Country:United States
Policy status:Superseded
Date Effective:2008
Policy Type:Economic Instruments>Fiscal/financial incentives>Tax relief
Policy Target:Wind, Bioenergy>Biofuels for transport, Bioenergy>Biomass for heat, Bioenergy>Biomass for power, Geothermal>Heat, Geothermal>Power, Ocean>Tidal, Ocean>Wave, Solar
Policy Sector:Multi-sectoral Policy
Size of Plant Targeted:Small and Large
Agency:Internal Revenue Service (IRS)
Legal References:H.R. 1424 Division B: Energy Improvement and Extension Act 2008; Public Law No: 110-343

Signed into law in October 2008, the Emergency Economic Stabilization Act of 2008 (H.R. 1424) included the Energy Improvement and Extension Act, which extended production tax credits (PTC) and investment tax credits (ITC) for various renewable energy sources, which were due to expire at the end of 2008. It also modified existing tax incentives for energy efficiency investments, as well as creating new ones. In terms of renewable energy, the Act extended the PTC for wind power by one year, till the end of 2009 (in 2007 this equalled USD 2.0 cents/kilowatt hour). In addition, small wind power gained a 30% ITC, up to USD 4,000 for wind turbines with capacities of 100 kilowatts or less, through to 2016. The bill also provided a two-year PTC extension, through 2010, for electricity produced from geothermal, biomass, and solar energy facilities, as well as waste-to-energy facilities, small hydropower facilities using irrigation water, capacity additions to existing hydropower plants, and hydropower facilities added to existing dams. Solar energy gained an eight-year extension (through 2016) of the 30% ITC for residential and commercial solar installations, as well as the elimination of the USD 2,000 tax credit cap for residential solar electric installations. In addition, the bill created a new ITC for electricity produced by marine and hydrokinetic renewable energy systems (also called advanced water power systems) with a rated capacity of at least 150 kilowatts and placed in service by 2011. The tax credits for fuel cells were also extended by 8 years, and the fuel cell tax credit limit tripled, to USD 1,500 for each 0.5 kilowatts of capacity. The act also created a new 10% tax credit for certain combined heat and power systems and for geothermal heat pumps (up to USD 2,000). For biofuel producers, the act extended a 50% first-year depreciation for cellulosic biomass ethanol plants to include any plant producing biofuels from cellulosic (non-food) biomass sources. The act also extended through 2009 a PTC of USD 1 per gallon for biodiesel and other biomass-based diesel fuels, and a credit of USD 10 cents per gallon for small biodiesel producers. It also reduced the PTC for renewable diesel blended with petroleum to USD 50 cents per gallon, while closing a loophole that allowed foreign producers to earn a U.S. tax credit. The act also extended a 30% tax credit for alternative fuel refueling facilities through 2010. To facilitate financing, the bill authorised USD 800 million in new Clean Renewable Energy Bonds for all of the above technologies. It also ends a prohibition on utilities from obtaining the ITC. The Act also aims for a more complete use and benefit of the tax credits. To this end it includes a provision to increase the income limits for the Alternative Minimum Tax (part of the federal income tax system which limits the types of deductions certain taxpayers can use to lower their tax). It also allows unused tax credits to be carried over to the following year.

This record is superseded by:American Recovery and Reinvestment Act of 2009: Tax-Based Provisions

Last modified: Tue, 09 Jun 2015 18:37:04 CEST