Production tax credits signed into law

On September 3rd, President Bush signed into law the renewable energy and energy efficiency Production Tax Credits and Investment Tax Credit Package. A summary of key provisions generated by 25x'25 are as follows:

•    Extends wind energy production tax credit for one year, through December 31, 2009.

•    Extends production tax credits from other renewable sources- solar, geothermal, and hydro energy through December 31, 2010.  Extends credits to marine renewable energy sources.  Expands the definition of facilities to include new biomass facilities.
 
•    Authorizes $2 billion of new Clean Renewable Energy Bonds (CREBs) for facilities producing electricity from all types of biomass, wind, geothermal, hydropower, landfill gas, trash combustion, marine and other small water-to-electricity projects.

•    Extends the biodiesel tax incentive through December 31, 2009. The new law provides that all biodiesel, regardless of the feedstock used to produce the fuel, qualifies for the $1 per gallon biodiesel incentive.  The measure also closes the so-called "splash and dash" loophole that made eligible for the tax credit any foreign-finished fuel sent to the United States, "splash"-blended with just enough U.S. fuel to claim the tax incentive, and then shipped to a third country for final use. The measure also defines the $1 renewable diesel tax incentive to exclude renewable diesel co-processed with petroleum products.

•    Continues the alternative fuel excise tax credit of $0.45 per gallon through December 31, 2009 for all fuels except hydrogen (the latter currently expires at the and of 2014).

•    Continues E85 station and fossil-free alcohol production tax credits.

•    Allows taxpayers to write off 50 percent of the cost of facilities that produce cellulosic ethanol, if such facilities go into operation before January 1, 2013.

•    Establishes a credit for plug-in hybrid vehicles at $2500.

•    Continues credits for energy efficiency improvements in homes, new homes, and appliances.

•    Extends green building bonds, and institutes new smart meter cost-recovery mechanisms.

•    Provides $2.5 billion in new tax credits for carbon capture and sequestration demonstration projects.

•    The bill is offset partially by establishing an excise tax on removal of price of crude oil and natural gas from offshore sites, and repealing manufacturing deductions for large oil and gas companies.