technology which
accounts for at least 2 percent but less than 3 percent of
annual domestic electricity production in the preceding taxable
year, as determined by the Secretary on the basis of data
reported by the Energy Information Administration.
``(f) Transfer of Credit by Certain Public Entities.--Rules similar
to the rules of subsection (e) of section 48D shall apply for purposes
of this section.
``(g) Regulations.--
``(1) In general.--Not later than 1 year after the date of
the enactment of this section, the Secretary shall prescribe
such regulations as may be necessary or appropriate to carry
out the purposes of this section. Such regulations shall
include a process for making eligibility certifications
described in subsection (d)(1)(E).
``(2) Certification.--The regulations developed under
paragraph (1) shall include a certification process under which
the Secretary, in consultation with the Secretary of Energy,
determines the eligibility of facilities for purposes of
subsection (d)(1).''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of the Internal Revenue Code of 1986 is amended by striking
``plus'' at the end of paragraph (31), by striking the period at the
end of paragraph (32) and inserting ``, plus'', and by adding at the
end the following new paragraph:
``(33) the emerging energy technology production credit
determined under section 45T(a).''.
(c) Special Rule for Proceeds of Transfers for Mutual or
Cooperative Electric Companies.--Section 501(c)(12)(I) of such Code, as
amended by the preceding provisions of this Act, is amended by striking
``or 48D(e)'' and inserting ``, 45T(f), or 48D(e)''.
(d) Clerical Amendment.--The table of sections for subpart D of
part IV of subchapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45T. Electricity produced from emerging energy technology.''.
(e) Effective Date.--The amendments made by this section shall
apply to electricity produced and sold in taxable years beginning after
the date of the enactment of this Act, at facilities placed in service
after such date of enactment.
SEC. 5. ENERGY CREDIT FOR ENERGY STORAGE TECHNOLOGIES.
(a) In General.--Section 48(a)(2)(A)(i) of the Internal Revenue
Code of 1986 is amended by striking ``and'' at the end of subclause
(III) and by inserting after subclause (IV) the following new
subclause:
``(V) energy property described in
paragraph (3)(A)(viii), and''.
(b) Energy Storage Technologies.--Section 48(a)(3)(A) of such Code
is amended by striking ``or'' at the end of clause (vi), by adding
``or'' at the end of clause (vii), and by adding at the end the
following new clause:
``(viii) equipment which receives, stores,
and delivers energy using batteries, compressed
air, pumped hydropower, hydrogen storage
(including hydrolysis), thermal energy storage,
regenerative fuel cells, flywheels, capacitors,
superconducting magnets, or other technologies
identified by the Secretary, in consultation
with the Secretary of Energy,''.
(c) National Limitation Relating to Energy Storage Property.--
Section 48(a)(5) of such Code is amended by adding at the end the
following new subparagraph:
``(F) National limitation relating to energy
storage property.--
``(i) In general.--The amount of credit
which (but for this subsection) would be
allowed with respect to all equipment described
in subsection (a)(3)(A)(viii) for any taxable
year shall not exceed the national megawatt
capacity limitation for energy storage property
allocated to the project of which such
equipment is a part.
``(ii) Amount of national credit
limitation.--
``(I) In general.--The aggregate
amount of national megawatt capacity
limitation allocated to projects under
clause (i) shall not exceed 20,000
megawatts.
``(II) Limitation on lithium ion
electric storage batteries.--The
Secretary shall ensure that not more
than 15,000 megawatts of the national
megawatt capacity limitation are
allocated to projects for lithium ion
electric storage batteries, in an
effort to facilitate the deployment of
a diverse suite of technological
designs.
``(iii) Allocation.--
``(I) Establishment of program.--
Not later than 180 days after the date
of enactment of this subparagraph, the
Secretary, in consultation with the
Secretary of Energy, shall develop a
process to allocate national megawatt
capacity limitation under this
subparagraph.
``(II) Applications.--Each
applicant for allocations under this
subparagraph shall submit an
application to the Secretary. The
Secretary shall issue a determination
as whether an applicant has been
allocated national megawatt capacity
limitation not later than 60 days after
the date of the submission of a
completed application under this
subclause.
``(III) Time limit on beginning and
completing construction.--An allocation
of national megawatt capacity
limitation under this clause shall be
void unless the taxpayer begins
construction of the project not later
than the date which is 1 year after the
date on which such allocation is made
and completes construction of such
project not later than the date which 5
years after the date on which such
construction begins.
``(IV) Reallocation of unused
limitation.--The Secretary shall
reallocate national megawatt capacity
limitation (and such reallocation shall
not be taken into account in applying
the limitation of clause (ii)(I)) to
the extent that any allocation is void
under subclause (III) or to the extent
that the credit attributable to such
allocation is recaptured under section
50(a).''.
(d) Transfer of Energy Storage Property Credit by Certain Public
Entities.--Section 48 of such Code is amended by adding at the end the
following new subsection:
``(e) Transfer of Energy Storage Property Credit by Certain Public
Entities.--In the case of any property described in subsection
(a)(3)(A)(viii), rules similar to the rules of subsection (e) of
section 48D shall apply for purposes of this section.''.
(e) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
the date of the enactment of this Act, 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).
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