On October 3, 2008, President George W. Bush signed into law the Emergency Economic Stabilization Act of 2008. Included with this legislation was the Energy Improvement and Extension Act of 2008 (hereafter Energy Improvement Act, or Act), which also became law. The Energy Improvement Act contains a number of energy-related incentives and other provisions of importance to renewable energy and clean coal technology companies.
Extension and Modification of Production Tax Credit. The Energy Improvement Act extends the availability of the renewable energy production tax credit to facilities placed in service by December 31, 2009, in the case of wind and refined coal facilities, and to facilities placed in service by December 31, 2010, in the case of other qualified facilities. The production tax credit was due to expire at the end of 2008. The Act also expands the facilities that qualify for the credit to new biomass facilities and those that generate power through marine renewables such as wave or tidal power generation facilities.
Long-Term Extension of Energy Credit. The Energy Improvement Act extends through 2016 the 30% investment tax credit for solar energy and qualified fuel cell property, as well as the 10% investment tax credit for microturbine property. The Act also provides a new 10% investment tax credit for combined heat and power system property and geothermal heat pumps.
Biofuels. The Energy Improvement Act extends the income tax credit and excise tax credit for biodiesel and other renewable diesel fuels through December 31, 2009, and increases the amount of the credit to $1.00 per gallon. Taxpayers will also now be able to immediately write off 50% of the cost of facilities that produce other cellulosic biofuels (in addition to those that produce cellulosic ethanol) if such facilities are placed into service by December 31, 2012.
New Clean Renewable Energy Bonds. Also included in the Energy Improvement Act is the authorization of $800 million of new clean renewable energy bonds to finance facilities generating power from wind, closed-loop biomass, open-loop biomass, geothermal, solar, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion facilities. The Act also extends through 2009 the termination date for existing clean renewable energy bonds.
Carbon Capture and Sequestration Demonstration Projects. The Energy Improvement Act increases to 30% the investment tax credit for advanced coal-based generation technology projects and certain coal gasification projects, and increases the maximum amount of credits allocable by $1.5 billion. Of this amount, $1.25 billion of the new credits are allocated to advanced coal-based generation technology projects and $250 million are allocated to coal gasification projects.
CO2 Capture Credit. The Energy Improvement Act provides a $10 credit per ton for the first 75 million metric tons of CO2 captured and transported from an industrial source for use in enhanced oil recovery and a $20 credit per ton for CO2 captured and transported from an industrial source for permanent storage in a geologic formation. Qualifying facilities must capture at least 500,000 tons per year. The credit applies to CO2 stored or used in the United States.
Carbon Audit of Tax Code. The Energy Improvement Act requires the government to conduct an audit of the tax code to identify the provisions that have the largest impacts on carbon and other greenhouse emissions and to assess the magnitude of such impacts.