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Tax Breaks for Businesses, Utilities, and Governments

The recently passed Emergency Economic Stabilization Act of 2008 (P.L. 110-343) included, extended and/or amended many offered for businesses, utilities, and government originally introduced in the Energy Policy Act of 2005 (EPACT). The bill also included tax incentives for consumers. For a complete summary of the tax incentives included in the bill, download the summary of Energy Tax Incentives in The Emergency Economic Stabilization Act of 2008.

The following types of incentives are covered in the bill:

Renewable Energy Incentives
These incentives include tax credits for production and facilities using wind, refined coal, geothermal, biomass, solar, and combined heat and power systems. In addition, $800 million of Clean Renewable Energy Bonds (CREBs) are authorized to finance renewable facilities.

Transportation & Domestic Fuel Security
These incentives provide tax credits for alternative fueling stations, cellulosic biofuel facilities, and for alternative fuel production, including biofuels, biomass gas versions of liquefied petroleum gas, liquefied or compressed natural gas, and aviation fuels. Idle reduction units and advanced insulation for heavy vehicles are also provided a tax exemption.

Energy Conservation and Efficiency
These incentives provide financing and incentives for state and local governments to reduce greenhouse emissions, for builders and developers to build efficient buildings or to improve existing buildings, and for manufacturers to produce efficient appliances. In addition, these incentives allow for swifter recovery of the cost of smart electric meters and grid equipment.

The table below outlines the incentives offered in the 2008 Economic Stabilization Act, as well as the audiences to which they apply.

Incentive

Details

Public Utilities

Businesses

Manufacturers

Government – States, Municipal, Tribal

Renewable Energy Incentives

Wind and refined coal production tax credit

Placed in service by Jan. 1, 2010

x

x
Energy Producers

 

 

Other sources (e.g., geothermal) production tax credit

Placed in service by Jan. 1, 2011

x

x
Energy Producers

 

 

Biomass facilities and facilities that generate electricity from marine renewables (e.g. wave and tidal) production tax credit

Placed in service by Jan. 1, 2011

x

x
Energy Producers

 

 

Solar energy and qualified fuel cell property

30% investment tax credit
Placed in service by Jan. 1, 2017

x

x
- Energy Producers
- Financial Investors

 

 

Qualified small wind energy property

30% investment tax credit

x

x
- Energy Producers
- Financial Investors

 

 

Microturbines

10% investment tax credit
Placed in service by Dec. 31, 2016

x

x
- Energy Producers
- Financial Investors

 

 

Clean Renewable Energy Bonds (CREBs) for facilities that generate electricity from:

  1. wind
  2. closed-loop biomass
  3. open-loop biomass
  4. geothermal
  5. small irrigation
  6. qualified hydropower
  7. landfill gas
  8. marine renewables
  9. trash combustion

$800 million of renewable energy bonds. The new bond authorization is allocated into thirds among qualifying:
- projects of state, local, tribal governments
- projects of public power providers
- electric cooperatives
Dec. 31, 2009.

x

 

 

x

Transportation and Domestic Fuel Security

Facilities that produce cellulosic biofuels.

This tax benefit is now available for the production of other cellulosic biofuels in addition to cellulosic ethanol.

Taxpayers may immediately write off 50% of the cost of facilities.

For facilities placed in service before Jan. 1, 2013.

 

x
- Fuel Producers

 

 

Biodiesel production tax credit.

The bill eliminates the current-law disparity in credit for biodiesel and agri-biodiesel, and eliminates the requirement that renewable diesel fuel must be produced using a thermal depolymerization process.

Biodiesel imported and sold for export will not be eligible for the credit effective May 15, 2008.

$1.00 per gallon tax credit

Available through Dec. 31, 2009

 

x
- Fuel Producers

 

 

Credit for small biodiesel producers

10¢/gallon tax credit
Available through Dec. 31, 2009

 

x
- Fuel Producers

 

 

Diesel fuel created from biomass production tax credit.

$1.00 per gallon tax credit

 

x
- Fuel Producers

 

 

Diesel fuel created by co-processing biomass with other feedstocks (e.g., petroleum).

50¢/gallon tax credit

 

x
- Fuel Producers

 

 

Alternative fuel excise tax credit through for all fuels except hydrogen.

Beginning in October 2009, qualified fuel derived from coal through the Fischer-Tropsch process must be produced at a facility that separates and sequesters at least 50% of its CO2 emissions. This sequestration requirement increases to 75% on Dec. 31, 2009.

Biomass gas versions of liquefied petroleum gas, liquefied or compressed natural gas, and aviation fuels are qualifying alternative fuels.

Available through Dec. 31, 2009

 

x
- Fuel Producers

 

 

Exemption from the heavy vehicle excise tax for the cost of idling reduction units, such as auxiliary power units (APUs), that eliminate the need for truck engine idling at rest stops or other temporary parking locations.

The bill also exempts the installation of advanced insulation, which can reduce the need for energy consumption by transportation vehicles carrying refrigerated cargo.

tax exemption

 

x – Truck Drivers

x- Vehicle Manufacturers

 

Alternative refueling property, such as natural gas or E85 pumps. Electric vehicle recharging properties are now eligible for the credit.

The credit for hydrogen refueling property is unchanged.

30% tax credit
Available through Dec. 31, 2010

 

x
- Independent Retailers
- Energy Producers

 

 

Publicly traded partnerships may treat income from the transportation or storage of certain alternative fuels and anthropogenic CO2 as qualifying income for purposes of the publicly traded partnership rules.

 

 

x
- Public Companies
- Financial Investors

 

 

Energy Conservation and Efficiency

Tax credit bonds to finance state and local government initiatives designed to reduce greenhouse emissions.

National limitation of $800 million, allocated to states, municipalities and tribal governments

 

 

 

x

Energy-efficient property installed in commercial buildings.

The energy savings must be accomplished through energy and power cost reductions for the building’s heating, cooling, ventilation, hot water, and interior lighting systems.

The amount deductible is up to $1.80 per square foot of building floor area for buildings achieving a 50% energy savings target.

Available through December 31, 2013

 

x

 

 

Energy-efficient new homes.

Contractors receive a credit for constructing homes that achieve a 30% or 50% reduction in heating and cooling energy consumption relative to a comparable dwelling.

The credit equals $1,000 for homes meeting a 30% efficiency standard, and $2,000 for homes meeting a 50% standard.
Available through Dec. 31, 2009

 

x
- Residential Home Builders

 

 

Manufacturers receive a tax credit for the production of energy-efficient dishwashers, clothes washers, and refrigerators. Credit is provided only for appliances that are U.S.-produced.

 

The bill changes specific efficiency criteria, the allowable credit amount, and extends the credit to appliances manufactured.

 

 

x

 

The bill provides accelerated depreciation for smart electric meters and smart electric grid equipment.

 

The bill allows taxpayers to recover the cost of this property over a 10-year period, unless the property already qualifies pursuant to a shorter recovery schedule.

 

x

 

 

Qualified green building and sustainable design project bonds.

Available through Oct. 1, 2012

 

x
- Real Estate Developers

 

 

 

Last Reviewed: 10/21/2008

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