Sec. 1. 36 MRSA §5202-D is enacted to read:

§5202-D.__Tax credit for pollution-reducing boilers

1.__Definitions.__As used in this section, unless the context otherwise indicates, the following terms have the following meanings.

A.__"Organic material" means material that produces energy when burned, including organic waste, municipal sludge or sewage and oceanic or terrestrial crops.

B.__"Pollution-reducing boiler or furnace system" means a boiler or furnace system placed into operation on or after January 1, 2006 that, without increasing the total output of nitrogen-oxygen compounds, burns organic material while:

(1)__Eliminating the amount of emissions of oxides of nitrogen that would have resulted from using air; or

(2)__Reducing particulates emissions by at least 20% below standards established by the Department of Environmental Protection, Board of Environmental Protection.

2.__Tax credit; transferability.__A business that uses a pollution-reducing boiler or furnace system on the site of its business is entitled to a credit against taxes due under this chapter.__The amount of the tax credit is equal to 1.5__per kilowatt-hour or its equivalent in heat energy produced by the pollution-reducing boiler or furnace system, but in no case may the credit exceed the amount of tax owed pursuant to this chapter.__Tax credits earned pursuant to this chapter are transferable and may be carried over from one tax year to the next.

3.__Other boilers or furnace systems.__A business that modifies a boiler or furnace system placed into operation prior to January 1, 2006 may qualify for the tax credit pursuant to subsection 2 if the existing boiler or furnace system is used in conjunction with technology that:

A.__Reduces nitrogen oxides without increasing or decreasing the total output of nitrogen-oxide compounds; or

B.__Reduces particulates emissions by at least 20% below standards established by the Department of Environmental Protection, Board of Environmental Protection.