Sec. 3. Investment credit for emerging energy technology
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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: For purposes of section 46, the emerging energy technology credit for any taxable year is an amount equal to the applicable percentage (as determined under subsection (c)) of the basis of any qualified emerging energy property placed in service by the taxpayer during such taxable year. 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 qualified production facility (as defined in section 45U(d)), carbon capture equipment, or energy storage technology.
For purposes of this section, the term carbon capture equipment means property which contains equipment that can separate and capture qualified carbon oxide (as defined in section 45Q(c)) and is placed in service at, and used in connection with, a facility— which satisfies the requirements under section 45Q(d)(2), and which is— an electric generating facility which— was originally placed in service before such property, and is a point source of air pollutants, a manufacturing or industrial facility— which was originally placed in service before such property, which is a point source of air pollutants, and for which such property is primarily used to capture qualified carbon oxide (as defined in section 45Q(c)) which would otherwise be released into the atmosphere as a result of— the production of ammonia, helium, or ethanol at such facility, or the processing of natural gas at such facility, or a manufacturing or industrial facility described in subclause
(II)for which item
(cc)of such subclause does not apply. For purposes of this section, the term carbon capture equipment shall include any direct air capture facility which can capture not less than 5,000 metric tons of qualified carbon oxide (as defined in section 45Q(c)) annually. The term direct air capture facility has the same meaning given such term under section 45Q(e)(1) (as in effect on the date of enactment of this section). With respect to any qualified carbon oxide captured using property described in subparagraph
(A)or (B), the taxpayer shall physically or contractually ensure the disposal, utilization, or use of such qualified carbon oxide in a manner consistent with the requirements under section 45Q. For purposes of this section, the term energy storage technology means stationary equipment which— is capable of absorbing energy, storing energy for a period of time, and dispatching the stored energy using batteries, compressed air, pumped hydropower, thermal energy storage, liquid air, regenerative fuel cells, flywheels, capacitors, superconducting magnets, stacked objects, or other technologies identified by the Secretary, in consultation with the Secretary of Energy, and has a capacity of not less than 1 megawatt. The term qualified emerging energy property shall not include any property for which, for the taxable year or any prior taxable year— electricity produced from such property is taken into account for purposes of the credit allowed under section 45, 45J, or 45U, qualified carbon oxide captured by such property is taken into account for purposes of the credit allowed under section 45Q, the basis of such property is taken into account for purposes of the credit allowed under section 48, 48A, 48B, or 48C, or hydrogen produced from such property is taken into account for purposes of the credit allowed under section 45V. With respect to any section described in clause (i), (ii), (iii), or
(iv)of subparagraph (A), no credit shall be allowed under such section for any taxable year with respect to any property for which a credit is allowed under this section for such taxable year or any prior taxable year. Subparagraphs (A)(ii) and
(B)shall not apply for purposes of the credit allowed under this section or section 45Q with respect to any qualified carbon oxide captured using property described in subparagraph
(A)or
(B)of paragraph
(2)if such carbon oxide is disposed of in a manner consistent with section 45Q(a)(3)(B). In the case of any qualified production facility which satisfies the requirements for— a tier 1 facility (as described in clause
(i)of section 45U(b)(2)(A)), the applicable percentage shall be 40 percent, a tier 2 facility (as described in clause
(ii)of such section), the applicable percentage shall be 30 percent, a tier 3 facility (as described in clause
(iii)of such section), the applicable percentage shall be 20 percent, and a tier 4 facility (as described in clause
(iv)of such section), the applicable percentage shall be 10 percent. With respect to carbon capture equipment, the applicable percentage shall be— in the case of tier 1 equipment, 40 percent, in the case of tier 2 equipment, 30 percent, in the case of tier 3 equipment, 20 percent, in the case of tier 4 equipment, 10 percent, and in the case of any other such equipment, zero percent. For purposes of this paragraph— The term tier 1 equipment means any carbon capture equipment for which the market penetration level for the calendar year preceding the calendar year in which construction of such equipment began is less than 0.75 percent. The term tier 2 equipment has the same meaning given the term tier 1 equipment under subclause (I), except that at least 0.75 percent but less than 1.5 percent shall be substituted for less than 0.75 percent . The term tier 3 equipment has the same meaning given the term tier 1 equipment under subclause (I), except that at least 1.5 percent but less than 2.25 percent shall be substituted for less than 0.75 percent . The term tier 4 equipment has the same meaning given the term tier 1 equipment under subclause (I), except that at least 2.25 percent but less than 3 percent shall be substituted for less than 0.75 percent . For purposes of this subparagraph, the term market penetration level means, with respect to any calendar year, the amount equal to the greater of— the amount (expressed as a percentage) equal to the quotient of— the total amount (expressed in metric tons) of carbon oxide captured and disposed of, used, or utilized in a manner consistent with the requirements under section 45Q by carbon capture equipment within the United States during such calendar year (as determined by the Secretary on the basis of data reported by the Energy Information Administration and the Environmental Protection Agency), divided by the total amount of greenhouse gas emissions in the United States (expressed in metric tons of CO2-e) during the most recent calendar year ending prior to the date of enactment of this section for which such data is available to the Administrator of the Environmental Protection Agency, or the amount determined under this clause for the preceding calendar year. For purposes of determining the applicable tier for any carbon capture equipment under subparagraph (B), such subparagraph shall be applied separately (and the total amount of carbon oxide captured by such equipment shall be determined separately) with respect to— any such equipment described in subclause
(I)of subsection (b)(2)(A)(ii), any such equipment described in subclause
(II)of such subsection, any such equipment described in subclause
(III)of such subsection, and any such equipment described in subparagraph
(B)of subsection (b)(2). For purposes of this paragraph, the determination as to whether any carbon capture equipment qualifies as a tier 1, 2, 3, or 4 equipment shall be made— during the year in which construction of such equipment begins (as determined under rules similar to the rules in section 45U(e)), and based on the determinations included in the report described in section 45U(b)(2)(D)(i)(II) with respect to such calendar year. The Secretary shall, as part of the reports published pursuant to section 45U(b)(2)(D)(i) and in the same manner as described under such section, publish the applicable market penetration level and tier for any carbon capture equipment (as determined separately for such equipment pursuant to subparagraph (C)). With respect to energy storage technology, the applicable percentage shall be— in the case of tier 1 technology, 40 percent, in the case of tier 2 technology, 30 percent, in the case of tier 3 technology, 20 percent, in the case of tier 4 technology, 10 percent, and in the case of any other such technology, zero percent. For purposes of this paragraph— The term tier 1 technology means any energy storage technology for which the market penetration level for the calendar year preceding the calendar year in which construction of such technology began is less than 0.75 percent. The term tier 2 technology has the same meaning given the term tier 1 technology under subclause (I), except that at least 0.75 percent but less than 1.5 percent shall be substituted for less than 0.75 percent . The term tier 3 technology has the same meaning given the term tier 1 technology under subclause (I), except that at least 1.5 percent but less than 2.25 percent shall be substituted for less than 0.75 percent . The term tier 4 technology has the same meaning given the term tier 1 technology under subclause (I), except that at least 2.25 percent but less than 3 percent shall be substituted for less than 0.75 percent . For purposes of this subparagraph, the term market penetration level means, with respect to any calendar year, the amount equal to the greater of— the amount (expressed as a percentage) equal to the quotient of— the total nameplate capacity (expressed in megawatts) of energy storage technology in operation within the United States at the beginning of such calendar year (as determined by the Secretary on the basis of data reported by the Energy Information Administration), divided by the total domestic electricity production nameplate capacity (expressed in megawatts) at the close of such year, or the amount determined under this clause for the preceding calendar year. For purposes of determining the applicable tier for any energy storage technology under subparagraph (B), such subparagraph shall be applied separately (and the total capacity of such technology shall be determined separately) with respect to— any such technology which is lithium-ion based, any such technology which uses pumped hydropower, any such technology which— is not described in subclause
(I)or (II), and is classified as short-duration storage under clause (ii), and any such technology which— is not described in subclause
(I)or (II), and is classified as long-duration storage under clause (ii). The Secretary of Energy (in consultation with the Secretary) shall issue such regulations or other guidance as the Secretary of Energy determines necessary or appropriate to define the terms short-duration storage and long-duration storage for purposes of classifying energy storage technology under clause (i). For purposes of this paragraph, the determination as to whether any energy storage technology qualifies as a tier 1, 2, 3, or 4 technology shall be made— during the year in which construction of such technology begins (as determined under rules similar to the rules in section 45U(e)), and based on the determinations included in the report described in section 45U(b)(2)(D)(i)(II) with respect to such calendar year. The Secretary shall, as part of the reports published pursuant to section 45U(b)(2)(D)(i) and in the same manner as described under such section, publish the applicable market penetration level and tier for any energy storage technology (as determined separately for such technology pursuant to subparagraph (C)). 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. If, with respect to a credit allowed under subsection
(a)for any taxable year, the taxpayer 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 taxpayer, shall be treated as the taxpayer for purposes of this title with respect to such credit (or such portion thereof). For purposes of this paragraph, the term eligible project partner means, with respect to any qualified emerging energy property, any person who— has an ownership interest in such property, provided equipment for or services in the construction of such property, provides electric transmission or distribution services for such property, purchases electricity from such property pursuant to a contract, or provides financing for such property. For purposes of clause (i)(V), any amount paid as consideration for a transfer described in subparagraph
(A)shall not be treated as financing for qualified emerging energy property. A deduction under part VI of subchapter B shall be allowed in an amount equal to the amount paid by the taxpayer as consideration for a transfer described in subparagraph (A). In the case of any credit (or portion thereof) with respect to which an election is made under subparagraph (A), such credit shall be taken into account in the first taxable year of the eligible project partner ending with, or after, the electing taxpayer’s taxable year with respect to which the credit was determined. An election under this paragraph to transfer any portion of the credit allowed under subsection
(a)shall be made not later than the due date for the return of tax for the electing taxpayer’s taxable year with respect to which the credit was determined. No election may be made under this paragraph by a taxpayer with respect to any portion of the credit allowed under subsection
(a)which has been previously transferred to such taxpayer under this paragraph. For purposes of section 141(b)(1), any benefit derived by an eligible project partner in connection with an election under this paragraph shall not be taken into account as a private business use. If, with respect to a credit under subsection
(a)for any taxable year— a qualified public entity would be the taxpayer (but for this subparagraph), and such entity elects the application of subparagraph
(A)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). For purposes of this subparagraph, the term qualified public entity means— any State or local government, or a political subdivision thereof, or an Indian tribal government. In the case of a taxpayer making an election under this paragraph, the credit subject to such an election shall be determined notwithstanding— section 50(b)(3), and in the case of any entity described in section 50(b)(4)(A)(i), section 50(b)(4). The Secretary may prescribe such regulations as may be appropriate to carry out the purposes of this paragraph, including— rules for determining which persons are eligible project partners with respect to any qualified emerging energy property, and requiring information to be included in an election under subparagraph
(A)or imposing additional reporting requirements. The Secretary (in consultation with the Secretary of Energy and the Administrator of the Environmental Protection Agency) shall issue such regulations or other guidance as the Secretary determines necessary or appropriate to carry out the purposes of this section, including rules for reporting— for purposes of paragraph (2)(B)(ii) of subsection (c), the amount of carbon oxide captured by carbon capture equipment, and for purposes of paragraph (3)(B)(ii) of such subsection, the capacity of energy storage technology. . Section 501(c)(12)(I) of such Code is amended by inserting or 48D(d)(2) after section 45J(e)(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: the emerging energy technology credit. . 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: the basis of any qualified emerging energy property (as defined in section 48D(b)(1)). . 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. . 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).