On Its Way Out of Committee, Stimulus Bill Retains Several Provisions Related to Green Jobs and Renewable Energy
As noted in last week's alert, Congress is in the process of passing economic recovery legislation that would (if enacted) expand existing, and establish new, tax incentive programs to further those goals. Specifically, the American Recovery and Reinvestment Tax Act (the Act) contains several provisions that would provide expanded or additional sources of funds for green projects. If enacted in its current form, the Act would, among other things:
- Establish a 30% credit for investment in facilities that manufacture advanced energy property, which includes technology for the production of renewable energy, energy storage, energy conservation, efficient transmission and distribution of electricity, and carbon capture or sequestration.
- Extend Code Section 45 renewable energy production tax credits by increasing the placed in service date for three years (through 2012 for wind and 2013 for other qualified facilities). As defined, qualified facilities produce electricity from wind, closedloop biomass, open-loop biomass, geothermal energy, municipal solid waste and qualified hydropower.
- Allow temporary election to claim 30% investment credit under Code Section 48 in lieu of the Code Section 45 production tax credit. Wind facilities currently qualify only for the production tax credit which is claimed over 10 years. This provision would allow tax credit equity investors to realize tax benefits sooner as the investment tax credit is claimed over a shorter time period. The Act would also repeal the subsidized energy financing limitation on the investment tax credit, which would permit other subsidies such as industrial revenue bonds or other subsidies to be combined with tax credit equity proceeds.
- Expand the volume for Clean Renewable Energy Bonds (CREBs). CREBs are tax credit bonds that may be used to finance renewable energy projects.
- Expand the volume for the recently established Qualified Energy Conservation Bonds (QECBs), which like CREBs, are tax credit bonds. The Act clarifies that proceeds of QECBs may be used for programs in which utilities provide ratepayers with energy-efficient property and recoup the costs of that property over an extended period of time. The proceeds of QECBs can be used for several other types of projects, including:
- implementing green community programs;
- rural development involving the production of electricity from renewable energy resources, or most facilities eligible for the production tax credit under Code Section 45;
- research projects related to the development of cellulosic ethanol or other nonfossil fuels, technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuel, increasing the efficiency of existing technologies for producing nonfossil fuels, automobile battery technologies, and technologies to reduce energy use in buildings;
- demonstration projects related to similar programs, but also including projects designed to promote the commercialization of green building technology;
- mass commuting facilities and related facilities that reduce the consumption of energy; and
- public education campaigns to promote energy efficiency.
The Act contains several other provisions, including those that would expand the New Markets Tax Credit program, revise certain tax-exempt bond limitations, and provide relief for cancellation of debt income. If you have any questions, please contact Paul Jones
, partner in the Tax Practice Group and member of the Firm's
Green Industries Initiative.
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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