President Obama has released a budget plan for the 2014 fiscal year that increases funding for the development of clean energy. Before you break out the champagne, however, keep in mind that this is just a proposal by the President and must still be approved by Congress. The plan, which was released on April 10, would:
- Increase funding for Department of Energy’s clean energy technology activities by more than 40%, to $6.2 billion.
- Increase funding for clean energy technology across all agencies by 30%, to approximately $7.9 billion
A noteworthy part of the budget plan is a proposal to make permanent certain tax incentives for renewable energy production and tax credits for advanced energy manufacturing. This part of plan would cost $23 billion spread over 10 years. Making the tax credit for the production of renewable energy (PTC) permanent would, in the words of the administration, “provide a strong, consistent incentive” for investments in renewable energy technologies and “meet our goal to double generation from wind, solar, and geothermal sources by 2020.” In addition, the budget plan makes the PTC a refundable credit, which, if finally approved by Congress, could be a key source of financing for many startup companies in the renewable energy industry.
To help pay for these and other increases in the Federal budget, the budget plan calls for a repeal of many tax incentives, such as the deduction for intangible drilling costs and the Section 199 manufacturing tax deduction for oil and gas, that many view as subsidies to taxpayers in the the fossil fuel industry. The repeal would raise approximately $44 billion over 10 years.
It should be noted that the President has introduced in prior budget cycles many of the ideas that now make up his budget plan for the 2014 fiscal year, but without success in getting them implemented. For example, in 2012 he included a permanent, refundable PTC in his proposed budget for the 2013 fiscal year, but this was finally rejected by Congress. So while it is encouraging to learn that the President and his team continue to support and push for clean, renewable energy, it is still a little too early to get excited about the prospect of additional funding for companies in the industry.