The Economic Security and Recovery Act of 2001 (P. 107-104),
which
was signed into law in early 2002, includes a two-year extension of the
production tax credit (PTC) for new wind, closed-loop biomass, and poultry
waste facilities. The production tax credit, created originally in the
Energy Policy Act of 1992, provided an inflation-adjusted tax credit of
1.5 cents per Kilowatthour for electricity generated from qualifying projects.
Under the new law, the production tax credit is now extended retroactively
from the end of 2001 to December 31, 2003.
In
1978, the Energy Tax Act of 1978 (ETA) (P.L.95-618)
Residential energy (income)
tax credits for solar and wind energy equipment expenditures: 30 percent
of the first $2,000 and 20 percent of the next $8,000.
Business energy tax
credit: 10 percent for investments in solar, wind, geothermal, and ocean
thermal technologies; (in addition to standard 10 percent investment tax
credit available on all types of equipment, except for property which
also served as structural components, such as some types of solar collectors,
e.g., roof panels). In sum, investors were eligible to receive income
tax credits of up to 25 percent of the cost of the technology.
Percentage depletion for geothermal deposits: depletion allowance rate
of 22 percent for 1978-1980 and 15 percent after 1983.
In
1980, the Crude Oil Windfall Profits Tax Act of 1980 (WPT)
(P.L.96-223)
Increased the ETA residential
energy tax credits for solar, wind, and geothermal technologies from 30
percent to 40 percent of the first $10,000 in expenditures.
Increased the ETA business energy tax credit for solar, wind, geothermal,
and ocean thermal technologies from 10 percent to 15 percent, and extended
the credits from December 1982 to December 1985.
Expanded and liberalized the tax credit for equipment that either converted
biomass into a synthetic fuel, burned the synthetic fuel, or used the
biomass as a fuel.
Allowed tax-exempt interest on industrial development bonds for the development
of solid waste to energy (WTE) producing facilities, for hydroelectric
facilities, and for facilities for producing renewable energy.
In
1981, the Economic Recovery Tax Act of 1981 (ERTA)
(P.L.97-34)
Allowed accelerated depreciation of capital (five years for most renewable
energy-related equipment), known as the Accelerated Cost Recovery System
(ACRS); public utility property was not eligible.
Provided for a 25 percent tax credit against the income tax for incremental
expenditures on research and development (R&D).
In
1982, the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) (P.L.97-248)
Canceled further
accelerations in ACRS mandated by ERTA, and provided for a basis adjustment
provision which reduced the cost basis for purposes of ACRS by the full
amount of any regular tax credits, energy tax credit, rehabilitation tax
credit.
In
1982 through 1985, the Termination of Energy Tax Credits
In December 1982, the 1978 ETA energy tax credits terminated for the following
categories of non-renewable energy property: alternative energy property
such as synfuels equipment and recycling equipment; equipment for producing
gas from geopressurized brine; shale oil equipment; and cogeneration equipment.
The remaining energy tax credits, extended by the WPT, terminated on December
31, 1985.
In
1986, the Tax Reform Act of 1986 (P.L.99-514)
Repealed the standard 10 percent
investment tax credit.
Eliminated the tax-free status of municipal solid waste (MSW) powerplants
(WTE) financed with industrial development bonds, reduced accelerated
depreciation, and eliminated the 10 percent tax credit (P.L.96-223).
Extended the WPT business energy tax credit for solar property through
1988 at the rates of 15 percent for 1986, 12 percent for 1987, and 10
percent for 1988; for geothermal property through 1988 at the rates of
15 percent for 1986, and 10 percent for 1987 and 1988; for ocean thermal
property through 1988 at the rate of 15 percent; and for biomass property
through 1987 at the rates of 15 percent for 1986, and 10 percent for 1987.
(The business energy tax credit for wind systems was not extended and,
consequently, expired on December 31, 1985.)
Public utility property became eligible for accelerated depreciation.
In
1992, the Energy Policy Act of 1992 (EPACT) (P.L.102-486)
Established a permanent 10
percent business energy tax credit for investments in solar and geothermal
equipment.
Established a 10-year, 1.5 cents per kilowatthour (kWh) production tax
credit (PTC) for privately owned as well as investor-owned wind projects
and biomass plants using dedicated crops (closed-loop) brought on-line
between 1994 and 1993, respectively, and June 30, 1999.
Instituted the Renewable Energy Production Incentive (REPI), which provides
1.5 cents per kWh incentive, subject to annual congressional appropriations
(section 1212), for generation from biomass (except municipal solid waste),
geothermal (except dry steam), wind and solar from tax exempt publicly
owned utilities and rural cooperatives.
Indefinitely extended the 10 percent business energy tax credit for solar
and geothermal projects.
In
1999, the Tax Relief Extension Act of 1999 (P.L. 106-170)
Extends and modifies the production tax credit (PTC in EPACT) for electricity
produced by wind and closed-loop biomass facilities. The tax credit is
expanded to include poultry waste facilities, including those that are
government-owned . All three types of facilities are qualified if placed
in service before January 1, 2002. Poultry waste facilities must have
been in service after 1999.
A nonrefundable tax credit of 20 percent is available for incremental
research expenses paid or incurred in a trade or business.
Notes: The residential energy credit provided a credit (offset)
against tax due for a portion of taxpayer expenditures for energy conservation
and renewable energy sources. The general business credit is a limited
nonrefundable credit (offset) against income tax that is claimed after
all other nonrefundable credits.
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