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Showing posts with label TREASURY GREEN BOOK PROPOSAL. Show all posts
Showing posts with label TREASURY GREEN BOOK PROPOSAL. Show all posts
Tuesday, February 14, 2012
OBAMA ADMINISTRATION PROPOSES ADDITIONAL TAX CREDITS FOR ADVANCED ENERGY PROJECTS
The following excerpt is from the Department of Treasury website:
"ADDITIONAL TAX CREDITS FOR INVESTMENT IN QUALIFIED
PROPERTY USED IN A QUALIFYING ADVANCED ENERGY MANUFACTURING
PROJECT
Current Law
A 30-percent tax credit is provided for investments in eligible property used in a qualifying
advanced energy project. A qualifying advanced energy project is a project that re-equips,
expands, or establishes a manufacturing facility for the production of: (1) property designed to
produce energy from renewable resources; (2) fuel cells, microturbines, or an energy storage
system for use with electric or hybrid-electric vehicles; (3) electric grids to support the
transmission, including storage, of intermittent sources of renewable energy; (4) property designed
to capture and sequester carbon dioxide emissions; (5) property designed to refine or blend
renewable fuels or to produce energy conservation technologies; (6) electric drive motor vehicles
that qualify for tax credits or components designed for use with such vehicles; and (7) other
advanced energy property designed to reduce greenhouse gas emissions.
Eligible property is property: (1) that is necessary for the production of the property listed above;
(2) that is tangible personal property or other tangible property (not including a building and its
structural components) that is used as an integral part of a qualifying facility; and (3) with respect
to which depreciation (or amortization in lieu of depreciation) is allowable.
Under the American Recovery and Reinvestment Act of 2009 (ARRA), total credits were limited to
$2.3 billion, and the Treasury Department, in consultation with the Department of Energy, was
required to establish a program to consider and award certifications for qualified investments
eligible for credits within 180 days of the date of enactment of ARRA. Credits may be allocated
only to projects where there is a reasonable expectation of commercial viability. In addition,
consideration must be given to which projects: (1) will provide the greatest domestic job creation;
(2) will have the greatest net impact in avoiding or reducing air pollutants or greenhouse gas
emissions; (3) have the greatest potential for technological innovation and commercial deployment;
(4) have the lowest levelized cost of generated or stored energy, or of measured reduction in energy
consumption or greenhouse gas emission; and (5) have the shortest completion time. Guidance
under current law requires taxpayers to apply for the credit with respect to their entire qualified
investment in a project.
Applications for certification under the program may be made only during the two-year period
beginning on the date the program is established. An applicant that is allocated credits must
provide evidence that the requirements of the certification have been met within one year of the
date of acceptance of the application and must place the property in service within three years from
the date of the issuance of the certification.
Reasons for Change
The $2.3 billion cap on the credit has resulted in the funding of less than one-third of the
technically acceptable applications that have been received. Rather than turning down worthy
projects that could be deployed quickly to create jobs and support economic activity, the program –8
which has proven successful in leveraging private investment in building and equipping factories
that manufacture clean energy products in America – should be expanded. An additional $5 billion
in credits would support nearly $17 billion in total capital investment, creating tens of thousands of
new construction and manufacturing jobs. Because there is already an existing pipeline of worthy
projects and substantial interest in this area, the additional credit can be deployed quickly to create
jobs and support economic activity.
Proposal
The proposal would authorize an additional $5 billion of credits for investments in eligible property
used in a qualifying advanced energy manufacturing project. Taxpayers would be able to apply for
a credit with respect to part or all of their qualified investment. If a taxpayer applies for a credit
with respect to only part of the qualified investment in the project, the taxpayer’s increased cost
sharing and the project’s reduced revenue cost to the government would be taken into account in
determining whether to allocate credits to the project.
Applications for the additional credits would be made during the two-year period beginning on the
date on which the additional authorization is enacted. As under current law, applicants that are
allocated the additional credits must provide evidence that the requirements of the certification
have been met within one year of the date of acceptance of the application and must place the
property in service within three years from the date of the issuance of the certification.
The change would be effective on the date of enactment.
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