| Renewable Energy Tax Extenders Pass in 11th Hour, Signed into Law |
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10.10.08
The oft-stalled legislative package of renewable energy and energy efficiency Production Tax Credit (PTC) and Investment Tax Credit (ITC) extensions has finally been adopted. President Bush last Friday signed into law the Emergency Economic Stabilization Act, a financial recovery measure that also incorporated the Energy Improvement and Extension Act of 2008, a package of tax credit extensions that have bandied back and forth between the Senate and the House for the past two years. The package signed into law passed the Senate 93-2 on September 23. On the verge of adjournment and by a vote of 263-171, the House passed the exact same package last Friday as part of the financial system rescue plan that immediately went to the White House for the president's signature. The package drew commendations from renewable energy interests, including the American Wind Energy Association. "We salute members of Congress in both parties who fought under difficult conditions to keep the renewable energy production tax credit and small turbine investment tax credit on the agenda until the very end, and then pushed them across the finish line," said Greg Wetstone, senior director of governmental and public affairs for AWEA. "These tax credits are essential to the continued growth of wind energy, to the economic and energy security of the United States, and to a successful beginning in the fight against global warming." Rhone Resch, president of the Solar Energy Industries Association, said the bill "is a major step in our long journey toward energy independence and ensures that solar energy will be a significant part of America’s energy future. This long-term extension of the solar tax credits will create a domestic solar industry with hundreds of thousands of jobs while providing clean, affordable, carbon-free energy to millions of American families, businesses, and communities." "Enactment of the biodiesel tax credit extension represents a significant legislative achievement on a key ASA priority because the growth in biodiesel sales has raised soybean prices by a conservative estimate of at least $2.00 per bushel," said American Soybean Association President John Hoffman. "Soybean farmers greatly appreciate the work of Congress to get this extension through before they adjourned." As signed into law, the legislative package: • Extends the wind energy production tax credit for one year, through December 31, 2009. • Extends the production tax credits for other renewable sources – solar power, geothermal energy and hydropower through December 31, 2010. The bill also expands the definition of facilities to include new biomass facilities. • Authorizes $2 billion of new Clean Renewable Energy Bonds (CREBs) for facilities producing electricity from all types of biomass, wind, geothermal, hydropower, landfill gas, trash combustion, marine and other small water-to-electricity projects. • Extends biodiesel Production Tax Credit for one year, modifying eligibility to include any type of diesel, irrespective of the process involved in making the diesel. This expands the field for non-vegetable oil diesel producers, although does not allow credit for renewable diesel co-produced with petroleum. • Continues the alternative fuel excise tax credit of $0.45 per gallon through December 31, 2009 for all fuels except hydrogen (the latter currently expires at the end of 2014). •Continues E85 station and fossil-free alcohol production tax credits. • Allows taxpayers to write off 50 percent of the cost of facilities that produce cellulosic ethanol, if such facilities go into operation before January 1, 2013. • Establishes a credit for plug-in hybrid vehicles at $2500. • Continues credits for energy efficiency improvements in homes, new homes, and appliances. • Extends green building bonds, and institutes new smart meter cost-recovery mechanisms. • Provides $2.5 billion in new tax credits for carbon capture and sequestration demonstration projects. The bill is offset partially by establishing an excise tax on removal of price of crude oil and natural gas from offshore sites, and repealing manufacturing deductions for large oil and gas companies. To read the legislation, go the House of Representatives Web site, http://www.house.gov/, click on the link to the Emergency Economic Stabilization Act of 2008, and scroll down to "Division B," the Energy Improvement and Extension Act of 2008. In other legislative developments, the 2008 Farm Bill also provided measures that will speed commercialization of advanced biofuels, including cellulosic ethanol, encourage the production of biomass crops, and expand the current Renewable Energy and Energy Efficiency Program. Specific energy provisions in the Food, Conservation and Energy Act of 2008, included: • Section 9003, which provides for grants covering up to 30 percent of the cost of developing and building demonstration-scale biorefineries for producing "advanced biofuels," or essentially all fuels that are not produced from corn kernel starch. It also allows for loan guarantees of up to $250 million for building commercial-scale biorefineries to produce advanced biofuels. The bill funds the biorefinery program by drawing $75 million in funds from the Commodity Credit Corporation (CCC) for fiscal year (FY) 2009, increasing to $245 million by FY 2010. It also authorizes $150 million per year in discretionary funds for the program. • Section 15321, which establishes a new tax credit for producers of cellulosic biofuels, that is, biofuels produced from wood, grasses, or the non-edible parts of plants. The new cellulosic biofuel producer credit is set at $1.01 per gallon and applies only to fuel produced and used as fuel in the United States. • Section 9005, which provides $55 million in CCC funds in FY 2009 to support advanced biofuel production, increasing to $105 million by FY 2012. It also authorizes up to $25 million per year in discretionary funding. • Section 9010, which allows the CCC to buy sugar from U.S. producers and sell it to bioenergy producers. • Section 9011, which creates the Biomass Crop Assistance Program to support the establishment and production of biomass crops. • Section 9007, which renames the U.S. Department of Agriculture's current Renewable Energy and Energy Efficiency Program as the "Rural Energy for America Program," providing $55 million in CCC funds for FY 2009, increasing to $70 million for FY 2011 and 2012, while authorizing another $25 million in discretionary funds. The program will provide grants of up to 25 percent of the cost of renewable energy systems and energy efficiency improvements for agricultural producers and rural small businesses, as well as guarantees for loans as large as $25 million. • Section 9009, which creates a new "Rural Energy Self-Sufficiency Initiative" that will support efforts to develop community-wide renewable energy systems. The bill provides no firm funding for the initiative but authorizes up to $5 million per year in discretionary funds. • Section 9013 authorizes up to $5 million per year to support community-wide wood-fueled energy systems. The bill also makes $35 million in mandatory funding available to encourage existing biorefineries to reduce their dependence on fossil fuels. It continues the Biomass Research and Development Initiative, a joint effort of U.S. Department of Energy (DOE) and the U.S. Department of Agriculture (USDA) that focuses on biofuels and bioproducts. The bill provides $20 million in mandatory funds to support the initiative in FY 2009, increasing to $40 million by FY 2012, while authorizing up to $35 million per year in discretionary funds. |