The US energy bill of 2005 has received a mixed bag of reviews depending on your interests. The folowing are the portions of the energy bill that appear to be most relevant to the topics I discuss:
A two-year extension of a tax credit to companies that produce power from renewable sources — an allocation worth $2.7 billion. The bulk of those funds will promote the construction of new wind farms, a boon to utilities and wind turbine manufacturers, while the remainder will assist biomass, geothermal and hydroelectric companies.
Biofuels : A 7.5 billion gallon Renewable Fuels Standard (RFS) which would add billions of gallons of ethanol, biodiesel and other renewables to the nations fuel supply by 2012. In addition to the RFS, the bill updates the small ethanol producer definition to 60 million gallons, extends the biodiesel tax credit through 2008, and establishes a 30% tax credit up to $30,000 for the cost of installing clean fuel refueling equipment, such as an E85 fuel pump.
Solar : Increases the permanent 10 percent business energy credit for solar to 30% for two years. Eligible technologies include photovoltaics, solar water heaters, concentrating solar power, and solar hybrid lighting. The credit reverts back to the permanent 10 percent level after two years. The bill establishes a 30 percent residential energy credit for solar for two years. For residential systems, the tax credit is capped at $2,000.
Geothermal, Wind: The bill continues to include geothermal energy in the Section 45 Production Tax Credit (PTC) for the full 1.9 cent/kwhr credit amount, but expands the credit period from five to the full ten years. As a result, geothermal and wind will now receive equal tax treatment -- the full ten-year, 1.9 cent production tax amount. Other technologies, such as open loop biomass, receive the full ten-year credit but for half the credit amount, or 0.95 cents/kwhr. The biggest clean energy perk in the bill was a two-year extension of a tax credit critical to companies that produce power from renewable sources -- an allocation worth $2.7 billion. The bulk of those funds will promote the construction of new wind farms, a boon to utilities and wind turbine manufacturers, while the remainder will assist biomass, geothermal and hydroelectric companies.
Direct users of geothermal energy may use a simpler procedure for leasing, or establishing a fee schedule instead of royalties payments. State and local governments are allowed to use geothermal resources for public purposes at a nominal charge.
Hybrid, fuel efficient vehicles: Close to $875 million in tax credits could be given to those who buy hybrid gas-electric vehicles before 2010. The bill favors companies that are just getting into the hybrid business. Each manufacturer can apply the tax credit to just 60,000 vehicles. Toyota sells roughly 150,000 hybrids per year and Honda 50,000 which means that a only a portion of their vehicles will be eligible for credits. The bill fails to include any provision for new fuel efficiency standards.
A new category of tax credits known as clean renewable energy bonds, or CREBs, that have an estimated value of $400 million. These tax-exempt bonds can be issued by local governments or electricity cooperatives to help pay for wind, solar, biomass and other specified projects. An additional $194 million will go toward the two-year extension of excise- and income-tax credits for manufacturers of biodiesel, a soybean derivative that is blended with regular diesel.
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