Stimulus bill includes renewable energy provisions

By Erin Voegele
Web exclusive posted Feb. 20, 2009, at 11:10 a.m. CST

U.S. President Barack Obama signed the $787 billion American Recovery and Reinvestment Act into law on Feb. 17.

"Today does not mark the end of our troubles," President Obama said during the signing ceremony on Denver. "Nor does it constitute all of what we must do to turn our economy around. But it does mark the beginning of the end � the beginning of what we need to do to create jobs for Americans scrambling in the wake of layoffs, to provide relief for families worried they won't be able to pay next month's bill and to set our economy on a firmer foundation, paving the way for long-term growth and prosperity."

The stimulus package is designed to invest in key areas that will save or create jobs immediately, while laying the groundwork for long-term economic growth. The U.S. White House estimates that over the next two years the package will save or create 3.5 million jobs in a variety of industries, including clean energy.

To help track the effects of the bill, the government has established a Web site, According to the Web site, an estimated $787 billion will be spent; $43 billion of that is slated for energy development and $111 billion for infrastructure and science.

According to a fact sheet released by the White House, energy aspects of the legislation will help accelerate the development and deployment of clean and renewable energy. The Clean Energy Finance Authority program included in the recovery plan will revive the renewable industry and double the amount of renewable energy produced over the next three years. Collectively, this funding is expected to leverage nearly $100 billion in clean energy projects. These projects will include the creation of a bigger, better, smarter electric grid, increased energy efficiency and green jobs training.

Growth Energy released a statement Feb. 17 applauding the inclusion of provisions supporting the renewable fuels industry in the American Recovery and Reinvestment Act of 2009. "These measures will help speed the development of next-generation cellulosic ethanol that promises significant job creation as well as considerable reductions in greenhouse gas emissions," the statement said. According to Growth Energy, the U.S. DOE estimates that for each additional one billion gallons of ethanol production that is brought on-line, as many as 20,000 new jobs could be created.

In the areas of renewable energy and biofuels, the legislation:
� Extends the production tax credit (PTC) for qualified biomass and municipal solid waste facilities through 2013.
� Permits tax payers to elect to claim an investment tax credit (ITC) in place of the PTC for certain projects, including closed-loop biomass, open-loop biomass, geothermal, landfill gas and trash renewable energy facilities placed in service from 2009 through 2013. The amount of the ITC would generally be 30 percent of the qualifying costs.
� Modifies the ITC by eliminating the reduction of the ITC for property financed by subsidized energy financing or tax-exempt private activity bonds.
� Would permit a taxpayer to receive a grant from the U.S. Treasury Department in place of claiming tax credits for certain properties placed in service in 2009 and 2010 that would otherwise qualify for the PTC or ITC. Federal, state and local governments and tax-exempt entities would not be eligible for the grants. Property placed in service after 2010, but on or before the applicable credit termination date, could qualify for the grants as long as construction began in 2009 or 2010. The amount of a grant would generally be equal to the amount of the ITC for which the project would have otherwise been eligible.
� Extends first-year bonus depreciation to property placed in service in 2009. This means an owner of qualifying property placed in service in 2009 could deduct 50 percent of the adjusted basis of the property in 2009. The remaining 50 percent would be depreciated over the regular tax depreciation schedule.
� Authorizes an additional $1.6 billion of Clean Renewable Energy Bonds (CREBs) to finance facilities that generate electricity from certain renewable resources.
� Authorizes an additional $2.4 billion of qualified energy conservation bonds and clarifies that the proceeds of qualified energy conservation bonds could be used for loans, grants, and other repayment mechanisms that implement green community programs.
� Modifies the carbon dioxide capture and sequestration credit to require that carbon dioxide used as a tertiary injectant be disposed of in secure geologic storage.
� Temporarily increases the business credit for alternative refueling property from 30 percent to 50 percent of the cost of qualifying property and increases the cap on the credit for depreciable property from $30,000 to $50,000. It also increases the cap on the credit for non-depreciable property from $1,000 to $2000, and applies to property placed in service during tax years 2009 and 2010.
� Creates a new 30 percent credit for investment in certain property used in a "qualifying advanced energy manufacturing project." Qualifying projects include those that re-equip, expand or establish a manufacturing facility for the production of property designed to produce energy from certain renewable resources, certain energy storage systems, electric grids to support the transmission of intermittent sources of renewable energy, property for carbon capture or sequestration, property designed to refine or blend fuels or produce energy conservation technologies or other advanced energy property designed to reduce greenhouse gases. To qualify, a project must be certified by the U.S. Treasury, which will consult with the U.S. DOE and consider a variety of factors including commercial viability, job creation, net impact on greenhouse gas emissions, newness of technology and project time completion.
� Provides $16.8 billion for the Energy Efficiency and Renewable Energy Program, including $2.5 billion for applied research, development, demonstration and deployment activities to include $800 million for projects related to biomass. This particular area of funding also includes $300 million for the Alternative Fueled Vehicles Pilot Grant Program, which will be established under the U.S. DOE Clean Cities Program and will provide grants certain public or nonprofit entities for the purchase of alternative fueled vehicles, fuel cell vehicles or hybrid vehicles and the installation or acquisition of infrastructure necessary to support the vehicles.
� Provides a total of $300 million to the Department of Defense for research, development, testing and evaluation, including pilot projects, demonstrations and energy efficient manufacturing enhancements. Funds are for improvements in energy generation and efficiency, transmission, regulation and storage and for use on military installations and within operational forces, to include research and development of energy for fuel cells, wind, solar, and other renewable energy sources to include biofuels and bioenergy.
� Provides $4.5 billion for the Electrical Delivery and Energy Reliability program.
� Provides $150 million in budget authority for rural business loans and grants, which will support $3.01 billion in rural business loans and grants. Of this amount, $2.99 million is for guaranteed business and industry loans and $20 million is for rural business enterprise grants.
� Provides $6 billion for the Innovative Technology Loan Guarantee program for the cost of guaranteed loans authorize by section 1705 of the Energy Policy Act of 2005. The loan program would provide loan guarantees for renewable technologies and transmission technologies. The $6 billion in appropriated funds is expected to support more than $60 billion in loans for these projects.
� Provides $15 million to the Department of the Interior Bureau of Land Management for wildland fire management. The funds should be used for high priority hazardous fuels reduction projects on federal lands.
� $500 million to the Department of Agriculture Forest Service for Wildland Fire Management, including $250 million for hazardous fuels reduction, forest health protection, rehabilitation and hazard mitigation activities on federal lands. The bill allows the Forest Service to use up to $50 million to make competitive grants for the purpose of creating incentives for increased use of biomass from federal and non-federal forested lands.

PDFs of the conference report and the joint explanatory statement of the conference committee are available on the U.S. House of Representatives Web site. Additional information and full text of the American Recovery and Reinvestment Act of 2009 is available on the Library of Congress Web site.

Information on the tax provisions of this legislation was sourced from information provided by Stoel Rives LLP.