Extenders for a series of key tax credits aimed at supporting the development of renewable energy generating facilities were passed today by the House 263 to 171 as part of the financial rescue bill, H.R. 1424 (the "Bill"), aimed at addressing the recent credit crisis. The renewable energy production tax credit ("PTC") gives qualified facilities placed into service by a statutory cutoff date a tax credit equal to 1.5 cents per kilowatt hour of electricity generated. The PTC cutoff date had been set for January 1, 2009, and legislation to extend that cutoff date had been stalled in Congressional negotiations. The PTC extenders were among the amendments added by the Senate, which took up the Bill after the House failed to pass its version of a financial rescue bill on September 29, 2008. The President is expected to sign the Bill.
The Bill extends the PTC cutoff date by either one or two years, depending on the type of generating technology. Tax credits for wind and "refined coal" facilities are extended one additional year to January 1, 2010. All other energy facilities, including solar, geothermal, and landfill gas, will continue to be eligible for the PTC for two more years, until January 1, 2011. The Bill provides no extension for "Indian coal" facilities; any such facility placed into service after December 31, 2008 will be ineligible for the PTC.
In addition to extending existing PTCs, the Bill also expands the types of renewable generation facilities that can qualify. A marine or hydrokinetic generating resource, which was not previously eligible for the PTC, may now qualify, provided its nameplate capacity is at least 150 killowatts and is placed into service before January 1, 2012. Among the technologies that will be eligible under this new provision are generating resources that produce electricity from wave, tidal, and ocean or river current energy.
The Bill also amends the qualification standards for "refined coal", which is a fuel produced from coal or lignite intended for use in steam production. Under the new requirements, refined coal must achieve at least a 40% emissions reduction, up from 20%, when compared to the feedstock coal. However, the Bill eliminates the requirement that the market value of the refined coal be 50% greater than the feedstock coal.
The PTC extenders are only one section of nearly 150 pages of energy provisions added to the Bill. The entire energy package, entitled the "Energy Improvement and Extension Act of 2008", is wide-ranging and includes tax incentives for coal gasification, transportation fuels, and energy efficiency measures. The result is a broad range of potential business opportunities for companies prepared to take advantage of these new provisions.
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