The Emergency Economic Stabilization Act of 2008, commonly known as the “Bailout Bill,” became law on October 3, 2008. In addition to granting the Secretary of the Treasury the power to deal with the financial crisis, the Act also included several provisions wholly unrelated to saving the financial sector. One such provision, the Energy Improvement and Extension Act of 2008 (EIEA), both expands existing financial incentives and creates new ones for producing cleaner energy. Below is a list of the most important incentives of the EIEA.
I. Production Tax Credits and Bonds
- Extends the expiration date for renewable energy credits for wind, refined coal facilities, closed and open-loop biomass, solar energy, small irrigation power, landfill gas, trash combustion, hydropower, marine and hydrokinetic renewable energy. These renewable energy credits will not expire until January 1, 2010.
- Extends the expiration date for solar energy property, fuel cell property, and microturbine property tax credits through the end of 2016.
- Creates a new energy tax credit for combined heat and power system property. Increases the credit limitation for fuel cell property from $500 to $1500. Allows tax credits to offset alternative minimum tax liabilities and enables public utility property to qualify for such credit.
- Extends the 30 percent tax credit for installing solar electricity generation equipment through 2016 and expands this tax credit to also include installation expenses for geothermal heat pumps and residential wind turbines. Eliminates the $2,000 annual cap on credits for installing solar electricity generation equipment.
- Extends the expiration date for issuing Clean Renewable Energy Bonds to December 31, 2009. Creates an entirely new tax credit called New Clean Renewable Energy Bonds (NCREBs) for capital expenditures on renewable energy facilities, and allows issuing up to $800 million in these NCREBs.
II. Commercial Building Provisions
- Extends the expiration date on the tax deduction for energy efficient commercial buildings to December 31, 2013.
- Extends the authority to issue tax-exempt bonds for qualified green building and sustainable design projects through September 30, 2012.
- Allows depreciation allowance of 50 percent for reuse and recycling property used to collect, distribute or recycle certain materials, including scrap, fibers and metals.
III. Residential Property Provisions
- Extends the tax credit for residential energy efficient property to December 31, 2016. Removes the monetary cap on the tax credit for solar electric property. Allows a 30 percent tax credit for expenditures on both small wind energy property and geothermal heat pump property.
- Extends through 2009 the tax credit for residential energy efficiency improvements, providing a range of credits for individual appliances between $45 and $250. Allows a depreciation allowance of 50 percent for reuse and recycling property used to collect, distribute or recycle certain materials, including scrap, fibers and metals.
IV. Transportation, Fuel Security, and Alternative Fuel Vehicle Refueling Equipment
- Allows bicycle commuters who are reimbursed for commuting expenses to exclude these reimbursements from gross income.
- Includes cellulosic biofuel within the definition of biomass ethanol plant property so that cellulosic biofuel qualifies for the bonus depreciation allowance.
- Increases income and excise tax credits for biodiesel and renewable diesel used as fuel and extends the tax credit through 2009.
- Extends the expiration date for excise tax credits for alternative fuel and fuel mixtures to December 31, 2009. Includes compressed or liquefied biomass gas and requires meeting certain carbon capture requirements.
- Allows a new tax credit for purchasers of plugin electric vehicles. The minimum tax credit is $2,500, and the credit increases as the kilowatt hour capacity of the battery increases with the maximum cap determined by the weight of the vehicle.
- Extends through 2010 the tax credit for up to 30 percent of the cost of installing alternative fuel vehicle refueling equipment. (Note that the credit for hydrogen refueling property was not extended because it is not set to expire until 2014). Anyone can claim this credit for expenses installing ethanol, compressed natural gas, or hydrogen refueling pumps (among others). Moreover, electricity is now included in the definition of “clean burning fuels,” so installing equipment to recharge the batteries of an electric-powered car now qualifies for the credit. A business can claim up to $30,000 in credits per location. An individual may claim up to $1000 at a principal residence.
V. Coal and Carbon Capture/ Sequestration
- Allows a 30 percent tax credit for advanced coal-based generation technology projects and increases the credit cap to $2.55 billion. Allows for carbon capture and carbon sequestration projects to qualify for the credit.
- Increases the investment tax credit rate for coal gasification projects to 30 percent and increases the aggregate credit amount for goal gasification projects.
- Creates a new tax credit for carbon dioxide sequestration.