Friday, October 3, 2008

Renewable Energy incentives enacted

The house comfortably passed the Splurge and the President has signed it into law. That's the good news. The bad news of course is that we taxpayers are now on the hook for another $700B of good money after bad with little indication that there won't be another "emergency" next month or next week.

The bill also includes provisions for disaster relief, mental health, and random other.

The renewable energy portions are basically good, although lacking some provisions that might have been adjusted or added if there had been more time and deliberation. But then, maybe we would have got less too.

Energy provisions of note:

Sec. 101 extends the renewable energy credit for wind for one year. AWEA and others make a compelling argument that a one-year extension is too short. Bizarrely, "refined coal" also gets this "renewable" energy credit. (I suppose coal could be renewable if enough life dies out and we just wait long enough.)

Sec. 102 provides the PTC for "marine renewables" which include the obvious wave and tidal, but also ocean currents and energy produced from the "free flow" of rivers, canals, etc., which is excellent news for Hydrovolts. The provision applies to equipment placed in service before 1/1/2012.

Sec. 103 extends the credit for solar out to 12/31/16.

Sec. 104 provides for a credit for small wind (less than 100kW) and increases it from $2000 to $4000.

Sec. 105 provides credits for geothermal heat pump systems.

Sec. 106 "clarifies" (as only the Government can!) residential rules for credits for small wind and geothermal.

Sec. 107 provides $800M of new Clean Renewable Energy Bonds (CREBs).

Sec. 117 requires a "carbon audit of the tax code" by the National Academy of Sciences who is tasked with issuing a report in 2 years.

Sec. 304 extends the new energy efficient home credit by one year, and Sec. 305 provides credits for energy efficient appliances.

Sec. 306 allows accelerated depreciation for "smart grid" hardware.

Sec. 404 extends the federal unemployment tax another year. No doubt some would call this a "tax increase" but it's more accurately termed a decision to not provide a tax cut.

There's a lot more stuff to help the steel industry, the coal industry, the oil and gas industry, the Black Lung Fund, for carbon sequestration, biofuels, plug-in electric vehicles, to encourage bicycle commuting, to dicker some more with the Alternative Minimum Tax (AMT), and clauses (whether intentionally so-designed or not) to further complicate everyone's tax return.

There are also some of the clauses quickly becoming infamous, such as Sec. 502 for Hollywood producers and Sec. 503 providing an exemption from tax for makers of wooden arrows for children. I can see the entertainment industry having the clout to stuff this in, but the childrens' archery lobby?

Glad to get at least enough on the renewable energy front to tide the industry over into the next Administration which will have the opportunity to do a thorough top-to-bottom restructuring of our energy economy and perhaps both simplify the rules and better align tax policy to a a sensible and realistic energy policy that addresses climate change, energy security, and the creation of jobs. The renewable energy industry is still in its infancy; our government has the opportunity to make the US a leader as it grows into the next global industry.
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