Green victory from senate bill proposal

Expansion within the US green sector could further explode if the House of Representatives and President Bush will approve the $18bn clean energy tax incentives passed by the Senate yesterday as part of the huge Baucus-Grassley bill. The amended proposal replaced the H.R. 6049 energy tax legislation approved in the House of Representatives earlier this year.

“This bill’s energy tax incentives will spark clean, homegrown sources of power and thousands of good-paying jobs here at home, too,” said Senate Finance Committee Chairman Max Baucus (D-Mont.). “These tax cuts for jobs, energy and families are coming not a moment too soon.”

In the bill’s Energy Improvement and Extension Act of 2008, tax credits for wind and refined coal is extended for one year, while credits for biomass facilities and marine-based energy source such as using waves and tides will be extended for 2 years.

Solar and fuel cell, however, got the best deal as the bill extends their 30% investment tax credit until 2016. The use of microturbines and geothermal also got a 10% tax credit until 2016.

Tax breaks for solar energy consumers such as residential and businesses will also be extended for 8 more years. Reuters reported this morning about several solar stocks rallying with this news. I wish I bought some!The proposed bill also authorizes $800 million of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion facilities.

In terms of carbon capture, the bill provides $1.5 billion in new tax credits for the creation of advanced coal electricity projects and coal gasification projects with carbon capture and sequestration (CCS) technology. Coal electricity project would have to capture and sequester at least 65% of the facility’s CO2 emissions and coal gasification project 75% or they forfeit the credits.

I’m sure environmental groups will not be too happy about the inclusion of coal in here, however clean they may be.

Meanwhile, those in the industrial sector who are diligently practicing their sustainability initiatives will be happy to know that the bill provides a $10 credit per ton for the first 75 million metric tons of CO2 captured and transported from an industrial source for use in enhanced oil recovery and $20 credit per ton for CO2 captured and transported from an industrial source for permanent storage in a geologic formation. Qualifying facilities must capture at least 500,000 metric tons of CO2 per year. The credit applies to CO2 stored or used in the United States.

In the automotive industry, drivers of plug-in electric vehicles will also get tax benefits ranging from $2,500 to $7,500. Cellulosic biofuel manufacturers can also immediately write off 50% of the cost of facilities if they are placed in service before January 1, 2013. Now that’s a great deal! I should check out my next-gen biofuel stocks immediately!

I’ll leave some of the proposed biofuel tax credit details to Simon Robinson’s Biofuels blog.

Other green tax credit proposals include energy-efficient homes and commercial buildings, whether their new or existing, and credits for energy-efficient appliances.

One itty-bitty bad news out of these, by the way, will target traditional oil and gas companies. According to the bill, the energy tax credits will be paid for by several offset provisions that include a delay of the tax deduction for domestic manufacturing activities of major American oil and gas companies. Rules will also be tightened concerning taxes on income earned overseas by these companies.

Also, oil spill liability tax is proposed to increase from 5 cents to 8 cents per barrel from 2009 though 2016, and to 9 cents in 2017. The bill also repeals the requirement that the tax be suspended when the unobligated balance exceeds $2.7 billion.

At this point, some House reps will probably modify something about it and if not, I’m sure we will hear protests from the White House on this issue.

2 Responses to Green victory from senate bill proposal

  1. geof fbaker 23 October, 2008 at 1:40 am #

    Some very intresting ideas and comments. I came across this page whilst looking for cheaper energy prices http://cheaperenergy.wordpress.com My bills haven risen by 35% this year and am now facing yet another increase by these greedy energy companies. (Thankfully I only rent so don’t have to worry about a mortgage as well.) Has anyone tried this green and cheap renewable energy? If so, be intrested to know how it worked for you.

  2. Kim 5 August, 2009 at 12:30 am #

    I think it is fantastic how the stimulus funds are making a difference. They are being taken advantage of all the time with the installation of geothermal heat pumps to replace high energy heating and cooling systems.

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