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Energy and efficiency intact in stimulus bill

Tens of billions of dollars for renewable energy and energy efficiency in direct investment and tax incentives are packed into a compromise bill.

Martin LaMonica Former Staff writer, CNET News
Martin LaMonica is a senior writer covering green tech and cutting-edge technologies. He joined CNET in 2002 to cover enterprise IT and Web development and was previously executive editor of IT publication InfoWorld.
Martin LaMonica
4 min read

The Senate on Wednesday reached an agreement on a massive government stimulus bill that includes tens of billions of dollars for energy through direct government investments and tax incentives.

The Senate pared down the package to $790 billion from the House's $820 billion version, but the majority of energy-related infrastructure spending and incentives remain in the compromise bill. Final votes on the bill, called the American Recovery and Reinvestment Act of 2009, in both houses could happen on Friday.

Overall, there is $50 billion for energy programs, much of it focused on energy efficiency and renewable energy, and $20 billion in tax incentives for renewable energy and efficiency, according to a conference report released by House Speaker Nancy Pelosi's office (click for PDF) and an Associated Press analysis. Provisions include:

  • $5 billion to weatherize homes of up to 1 million low-income people.

  • $11 billion toward smart-grid technologies to run the power grid more efficiently.

  • $13.9 billion in loans to subsidize renewable-energy projects and transmission.

  • $6.3 billion in state energy-efficient and clean-energy grants.

  • $4.5 billion to make federal buildings more energy efficient.

There is $2 billion for advanced battery manufacturing and over $2 billion for carbon capture and storage demonstration projects, according to a Wall Street Journal comparison of the House and Senate versions.

The bill has $400 million in spending to create the Advanced Research Project Agency-Energy (ARPA-E) "to support high-risk, high-payoff research into energy sources and energy efficiency in collaboration with industry," according to Pelosi's office.

In transportation, there is $8.4 billion for mass transit and $8 billion for construction of high-speed railways.

In a win for the renewable-energy industry, the bill gives renewable-energy project developers an alternative method to take advantage of government incentives.

Many renewable-energy projects have been stalled, or scrapped, because many investors don't have enough income to take advantage of the existing 30 percent federal tax credit. The bill now allows renewable-energy project developers to effectively get the same credit by applying for a loan from the Department of Energy for 30 percent of the project, explained Rhone Resch, the president of the Solar Energy Industry Association (SEIA).

The bill extends the tax credit for wind power investments three years through 2012 and for electricity derived from biomass, geothermal, hydropower, landfill gas, waste-to-energy, and ocean power facilities through 2013.

The restructured renewable energy incentives and loan guarantees are designed to bring back financial liquidity to the renewable energy business, which has been hard hit by the credit crisis.

"We have met with company after company (in solar and wind) that have had to shelve projects because they couldn't get access to capital markets," Carol Browner, the White House energy and climate director, told the AP earlier this week. "In these small companies, access to capital is going to make a big difference."

There are also tax credits available for investment in "advanced energy facilities" and billions of dollars available for installation of solar on government buildings, military bases, and schools, according to the SEIA.

Solar hot water
For consumers, there are more incentives for purchasing renewable energy systems and up to a $7,500 tax rebate for plug-in electric vehicles.

To retrofit existing homes to be more efficient, the bill extends and expands tax credits for purchase "such as new furnaces, energy-efficient windows and doors, or insulation," according to the committee report. The House and Senate versions extended these credits to 2010 and increased the level to 30 percent with a cap of $1,500 on combined purchases, according to Environment and Energy Daily (subscription required).

Solar hot-water systems will be more attractive because the $2,000 cap on the 30 percent tax credit is lifted, according to SEIA's Resch. The Senate version of the bill also removed the $4,000 tax credit cap on small wind investments.

"We think it's a pretty big boost of adrenaline for the industry," SEIA's Resch said. "It will take a little longer for the manufacturing incentives to take hold, but we'll see demand in the next couple of weeks pick up and (solar) installers start to put up help wanted signs."

The $30 billion in direct spending on smart grid, advanced batteries, and energy efficiency will create 500,000 jobs, said Pelosi's office.

Environmental groups urged passage of the bill. "Tens of billions of dollars for clean energy, energy efficiency, public transportation, scientific research and a smart energy grid remain. Tens of billions set to be wasted on coal and other outdated energy sources were removed," said Gene Karpinski, president of the League of Conservation Voters, in a statement.

Friends of the Earth President Brent Blackwelder said that provisions to authorize $50 billion in loan guarantees for the nuclear industry were removed.