On January 15, 2009, the House Appropriations Committee released a draft of the American Recovery and Reinvestment Act of 2009, and today, the House Ways and Means Committee released a draft of the American Recovery and Reinvestment Tax Act of 2009. Both committees worked closely with the Obama team and Senate Democratic leaders in developing these drafts. 

These drafts of the spending and tax provisions of the overall stimulus package, which contain many provisions encouraging renewable energy, energy efficiency, and transmission infrastructure, set the starting point for the debate ahead.  

The Appropriations Committee provided a "discussion draft" of a legislative report, the energy section of which is available by clicking here, and the Ways and Means Committee provided a detailed summary of the tax relief provisions, available by clicking here, which includes energy provisions on pages 5-6.Overall, the legislation proposes $32 billion for renewable energy, smart grid, and transmission investments. It also includes $16 billion to repair public housing and make energy efficiency retrofits and $6 billion to weatherize modest-income homes.
  • The tax bill features a three-year extension of the renewable energy production tax credit (PTC) (for wind, geothermal, biomass, etc.) and allows, for a temporary period, an election to claim the investment tax credit (ITC) (normally for solar) in lieu of the PTC. Dollar limits on certain other energy credits would be lifted.

  • Although the tax bill does not offer to make the ITC or PTC "refundable" for renewable energy investments, a different means of encouraging new investments is offered. An option will be given to project developers/owners to receive a DOE grant rather than a tax credit, in order to recognize the decreasing number of entities having taxable income for which a credit is useful.

  • The bill would repeal the current reduction in ITC for energy projects financed through industrial development bonds or through any other federal, state, or local subsidized financing programs.

  • Loan guarantees would be offered for commercially proven renewables and transmission projects, and additional funding is proposed for Clean Renewable Energy Bonds and Qualified Energy Conservation Bonds.

  • Substantial funding for renewable energy projects is directed through various government agencies, for example, $350 million for DOD renewable energy pilot projects, and $6.9 billion for maintenance and improvement projects on federal buildings, which apparently can include renewable energy and energy efficiency investments.

  • In addition, block grants are proposed to support efforts to upgrade energy efficiency and install renewables at state and local facilities. 

  • A large commitment is made to transmission investments in the Western U.S., by awarding $3.25 billion to the Western Area Power Administration and $3.25 billion to Bonneville Power Administration.

  • Funding for multiple "smart grid" demonstration projects is proposed.

  • A down payment is made on addressing climate change by providing $2.4 billion for carbon capture and sequestration demonstration projects.

Several of the programs have sunset provisions in 2011.

Not surprisingly, the focus of the energy package in the stimulus legislation is on three things: job creation and preservation across the renewable energy and efficiency industry, transmission in the West to move renewable energy to market, and job creation via energy efficiency programs in both government buildings and private housing stock. An omnibus energy bill is widely expected during the second quarter of the year, in which other energy initiatives might be addressed, in particular, a national renewable energy portfolio standard and enhancements to federal authority over transmission siting.

For more information on this legislation, please contact Howard H. Shafferman, hhs@ballardspahr.com, 202.661.2205.


 Copyright  2009 by Ballard Spahr LLP.
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