Country:United States
Policy status:Ended
Date Effective:2009
Policy Type:Economic Instruments>Fiscal/financial incentives>Grants and subsidies, Economic Instruments>Direct investment>Funds to sub-national governments, Economic Instruments>Fiscal/financial incentives>Tax relief
Policy Target:Transport, Energy Sector>Electricity Generation>Renewable, Industry, Framework/ Multi-sectoral Policy
Funding:USD 30 billion

The American Recovery and Reinvestment Act (ARRA), signed into law on 17 February 2009, is a supplemental spending bill that contains over USD 80 billion to support clean energy research, development, and deployment. Of this amount, an estimated USD 30 billion is available in the form of tax-based incentives. These tax provisions include: A Production Tax Credit (PTC) for renewable energy technologies ? taxpayers that invest in certain energy producing facilities may claim a tax credit equal to approximately USD 0.021 per kilowatt hour of energy produced by the qualifying facility from the date the project is placed in service. ARRA extends the placed in service deadline through the year 2012 for wind facilities and the year 2013 for closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy, and marine renewable facilities. ARRA also permits taxpayers to elect to claim an Investment Tax Credit in lieu of the Production Tax Credit. An Investment Tax Credit (ITC) for renewable energy technologies ? taxpayers that invest in certain energy properties are entitled to a 30% Investment Tax Credit based upon project costs for qualifying advanced energy properties. A new scheme also provides the option for developers to receive cash grants, of equal value to the ITC, instead of these PTC/ITC tax credits. Grants are available for renewable energy projects that are placed in service in 2009-10, or that begin construction in 2009-10 and are in service before 2013 for wind, 2017 for solar and 2014 for other qualified technologies. ARRA also removes the subsidised energy financing penalty under the ITC, allowing projects that apply for the tax credit to benefit from other state and local subsides. ARRA removes previous tax credit dollar caps for commercial small wind energy, solar water heating, and geothermal heat pump technologies. ARRA extends the 50% bonus depreciation (ability to claim 50% of the depreciable basis in the first year, with the remaining basis depreciated as normal according to the applicable schedules) to qualified renewable energy projects acquired and placed in service in 2009 (such as wind turbines and solar panels). ARRA also increases funding for Clean Renewable Energy Bonds, by USD 1.6 billion, for eligible renewable technologies owned by governmental or tribal entities, as well as municipal utilities and cooperatives. Manufacturing Tax Credit (MTC) for facilities located in the US: ARRA creates a new incentive for the creation or expansion of manufacturing facilities that produce clean energy components and systems. Up to USD 2.3 billion in tax credits are available for qualifying projects. MTC applicants receive a tax credit worth up to 30% of the capital costs for approved projects. Alternative Refueling Tax Credits: The alternative refueling property credit provides a tax credit to businesses (e.g., gas stations) that install alternative fuel pumps, such E85 fuel, electricity, hydrogen, and natural gas. For 2009 and 2010, the bill increases the 30% credit for businesses (capped at USD 30,000) to 50% (capped at USD 50,000). The cap for hydrogen refueling pumps is be increased to USD 200,000 (credit remains at 30%). In addition, the bill increases the 30% alternative refueling property credit for individuals (capped at USD 1,000) to 50% (capped at USD 2,000). An additional USD 2.4 billion provided in Energy Conservation Bonds for State, local, and tribal programmes to finance clean energy projects. The tax credit for residential energy efficiency upgrades is increased to 30% for 2009 and 2010 (from 10%) with a USD 1500 cap. The plug-in hybrid electric vehicle consumer tax credit is also increased, reaching up to USD 7 500.

This record supersedes:Energy Improvement and Extension Act 2008 - Tax Incentives

Last modified: Fri, 16 May 2014 17:58:35 CEST