U.S. Bailout of Financial Sector Also Extends Alternative Energy Incentives

Though the U.S. Treasury's initial proposal for a bailout of the financial sector was only three pages when it was first submitted to Congress, federal legislators did not waste time in expanding its scope. The $700 billion emergency stabilization package, passed early this month, eventually swelled to more than 400 pages. One of the largest additions to the bill was a new section extending incentives for alternative and renewable energy. 

These provisions include an extension of the wind energy Production Tax Credit and the solar energy Investment Tax Credit, as well as several other energy credits. In total, the bailout act contains 150 pages of energy provisions. 

The 30 percent investment tax credit for solar, geothermal and fuel cells was extended through 2016, as was the ten percent credit for microturbines. New investment credits were introduced for combined heat and power systems, small commercial wind property and geothermal heat pump, all of which will stay in effect through 2017. A new provision allows public utility property to beeligible for the credit, and the credit may now be used to reduce the alternative minimum tax for certain taxpayers.

The wind Production Tax Credit (PTC), the largest of the PTCs, was only extended through next year, but a variety of other power-generation methods received extensions through 2011. This included producers of electricity from closed- and open-loop biomass, geothermal, small irrigation power, municipal solid waste, trash combustion and qualified hydropower. A new PTC for marine and hydrokinetic renewable energy has also been added.

The termination date for existing clean renewable energy bonds has been pushed back until the end of 2009. Under the act's provisions, $800 million in new funding for these bonds has been approved, and can be used to finance facilities for wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion-base power. Local government-led conservation and greenhouse gas reduction projects will be able to benefit from new qualified energy conservation bonds authorized through the bailout bill.

A breakdown of the bailout bill's energy provisions is available at: http://www.nixonpeabody.com/publications_detail1.asp?ID=2443

The full Emergency Economic Stabilization Act (H.R. 1424) is available on http://thomas.loc.gov/.