The focus remains on the American Economic Recovery and Reinvestment Act of 2009 in Washington, D.C. Last week, the House passed its version despite united Republican opposition. As the Senate debate progresses, it is apparent that Democrats will need to continue to reach across the aisle to build support within the Minority party. As such, the size and scope of the ultimate package will continue to transform. The following is an overview of the energy and environment provisions contained in the Senate bill. After approval, the House and Senate bills will meet in conference where representatives from both chambers negotiate on a version that must again be passed.
Tax Incentives for Renewable Energy
The Senate Finance Committee drafted its portion of the American Economic Recovery and Reinvestment Act of 2009 which included $522 billion in tax incentives aimed at encouraging renewable energy production:
- Extension of Renewable Energy Production Tax Credit Extends the placed-in-service date for wind facilities for three years (through December 31, 2012) and extends the placed-in-service date through December 31, 2013, for certain other qualifying facilities, including closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy and marine renewable facilities.
- Modification of the Production Tax Credit Temporary modification allows companies eligible for the Production Tax Credit to elect to take the Investment Tax Credit for facilities placed in service in 2009 and 2010.
- Business Energy Credit Modification Eliminates the cap on small wind property and repeals the basis reduction for subsidized energy financing.
- Clean Renewable Energy Bonds Appropriates an additional $1.6 billion of clean renewable energy bonds to finance facilities that generate electricity from the following sources: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewables and trash combustion facilities. This authorization will be subdivided into thirds: 1/3 will be available for qualifying projects of state/local/tribal governments; 1/3 for qualifying projects of public power providers; and 1/3 for qualifying projects of electric cooperatives.
- Qualified Energy Conservation Bonds Appropriates an additional $2.4 billion of qualified energy conservation bonds to finance state, municipal and tribal government programs and initiatives designed to reduce greenhouse gas emissions.
- Energy-Efficient Existing Homes Increases the value of the credit to 30 percent for 2009 and 2010, and establishes a per-dwelling maximum for this period of $1,500 and eliminates the separate limitations on specific energy-efficient properties. The proposal would also repeal the current-law basis reduction for subsidized energy financing.
- Residential Energy Property Removes caps on current tax credits for residential solar thermal, small wind and geothermal heat pump property, and repeals the current-law basis reduction for subsidized energy financing.
- Tax Credits for Alternative Fuel Pumps Increases the 30 percent alternative refueling property credit for businesses (capped at $30,000) to 50 percent (capped at $50,000). Hydrogen refueling pumps remain at a 30 percent credit percent but with an increased cap of $200,000. The bill also increases the 30 percent alternative refueling property credit for individuals (capped at $1,000) to 50 percent (capped at $2,000).
- Energy Research and Development Credit Provides for an enhanced 20 percent R&D credit in taxable years beginning in 2009 and 2010 for research expenditures incurred in the fields of fuel cells, battery technology, renewable energy, energy conservation technology, efficient transmission and distribution of electricity, and carbon capture and sequestration.
- Five-year Carry-back of General Business Credits Extends the carry-back period for general business credits, including energy credits, from one year to five years. The proposal also temporarily allows general business credits arising in 2008 and 2009 to be used to offset AMT.
In addition to the tax incentives laid out by the Senate Finance Committee, the Senate Appropriations Committee has come up with a proposal to stem the impacts of the current fiscal downturn and reinvigorate the economy. Among the funding highlights of their proposal are:
Department of Agriculture
- $100 million in competitive grants for research in renewable energy and emerging agricultural production technology.
- $200 million in budget authority for loan guarantees and grants to assist in the development of new and emerging technologies in advanced biofuels.
- $50 million in budget authority for loans and grants to promote energy efficiency and renewable energy development for agricultural producers and rural small businesses.
- $50 million to be used to fund biomass utilization grants to promote the use of woody biomass as a renewable energy source.
Department of Defense
- $200 million for the lease of alternative energy vehicles for use in support functions on military installations.
- $100 million in Defense Production Act Purchases for lithium ion batteries, robotics, fuel cells and other alternative technologies for next generation vehicles.
- $200 million for rapid technology transitions and the demonstration of energy efficient technologies for use by operational forces and military installations.
- $494 million for energy conversation and alternative energy projects for the Navy and Marine Corps.
- $118 for military construction, defense-wide, for the Energy Conservation Investment Program.
Department of Energy
- $2 billion for grants for the manufacturing of advanced batteries and components.
- $4.2 billion for energy efficiency and conservation block grants.
- $2.6 billion for energy efficiency and renewable energy research, development demonstration and deployment activities to accelerate the development of technologies that will diversify the nation's energy portfolio.
- $350 million in grants for acquisition of alternative fuel or fuel-cell vehicles.
- $200 million in grants for infrastructure projects that encourage the use of plug-in electric drive vehicles.
- $500 million for state energy programs.
- $1.6 billion in grants for schools and hospitals for energy efficiency improvements.
- $4.5 billion for electric grid modernization and reliability activities.
- $200 million to support energy storage technologies to improve the renewable integration, load management and reliability.
- $2 billion for one or more near-zero emissions power plant(s) designed to capture and sequester a high percentage of carbon dioxide.
- $1 billion for the Department of Energy's Clean Coal Power Initiative.
- $1.52 billion for a competitive solicitation to demonstrate carbon capture from industrial sources.
- $70 million for activities related to geologic sequestration of carbon dioxide.
- $9.5 billion for the Innovative Technology Loan Guarantee Program for standard renewable projects such as wind and solar and for electricity transmission projects.
- $50 billion in budgetary authority for the Innovative Technology Loan Guarantee program.
- $10 billion in loan guarantees for the rapid deployment of renewable energy and electric power transmission projects.
General Services Administration
- $600 million for the procurement of high-efficiency motor vehicles for the federal motor vehicle fleet as well as infrastructure improvements to support such vehicles.
Environmental Protection Agency
- $6.4 billion in state and tribal assistance grants, including funding for brownfield remediation and cost-effective emission reduction projects.