text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Climate Change Investment Act of 
  2006''.
  
  SEC. 2. REPEAL OF TAX SUBSIDIES FOR THE OIL AND GAS INDUSTRY.
  
      (a) Repeal of Election To Expense Certain Refineries.--
              (1) Subparagraph (B) of section 179C(c)(2) of the Internal 
          Revenue Code of 1986 is amended by striking ``January 1, 2012'' 
          and inserting ``the date of the enactment of the Climate Change 
          Investment Act of 2006''.
              (2) Paragraph (2) of section 179C(c) of such Code is 
          amended by striking ``January 1, 2008'' each place it appears 
          and inserting ``the date of the enactment of the Climate Change 
          Investment Act of 2006''.
      (b) Repeal of Amortization of Geological and Geophysical 
  Expenditures.--Subsection (h) of section 167 of such Code is amended by 
  adding at the end the following new paragraph:
              ``(5) Termination.--This subsection shall not apply to any 
          expenses paid or incurred in any taxable year beginning after 
          the date of the enactment of this Act.''.
      (c) Repeal of Enhanced Oil Recovery Credit.--Section 43 of such 
  Code (relating to enhanced oil recovery credit) is amended by adding at 
  the end the following new subsection:
      ``(f) Termination.--This section shall not apply to taxable years 
  beginning after the date of the enactment of this subsection.''.
      (d) Repeal of Credit for Production of Low Sulfur Diesel Fuel.--
  Section 45H of such Code (relating to credit for production of low 
  sulfur diesel fuel) is amended by adding at the end the following new 
  subsection:
      ``(h) Termination.--This section shall not apply to taxable years 
  beginning after the date of the enactment of this subsection.''.
      (e) Repeal of Credit for Producing Fuel From a Nonconventional 
  Source.--Subpart D of part IV of subchapter A of chapter 1 of such Code 
  is amended by striking section 45K (relating to credit for producing 
  fuel from a nonconventional source).
      (f) Repeal of Deduction for Capital Costs Incurred in Complying 
  With Environmental Protection Agency Sulfur Regulations.--Section 179B 
  of such Code (relating to deduction for capital costs incurred in 
  complying with Environmental Protection Agency sulfur regulations) is 
  amended by adding at the end the following new subsection:
      ``(f) Termination.--This section shall not apply to taxable years 
  beginning after the date of the enactment of this subsection.''.
      (g) Repeal of Certain Intangible Drilling and Development Costs.--
  Subsection (c) of section 263 of such Code (relating to intangible 
  drilling and development costs in the case of oil and gas wells and 
  geothermal wells) is amended by adding at the end the following new 
  sentence: ``This subsection shall not apply to costs incurred after the 
  date of the enactment of this sentence with respect to any oil or gas 
  well.''.
      (h) Repeal of Certain Oil and Gas Provisions.--
              (1) In general.--Part I of subchapter I of chapter 1 of 
          such Code (relating to deductions) is amended by adding at the 
          end the following new section:
  
  ``SEC. 618. OIL AND GAS LIMITATION.
  
      ``This part shall not apply with respect to any expenditure which 
  relates to any oil or gas well and which is paid or incurred after the 
  date of the enactment of this section.''.
              (2) Clerical amendment.--The table of sections for part I 
          of subchapter I of chapter 1 of such Code is amended by adding 
          at the end the following new item:
  
  ``Sec. 618. Oil and gas limitation.''.
      (i) Effective Date.--
              (1) In general.--Except as provided in paragraph (2), the 
          amendments made by this section shall take effect on the date 
          of the enactment of this Act.
              (2) Repeal of credit for producing fuel from a 
          nonconventional source.--The amendment made by subsection (e) 
          shall apply with respect to fuels sold or produced after the 
          date of the enactment of this Act.
  
  SEC. 3. GREENHOUSE GAS INTENSITY REDUCTION INVESTMENT TAX CREDIT.
  
      (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
  (relating to business-related credits) is amended by adding at the end 
  the following new section:
  
  ``SEC. 45N. GREENHOUSE GAS INTENSITY REDUCTION INVESTMENT CREDIT.
  
      ``(a) Allowance of Credit.--
              ``(1) In general.--For purposes of section 38, in the case 
          of a taxpayer's investment in a greenhouse gas intensity 
          reduction project approved by the Secretary of Energy, the 
          greenhouse gas intensity reduction investment credit determined 
          under this section for the taxable year is an amount equal to--
                      ``(A) the percentage reduction in greenhouse gas 
                  intensity certified for such project for such year by 
                  the Secretary of Energy, multiplied by
                      ``(B) the investment in such project during such 
                  year which is attributable, directly or indirectly, to 
                  the taxpayer, as determined by the Secretary of Energy.
              ``(2) Aggregate dollar limitation.--The credit determined 
          under paragraph (1) for any taxable year, when added to any 
          credit allowed to the taxpayer with respect to the such project 
          in any preceding taxable year, shall not exceed 50 percent of 
          the investment attributable to the taxpayer with respect to 
          such project through such taxable year.
      ``(b) Limitation on Aggregate Credit Allowable.--
              ``(1) In general.--The amount of the greenhouse gas 
          intensity reduction investment credit determined under 
          subsection (a) for any project, when added to all such credits 
          allowed to all taxpayers with respect to the such project shall 
          not exceed the credit dollar amount allocated to such project 
          under this subsection by the Secretary of Energy from the 
          greenhouse gas intensity reduction investment credit limitation 
          for the calendar year in which such allocation is made.
              ``(2) Time for making allocation.--An allocation shall be 
          taken into account under paragraph (1) only if it is made not 
          later than the close of the calendar year in which the 
          greenhouse gas intensity reduction project proposal with 
          respect to such project is approved by the Secretary of Energy.
              ``(3) Overall limitation on aggregate credit allowable.--
          The Secretary of Energy may allocate the aggregate credit 
          dollar amount to any such project for a period not to exceed a 
          10-year period beginning with the calendar year described in 
          paragraph (2).
      ``(c) Limitation on Amount of Credits Allocated.--
              ``(1) In general.--There is a greenhouse gas intensity 
          reduction investment credit limitation amount for each calendar 
          year. Except as provided in paragraph (2), such limitation 
          amount is $600,000,000 for each of calendar years 2008 through 
          2012, and zero thereafter.
              ``(2) Carryover of unused issuance limitation.--If for any 
          calendar year the limitation amount imposed by paragraph (1) 
          exceeds the amount of greenhouse gas intensity reduction 
          investment credits allocated during such year, such excess 
          shall be carried forward to the succeeding calendar year as an 
          addition to the limitation imposed by paragraph (1).
      ``(d) Greenhouse Gas Intensity Reduction Project; Greenhouse Gas 
  Intensity.--For purposes of this section--
              ``(1) Greenhouse gas intensity reduction project.--The term 
          `greenhouse gas intensity reduction project' means any project 
          approved under this section by the Secretary of Energy. Such 
          approval shall be based on the following criteria:
                      ``(A) The extent of the reduction in greenhouse gas 
                  intensity proposed for the project.
                      ``(B) Improvements in system efficiency.
                      ``(C) In the case of projects located outside the 
                  United States, the extent of technology transfer.
                      ``(D) The existence and nature of agreements for 
                  sharing project benefits and liability between the 
                  taxpayer and any host government.
              ``(2) Greenhouse gas intensity.--The greenhouse gas 
          intensity for any period is equal to the volume of emissions 
          divided by the economic activity associated with a project.
      ``(e) Recapture of Credit in Certain Cases.--
              ``(1) In general.--If, at any time during the 20-year 
          period of a greenhouse gas intensity reduction project, there 
          is a recapture event with respect to such project, then the tax 
          imposed by this chapter for the taxable year in which such 
          event occurs shall be increased by the credit recapture amount.
              ``(2) Credit recapture amount.--For purposes of paragraph 
          (1)--
                      ``(A) In general.--The credit recapture amount is 
                  an amount equal to the recapture percentage of all 
                  greenhouse gas intensity reduction investment credits 
                  previously allowable to a taxpayer with respect to any 
                  investment in such project that is attributable to such 
                  taxpayer.
                      ``(B) Recapture percentage.--The recapture 
                  percentage shall be 100 percent if the recapture event 
                  occurs during the first 5 years of the project, 75 
                  percent if the recapture event occurs during the second 
                  5 years of the project, 50 percent if the recapture 
                  event occurs during the third 5 years of the project, 
                  25 percent if the recapture event occurs during the 
                  fourth 5 years of the project, and 0 percent if the 
                  recapture event occurs at any time after the 20th year 
                  of the project.
              ``(3) Recapture event.--For purposes of paragraph (1), 
          there is a recapture event with respect to a greenhouse gas 
          intensity reduction project if--
                      ``(A) the taxpayer violates a term or condition of 
                  the approval of the project by the Secretary of Energy 
                  at any time,
                      ``(B) the taxpayer adopts a practice which the 
                  Secretary of Energy has specified in its approval of 
                  the project as a practice which would tend to defeat 
                  the purposes of the program, or
                      ``(C) the taxpayer disposes of any ownership 
                  interest arising out of its investment that the 
                  Secretary of Energy has determined is attributable to 
                  the project, unless the Secretary of Energy determines 
                  that such disposition will not have any adverse effect 
                  on the greenhouse gas intensity reduction project.
          If an event which otherwise would be a recapture event is 
          outside the control of the taxpayer, as determined by the 
          Secretary of Energy, such event shall not be treated as a 
          recapture event with respect to such taxpayer.
              ``(4) Special rules.--
                      ``(A) Tax benefit rule.--The tax for the taxable 
                  year shall be increased under paragraph (1) only with 
                  respect to credits allowed by reason of this section 
                  which were used to reduce tax liability. In the case of 
                  credits not so used to reduce tax liability, the 
                  carryforwards and carrybacks under section 39 shall be 
                  appropriately adjusted.
                      ``(B) No credits against tax.--Any increase in tax 
                  under this subsection shall not be treated as a tax 
                  imposed by this chapter for purposes of determining the 
                  amount of any credit under this chapter or for purposes 
                  of section 55.
      ``(f) Disallowance of Double Benefit.--
              ``(1) Basis reduction.--The basis of any investment in a 
          greenhouse gas intensity reduction project shall be reduced by 
          the amount of any credit determined under this section with 
          respect to such investment.
              ``(2) Charitable deduction disallowed.--No deduction shall 
          be allowed to a taxpayer under section 170 with respect to any 
          contribution which the Secretary of Energy certifies to the 
          Secretary of the Treasury constitutes an investment in a 
          greenhouse gas intensity reduction project that is attributable 
          to such taxpayer.
      ``(g) Certification to Treasury.--The Secretary of Energy shall 
  certify to the Secretary of the Treasury before January 31 of each year 
  with respect to each taxpayer which has made an investment in a 
  greenhouse gas intensity reduction project--
              ``(1) the amount of the greenhouse gas intensity reduction 
          investment credit allowable to such taxpayer for the preceding 
          calendar year,
              ``(2) whether a recapture event occurred with respect to 
          such taxpayer during the preceding calendar year, and
              ``(3) the credit recapture amount, if any, with respect to 
          such taxpayer for the preceding calendar year.
      ``(h) Regulations.--The Secretary of the Treasury shall prescribe 
  such regulations as may be appropriate to carry out this section, 
  including regulations--
              ``(1) which limit the credit for investments which are 
          directly or indirectly subsidized by other Federal benefits,
              ``(2) which prevent the abuse of the provisions of this 
          section through the use of related parties, and
              ``(3) which impose appropriate reporting requirements.''.
      (b) Credit Made Part of General Business Credit.--Subsection (b) of 
  section 38 is amended by striking ``and'' at the end of paragraph (29), 
  by striking the period at the end of paragraph (30) and inserting ``, 
  and'', and by adding at the end the following new paragraph:
              ``(31) the greenhouse gas intensity reduction investment 
          credit determined under section 45N(a).''.
      (c) Deduction for Unused Credit.--Subsection (c) of section 196 is 
  amended by striking ``and'' at the end of paragraph (12), by striking 
  the period at the end of paragraph (13) and inserting ``, and'', and by 
  adding at the end the following new paragraph:
              ``(14) the greenhouse gas intensity reduction investment 
          credit determined under section 45N(a).''.
      (d) Clerical Amendment.--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. 45N. Greenhouse gas intensity reduction investment credit.''.
      (e) Effective Date.--The amendments made by this section shall 
  apply to investments made after December 31, 2007.
target: Climate Change Investment Act of 2006 - Repeals provisions of the Internal Revenue Code allowing: (1) an election to expense the cost of certain liquid fuel processing refineries; (2) accelerated amortization of geological and geophysical expenditures; (3) a tax credit for enhanced oil recovery costs; (4) a tax credit for the production of low sulfur diesel fuel; (5) a tax credit for producing fuel from a nonconventional source; (6) a tax deduction for capital costs incurred in complying with certain sulfur regulations; (7) a tax deduction for intangible drilling and development costs for oil and gas wells and geothermal wells; and (8) tax deductions for certain oil and gas well expenditures.
  
  Allows a business-related tax credit for investment in a greenhouse gas intensity reduction project approved by the Secretary of Energy.
feat_title: To repeal tax subsidies enacted by the Energy Policy Act of 2005 for oil and gas and certain other oil and gas subsidies in the Internal Revenue Code of 1986, and to establish a greenhouse gas intensity reduction investment tax credit.