Notes on Energy in the Stimulus Package

President Obama’s stimulus package passed today in the United States House, wrapping up the first step of its journey to passage. Although the bill must make it past Republican opposition in the Senate, it’s almost certainly in the clear.

Because of its massive size — at $819 billion, it may be the largest one-off expenditure ever — the bill has received plenty of coverage, but little commentary on its specifics. As energy is one of the largest sections of the bill, I decided to dig in and see what it provides for.

While the House’s version of the bill had its own sections, I’ve reordered the items in a way that made a bit more sense to me, as well as skipping some that seemed to minor to list. Here they are:

Renewables and tax credits

• Existing tax credits on the following are extended through 2009: Wind, refined coal, biodiesel and renewable diesel (except foreign-produced fuel), regular fuels that incorporate biomass gas, energy-efficient biomass fuel stoves and residential energy efficiency improvements
• Existing tax credits on the following are extended through 2010: Solar, biomass and most other renewables, alternative fuel vehicle refueling expenditures,
• The tax deduction for energy efficient commercial buildings is extended through 2013
• Existing tax credits on the following are extended through 2016: Home solar, fuel cells, microturbines, and “energy efficient property”. These credits are also now offset against alternative minimum tax liabilities; utilities are qualified for this
• The credit limit for fuel cells is increased to $1,500
• Marine and hydrokinetic energy will qualify for renewable energy tax credits
• Residential wind turbines and geothermal heat pumps will receive a new 30 percent tax credit

Coal

• Advanced coal projects receive a 30 percent investment tax credit rate; the maximum credits allowed are now $2.55 billion
• Coal gasification has also received a 30 percent ITC rate
• The steel industry can claim liquefied coal waste sludge that is used as a feedstock for making coke as a “renewable resource”
• CO2 sequestration is allowed its own tax credit

Utilities

• Utilities can continue issuing clean renewable energy bonds through 2009, and they are also allowed a new tax credit for the bonds
• Utilities can also defer taxes on the gains they made by selling transmission properties to independent transmission companies through 2009

Vehicles and transportation

• Plug-in electric vehicles will receive a new tax credit that won’t expire until 2015
• Employees can now exclude any reimbursements their company gives them for commuting by bike from their taxes
• For trucks, idling reduction devices and advanced insulation will be protected from the excise tax

Energy efficiency (some of these are under the credits section)

• Investment in energy conservation bonds for consumption reduction projects is allowed a new tax credit
• Smart electric meters and grid systems get an accelerated 10-year recovery period
• Tax-exempt bonds for green building and sustainable designs have been extended through 2012

Miscellaneous

• A review is ordered on all tax code provisions that may have effects on greenhouse gas emissions
• The suspension of the taxable income limit on percentage depletion of oil and natural gas on marginal properties has been extended
• Some refinery property costs can now be expensed through 2013
• The tax deduction for domestic production by oil and gas companies has been reduced by 3 percent