Stimulus Bill Includes More Than $100 billion for CleanTech

The $825 billion economic stimulus bill rolled out last week by House Democrats includes $19.96 billion of tax incentives for wind and solar energy, $53.75 billion for direct spending on energy technology programs largely focused on energy efficiency and on the national grid, and $18.27 billion for water and environmental spending.

According to the "American Recovery and Reinvestment Tax Act of 2009" (PDF) released over the Martin Luther King holiday weekend by the House Ways and Means Committee, the bill would extend the placed-in-service date for wind facilities through 2012. It would also extend the placed-in-service date for other qualifying facilities, including closed-loop biomass, geothermal, hydropower, landfill gas, waste-to-energy, and marine renewable facilities, through December 2013. This proposal is estimated to cost the government $13.14 billion over 10 years.

Because current market conditions and the uncertain future tax positions of potential investors in renewable projects have made it harder for the industry to find financing, the bill will also allow facilities that are placed-in-service in 2009 and 2010 to elect to claim the investment tax credit (ITC) in lieu of the production tax credit (PTC).

Under current law, facilities that produce electricity from solar facilities are eligible to take a 30% investment tax credit in the year that the facility is placed in service. Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy, and marine renewable facilities are eligible for a production tax credit that is payable over 10 years. The proposal to allow a temporary election to claim the ITC in lieu of the PTC is estimated to cost $218 billion over 10 years.

Currently, the investment tax credit must be reduced if the property qualifying for the investment tax credit is also financed with industrial development bonds or through any other federal, state, or local subsidized financing program. The bill would repeal this subsidized energy financing limitation on the investment tax credit in order to allow businesses and individuals to qualify for the full amount of the investment tax credit even if such property is financed with industrial development bonds or through any other subsidized energy financing.

The bill also authorizes an additional $1.6 billion of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable, and trash combustion facilities. This $1.6 billion authorization will be subdivided into thirds: A third will be available for qualifying projects of state/local/tribal governments; a third for qualifying projects of public power providers; and the final third for qualifying projects of electric cooperatives. This proposal is estimated to cost $578 million over 10 years.

The bill also designates $11 billion for national grid improvements, $2.4 billion for carbon capture and sequestration projects, and $2 billion in energy technology research grants.

According to an analysis of the bill by Ardour Capital Investments, indirect subsidies put the bill’s spending on clean technology over $100 billion. “Outside the energy and environmental sections of the bill, there is $42.36 billion in various construction and jobs programs that have a strong focus on energy efficiency. We believe at least 20% of this amount will be spent on CleanTech and increase the total for the sector to over $100 billion. Note that these cost are over a 10 year period,” the group said in a statement.

The group broke down the bill’s energy spending as follows (all figures are in billions):

 
Courtesy: Ardour Capital Investments

President Obama issued a statement praising the bill, saying it would "save or create over three million jobs, provide tax relief to struggling families and businesses that create jobs, and invest in priorities like health care, education, and energy that will make America strong and competitive in the 21st century."

The House expects that it will call for votes this week on the bill. The bill would then be advanced to the floor for a vote during the last week of this month. A companion measure is expected to advance in the Senate in the same timeframe.

Sources: House of Representatives Committee on Ways and Means, Ardour Capital Investments