Stimulus act, federal budget include renewable energy funding

By Ryan C. Christiansen | April 14, 2009
The $787 billion American Recovery and Reinvestment Act that President Barack Obama signed into law Feb. 17 includes $43 billion to support energy development, according to the White House. The Clean Energy Finance Authority program included in the recovery plan intends to revive the renewable energy industry and to double the amount of energy produced from renewable sources over the next three years. Collectively, this funding is expected to leverage nearly $100 billion in clean energy projects.

For producers, the legislation provides $6 billion for the Innovative Technology Loan Guarantee program to provide support for more than $60 billion in loans for renewable technologies. The legislation also provides $150 million to support $3 billion in rural business loans and grants.

In addition, the recovery plan creates a new 30 percent tax credit for investment in property used to re-equip, expand or establish a manufacturing facility designed to produce energy from renewable resources and to support the transmission of intermittent sources of renewable energy. The tax credit will also be used for property for carbon capture or sequestration, property designed to refine or blend fuels or produce energy conservation technologies, or other advanced energy property designed to reduce greenhouse gases (GHG).

For retailers, the recovery plan also temporarily increases the business credit for alternative refueling property from 30 percent to 50 percent of the cost of qualifying property and increases the cap on the credit for depreciable property from $30,000 to $50,000. It also increases the cap on the credit for non-depreciable property from $1,000 to $2,000, and applies to property placed in service during tax years 2009 and 2010.

For researchers, the legislation provides $16.8 billion for the Energy Efficiency and Renewable Energy Program, including $2.5 billion for applied research, development, demonstration and deployment activities to include $800 million for projects related to biomass. This particular area of funding also includes $300 million for the Alternative Fueled Vehicles Pilot Grant Program, which will provide grants to public or nonprofit entities for the purchase of alternative fueled vehicles and the installation or acquisition of infrastructure necessary to support the vehicles.

In addition to the recovery act, as of March, the proposed federal budget for fiscal year 2010 put forth by Obama contained billions of dollars in new spending for renewable fuels-related projects. The budget included $10.5 billion for the U.S. EPA, a 34 percent increase from 2009. The EPA budget included spending to develop a cap-and-trade program, which would require a reduction of GHG emissions to 14 percent below 2005 levels by 2020. Revenue from the program is expected to begin accruing in fiscal year 2012 and is projected to total $150 billion over 10 years.

During a press conference in March, USDA Secretary Tom Vilsack said he has encouraged the EPA to take aggressive action on increasing the blending rate to 12 or 13 percent for ethanol. "The role that USDA has is to make sure that regulators appreciate the stress that the biofuels industry is under, generally," Vilsack said. "Increasing that blend rate quickly would provide increased market opportunities and increased stability."

Estimated allocations for the USDA increased slightly from $24.6 billion in 2009 to $26 billion in 2010. Included in the funding is $250 million in loans and grants for renewable fuels projects. In March, Vilsack said the USDA will work with distressed ethanol producers to restructure loans using USDA loan guarantee programs.

Under the proposed budget, the U.S. DOE is allocated a total budget of $26.3 billion. Among its expected duties is continued support for research, development, demonstration and commercialization of biofuels and renewable energy through loan guarantees. Specific monetary totals were not supplied for the loan guarantee program.

In March, DOE Secretary Steven Chu said the DOE intends to continue the research necessary to commercialize generating gasoline and diesel-like biofuels from lumber waste, crop wastes, solid waste and nonfood crops.