Renewable Energy: Background and Issues for the 110th Congress

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Renewable energy can be used to produce liquid fuels and electricity. A variety of funding, tax
incentives, and regulatory policies have been enacted to support renewables as a means for
addressing concerns about energy security, air pollution, international competitiveness, and
climate change. This report reviews the background for renewables and describes the current
congressional debate.
Budget and funding issues are key concerns. The Energy Policy Act of 2005 authorized several
new renewable energy demonstration and deployment programs, but most of them have not been
funded. Further, the Energy Independence and Security Act of 2007 (P.L. 110-140) authorized
several new renewable energy programs that have not yet received appropriations. The
Consolidated Appropriations Act for 2008 (P.L. 110-161) increased Department of Energy (DOE)
renewable energy funding by $31.4 million (7%). The Continuing Appropriations Resolution for
FY2009 (P.L. 110-329, H.R. 2638) continues DOE funding at the FY2008 level through March 6,

2009.

Tax policies are also at issue. The interaction of the federal renewable energy electricity
production tax credit (PTC) with state renewable portfolio standard (RPS) policies has forged a
strong incentive for wind energy development. The Emergency Economic Stabilization Act of
2008 (P.L. 110-343 [Division B], H.R. 1424) extends the PTC for wind farms for one year (three
years for most other renewables) through the end of 2009, provides $800 million for a new
category of clean renewable energy (tax credit) bonds, and extends for eight years the 30% level
for the business solar tax credit and the 30% residential solar tax credit. Further, the law repeals
nearly $17.7 billion in tax subsidies for oil and natural gas and reduces certain other financial
incentives that will be used to offset the cost of the tax incentives for renewable energy ($9.1
billion) and energy efficiency ($3.6 billion).
The ethanol fuel issue intensified for much of the 110^th Congress. Corn ethanol production
climbed rapidly, but appeared to be causing food price increases. Concerns about rising food
prices and apparent limits to the long-term potential for corn ethanol have brought a focus on
cellulosic ethanol. Cellulosic sources avoid many limits on corn and appear to have much lower
net CO² emissions, but they require an extensive and costly conversion process. P.L. 110-140 set
a new renewable fuels standard (RFS), which starts at 9.0 billion gallons in 2008 and rises to 36
billion gallons in 2022. P.L. 110-343 (H.R. 1424) and the farm bill (P.L. 110-246, H.R. 6124)
contain several tax incentives and other provisions for biofuels.

History and Background..................................................................................................................1
Fuels Production........................................................................................................................1
Electricity Production................................................................................................................2 ^th
Action in the 110 Congress.....................................................................................................3
Budget and Funding Issues and Action...........................................................................................4
EPACT Implementation (P.L. 109-58)......................................................................................4
Loan Guarantee Program....................................................................................................4
Biofuels and Other New Program Authorizations..............................................................7
Energy Independence Act Implementation (P.L. 110-140).......................................................8
Accelerated Research and Development.............................................................................8
International Energy Programs...........................................................................................8
Green Jobs...........................................................................................................................9
FY2009 DOE Budget................................................................................................................9
Energy Efficiency and Renewable Energy..........................................................................9
Electricity Delivery and Energy Reliability.......................................................................11
FY2009 Department of Agriculture (USDA) Request.............................................................11
Congressional Action on FY2009 Appropriations (P.L. 110-329)..........................................12
House Passes H.R. 2638, Continuing Appropriations Resolution....................................12
House Passes H.R. 7110, Supplemental Appropriations...................................................12
Senate Adopts H.R. 2638..................................................................................................13
Tax Credit Issues and Action (P.L. 110-343).................................................................................13
Debate over Proposed Incentives............................................................................................14
Renewable Energy Electricity Production Tax Credit (PTC)..................................................14
Background and History...................................................................................................14
Current Status and Past Significance................................................................................15
Revenue Effects................................................................................................................15
Impact on Resource Development....................................................................................15
Combined Impact with State Renewable Portfolio Standards..........................................17
Credit Design Issues.........................................................................................................18
Debate Over PTC Extension.............................................................................................19
Solar Investment Tax Credits..................................................................................................21
Residential Credit.............................................................................................................21
Business Credit.................................................................................................................21
Other Business Tax Credits.....................................................................................................22
Clean Renewable Energy (Tax Credit) Bonds.........................................................................22
Revenue Offsets Debate..........................................................................................................24
Regulatory Issues and Action........................................................................................................24
Renewable Portfolio Standard (RPS)......................................................................................24
State RPS Debate..............................................................................................................25
Federal Tax Credit (PTC) Supports State RPS Policies....................................................25
Federal RPS Debate..........................................................................................................25
Other Regulatory Issues..........................................................................................................26
Wind Energy.....................................................................................................................26
Marine (Tidal, Wave, and Ocean) Energy and Hydrokinetic (River Current)
Energy ............................................................................................................................ 27
Renewable Fuels and Energy Security..........................................................................................28

Types of Renewable “Biofuels”..............................................................................................28
Corn Ethanol.....................................................................................................................28
Corn Ethanol Impacts and Debate....................................................................................28
Cellulosic Ethanol.............................................................................................................29
Renewable Fuel Standard (RFS).............................................................................................29
New Goals Set By the Energy Independence Act.............................................................29
Implementation Concerns.................................................................................................30
Potential to Reduce Oil Imports........................................................................................30
Biofuels Funding and Tax Issues.............................................................................................30
Biofuels Technology Funding Initiative............................................................................30
Tax Incentives Provided in P.L. 110-343 (Division B) ....................................................31
Climate Change.............................................................................................................................31
CO² Emissions Reduction Estimates.......................................................................................31
Support for Renewables to Curb CO².....................................................................................32
Climate Security Act (S. 3036)...............................................................................................32
Legi slation ..................................................................................................................................... 33
Major Laws Enacted in the First Session................................................................................33
FY2008 Appropriations (P.L. 110-161)............................................................................33
Energy Independence and Security Act (P.L. 110-140)....................................................33
Major Laws Enacted in Second Session.................................................................................34
Farm Bill (P.L. 110-246) Provisions.................................................................................34
FY2009 Appropriations (P.L. 110-329)............................................................................34
Emergency Economic Stabilization Act (P.L. 110-343)....................................................34
Other Laws and Bills...............................................................................................................35
Table 1. DOE Loan Guarantee Program Funding...........................................................................6
Table 2. Selected Wind Production Tax Credit (PTC) Extension Proposals.................................20
Table 3. Clean Renewable Energy Bonds History.........................................................................24
Table 4. DOE Renewable Energy Budget for FY2006-FY2009...................................................35
Table 5. Production Tax Credit Value and Duration by Resource.................................................36
Table 6. Production Tax Credit Claims, History and Projections..................................................37
Table 7. Renewable Fuels Compared with Persian Gulf Imports..................................................38
Author Contact Information..........................................................................................................38

enewable energy is derived from resources that are generally not depleted by human use,
such as the sun, wind, and water movement. These primary sources of energy can be
converted into heat, electricity, and mechanical energy in several ways. There are some R

mature technologies for conversion of renewable energy such as hydropower, biomass, and waste
combustion. Other conversion technologies, such as wind turbines and photovoltaics, are already
well developed, but they have not achieved the technological efficiency and market penetration
that many expect they will ultimately reach. Although geothermal energy is produced from
geological rather than solar sources, it is often included as a renewable energy resource (and is
treated as such in this report). Commercial nuclear power is not generally considered to be a ¹
renewable energy resource.
Despite fluctuating government policies since the 1970s, a combination of incentives and high
energy prices has enabled wind energy to gain a toe-hold in electric power markets and allowed
ethanol to secure a modest, but growing, presence in motor fuels markets. Congress is now
debating whether to provide additional subsidies, incentives, and mandates to further expand
renewable energy use. This report describes the background and primary policy issue areas
affecting renewable energy, including budget and funding, tax incentives, electricity regulatory
initiatives, renewable fuels, and climate change.

The energy crises of the 1970s spurred the federal government, and some state governments, to
mount a variety of renewable energy policies. These policies included support for research and
development (R&D), technology demonstration projects, and commercial deployment of
equipment. For renewable energy, these policies included a focus on the production of both liquid
fuels and electricity.
The Energy Tax Act of 1978 established a 4 cents per gallon excise tax exemption for ethanol
blended into gasoline. This incentive expired, and was extended, several times during the 1980s ²
and 1990s. In some cases, the incentive was modified at the same time that it was extended. The
Energy Policy Act of 1992 extended the excise tax exemption and created a tax deduction for
clean-fuel vehicles that included those using 85% ethanol (E85). It also established a requirement
that federal, state, and other vehicle fleets include a growing percentage of alternative-fueled ³
vehicles, including those using ethanol. In 2000, the General Accounting Office (GAO) reported
that the excise tax exemption and the alcohol fuel tax credits had been the most important ⁴
incentives for renewable fuels. By the time that the Energy Policy Act of 2005 (EPACT) was
enacted, a variety of tax, grant, loan, and regulatory provisions had been established for
renewable fuels. This included some 17 programs spanning five agencies. At present, the major

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tax incentives are a 51 cents per gallon excise tax exemption for ethanol blends, a $1 dollar per
gallon tax credit for agri-biodiesel (50 cents per gallon for recycled biodiesel), and the alternative ⁵
motor vehicle tax credit. However, some believe that the Renewable Fuel Standard (RFS) set by
EPACT Section 1501—which requires that motor fuels contain increasing amounts of renewable
fuel each year through 2012—may now be the most important policy supporting renewable ⁶
biofuels.
The Public Utility Regulatory Policies Act (PURPA, Section 210) created a policy framework that
required electric utilities to purchase electricity produced from renewable energy sources. PURPA
also empowered the states to set the price for such purchases. PURPA aimed to reduce oil use for
power production, encourage the use of renewable energy for power production, and to structure
a new dimension of competition to help keep electricity prices down. In the early 1980s, under
the influence of PURPA regulation, a convergence of federal and state policies launched
commercial deployment of wind and solar energy in California. In particular, the development of
early wind farms was driven mainly by a combination of federal and state investment tax credits
for wind energy.
As the new wind industry developed, two emerging aspects stimulated further policy changes.
First, some firms took advantage of the investment tax credits by capturing the tax benefits at the
front end and leaving wind machines that operated poorly or not at all. Recognition of this
problem eventually led to the creation of a production-oriented tax credit. Second, in order to
obtain third party financing, wind farm developers needed to secure agreements for power
purchases that fixed the price for a long-term (10 years or more) period. This led the California
Public Utility Commission to promote the development of “standard offer” contracts. These
contracts reduced investment risk, established stable revenue streams, and helped launch early
wind farm developments.
Oil and natural gas prices slumped during the mid-1980s, and declined more steeply in the late

1980s. Meanwhile, Congress let the residential solar investment tax credit expire in 1985.

Funding for Department of Energy (DOE) renewable energy R&D programs also declined,
reaching a low point in 1990.
In late 1990 and early 1991, the Persian Gulf War re-ignited interest in renewable energy. Other
nations, notably Japan and Germany, began to undertake more aggressive policies to subsidize
renewables, especially wind and solar technologies. In the United States, Congress began to
increase funding for the Department of Energy (DOE) renewable energy R&D program. In 1992,
the United States became a signatory of the United Nations Framework Convention on Climate
Change (UNFCCC). This action forged a new environmental motive for support of renewable
energy. These national interests were reflected in the Energy Policy Act of 1992 (P.L. 102-486).
For electricity, this law made permanent the 10% business investment tax credit for solar and

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geothermal equipment. It also created a new renewable energy electricity production tax credit of

1.5 cents per kilowatt-hour (kwh) for wind farms and closed-loop (energy crop) biomass.

Climate change concerns spurred other industrialized nations to strengthen renewable energy
policies and programs. Through the 1990s, concern about global climate change became an
increasingly important motive in the European Union (EU), Japan, and other countries for raising
renewable energy production goals and providing incentives to support commercial deployment.
The Kyoto Protocol set emission reduction targets for carbon dioxide (CO²) and other greenhouse
gases (GHG). After signing the Protocol, these nations intensified their efforts for commercial
deployment of renewable energy. In the United States, concern about climate change was largely
offset by a concern about the potential effect of the Kyoto CO² emission reduction targets on
economic growth and competitiveness. As a result of this economic concern, the United States
has taken a more limited effort than many other industrialized nations to support renewable
energy as a strategy for addressing climate change. The federal government has continued support
for existing funding and subsidies. However, aside from the previously mentioned policies, it has
not established major new policies and programs like the feed-in tariff in Germany or the ⁷
European Union’s target for producing 20% of its energy from renewables.
State action on renewable energy has often supplanted federal action or created models for new
federal policies. As one example, California has implemented very aggressive programs for
renewable energy. In the mid-1990s, the advent of electric industry restructuring led California
state policymakers to create a public goods charge on ratepayer electricity use. Part of the
resulting revenue was used to fund renewable energy development and deployment programs.
Also, California’s electricity shortages in 2000 and 2001 prompted the state to expand its
renewable energy programs. Motivated by concern over climate change, California has recently
adopted more aggressive actions for renewables. This includes a $3 billion solar deployment
initiative, and an increase of its renewable portfolio standard to 33% of total electricity
production by 2020.

Economic and environmental concerns—namely energy security, international competitiveness,
high energy prices, air pollution, and climate change—are now driving policy proposals to ^th
support renewable energy R&D and market deployment. In the 110 Congress, more than 200 ⁸
bills were introduced that would support renewable energy. In the first session, the Energy
Independence Act (P.L. 110-140) and the Consolidated Appropriations Act (P.L. 110-161) ⁹
increased support for renewable energy. In the second session, the Emergency Economic

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Stabilization Act (P.L. 110-343, Division B) provided several billion in tax incentives for
renewables.
(For more details on the Energy Independence Act, see CRS Report RL34294, Energy
Independence and Security Act of 2007: A Summary of Major Provisions, by Fred Sissine; for
more details on FY2008 appropriations for DOE’s renewable energy programs, see CRS Report
RL34009, Energy and Water Development: FY2008 Appropriations, by Carl E. Behrens et al. and
CRS Report RL34417, Energy and Water Development: FY2009 Appropriations, by Carl E.
Behrens et al.; for more information about renewable energy laws and bills, see CRS Report ^th
RL33831, Energy Efficiency and Renewable Energy Legislation in the 110 Congress, by Fred
Sissine, Lynn J. Cunningham, and Mark Gurevitz.)

As part of the strategy to address energy security, climate change, and other national interests, the
Energy Policy Act of 2005 (EPACT, P.L. 109-58) contained several provisions that authorized
new programs and spending for renewable energy. Many of those provisions have either gone
unfunded or have been funded below the authorized level.
Title 17 of EPACT created a DOE loan guarantee program for certain energy technologies that ¹⁰
could improve energy security, curb air pollution, and reduce greenhouse gas emissions.
Innovative renewable energy power plants and fuel production facilities would be eligible for a ¹¹
federal loan guarantee covering up to 80% of construction costs.
Many view this program as a key element of EPACT that addresses climate change and supports
the commercial development of biofuels, such as cellulosic ethanol. The law authorizes DOE to
issue loan guarantees to eligible projects that:
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Title 17 provides broad authority for DOE to guarantee loans that support early commercial use
of advanced technologies, if “there is reasonable prospect of repayment of the principal and ¹³
interest on the obligation by the borrower.” The emphasis on “early commercial use only”

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distinguishes the program from other DOE activities that are focused on research, development,
and demonstration. Further, DOE states that the program will support the goals of the President’s ¹⁴
Advanced Energy Initiative.
In October 2007, DOE issued final loan guarantee regulations.¹⁵ The regulations provide that
DOE may issue guarantees for up to 100% of the amount of the loan, subject to the EPACT
limitation that DOE may not guarantee more than 80% of the total cost for an eligible project.
Under the final rule, if DOE issues a guarantee for 100% of a debt instrument, the loan must be
issued and funded by the Treasury Department’s Federal Financing Bank. DOE says that it
intends to issue loan guarantees only if borrowers and project sponsors pay the “credit subsidy ¹⁶
cost” for any loan guarantee they receive.
The subsidy cost is the expected long-term liability to the federal government in issuing the loan ¹⁷
guarantee, excluding the administrative cost. Title 17 specifies that DOE must receive either an
appropriation for the subsidy cost or payment of that cost by the borrower. No funds have been
appropriated for the subsidy cost of loan guarantees. DOE anticipates that the project borrower
(sponsor) will pay this cost. Thus, DOE says it does not plan to use taxpayer funds to pay for the ¹⁸
credit subsidy cost of the loan guarantees.
Two provisions of the law (P.L. 110-140) expand the range of facilities eligible for loan
guarantees. Section 134 amended EPACT Title 17 to direct that DOE establish a loan guarantee
program for facilities that manufacture “fuel efficient vehicles or parts of those vehicles,
including electric drive vehicles and advanced diesel vehicles.” Section 135 allows DOE, under
certain conditions, to establish a loan guarantee program for the construction of facilities that
manufacture advanced vehicle batteries and battery systems. Eligible parties would include
manufacturers of advanced lithium ion batteries, manufacturers of hybrid electrical systems and
components, and software designers.

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¹⁶^DOE.^FY²⁰^{09 Re}^que^s^t^{, p. 33}^0.
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^go^vern^m^eⁿ^t^o^f^{a d}ⁱ^rect^l^o^an^o^r^{a l}^o^an^gu^aran^t^ee,^cal^cu^l^a^t^e^d^oⁿⁿ^e^t^presen^t^val^u^{e b}^a^si^s,^excl^u^dⁱⁿ^g^ad^mⁱⁿⁱ^st^ratⁱ^v^{e co}^st^s.^”
^T^h^e^Dⁱ^r^e^c^t^or^of^the^O^f^fⁱ^c^e^of^Mana^g^e^m^e^{nt a}^{nd B}^u^dg^e^t^is^r^e^s^ponsⁱ^b^le^f^o^r^c^oor^dina^ti^ng^the^e^s^tim^a^{tion of}^s^ubsⁱ^d^y^c^o^s^t^s^.
^For^m^o^r^e^dis^c^us^sⁱ^oⁿ^of^s^ubsⁱ^d^y^cos^t^s^,^s^e^e^C^R^S^R^e^por^{t R}^L³⁰³⁴⁶^,^F^e^de^{ral Cre}^d^{it Re}^f^o^{rm: Imple}^m^eⁿ^t^a^tioⁿ^{of t}^h^e
^C^han^ge^{d Bu}^dge^tar^y^Tr^e^a^tm^eⁿ^{t of}^Dⁱ^r^e^c^t^Loaⁿ^s^a^{nd Lo}^an^G^uar^ante^e^s^,^b^y^Ja^{mes M}^.^Bickle^y^.
¹⁸^DOE^F^Y²⁰⁰⁹^R^e^qu^est^{, p. 32}^9-³³⁰^.

DOE Loan Guarantee Program funding is shown in Table 1. In FY2006, DOE used about
$500,000 from three separate appropriation accounts to fund start-up activities for $2 billion in ¹⁹
loan guarantee authority. The FY2007 continuing appropriations bill (P.L. 110-5, H.J.Res. 20)
provided $7 million from DOE’s Departmental Administration Account for program operating
costs. Also, P.L. 110-5 raised the loan guarantee program authority to $4 billion, and required that ²⁰
DOE prepare a rulemaking to implement the program.
Table 1. DOE Loan Guarantee Program Funding
^{($ mill}^ions)
^FY20^{06 Apprn.}^FY20^{07 Apprn.}^FY20^{08 Apprn.}^FY20^{09 Request}
^{$0.5 $7.0}^$4.5^$19.9
^Source:^{GAO; a}^nd^{DOE FY2009 Congressional Budget Request}^{, vol.}^{2, p. 3}^29.
At both House and Senate energy committee hearings on the DOE FY2008 budget request,
concerns were raised that the Loan Guarantee Program had not been implemented. DOE stated
that, beginning in FY2008, the administrative activities for the Loan Guarantee Program Office
would be funded in a separate discrete appropriation account entitled “Innovative Technology ²¹
Loan Guarantee Program.”
The FY2008 Consolidated Appropriations Act (P.L. 110-161) directed DOE to issue $38.5 billion ²²
in new loan guarantee authority through the end of FY2009. The law calls for $10.0 billion of
the $38.5 billion to be designated to support renewables, energy efficiency, distributed energy,
and transmission and distribution projects.
For FY2009, DOE requests $19.9 million for the Innovative Technology Loan Guarantee
Program. This funding would cover administrative and operational expenses to support personnel
and associated costs. DOE expects that the amount requested will be offset by collections ²³
authorized by EPACT (§1702[h]). The FY2009 DOE request seeks to extend that authority
through the end of FY2011. Specifically, DOE’s request calls for $20.0 billion of the $38.5 billion ²⁴
to be available through FY2010 to support renewables and certain other projects. The remaining ²⁵
$18.5 billion would be available through FY2011 to support nuclear power facilities.

¹⁹^G^o^v^e^rn^m^e^nt^A^c^c^ounta^b^ility^Offⁱ^c^e^(GAO).^O^b^s^e^r^v^ations^oⁿ^Ac^ti^oⁿ^s^{to I}^m^ple^m^eⁿ^{t t}^h^e^N^e^w^Lo^an^G^uar^aⁿ^te^e
^P^r^o^g^r^a^m^f^o^{r I}ⁿ^no^va^tⁱ^{ve T}^ech^no^l^o^gⁱ^es.⁽^G^A^O^-^07-⁷⁹^8T⁾^p.^2.
²⁰^D^O^E^is^s^u^e^d^t^h^e^pr^op^os^e^d^r^u^le^oⁿ^Ma^y^{16, 20}⁰⁷^{. h}^ttp:^//w^w^w^.lg^p^r^o^g^r^am^.e^ne^r^g^y^.^g^o^v^/^N^O^P^R^-^f^r^-⁵^-¹⁶^-^07.^pdf^.
²¹^DOE.^FY²⁰^{09 C}^oⁿ^g^r^e^s^sⁱ^on^{al B}^u^dge^{t Re}^que^s^t^{, B}^u^d^g^e^t^Hⁱ^g^h^li^ghts^.^Fe^br^ua^r^y²⁰⁰⁸^{. p}^.⁵²^.
²²^T^h^e^$38^.5^bill^io^{n of}^ne^w^a^u^thori^t^y^{is prov}^ide^d^{in a}^ddi^tio^{n t}^o^the^$4^{.0 b}^illi^on^{in a}^u^th^ority^se^{t by}^the^FY200⁷
^a^ppro^p^ria^tio^{ns b}^{ill. T}^h^{us, t}^h^e^tw^{o y}^e^a^r^{s of}^a^pprop^ria^tio^ns^pr^ov^ide^f^o^{r a}^c^o^m^b^ine^d^to^ta^{l of}^$4^2.^{5 b}^illi^oⁿⁱⁿ^loaⁿ
^gu^aran^t^{ee au}^t^h^o^rⁱ^t^y^.
²³^DOE.^FY²⁰^{09 C}^oⁿ^g^r^e^s^sⁱ^on^{al B}^u^dge^{t Re}^que^s^t^{, B}^u^d^g^e^t^Hⁱ^g^h^li^ghts^.^Fe^br^ua^r^y²⁰⁰⁸^{. p}^.³²⁹^.^Se^c^tioⁿ¹⁷⁰²⁽^h)^s^t^a^t^e^s^tha^t
^“^D^O^E^s^h^a^{ll c}^h^a^r^g^e^a^{nd c}^o^lle^c^t^f^e^e^s^f^o^r^g^u^a^r^aⁿ^te^e^s^{in a}^m^ounts^the^S^e^c^r^e^t^a^r^y^de^te^r^m^ine^s^a^r^e^s^u^f^f^ic^ie^{nt to c}^o^v^e^r
^ap^p^lⁱ^cab^l^e^ad^mⁱⁿⁱ^st^ratⁱ^v^{e exp}^eⁿ^s^es.^”
²⁴^T^h^{e o}^t^h^e^r^p^r^o^j^ect^{s i}ⁿ^cl^u^d^e^u^r^anⁱ^u^m^en^ri^ch^m^eⁿ^t^,^co^al^-b^ased^po^w^e^r,^ad^van^ced^co^al^gasi^fⁱ^catⁱ^oⁿ^,^and^el^ect^ri^ci^t^y
^de^liv^e^r^y^.
²⁵^DOE.^FY²⁰^{09 C}^oⁿ^g^r^e^s^sⁱ^on^{al B}^u^dge^{t Re}^que^s^t^,^V^o^{l. 2.}^Fe^br^ua^r^y²⁰^{08. p. 33}^0.

The Continuing Appropriations Resolution for FY2009 (P.L. 110-329, H.R. 2638) provides for
continued funding at the FY2008 level through March 6, 2009.
In February 2007, the FY2007 Continuing Appropriations Resolution (P.L. 110-5) provided $4
billion in authority for loan guarantees. In May 2007, DOE announced a solicitation for the first
round of projects. Eligible categories of renewable energy projects included biomass, solar, wind, ²⁶
and hydropower. In October 2007, DOE announced that it was inviting 16 pre-applicants to ²⁷
submit full loan guarantee applications. Among the 16 pre-applicants, eight proposed renewable
energy projects. There are six biofuels projects, of which four involve cellulosic ethanol fuel
production facilities and two involve biodiesel fuel production facilities. Also, there are two solar
projects. One involves concentrated solar-thermal technology, and the other involves the
manufacture of thin-film solar photovoltaic equipment.
On June 30, 2008, DOE announced three solicitations for the 2^nd round of solicitations. A total of
up to $30.5 billion of loan guarantee authority was established for “advanced energy
technologies” that would reduce air pollutants or greenhouse gases. One of the three solicitations ²⁸
was for “renewable energy and advanced transmission and distribution technologies.” On
October 29, 2008, DOE announced that it was extending the “Renewables Solicitation”
application due dates for stand-alone and manufacturing projects and for Part I large-scale
integration projects, from December 31, 2008, to February 26, 2009. The deadline for Part II ²⁹
applications for large-scale integration projects will remain set at April 30, 2009.
Several biofuels programs authorized by EPACT have not been funded, including sugar cane
ethanol (§208), biodiesel (§757), advanced biofuels (§1514), and cellulosic ethanol (§942, §1511,
§1512). Unfunded biomass provisions include forest biomass (§210), biomass research and
development (§941g), and bioenergy (§971d). Additionally, residential and small business
renewable rebates (§206c) and insular areas (§251, §252) have not been funded. Provisions for
technologies that would address climate change by reducing greenhouse gas emissions (§1601,
§1602) also remain unfunded. Distributed energy (§921) and renewable energy (§931) are funded
below authorized levels.

²⁶^T^h^e^othe^r^e^lig^ible^c^a^t^e^g^or^ie^s^w^e^r^e^hy^dr^og^eⁿ^{, a}^d^v^a^nc^e^d^f^o^s^s^{il e}ⁿ^e^r^gy⁽^c^oa^l)^{, c}^a^r^bon^s^e^que^s^t^r^a^tio^{n, e}^l^e^c^tr^ic^ity^de^liv^e^r^y
^a^{nd e}ⁿ^e^r^g^y^re^lia^bility^{, a}^lte^rna^tiv^e^f^u^e^l^v^e^hic^l^e^s^{, indus}^tria^{l e}ⁿ^e^r^gy^effⁱ^cⁱ^eⁿ^cy^{, a}^{nd poll}^u^ti^{on c}^o^ntr^o^{l e}^q^uipm^eⁿ^t.
²⁷^DOE.^D^O^E^An^no^unc^e^s^Fi^nal^Rul^e^for^Lo^an^G^u^ar^ante^e^Pr^ogr^am^{. (}^P^re^s^s^Re^le^a^s^e⁾^O^c^tobe^{r 4,}²⁰⁰⁷^.
^http:^//w^w^w^.lg^p^r^o^g^r^am^.e^ne^r^g^y^.^g^o^v^/^pr^e^s^s^/¹⁰⁰⁴⁰^7.h^t^m^l^.
²⁸^T^h^e^othe^{r sol}ⁱ^c^ita^tio^{ns w}^e^re^f^o^{r e}ⁿ^e^r^gy^e^f^fⁱ^cⁱ^eⁿ^c^y^a^{nd nuc}^le^a^r^pow^e^r^f^a^c^ilitie^{s. Se}^e^{DOE loa}ⁿ^g^u^a^r^aⁿ^te^e^prog^ra^m
^ch^r^o^no^l^o^gy^at^h^t^t^p^:^/^/^www^.^l^gp^r^o^gr^a^m^.^eⁿ^e^r^g^y^.^go^v/^.
²⁹^DOE.^D^O^E^Ex^te^nds^Ap^plic^at^ioⁿ^D^e^adline^f^o^r^Re^ne^w^able^Eⁿ^e^r^gy^Loaⁿ^G^u^ar^aⁿ^te^e^So^lic^itatⁱ^oⁿ^.⁽^p^{ress rel}^ease)
^http:^//w^w^w^.lg^p^r^o^g^r^am^.e^ne^r^g^y^.^g^o^v^/^pr^e^s^s^/¹⁰²⁹⁰^8.p^d^f^.

As part of the strategy to address energy security, climate change, and other national interests, the
Energy Independence and Security Act of 2008 (EISA, P.L. 110-140) contained several
provisions that authorized new programs and spending for renewable energy. Some of those
provisions have either gone unfunded or have been funded below the authorized level.
Title VI directs DOE to conduct several new programs to accelerate the development of
renewable energy and hydrogen technologies. For example, $90 million was authorized for new
geothermal programs, but the FY2009 continuing appropriations bill (P.L. 110-329) does not
include new funding to cover the cost of the programs. Also, $1 billion was authorized over a 10-
year period to support the establishment of a hydrogen prize (H-prize) to accelerate technology
development. DOE has issued a solicitation for an organizational host, pending congressional ³⁰
appropriations. P.L. 110-329 does not provide new funding for this program.
Title IX, Subtitle A, calls for a new program of “Assistance to Promote Clean and Efficient
Energy Technologies in Foreign Countries.” The U.S. Agency for International Development
(USAID) is directed to report to Congress on efforts to support policies for clean and efficient
energy technologies. The Department of Commerce is directed to increase efforts to export such
technologies and report to Congress on the results. Other U.S. agencies with export promotion
responsibilities are required to increase efforts to support these technologies. Also, a multi-agency
Task Force on International Cooperation for Clean and Efficient Energy Technologies is created
to support the implementation of clean energy markets in key developing countries. The Senate
Appropriations Committee recommended $100 million for FY2009 USAID programs that ³¹
“directly support zero-carbon” efficiency and renewables programs. However, P.L. 110-329
does not provide appropriations at that level, and it does not call for the new program
developments set out in the Energy Independence Act.
Subtitle B directs that an “International Clean Energy Foundation” be established, with the long-
term goal of reducing greenhouse emissions. Authorized funds would be used to make grants to
promote projects outside the United States that serve as models of how to reduce emissions. The
Senate Appropriations Committee recommended $200 million for a U.S. contribution to establish
an “International Clean Energy Fund” at the World Bank or other entity, and requires that the ³²
contribution “be matched by other sources.” However, P.L. 110-329 does not provide
appropriations for such a fund.

³⁰^Se^e^htt^p^://w^ww^.h^y^d^rog^e^n.eⁿ^e^r^gy^.g^ov^/ne^w^s_h-priz^e^_^a^d^mⁱ^nistra^tor.^htm^l^.
³¹^S.R^e^pt.¹^10-⁴²^5,^p.^43.
³²^S.R^e^pt.¹^10-⁴²^5,^p.^67.

Title X authorizes up to $125 million in funding to establish national and state job training
programs, administered by the Department of Labor, to help address job shortages that impair
growth in green industries, such as energy efficient buildings and construction, renewable electric
power, energy efficient vehicles, and biofuels development. No funding was proposed for such
programs in FY2009 budget requests nor in congressional committee appropriations
recomme ndations.
The President’s 2008 State of the Union address set out goals to strengthen energy security and
confront global climate change, and stated that “... the best way to meet these goals is for America
to continue leading the way toward the development of cleaner and more energy-efficient ³³
technology.” As part of that effort, the Administration proposes to continue its support for the
Advanced Energy Initiative (AEI, an element of the American Competitiveness Initiative), which
“aims to reduce America’s dependence on imported energy sources.” The AEI includes hydrogen, ³⁴
biofuels, and solar energy initiatives that are supported by programs in EERE.
According to the FY2009 budget document, the Hydrogen Initiative has a “long-term aim” of
developing hydrogen technology that will help the Nation achieve a “cleaner, more secure energy ³⁵
future.” Further, current research aims to “enable industry to commercialize a hydrogen
infrastructure and fuel cell vehicles by 2020.” The Biofuels Initiative seeks to make cellulosic
ethanol cost competitive by 2012 using a wide array of regionally available biomass sources. The
Solar America Initiative aims to “... accelerate the market competitiveness of photovoltaic
systems using several industry-led consortia which are focused on lowering the cost of solar ³⁶
energy through manufacturing and efficiency improvements.” Further, the Budget states that ³⁷
there is a goal to make solar power “cost-competitive with conventional electricity by 2015.”
As Table 4 shows, DOE’s FY2009 request seeks $1,255.4 million for the EERE programs.
Compared to the FY2008 appropriation, the FY2009 request would reduce EERE funding by
$467.0 million, or 27.1%. The request would eliminate $186.7 million in Congressionally-³⁸
Directed Assistance and it would reduce Facilities construction spending by $57.3 million. For
renewable energy technologies, Table 4 shows that—compared to the FY2008 appropriation—
the key increases are for Biomass Energy ($26.8 million) and Geothermal Energy ($10.2 million).
The key decreases are for Water/Hydrokinetic Power (-$6.9 million) and Solar Energy (-$12.3

³³^T^h^e^W^h^ite^H^ous^e^.^Sta^t^e^of^the^Uⁿ^io^{n 2}⁰⁰⁸^.^htt^p^://w^w^w^.^w^hite^hous^e^.^g^o^v^/^ne^w^s^/re^l^e^a^s^e^s^/²⁰⁰⁸^/^01/^prin^t/20⁰⁸⁰¹^28-
^13.^htm^l^.
³⁴^U.^S^.^E^x^ecu^tⁱ^v^{e Off}ⁱ^{ce o}^f^t^h^{e P}^r^esi^d^en^t^,^Bu^dge^t^{of t}^h^e^Uⁿ^ite^{d S}^t^ate^s^G^o^v^e^r^nm^eⁿ^{t, Fis}^c^a^l^Ye^ar²⁰⁰⁷^,^A^ppe^ndix^,^p.³^90.
^A^l^so^{see DOE,}^FY200^{7 C}^oⁿ^g^r^e^s^sⁱ^on^{al B}^u^d^g^e^t^Re^q^u^e^s^t:^Bu^dge^{t H}ⁱ^ghli^ghts^{, p}^.⁴¹^.
³⁵^U.^S^.^E^x^ecu^tⁱ^v^{e Off}ⁱ^{ce o}^f^t^h^{e P}^r^esi^d^en^t^,^Bu^dge^t^{of t}^h^e^Uⁿ^ite^{d S}^t^ate^s^G^o^v^e^r^nm^eⁿ^{t, Fis}^c^a^l^Ye^ar²⁰⁰⁹^,^A^ppe^ndix^,^p.³^93.
³⁶^U.^S^.^E^x^ecu^tⁱ^v^{e Off}ⁱ^{ce o}^f^t^h^{e P}^r^esi^d^en^t^,^Bu^dge^t^{of t}^h^e^Uⁿ^ite^{d S}^t^ate^s^G^o^v^e^r^nm^eⁿ^{t, Fis}^c^a^l^Ye^ar²⁰⁰⁹^,^A^ppe^ndix^,^p.³^93.
³⁷^U^.^{S. Bu}^dge^t^{, p. 59}^.
³⁸^Fa^c^ilitie^s^f^undi^ng^f^o^{r c}^ons^truc^ti^oⁿ^teⁿ^d^s^to^be^prov^ide^dⁱⁿ^a^lum^p^s^u^m^.^N^o^m^a^{jor c}^ons^truc^tio^{n p}^r^oje^c^ts^w^{ould be}
^c^aⁿ^c^e^lle^{d a}^s^a^re^{sult of}^this^pro^p^o^s^e^d^re^duc^ti^on.

million). Overall, funding for renewable energy technologies would increase by $20.7 million
(4.6%). For deployment programs, the main increase is for the Asia Pacific Partnership ($7.5 ³⁹
million). Also, the request would terminate the Renewable Energy Production Incentive (-$5.0 ⁴⁰
million).
In contrast to the Administration’s request, the House Appropriations Committee recommended ⁴¹
$2,531.1 million for DOE’s EERE programs in FY2009. This would be a $808.7 million (47%)
increase over the FY2008 appropriation and a $1,275.7 million (102%) increase over the DOE
request. Compared with the request, the Committee recommendation would embrace a $381.5
million increase for R&D programs. Further, the Committee-approved bill would provide $259.2
million more for energy assistance programs, of which $250.0 million would go to the
Weatherization Program—in sharp contrast to DOE’s proposal to eliminate it. Also, the
Committee recommended $500.0 million for new assistance programs authorized by the Energy
Independence and Security Act (EISA, P.L. 110-140).
As a major initiative, the Committee recommended $500.0 million as “initial program
investment” for several new programs authorized by EISA. The Renewable Fuel Infrastructure
Program (EISA §244) would get $25.0 million to begin grant-giving operations. Aside from the
$500.0 million initiative, some additional EISA-related funding would be provided under the
technology programs. The most notable examples are $25 million for the production of advanced
biofuels (EISA §207) under the Biomass and Biorefinery Program and $33 million for zero net
energy commercial buildings (EISA §422) under the Buildings Program.
The committee recommended $134.7 million for Congressionally-Directed Assistance.
In addition to funding recommendations, the House Appropriations Committee report includes
three policy directives for DOE. First, DOE would be required to report annually on the return on
investment for each of the major EERE program funding accounts. Second, DOE would be
directed to make up to $20 million of EERE funds available for “projects at the local level
capable of reducing electricity demand.” Each project would involve multiple technologies and
public-private partnerships. Priority would go to projects that have a substantial local cost-share,
help reduce water use, or curb greenhouse gas emissions. Third, DOE would be required to
implement “an aggressive program” of minority outreach at Historically Black Colleges and
Universities and at Hispanic Serving Institutions to deepen the recruiting pool of scientific and
technical persons available to support the growing renewable energy marketplace.
The Senate Appropriations Committee recommended (S. 3258) $1,928.3 million for EERE,⁴²
which is $205.9 million (12.0%) more than the FY2008 appropriation and $672.9 million (53.6%)
more than the request.

³⁹^{DOE Req}^u^e^st^,^p.⁴⁸^2-4⁸³^.^T^h^e^Asia^P^a^cⁱ^fⁱ^c^P^a^rt^ne^rship^(A^PP^{) is a}^m^u^ltina^tiona^l^un^de^rta^k^ing^tha^t^t^h^e^f^e^de^ra^l
^go^vern^m^eⁿ^t^su^p^p^o^r^t^s^t^h^rou^g^h^several^agen^ci^es.^T^h^{e Dep}^a^rt^m^eⁿ^t^o^f^S^t^at^{e i}^s^t^h^{e l}^ead^agen^cy^f^o^{r A}^P^P^.^DOE^{’s req}^u^e^st^f^o^r
^A^P^{P in}^FY²⁰⁰⁹^w^ould^s^u^p^por^{t ne}^w^r^e^new^a^ble^pow^e^r^g^e^ne^r^a^ting^c^a^pa^c^ity^{, be}^s^t^m^a^nuf^ac^turⁱ^ng^pr^a^c^tic^e^s^f^o^r^ta^r^g^e^t^e^d
^ind^u^s^t^rⁱ^e^s^{, a}ⁿ^{d be}^s^t^de^sⁱ^gⁿ^aⁿ^d^c^o^ns^tr^uc^ti^on^pr^a^c^tic^e^s^f^o^r^buil^d^ing^s^a^{nd e}^f^fⁱ^cⁱ^eⁿ^{t a}^pplia^nc^e^s^t^a^nda^r^d^s^.
⁴⁰^F^o^{r a}^b^rⁱ^e^f^dⁱ^scu^ssi^oⁿ^o^f^t^h^{e Renewab}^l^{e E}ⁿ^erg^y^P^r^od^u^c^tⁱ^oⁿ^In^cen^tⁱ^ve,^{see t}^h^{e sect}ⁱ^oⁿ^on^“Cl^ean^Renewab^l^{e E}ⁿ^erg^y
^(T^a^x^Cred^{it) Bo}ⁿ^d^{s”, b}^e^l^o^w^.
⁴¹^Se^e^the^H^o^us^e^r^e^por^t^oⁿ^H^.^R^.⁷³^24.
⁴²^T^h^e^Se^na^te^A^ppropria^ti^{ons C}^o^m^m^itte^e^re^{port dire}^c^t^{s tha}^t^$5^9.5^mⁱ^llion^of^a^pro^pose^d^$^72.^{9 m}^illioⁿ^inc^r^e^a^s^e^f^o^{r the}
^Sola^{r E}ⁿ^e^r^gy^P^r^og^ra^m^,^w^{ill be}^prov^ide^d^by^a^traⁿ^s^f^e^r^f^r^o^m^the^Ba^sⁱ^c^Ene^r^g^y^Sc^ie^nc^es^P^r^og^ra^m^unde^{r the}^O^f^fⁱ^ce^of
^S^cⁱ^eⁿ^ce.

Compared with the House Appropriations Committee report, the Senate Appropriations
Committee recommended $602.8 million, or 23.8%, less for EERE programs. The main
difference ($450.0 million) is that the House Appropriations Committee proposes an increase of
$500.0 million for a new EISA Federal Assistance Program, while the Senate Appropriations
Committee proposes an increase of $50.0 million for a new Local Government/Tribal Technology
Demonstration Program. Further, the Senate report recommended less funding than the House
report for several technology programs. Relative to the House Committee report figures, the
Senate Committee report’s proposed decreases for renewable energy R&D include Geothermal
(-$20.0 million), Bioenergy (-$15.0 million), and Water Energy (-$10.0 million). The major
decreases for energy efficiency include Weatherization (-$48.8 million), Industrial Technologies
(-$34.9) million, and Vehicle Technologies (-$24.5 million).
The Senate Appropriations Committee recommended $124.2 million for Congressionally-
Directed Projects.
In general, both committee reports recommended higher funding levels than the request. In
particular, each included more than $200 million for the Weatherization Program. Both ⁴³
committees disagreed with the DOE request to fund the Asia Pacific Partnership, and neither
committee recommended funding it. Both committees called for the Biomass program to
emphasize the use of non-food sources for the development of biofuels. The Senate Committee
report further stressed R&D efforts to focus on algae as a biofuels source.
The FY2009 request includes $134.0 million for the Office of Electricity Delivery and Energy
Reliability (OE). The House Appropriations Committee recommended $149.3 million, which is
$15.3 million more than the request. The Senate Appropriations Committee recommended $166.9
million, which is $17.7 million more than the House Appropriations Committee recommended.
For OE congressionally directed projects, the House Committee report called for $5.3 million,
while the Senate Committee report sought $12.9 million.
The FY2009 budget document states that the Administration’s 2007 farm bill proposal “...
provides more than $1.6 billion in new renewable energy funding and targets programs to ⁴⁴
cellulosic ethanol projects.” In its FY2009 request document, the USDA states that, “While
discretionary funding is not being requested, the Administration’s farm bill proposal includes
funding for renewable energy/energy efficiency loans and grants, and biomass research and

⁴³^{DOE Req}^u^e^st^,^p.⁴⁸^2-4⁸³^.^T^h^e^Asia^P^a^cⁱ^fⁱ^c^P^a^rt^ne^rship^(A^PP^{) is a}^m^u^ltina^tiona^l^un^de^rta^k^ing^tha^t^t^h^e^f^e^de^ra^l
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^o^v^{er t}^h^{e F}^Y²⁰⁰⁸^requ^est^f^o^{r E}^E^R^E^,^t^h^{e A}^d^mⁱⁿⁱ^st^ratⁱ^oⁿ^t^h^reat^en^e^d^t^o^v^e^{to t}^h^e^a^ppr^opr^ia^ti^ons^bill^{, i}ⁿ^p^a^r^t^{, due}^{to t}^h^e
^la^c^k^of^f^unding^f^o^r^A^P^P^.
⁴⁴^F^Y²⁰⁰⁹^B^u^dg^et^o^f^t^h^{e U.}^S^.^G^o^vern^m^en^t^{. A}^ppeⁿ^d^ix^{. p.}¹^20.

development grants.⁴⁵ (For more details, see CRS Report RL34130, Renewable Energy Policy in
the 2008 Farm Bill, by Tom Capehart.)
On September 24, 2008, the House substitute to the Senate substitute to the proposed Department
of Homeland Security Appropriations Act, 2008 (H.R. 2638) was brought to the House floor. The
substitute was adopted by vote of 370 to 58. Division A—the Continuing Appropriations
Resolution, 2009—would continue federal funding at FY2008 levels through March 6, 2009. Two
provisions of the resolution would provide additional funding for energy efficiency. Section 129
would provide $7.51 billion for a DOE Advanced Technology Vehicles Manufacturing Loan
Program authorized by the Energy Independence Act (P.L. 110-140, §136[d]). The Program
would support $25 billion in loans to domestic automobile manufacturers and automobile part
manufacturers to cover up to 30% of the costs of re-equipping, expanding, or establishing a
manufacturing facility in the United States to produce advanced technology vehicles or
components (automobiles and parts that exceed fuel-efficiency standards). Recipients would be
required to pay employees and contractors prevailing wage rates, and the program would be
scheduled to expire in 2017. Section 130 would provide an additional $250 million for the DOE
Weatherization Assistance Program in FY2009. Those additional funds would remain available
until expended.
On September 26, 2008, the House passed the Supplemental Appropriations Bill for Fiscal Year
2009 (H.R. 7110) by a vote of 264 to 158. The bill would fund a green schools initiative at the
Department of Education (DOED) and provide additional funding, above that in the Continuing
Resolution (H.R. 2638), for efficiency and renewables programs at DOE.
Chapter 6 (Energy Development) would provide an additional $500 million in FY2009
appropriations for DOE’s Office of Energy Efficiency and Renewable Energy (EERE). The
purpose of the additional funding is to accelerate the development of technologies that would
“diversify the nation’s energy portfolio and contribute to a reliable, domestic energy supply.” An
additional $100 million would be provided to DOE’s Office of Electricity Delivery and Energy
Reliability (OE) to “modernize the electric grid, enhance security and reliability of the energy
infrastructure, and facilitate recovery from disruptions to the energy supply.” For the cost of loans
authorized by the Energy Independence Act (P.L. 110-140, §135) the bill would provide $1 billion
to remain available until expended. Of that amount, $5 million could be used only for
administrative expenses to conduct the loan program. The leveraged loan guarantee commitments
would be capped at a total of $3.3 billion in loan principal.

⁴⁵^U^S^D^A^{. FY}²⁰⁰^{9 B}^u^dg^e^t^Sum^m^a^r^y^a^{nd A}^nnua^l^P^e^r^f^or^m^a^nc^e^P^l^aⁿ^.^Fe^br^ua^r^y²⁰⁰⁸^{. p}^.⁴⁴^.
^http:^//w^w^w^.obpa^.us^d^a^.^g^o^v^/^bu^ds^u^m^/^f^y^09buds^um^.pdf^.

On September 27, 2008, the Senate adopted the House-passed version of H.R. 2638 by vote of 78
to 12. The Senate did not act on the supplement bill, H.R. 7110.

On October 3, 2008, the proposed Emergency Economic Stabilization Act of 2008 (H.R. 1424)
was signed into law as P.L. 110-343. Division B contains the Energy Improvement and Extension ⁴⁶
Act (EIEA), which extends and establishes several tax incentives for renewable energy.
P.L. 110-343 extends or re-establishes several tax incentives that support renewable electricity
production, biofuels production, transportation efficiency and conservation, buildings efficiency,
and equipment efficiency. The law has four incentives for electricity production: the production
tax credit, two solar investment tax credits, and new clean energy (tax credit) bonds. Also, the law
has several incentives for biofuels. P.L. 110-343 includes $9.1 billion in renewable energy
production (electricity and fuels) tax incentives and $3.6 billion in energy efficiency ⁴⁷
(transportation and buildings/equipment) tax incentives. The renewable energy incentives
include $5.8 billion for the renewable energy electricity production tax credit (PTC), $1.9 billion
for business solar (and fuel cell) credits, $1.3 billion for residential solar tax credits, and $267 ⁴⁸
million for clean renewable energy (tax credit) bonds. (For more about the background and
debate on the renewable energy incentives, see the discussion below. For more details about the
energy efficiency incentives, see CRS Report RL33831, Energy Efficiency and Renewable Energy ^th
Legislation in the 110 Congress, by Fred Sissine, Lynn J. Cunningham, and Mark Gurevitz.)
EIEA offsets the cost of the incentives by reducing several existing subsidies, with the effect of
generating nearly $17 billion in revenue over 10 years. The largest offset, $6.67 billion, is
provided by a modification of the requirements imposed on brokers for the reporting of their
customers’ basis in securities transactions. A freeze on a deduction for certain types of oil and
natural gas production will provide $4.91 billion. Additional revenue will be derived from
changes in foreign income taxes under Foreign Oil and Gas Extraction Income (FOGEI) and
Foreign Oil Related Income (FORI) rules for the production and sale of oil and gas products
($2.23 billion), a modification of the excise tax for the Oil Spill Liability Trust Fund ($1.72 ⁴⁹
billion), and an extension of the Federal Unemployment Tax Act (FUTA) surtax ($1.47 billion).

⁴⁶^EI^EA^w^a^s^fⁱ^r^s^{t intr}^o^duc^e^dⁱⁿ^t^h^e^te^x^t^of^the^Se^na^te^-^a^dop^te^{d s}^u^bs^tit^ute^to^H^.^R^.⁶⁰^49.^A^br^ie^f^le^gⁱ^s^l^a^tⁱ^v^e^his^t^or^y^of
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^Cu^rren^t^Issu^es^{, by}^Sa^lv^a^t^ore^L^a^z^z^a^ri.

Aside from several differences over the amount and duration of some incentives, the primary
issue was focused on House proposals to fully offset the estimated cost of the incentives by ⁵⁰
reducing other tax subsidies. For example, during the House floor debate over H.R. 5351,
opponents argued that the proposed repeal of oil and natural gas subsidies (§301 and §302) would
raise gasoline prices and lead to higher energy costs generally. Further, they contended that such a
repeal would cause a decline in oil industry jobs. Also, some opponents argued that the proposed

35% cap on the renewable energy production tax credit (PTC) would severely impair the ability ⁵¹

of the credit to stimulate the development of new wind farms.
Proponents argued that the repeal would focus mainly on the five largest oil companies, which
have recently made historical record-breaking profits and, thus, do not need the subsidies.
Further, they contended that the subsidies currently favor conventional fuels and that the bill
would help to bring support into a more equal balance. Proponents also argued that the incentives
would spur the development of greater numbers of “green jobs” and help reduce greenhouse gas ⁵²
emissions. (For more details about the proposed revenue offsets, see CRS Report RL33578,
Energy Tax Policy: History and Current Issues, by Salvatore Lazzari.)
Electricity produced by certain renewable energy facilities is eligible for an income tax credit
based on production. Eligible facilities include those that produce electricity from wind, closed-
loop biomass, open-loop biomass (including agricultural livestock waste nutrients), geothermal
energy, solar energy, small irrigation power, landfill gas, and trash combustion. The credit’s
expiration date refers to the deadline for a facility to be placed into initial operation. Once a
facility is qualified, a taxpayer may claim the credit annually over a 10-year period that ⁵³
commences on the facility’s placed-in-service date.
The PTC was established by federal law (P.L. 102-486) in 1992.⁵⁴ The credit was originally set at ⁵⁵

1.5 cents/kwh and is adjusted annually for the previous year’s inflation rate. Since 1992, it has ⁵⁶

expired and been reinstated three times, and it has been extended two other times. In August

⁵⁰^C^ong^r^e^s^sⁱ^ona^{l R}^e^c^o^r^d^.^Fe^br^ua^r^y^27,²⁰⁰⁸^{. p}^.^H¹⁰⁹^1-^H¹¹³^1.
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^om^b/le^gⁱ^s^l^a^tiv^e^/^s^a^p/110-^2/^s^a^phr⁵³⁵¹^-^r^.^p^d^f^.
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⁵⁶^T^h^e^m^o^s^t^r^e^ce^{nt e}^x^pir^a^tion^oc^c^u^r^r^e^d^dur^ing²⁰⁰⁴^.

2005, the Energy Policy Act of 2005 (P.L. 109-58, §1301) extended the PTC for two years, ⁵⁷

through the end of calendar year 2007. Also, the credit was expanded to include incremental
hydropower and to increase the credit duration to 10 years for open-loop biomass, geothermal,
solar, small irrigation power, and municipal solid waste. The Tax Relief Act of 2006 (P.L. 109-
432, §201) extended the PTC for one additional year, through the end of 2008. The Emergency
Economic Stabilization Act (P.L. 110-343, Division B, §101 and§102) extended the PTC for
windfarms for one year, through the end of 2009. The PTC for biomass, geothermal, solar, and
some other sources was extended for two years, through the end of 2010. Also, the PTC was
expanded to include marine (ocean, tidal, wave) and hydrokinetic (river current) power sources,
with eligibility established for three years, through the end of 2011.
For claims against 2008 taxes, the credit stands at 2.1 cents/kwh for wind, closed-loop biomass,
geothermal, and solar facilities. The credit stands at 1.0 cents/kwh for marine/hydrokinetic, open-
loop biomass, small irrigation power, incremental hydropower, and municipal solid waste
(including landfill gas and trash combustion facilities).
In 2007, the credit stood at 2.0 cents/kwh for claims against 2006 taxes. To illustrate the credit’s
significance, this 2.0 cents/kwh represented about one-third of wind production costs in 2006. As
Table 5 shows, half credit (valued at 1.0 cents/kwh in 2006) was provided for electricity
produced by facilities that used open-loop biomass, small irrigation water flows, incremental
hydropower, or landfill gas from municipal solid waste. In application, the credit may be reduced
for facilities that receive certain other federal credits, grants, tax-exempt bonds, or subsidized
energy financing. The amount of credit that may be claimed is phased out as the market price of ⁵⁸
electricity exceeds certain threshold levels.
Claims for the PTC were less than $1 million in 1993 and 1994. Table 6 shows that credit claims
started growing more rapidly in 1995 and increased sharply, though erratically, from 1999
through 2005. Wind farm developments accounted for more than 90% of the dollar value of PTC ⁵⁹
claims through 2005. Given the credit’s availability for new projects through 2008, the table
shows that the claims for 2006 through 2010 are estimated to increase substantially (in current
year dollars) relative to past levels.
The PTC, combined with other policies, has had a positive though erratic effect on the growth of
the wind energy industry. In contrast, it has had very little effect on baseload renewables, such as
geothermal and biomass energy, and it has had virtually no effect on solar energy development.
The following sections discuss PTC impacts in more detail.

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⁵⁹^P^e^r^s^ona^{l c}^o^m^m^unic^a^{tion w}^{ith C}^u^r^tis^C^a^r^l^s^on,^O^f^fⁱ^c^e^of^T^a^x^P^o^lic^y^,^D^e^pa^r^t^m^e^{nt of}^the^T^r^ea^s^u^r^y^{. N}^o^v^e^m^b^e^r²⁰⁰^8.

Coupled with rising energy costs, R&D advances, and a variety of state policies, the PTC has ⁶⁰
stimulated significant growth in wind capacity over the past 10 years. However, the PTC
expirations in 2000, 2002, and 2004 caused annual capacity growth to fall sharply in those years,
by as much as 80% relative to the previous year. After each expiration, the PTC was reinstated for ⁶¹
one- to two-year periods. In 2005, one wind industry representative testified:
^Unf^o^rtun^atel^y^{... t}^w^{o pl}^u^s^on^e^plu^s^oⁿ^{e pl}^u^s^oⁿ^e^doesⁿ^o^{t n}^e^c^e^s^s^a^ril^y^equ^a^l^fⁱ^v^e^predictable
^y^ears^.^Ins^t^{ead, it}^repres^en^tsⁿ^o^t^th^e^s^u^m^{total o}^f^y^ears^t^h^{e cred}^{it h}^a^s^{been i}ⁿ^{place, bu}^t^rath^er
^p^e^rⁱ^o^d^s^o^f^uⁿ^cer^tain^t^y^,^w^h^eⁿⁿ^e^w^wⁱⁿ^d^coⁿ^s^tr^u^c^tioⁿ^sto^p^p^e^d^,^jo^b^s^w^e^r^e^e^l^imⁱⁿ^a^t^e^d^,^aⁿ^d^c^o^s^t^s
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ⁿ^a^tu^re^of^t^h^{e credit}^h^a^s^prev^eⁿ^{ted t}^h^eⁿ^{eeded in}^v^e^st^m^eⁿ^tⁱⁿ^U.S.-^b^ased^f^acili^ties^th^at^w^ill⁶²
^driv^{e econ}^o^mⁱ^es^o^f^s^{cale a}ⁿ^{d ef}^ficien^cⁱ^es^.
In 2007, one renewable energy analyst echoed this observation, testifying that the frequent credit
expiration, and short-term nature of reinstatements and extensions, have led to several adverse
impacts on wind industry growth. The variability of the credit has caused the growing demand for
wind power to be “compressed into tight and frenzied windows of development. This cycle of
boom-and-bust has resulted in under-investment in manufacturing capacity in the United States
and variability in equipment and supply costs.” It may also have caused under-investment in ⁶³
transmission planning and development, further restricting growth.
The American Wind Energy Association has noted that the cycle of decline in wind industry ⁶⁴
activity actually starts about eight months before a PTC expiration date. Representatives of the
wind industry have testified that the cycle of peak manufacturing production demands followed ⁶⁵
by cutbacks “would be eliminated if a long-term PTC extension was in effect.” Opponents of
the PTC say that the credit was created to provide temporary economic assistance to help the
renewable electricity production industry get started. Further, they say that the PTC was not
intended to be a permanent subsidy. Despite 15 years of subsidies, wind still apparently cannot
compete without the PTC, opponents note.
Geothermal power facilities are physically and operationally more like conventional coal-fired
power plants than wind machines. There is usually one large, highly capital-intensive plant that ⁶⁶
uses heat to produce base-load power. However, industry testimony suggests that identifying a

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^Ma^rc^{h 29}^{, 2}⁰⁰⁷^{. T}^e^stim^ony^o^f^R^y^aⁿ^Wⁱ^se^{r, p. 5}^.^h^ttp:/^/f^inaⁿ^c^e^.^se^na^te^.g^ov^/site^pa^g^e^s/^he^a^r^ing⁰³²⁹^07.^h^t^m^.
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⁶²^{U.S. C}^ong^re^{ss. House}^.^C^o^m^m^itte^e^{on W}^a^y^s^a^{nd Me}^aⁿ^s.^T^a^x^C^r^e^d^it^s^for^Ele^c^t^rⁱ^c^ity^Pr^o^duc^ti^on^fr^om^Re^ne^w^able
^Sour^c^e^s^.^H^e^a^r^ing^he^l^d^Ma^y^24,²⁰⁰⁵^{. T}^e^s^tim^on^y^of^D^e^aⁿ^G^o^s^s^e^{lin, F}^P^L^Ene^r^g^y^{. p. 25-}²⁶^.
^http:^//w^ay^sa^ndm^ea^ns^.hous^e^.^g^o^v^/^he^a^r^ing^s^.a^s^p^?f^or^m^m^ode⁼^d^e^t^a^il&^hea^r^ing⁼^411.
⁶³^S^eⁿ^a^t^e^Fⁱⁿ^aⁿ^{ce Co}^mmⁱ^t^t^ee,^C^l^e^{an Ene}^r^gy^,^T^e^s^tⁱ^m^ony^of^R^y^aⁿ^Wⁱ^s^e^r^,^p.^7.
⁶⁴^Ameri^can^Wⁱⁿ^d^Eⁿ^ergy^A^sso^ci^atⁱ^oⁿ^(A^W^E^A⁾^.^Le^gis^l^ativ^e^Prⁱ^o^r^iti^e^s^:^Pr^oduc^ti^on^Tax^C^r^e^dⁱ^t^Ex^te^ns^ion.
^http:^//www^.a^w^e^a^.^org^/^le^gⁱ^sla^tiv^e^/^.
⁶⁵^Ho^u^s^{e W}^a^y^s^an^d^M^ean^{s Co}^mmⁱ^t^t^ee,^T^a^{x Cred}ⁱ^t^s^f^o^{r R}^eⁿ^e^wab^l^es^,^T^e^s^tⁱ^m^on^y^of^D^e^aⁿ^G^o^s^s^e^{lin, p.}²⁵^.
⁶⁶^T^h^e^s^e^f^a^c^ilitie^{s a}^r^e^of^t^e^{n 10 m}^e^ga^wa^{tt (m}^{w) to 1}^{00 m}^w^{in c}^a^p^a^c^ity^{, c}^o^m^p^a^r^e^d^w^{ith w}ⁱ^{nd m}^a^c^h^ine^s^tha^t^us^ua^lly^ra^ng^e
^f^r^o^m^{2 m}^w^{to 5 m}^w^.

suitable geothermal resource is similar to prospecting for oil or natural gas. The costs and risks of
exploration for geothermal are as high or higher than those for the oil and gas industry, and the
ability to attract financing is far more difficult. Once a resource is verified, permitting and
construction can take three to five years or more. Since 1992, there has been very limited ⁶⁷
development of new geothermal facilities.
In 2005, EPACT increased the amount of the PTC available to geothermal facilities from half to
full credit. However, the PTC’s short windows of availability have made the credit largely
ineffective as an incentive for the geothermal industry. Industry representatives have noted that
the largest projects “may not go forward because they face unacceptable risks trying to meet the
rigid deadline ... [or to avoid] taking an all-or-nothing gamble on future extensions of the ⁶⁸
credit.” The geothermal industry says a PTC extension of 10 years or more could be sufficient ⁶⁹
to stimulate a higher level of sustained industry growth.
Representatives of biomass, hydropower, and landfill gas industries say their facilities are more
like geothermal facilities than wind machines and, thus, also require a longer-term PTC period. In

2005 testimony, EIA offered a similar observation:

^Sh^o^r^t-^ter^m^ex^ten^s^ioⁿ^s^o^f^th^{e PT}^{C ar}^{e lik}^el^y^to^h^a^v^e^lⁱ^m^itedⁱ^m^p^{act o}ⁿ^q^u^ali^f^yⁱⁿ^g
^t^e^c^hno^l^o^gi^e^s^lⁱ^ke^bⁱ^o^m^a^s^{s a}ⁿ^d^ge^o^t^he^r^m^a^l^,^w^hⁱ^c^{h ha}^ve^r^e^l^a^tⁱ^v^e^l^y^l^oⁿ^g^d^e^ve^l^o^p^m^eⁿ^t^peri^ods^,⁷⁰
^ev^enⁱ^f^t^h^{e credit}^w^e^{re larg}^{e e}ⁿ^oug^h^to^m^a^k^e^t^h^e^m^econ^o^mⁱ^cal.
The PTC has been even less valuable for solar energy equipment. Most solar electricity
equipment comes as small, widely distributed units that are designed mainly for on-site use, not ⁷¹
for power sales to the grid. These aspects make the PTC less valuable for solar than the business ⁷²
and residential investment tax credits (ITC). Due to rules against multiple tax credit use, solar
equipment cannot qualify for both the PTC and ITC, and so owners must choose one or the other. ⁷³
Representatives of the solar industry have indicated a clear preference for ITC over PTC. Even
with the PTC, solar is too expensive for utility-scale application.
After its creation in 1992, the PTC was virtually unused until states began to establish renewable ⁷⁴⁷⁵
portfolio standard (RPS) policies. State RPS action began in the mid-1990s. Since then, an

⁶⁷^U^.^{S. C}^ong^r^e^s^s^.^Se^na^te^{. C}^o^m^m^itt^e^e^{on E}ⁿ^e^r^gy^a^{nd N}^a^tur^a^{l R}^e^s^our^c^e^s^.^I^m^ple^m^eⁿ^tatioⁿ^{of Pr}^ov^is^ions^{of t}^h^e^Ene^r^gy
^P^o^lⁱ^{cy A}^c^t^of²⁰⁰⁵^.^H^e^a^r^ing^he^ld^J^u^ly^{11, 2}⁰⁰⁶^{. T}^e^s^tim^on^y^of^K^a^r^l^G^a^w^e^{ll, G}^e^othe^r^m^a^l^Ene^r^gy^A^s^s^o^cⁱ^a^{tion (}^G^EA⁾^.^p.
⁹⁵^.^h^t^t^p^://f^rw^eb^g^a^t^e^.acce^ss.g^p^o^.^g^o^v^/^cg^i-bⁱⁿ^/^g^e^td^o^c^.cgⁱ^?^dbna^m^e⁼¹^09_s^eⁿ^a^t^e^_he^a^r^ing^s^&^docⁱ^d⁼^f^:300^04.^pdf^.
⁶⁸^Se^na^te^Ene^r^g^y^Co^m^m^itte^e^,^I^m^ple^m^eⁿ^tati^{on of}^E^PAC^T^{, T}^e^s^tim^ony^of^G^E^A^,^{p. 92-}^93.
⁶⁹^P^e^r^s^ona^{l c}^o^m^m^unic^a^{tion w}^{ith K}^a^r^l^G^a^w^e^ll,^G^e^othe^r^m^a^l^Ene^r^gy^A^s^s^o^cⁱ^a^tion,^A^p^r^{il 6,}²⁰⁰⁷^.
⁷⁰^Ho^u^s^{e W}^a^y^s^an^d^M^ean^{s Co}^mmⁱ^t^t^ee,^T^a^{x Cred}ⁱ^t^s^f^o^{r R}^eⁿ^e^wab^l^es,^T^e^s^tⁱ^m^on^y^of^D^r^{. H}^o^w^a^r^d^G^r^ue^ns^pe^c^t^f^o^r^the
^Ene^r^gy^Iⁿ^f^o^r^m^a^{tion A}^d^mⁱ^nis^t^r^a^ti^{on (}^E^I^A⁾^,^p^.¹⁰^.
⁷¹^A^l^so^,^so^l^a^{r en}^erg^y^eq^uⁱ^p^m^en^t^h^a^{s h}ⁱ^gh^capⁱ^t^a^l^co^st^{s an}^{d l}^o^w^cap^aci^t^y^f^a^ct^o^r^s.
⁷²^Ho^u^s^{e W}^a^y^s^an^d^M^ean^{s Co}^mmⁱ^t^t^ee,^T^a^{x Cred}ⁱ^t^s^f^o^{r R}^eⁿ^e^wab^l^es^,^EI^A^T^e^s^tⁱ^m^on^y^,^{p. 6-}^9.
⁷³^Ho^u^s^{e W}^a^y^s^an^d^M^ean^{s Co}^mmⁱ^t^t^ee,^T^a^{x Cred}ⁱ^t^s^f^o^{r R}^eⁿ^e^wab^l^es^,^T^e^s^tⁱ^m^on^y^of^C^h^rⁱ^s^O^’^B^r^ie^{n f}^o^r^the^Sola^r^Ene^r^g^y
^Iⁿ^d^u^s^t^rⁱ^e^s^A^s^s^o^cⁱ^a^{tion (}^S^EI^A⁾^{, p.}^47-^49.
⁷⁴^EIA^,^AEO200⁵^{, p. 58}^.
⁷⁵^I^o^w^a^fⁱ^r^s^{t e}^s^t^a^blis^he^{d a}^r^e^ne^w^a^ble^eⁿ^e^r^gy^r^e^quir^e^m^e^{nt in 1}⁹⁸³^{. H}^o^w^e^v^e^r^,^m^o^s^t^s^t^a^t^e^s^{did n}^o^{t c}^o^ns^id^e^r^aⁿ^R^P^S^unt^il
^af^t^e^{r el}^ect^ri^ci^t^y^rest^ru^ct^u^rⁱⁿ^{g p}^o^lⁱ^cⁱ^e^{s ap}^p^earedⁱⁿ^t^h^{e m}ⁱ^d^-¹⁹⁹⁰^s^.^T^h^{e f}^o^l^l^o^wⁱⁿ^g^sectⁱ^oⁿ^o^f^t^hⁱ^s^re^p^o^r^t^dⁱ^scu^{sses st}^at^e
^{RPS a}^c^tiv^ity^{in g}^r^e^a^t^e^r^de^ta^il.

increasing number of states have implemented an RPS. Table 5 shows the trend depicting the
close correlation between rising PTC claims and the growing number of states with an RPS. Since
the late 1990s, many have noted that the combined effect of the PTC with state RPS policies has ⁷⁶
been a major spur to wind energy growth.
The variability in tax credit availability has led to erratic growth in energy production, and it has
caused the U.S. wind industry to become more dependent on European equipment due to stronger ⁷⁷
European requirements for renewables. Despite these problems, wind has been the main
beneficiary of the credit. A related issue is that the PTC has not been effective at stimulating the
development of other renewable energy facilities, which generally need a longer period of credit
availability. The main proposal to address the variable impact on wind and the lack of impact on
other renewables is the enactment of a longer-term PTC extension. The wind industry prefers an
extension of five years or more.
On occasion, the PTC has been expanded to include a broader range of renewable energy ^th
resources. This credit design issue surfaced in the 110 Congress, as it addressed the question of
whether the credit should be expanded to include production from equipment that uses marine
energy (tidal, wave, and ocean thermal) resources and hydrokinetic (river current) resources. P.L.
110-343 (Division B, §102) did expand the credit to cover those resources, establishing a 1.0
cent/kwh credit with a three-year eligibility window.
At least two studies have attempted to assess the potential results of a longer-term PTC extension.
In one study, EIA examined a 10-year extension and found that wind power would continue to ⁷⁸
show the largest projected gains. Landfill gas, geothermal, and biomass were also projected to
experience some capacity expansion. EIA estimated a 7-fold increase for wind, a 50% increase ⁷⁹
for biomass, and a 20% increase for geothermal facilities.
In 2007, DOE’s Lawrence Berkeley National Laboratory (Berkeley Lab) reported the results of a
study that examined the potential benefits of extending the PTC for 5 to 10 years. Relative to a
projection with continued cycles of one-year to two-year extensions, it found that the installed
cost of wind could be reduced by 5% to 15%. Additional benefits could include better
transmission planning and enhanced private R&D spending. Also, Berkeley Lab estimated that a

10-year extension could increase the domestic share of manufactured wind equipment from the ⁸⁰

current level of 30% to about 70%. The Joint Committee on Taxation has estimated that the one-

⁷⁶^{DOE. En}^erg^y^In^f^o^r^m^atioⁿ^A^d^mⁱⁿⁱ^stratioⁿ^(EIA^).^An^nu^{al E}ⁿ^e^r^gy^O^u^tlo^ok²⁰⁰⁶^.⁽^S^e^c^tⁱ^on^on^“^S^ta^te^R^e^ne^w^a^ble
^Ene^r^gy^R^e^quir^e^m^e^nts^a^{nd G}^o^a^l^s^:^U^pda^te^T^h^r^oug^h²⁰⁰⁵^.)^p.^27.^Fur^t^he^r^dis^c^us^sⁱ^on^of^the^im^por^ta^nc^e^of^the^P^T^C^to
^{RPS is}^pre^s^eⁿ^te^{d i}ⁿ^the^se^c^tioⁿ^un^de^r^Re^ne^w^a^ble^P^o^rtf^o^li^{o S}^t^a^nda^rd^eⁿ^title^d^“^F^e^d^e^r^a^l^T^a^x^Cre^d^{it (P}^T^C^{) Su}^pp^{orts Sta}^t^e
^{RPS Polic}^ie^s^.^”
⁷⁷^S^eⁿ^a^t^e^Fⁱⁿ^aⁿ^{ce Co}^mmⁱ^t^t^ee,^C^l^e^{an Ene}^r^gy^,^T^e^s^tⁱ^m^ony^of^R^y^aⁿ^Wⁱ^s^e^r^,^p.^7-^9.
⁷⁸^P^r^ior^to^the^P^T^C^e^x^te^ns^ionⁱⁿ^E^P^A^C^T^{05, EI}^A^e^x^am^ine^d^aⁿ^e^x^te^nsⁱ^{on f}^r^om^the^e^nd^of²⁰^{05 t}^h^r^o^ug^{h t}^h^e^e^nd^of²⁰^15.
^T^h^{e ext}^eⁿ^sⁱ^oⁿⁱⁿ^cl^ud^ed^al^l^reso^u^r^{ces co}^vered^b^y^t^h^e^P^T^{C at}^t^h^at^tⁱ^{me at}^t^h^{e val}^u^{es t}^h^at^w^e^{re i}ⁿ^p^l^{ace t}^h^en^.^E^I^A^.^Ann^ual
^Ene^r^gy^O^u^tl^ook²⁰^{05 (}^AEO²⁰⁰⁵⁾^{. p.}⁶⁰^.
⁷⁹^Ho^u^s^{e W}^a^y^s^an^d^M^ean^{s Co}^mmⁱ^t^t^ee,^T^a^{x Cred}ⁱ^t^s^f^o^{r R}^eⁿ^e^wab^l^es^,^EIA^T^e^s^tⁱ^m^on^y^,^{p. 1}⁰^.
⁸⁰^S^eⁿ^a^t^e^Fⁱⁿ^aⁿ^{ce Co}^mmⁱ^t^t^ee,^C^l^e^{an Ene}^r^gy^,^T^e^s^tⁱ^m^ony^of^R^y^aⁿ^Wⁱ^s^e^r^,^p.^8-¹⁰^.

year⁸¹ extension of the wind credit’s placed-in-service deadline in P.L. 110-343 would reduce tax ⁸²
revenue to the U.S. Treasury by about $5.8 billion over the 10-year duration of credit claims.
In 2007 testimony, MidAmerican Energy Company suggested that a 5-to-10 year PTC extension
would also be the best way to encourage baseload renewables, such as geothermal and biomass.
Such an extension, it said, would provide long-term certainty to utilities, independent project
developers, and manufacturers. To address budget-related cost concerns for a PTC extension,
Mid-American suggested that a long-term extension could be coupled with a gradual phase-down
of the credit to 1.5 cents/kwh. Alternatively, if the credit extension were set at something less than
five years, Mid-American proposed that a conditional second deadline could be set up that would
extend the placed-in-service eligibility period. That extension would require an offsetting
reduction in the credit period, the length of time over which credit claims could be filed. The
conditions required for an extension to a secondary placed-in-service deadline are that the project
must be under construction and have signed power sales contracts before the initial credit
expiration date and it must bring the project online before the secondary placed-in-service
deadline. For example, if the secondary deadline were set as one year past the initial placed-in-
service deadline, a project that met those conditions would be eligible to receive the credit, but ⁸³
only for nine years instead of ten.
Because the PTC was set to expire at the end of 2008, proposals to extend it began early in the ^th
first session of the 110 Congress. Table 2 shows that several proposals—with different time
periods—were considered. Although PTC cost was a concern, growing higher in relation to the
time period, the debate focused mainly on House paygo requirements that drew Administration
veto threats. The House consistently proposed that the cost of the incentives be fully offset.
Proposed offsets stressed reduced tax subsidies for oil and natural gas, which the Administration ⁸⁴
found unacceptable. In the first session, H.R. 2776 proposed a four-year extension that was ⁸⁵
incorporated into H.R. 3221 and, later, into a House-passed version of H.R. 6. The Senate was
unable to pass any tax incentive package in the first session, and the Energy Independence and
Security Act of 2007 (P.L. 110-140) was enacted without tax provisions. In the second session, ⁸⁶
the key bills were H.R. 5351, H.R. 6049, and H.R. 1424.

⁸¹^T^h^e^la^w^prov^ide^s^a^tw^o-^y^e^a^r^e^x^te^nsion^f^o^{r pr}^od^uc^tio^{n f}^r^om^m^o^{st othe}^{r sourc}^e^s^aⁿ^d^se^{ts a}^thre^e^-^y^e^a^r^e^lig^ibility
^wⁱ^ndow^f^o^r^pr^oduc^ti^on^f^r^om^m^a^rⁱ^ne^a^nd^hy^dr^ok^ine^tic^s^our^c^e^s^.
⁸²^Joint^Com^m^itte^e^{on T}^a^x^a^tion.^Es^tim^ate^d^B^u^d^g^e^t^Ef^fe^c^t^s^{of t}^h^e^T^a^x^Pr^ov^is^ions^C^oⁿ^t^ai^ne^{d i}ⁿ^{an Am}^eⁿ^dm^eⁿ^{t i}ⁿ^t^h^e
^N^a^tur^e^o^f^s^S^ubs^ti^tute^t^o^H^.^R^.¹⁴²⁴^{, Sc}^he^du^le^{d f}^o^r^C^o^ns^ide^r^at^io^{n o}ⁿ^the^Seⁿ^a^te^Fl^oor^{on O}^c^t^obe^r¹^,²⁰⁰⁸^{. O}^c^t^obe^r^1,
²⁰⁰^{8. htt}^p^://w^w^w^.hous^e^.^g^o^v^/jc^t/x^-78-^08.^pdf^.
⁸³^S^eⁿ^a^t^e^Fⁱⁿ^aⁿ^{ce Co}^mmⁱ^t^t^ee,^C^l^e^{an Ene}^r^gy^,^T^e^s^tⁱ^m^ony^of^T^{odd R}^a^ba^of^MidA^m^e^rⁱ^c^aⁿ^Ene^r^gy^C^o^m^p^aⁿ^y^,^{p. 3.}
⁸⁴^E^x^ecu^tⁱ^v^{e O}^f^fⁱ^{ce o}^f^t^h^{e P}^r^esi^d^ent.^Of^fⁱ^{ce o}^f^M^aⁿ^a^g^e^m^eⁿ^t^an^d^B^udget^.^State^m^eⁿ^t^{of A}^d^mⁱⁿⁱ^s^t^r^a^ti^on^Polic^y^oⁿ^H^.^R.⁶^.
^De^c^e^m^b^e^r^{7, 20}^07.^htt^p^://w^ww^.^w^hite^h^ouse^.^g^o^v^/^om^b/le^gⁱ^sla^tiv^e^/^sa^p/11^0-1/^hr6sa^p^-^h^_²^.^pdf^.
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^f^our^-^y^e^a^r^P^T^C^e^x^te^ns^{ion (}^§¹¹⁰⁰¹⁾^.
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^Le^gis^l^ati^oⁿⁱⁿ^the¹¹⁰^C^o^ng^ress^{, by}^Fre^d^Sis^sⁱ^ne^{, L}^y^{nn J}^.^Cunⁿⁱⁿ^g^h^a^m^{, a}^{nd Ma}^rk^G^u^re^v^itz⁽²^sess^ioⁿ⁾^.

Table 2. Selected Wind Production Tax Credit (PTC) Extension Proposals
^{House Senate}
^Bill^Extension^Extension
^Period^{Final Action}^Period^{Final Action}
^{First Sess}^ion
^{H.R. 6} ^{4 years}^adopted^{2 years}^{cloture motion defeated}
^(§1501)^(235-1⁸¹⁾^(S.Amdt^{. 384}¹⁾^(59-40)
^{Second Session}
^{H.R. 5351} ^{3 years}^adopted^{— no}^action
^(236-1⁸²⁾
^{H.R. 6049} ^{1 year}^adopted^{1 year}^adopted
^(263-1⁶⁰⁾^(93-2)
^{P.L. 110-3}⁴³^{1 year}^adopted^{1 year}^adopted
^{(H.R. 1424)} ^(263-1⁷¹⁾^(74-25)
Proponents of extending the credit past 2008 argued that the PTC is merited because it corrects a
market failure by providing economic value for the environmental benefits of “clean” energy
sources that emit less (in many cases, far less) air pollutants and CO² than conventional energy
equipment. Also, they contended that it helps “level the playing field,” noting that there is an even ⁸⁷
longer history of federal subsidies for conventional energy. For example, they point to the ⁸⁸
permanent depletion allowance for oil and natural gas that has been in place for many decades.
Opponents of extending the PTC beyond the end of 2008 argued that generally there are no
market failures that warrant special tax subsidies for particular types of renewable energy
technologies. They argued further that subsidies generally distort the free market and that
renewables should not get special treatment that exempts them from this principle. Also,
regarding the concern about the environmental problems of “dirty” conventional energy sources,
they contended that the most cost-effective economic policy is to put a tax on the pollution from
energy sources and let the free market make the necessary adjustments. Another argument against
the PTC was that much renewable energy production, particularly from wind and solar
equipment, has a fluctuating nature that makes it less valuable than energy produced by ⁸⁹
conventional facilities.
At a Senate hearing in February 2007, Energy Secretary Bodman testified that the Administration
was unlikely to support a five-year or 10-year PTC extension because it would not be consistent ⁹⁰
with free markets. Consistent with that stance, the Administration’s FY2008 budget request did

⁸⁷^Fe^de^ra^{l subsi}^d^ie^{s f}^o^{r c}^onv^eⁿ^ti^on^a^l^eⁿ^e^r^gy^re^sourc^e^s^a^{nd te}^c^hno^logⁱ^e^s^a^{nd f}^o^{r e}^l^e^c^t^ric^pow^e^r^f^a^c^ilitie^{s (inc}^lu^ding
^l^a^{rge h}^y^d^r^o^e^l^ect^ri^{c p}^o^w^{er p}^l^an^t^s⁾^h^a^{ve b}^een^t^r^aced^b^{ack as f}^a^{r a}^s^t^h^{e 1}⁹²⁰^s^and¹⁹³⁰^s.^S^{ee DOE}⁽^P^aci^fⁱ^{c No}^rt^h^w^e^s^t
^L^a^bor^a^t^or^y⁾^,^{An Ana}^l^y^s^is^{of Fe}^de^r^a^{l I}ⁿ^c^eⁿ^tiv^e^s^U^s^e^d^t^o^S^tim^ul^ate^Ene^r^gy^Pr^o^duc^ti^on,¹⁹⁸⁰^.³⁰⁰^p.
⁸⁸^GA^O.^Pe^tr^ole^u^m^an^{d Et}^ha^nol^Fu^e^l^s^:^Tax^Iⁿ^c^eⁿ^tiv^e^s^aⁿ^d^Re^late^{d G}^A^O^W^o^r^k^{. (}^G^A^O^/R^C^E^D^-^00-^301R⁾^Se^pte^m^be^r^25,
²⁰⁰^{0. T}^h^e^re^p^o^rt^note^s^t^h^a^t^f^r^om¹⁹⁶^{8 t}^h^ro^ug^h²⁰^00,^a^b^o^u^t^$1⁵⁰^bi^llion^(c^onsta^nt²⁰⁰⁰^dol^la^{rs) w}^o^{rth of}^ta^x^inc^eⁿ^tiv^e^s
^w^e^r^e^prov^ide^d^t^o^su^pp^{ort t}^h^e^o^{il a}^nd^na^tura^{l g}^a^{s in}^dustrie^s.
⁸⁹^Som^e^a^r^g^u^e^f^u^rthe^{r tha}^t^a^s^t^h^e^c^o^ntrib^u^ti^ons^f^r^om^wⁱ^{nd a}ⁿ^{d s}^o^la^r^p^o^w^e^{r produc}^ti^on^ris^e^{, the}ⁱ^r^inte^rm^itte^nt^na^ture^m^a^y
^c^r^e^a^t^e^g^r^id^m^a^na^ge^m^e^{nt proble}^m^{s f}^o^{r e}^l^e^c^t^ric^utilitie^s.
⁹⁰^U^.^{S. C}^ong^r^e^s^s^.^Se^na^te^{. C}^o^m^m^itt^e^e^{on E}ⁿ^e^r^gy^a^{nd N}^a^tur^a^{l R}^e^s^our^c^e^s^.^Pr^opos^e^d^Bu^dge^{t f}^o^r^FY²⁰⁰⁸^for^the
⁽^c^onti^nue^d.^..)

not include a provision to cover a PTC extension beyond 2008. Similarly, the Administration’s
FY2009 budget request did not include such a provision. However, Section 304 of the Senate
version (S.Con.Res. 70) of the budget resolution proposed the creation a deficit-neutral reserve
that could be used to support a five-year PTC extension. Further, Section 305 of the House budget
resolution (H.Con.Res. 312) also allowed for support of renewable energy tax incentives.
The Energy Tax Act of 1978 (P.L. 95-618) established a residential energy investment tax credit ⁹¹
(ITC) for solar and wind energy equipment. As energy prices declined, Congress allowed the
credit to expire at the end of 1985. In 2005, EPACT (P.L. 109-58, §1335) established a 30% ⁹²
residential solar credit with a cap at $2,000, through the end of 2007. The Tax Relief Act of

2006 (P.L. 109-432, §206) extended the credit through the end of 2008.

The Emergency Economic Stabilization Act of 2008 (P.L. 110-343, Div. B, §106) extends the
residential solar tax credit at the 30% level for eight years, through the end of 2016. Further, the
annual cap on the credit is increased from $2,000 to $4,000. Also, residential wind equipment and
ground source heat pumps are eligible for a 30% credit.
The Energy Tax Act also established a 10% business investment tax credit for solar, wind, ⁹³
geothermal, and ocean energy equipment. The Energy Policy Act of 1992 made permanent the

10% business credit for solar and geothermal equipment. In 2005, EPACT (§1337) increased the ⁹⁴

solar business credit to 30% through the end of 2007. The Tax Relief Act of 2006 extended the
30% rate through the end of 2008. Without an extension, the credit would have dropped back to

10% after 2008.

P.L. 110-343 (Div. B, §103) extends the business solar tax credit at the 30% level for eight years, ⁹⁵
through the end of 2016. Further, the credit would be allowed to offset the alternative minimum
tax. Also, public utilities would become eligible for the credit.

^(...c^on^tin^ue^d)
^D^e^par^tm^eⁿ^{t o}^f^Eⁿ^e^r^gy^.^He^a^r^ing^h^e^{ld Fe}^br^ua^ry^{7, 20}^07.^htt^p^://e^ne^rg^y^.^s^e^na^te^.g^ov^/^p^u^b^lic^/
ⁱⁿ^d^e^x.^cfm^?^F^u^se^A^c^tⁱ^oⁿ⁼^Heariⁿ^gs.^H^eariⁿ^g&He^ariⁿ^g_^ID=1⁶⁰¹^.
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^P^r^of^its^T^a^x^A^c^{t of}¹⁹⁸^{0 (}^P^.L^.^96-²²³⁾^inc^r^e^a^s^e^d^the^c^r^e^d^{it f}^r^om^30%^{to 4}⁰^%^of^the^fⁱ^r^s^{t $1}^0,0⁰⁰^.
⁹²^Joint^T^a^x^Co^m^m^itte^e^,^D^e^s^c^rⁱ^ptio^{n of}^H^.^R.⁶^{, p. 49}^.
⁹³^T^h^e^Wⁱ^ndf^a^{ll P}^r^of^{its A}^c^{t inc}^r^e^a^s^e^d^the^c^r^e^d^it^to^15%^aⁿ^{d e}^x^te^nde^d^{it thr}^oug^h^the^e^nd^of¹⁹^85.^T^h^e^Ta^x^Re^f^o^r^m^A^c^t
^of¹⁹⁸^{6 (}^P^.L^{. 99-}⁵¹⁴⁾^e^x^te^nde^d^th^e^c^r^e^d^{it thr}^oug^h¹⁹⁸⁸^.
⁹⁴^Joint^T^a^x^Co^m^m^itte^e^,^D^e^s^c^rⁱ^ptio^{n of}^H^.^R.⁶^{, p. 52-}⁵³^.
⁹⁵^T^h^is^is^the^s^a^m^e^pr^ov^is^{ion t}^h^a^t^th^e^H^ous^e^a^ppr^ov^e^dⁱⁿ^H^.^R^.^{6 (}^§¹⁵⁰³⁾^on^D^e^c^e^m^b^e^r^{6, 2}⁰⁰⁷^{. S}^.^A^m^{dt. 3}⁸⁴¹ⁱⁿ^c^l^ude^d
^t^h^{e sam}^e^p^r^o^vⁱ^sⁱ^oⁿⁱⁿ^sectⁱ^oⁿ¹⁵⁰²^,^excep^t^t^h^atⁱ^t^w^o^u^l^{d h}^a^{ve al}^so^mad^e^cert^aⁱⁿ^co^m^bⁱⁿ^ed^h^eat^and^p^o^w^{er eq}^uⁱ^p^m^en^t
^elⁱ^gⁱ^b^l^e^f^o^{r t}^h^{e cred}ⁱ^t^.^H^o^w^e^ver,^t^h^{e am}^en^d^m^en^t^{was d}^e^feat^ed^oⁿ^a^cl^o^t^u^r^{e vo}^t^e^andⁱ^t^w^a^{s n}^o^t^f^u^rt^h^e^r^coⁿ^sⁱ^d^ered.^T^h^e
^Sola^r^Eⁿ^e^r^gy^I^ndus^tr^y^A^s^s^o^cⁱ^a^{tion ha}^d^eⁿ^d^o^r^s^e^d^H^.^R^.⁵^50/^S.⁵⁹^0,^w^h^ic^{h w}^{ould ha}^v^e^e^x^pa^nde^{d t}^h^e^b^u^sⁱ^ne^s^s^c^r^e^d^{it t}^o
ⁱⁿ^cl^ud^{e cert}^aⁱⁿ^so^l^a^{r st}^o^r^{age an}^d^lⁱ^gh^tⁱⁿ^{g eq}^ui^p^m^en^t^,^an^{d i}^t^w^o^u^l^d^{have e}^x^t^eⁿ^d^e^d^t^h^{e cred}ⁱ^t^at^t^h^{e 30% l}^e^vel^f^o^{r ei}^gh^t
⁽^c^onti^nue^d.^..)

The debate over extending these credits was similar to that for the PTC. Opponents argued that
subsidies distort the operation of the free market. They also contended that the most effective
policy is to impose a tax on energy equipment that causes pollution. The solar industry has
testified that the business ITC is the most important tax incentive for solar equipment. Proponents
of the credit counter-argued that the credits correct a market failure and help establish equality
with subsidies that exist for conventional energy equipment. They also asserted that the subsidy-
induced increase in demand helps manufacturers establish economies of scale that will broaden
the use of solar equipment and make it more competitive in the long term.
P.L. 110-343 established other new business tax incentives. Division B (§104) establishes a 30%
credit (capped at $4,000) over an eight-year period (end of 2016) for wind machines with a
capacity of 100 kilowatts or less. Also, the permanent 10% credit is expanded to include ⁹⁶
geothermal (ground source) heat pumps (§105).
Non-profit electric utilities provide about 25% of the nation’s electricity.⁹⁷ Due to their tax-
exempt status, they are not eligible for the PTC. To address the cost and risk barriers for
developing renewable energy facilities, these organizations have sought incentives comparable to
the PTC. Using a design that parallels the PTC, the Energy Policy Act of 1992 (EPACT92)
established a renewable energy production incentive (REPI) that provided 1.5 cents/kwh, adjusted ⁹⁸
for inflation. REPI typically receives about $5 million per year, through DOE appropriations.
This limited funding and annual uncertainty may have severely limited REPI’s potential. DOE
data for 2004 shows, for example, that funding covered only about 10% of requests for REPI ⁹⁹
payments.
In 2005 testimony, the American Public Power Association (APPA) stated that REPI was
“woefully underfunded,” and the National Rural Electric Cooperative Association (NRECA)
proposed that a “clean energy bond” be created to establish an incentive for non-profit electric ¹⁰⁰
utilities that would be more comparable in scope to the PTC. Subsequently, EPACT (§1303)
established clean renewable energy bonds (CREBs), a tax credit bond that allowed the bond ¹⁰¹
holder to receive a federal tax credit in lieu of interest paid by the issuer. EPACT authorized

^(...c^on^tin^ue^d)
^years.
⁹⁶^A^dditio^na^{l e}ⁿ^e^r^g^y^-^e^ff^ic^ie^{nt e}^quip^m^eⁿ^{t w}^a^s^m^a^de^e^lig^ible^f^o^{r the}¹⁰^%^c^r^e^d^{it. For}^m^o^re^de^ta^{ils, se}^e^th^e^onliⁿ^e
^da^ta^ba^se^{s a}^t^http:^//www^.e^ne^rgy^t^a^x^inc^eⁿ^tiv^e^s^.org^{/ a}^{nd a}^t^http^://w^ww^.dsire^usa^.^org^/^.
⁹⁷^T^h^e^s^e^non-pr^of^{it org}^a^niz^a^tio^nsⁱⁿ^c^l^ude^p^ubl^ic^p^o^w^e^{r utilitie}^s^,^c^o^op^e^r^a^tiv^e^e^l^e^c^t^ric^utilitie^s^,^a^{nd f}^e^de^ra^lly^o^w^ne^d
^pow^e^r^utilitie^s.
⁹⁸^For^ba^c^k^g^r^ound^on^R^E^P^I^,^s^e^e^the^D^a^ta^ba^s^e^of^Sta^t^e^Iⁿ^c^eⁿ^tiv^e^s^f^o^r^R^e^ne^w^a^ble^Ene^r^gy^{. http:}^//w^w^w^.dsⁱ^r^e^us^a^.^or^g^/
^lⁱ^b^rary^/ⁱⁿ^c^l^u^d^e^s/ⁱⁿ^cen^tⁱ^v^e2^.^c^f^m^?Iⁿ^cen^tⁱ^v^e_^Co^d^e=US³³^F^&S^t^a^t^e=f^e^d^eral^&cu^rren^t^p^a^gei^d⁼¹^&ee=0^&re⁼¹^.
⁹⁹^For^histor^ic^a^l^de^ta^{ils of}^RE^P^I’s^u^s^e^,^se^e^the^ta^bl^e^eⁿ^title^{d “}^R^E^P^{I A}^ppr^opria^ti^on^Sum^m^a^r^y^,^”^{on DOE’s w}^e^bsite^a^t
^h^t^t^p^:^/^/^www^.^eere.^en^er^g^y^.^g^o^v^/^wⁱ^p^/^r^epⁱ^.^cfm^.
¹⁰⁰^{U.S. C}^ong^re^{ss. House}^.^C^o^m^m^itte^e^{on W}^a^y^s^a^{nd Me}^aⁿ^s.^T^a^x^C^r^e^d^it^s^for^Ele^c^t^rⁱ^c^ity^Pr^o^duc^ti^on^fr^om^Re^ne^w^able
^Sour^c^e^s^.^H^e^a^r^ing^he^l^d^Ma^y^24,²⁰⁰⁵^{. T}^e^s^tim^on^y^of^A^P^P^A⁽^p^{. 6}¹^-⁶³⁾^aⁿ^d^N^R^EC^A⁽^p^{. 6}⁷^-⁶⁹⁾^.
¹⁰¹^T^h^u^s^,^CRE^{Bs al}^l^o^w^{a b}^oⁿ^dⁱ^ssu^e^r^t^o^b^o^r^r^o^w^at^{a zero}^p^e^rcen^tⁱⁿ^t^e^r^e^st^rat^e^.^E^lⁱ^gⁱ^b^l^e^bo^ndⁱ^ssu^{ers i}ⁿ^cl^u^d^e^st^at^{e an}^d
^loc^a^l^g^o^v^e^rⁿ^m^e^nts^,^c^oope^r^a^tiv^e^e^l^e^c^t^rⁱ^c^c^o^m^p^aⁿ^ie^s^,^a^{nd c}^e^r^ta^{in ot}^he^r^no^n-^pr^of^{it or}^g^a^niz^a^tio^ns^{. F}^o^r^t^h^e^bo^nd^hol^de^r^,^t^h^e
⁽^c^onti^nue^d.^..)

$800 million in CREBs for 2006 and 2007.¹⁰² In late 2006, the Internal Revenue Service (IRS) ¹⁰³
reported requests totaling $2.6 billion in bond authority. The Tax Relief Act of 2006 (§202)
authorized a second round of CREBs through the end of 2008, adding $400 million more in total ¹⁰⁴
bond authority.
P.L. 110-343 (Div. B, §107) established a new category of CREBs (New CREBs) for
state/local/tribal governments, public power providers (utilities), and cooperative electric ¹⁰⁵
companies. The “New CREBs” differ from the previously issued CREBs in four aspects. First,
issuers of New CREBs will be subjected to a shorter three-year period for use of the bond
proceeds, two years less than the previous five-year period for CREBs. Second, the tax credit rate ¹⁰⁶
will be lower, set at 70% of the previous rate for CREBs. Third, taxpayers can carry forward
unused credits into future years. Fourth, the tax credit benefits can be separated from bond ¹⁰⁷
ownership.
A national limit of $800 million was set for New CREBs, of which one-third will be available for
state, local and tribal governments; one-third for public power providers; and one-third for
cooperative electric companies. The revenue drain on the U.S. Treasury is estimated at a total of ¹⁰⁸
$267 million over the period from 2009 through 2018. The Administration repeatedly stated its
opposition to the New CREBs that the House approved in the first session (H.R. 3221 and the ¹⁰⁹
House version of H.R. 6) and in the second session (H.R. 5351 and H.R. 6049). For example, it
contended that the CREBs are “expensive and highly inefficient,” and that New CREBs would be
“inconsistent with the Federal Credit Reform Act of 1990 and/or unduly constrain the ¹¹⁰
Administration’s ability to effectively manage Federal credit programs. Proponents of the New
CREBs counter-argue that the New CREBs would “help limit the environmental consequences of
continued reliance on power generated using fossil fuels.” The tax-credit bonds, they argue, can ¹¹¹
attract investment from taxpayers that are unable to benefit from tax credits.

^(...c^on^tin^ue^d)
^ta^x^c^r^e^d^{it is}^a^l^s^o^tr^e^a^t^e^d^a^s^ta^x^a^ble^inte^r^e^s^t^{. For}^e^x^am^ple^,^a^bo^nd^hol^de^r^{in a}^30%^ta^x^br^a^c^k^e^t^w^{ho r}^e^c^e^iv^e^s^a^$100^ta^x
^credⁱ^t^f^r^o^m^t^h^{e b}^oⁿ^d^pu^rch^a^{se w}^o^u^l^d^al^s^o^h^a^{ve $}³⁰^t^r^eat^ed^{as t}^a^xabl^{e i}ⁿ^t^e^restⁱⁿ^co^m^e^,^l^eaviⁿ^{g a n}^e^t^t^a^{x cred}ⁱ^t^o^f⁷⁰^%^.
^Se^e^https^:^/^/^w^w^w^.a^ppa^ne^t.or^g^/^f^iles/P^D^Fs^/^C^R^E^B^.^pdf^.
¹⁰²^T^h^{is inc}^l^u^d^e^d^$5^{00 m}^illio^{n f}^o^{r g}^o^v^e^rnm^e^nta^l^borrow^e^rs.
¹⁰³^{DOE’s de}^sc^riptioⁿ^of^the^re^que^st^{s a}^nd^$8^{00 m}^illio^{n IRS a}^l^l^o^c^a^tioⁿ^{is prov}ⁱ^d^e^d^a^t^htt^p^://a^p^p^s1.e^e^r^e^.^eⁿ^e^r^gy^.g^ov^/ⁿ^e^w^s/
^ne^w^s^_de^ta^il.c^f^m^/^ne^w^s^_id=¹⁰⁴²^3.
¹⁰⁴^{DOE’s de}^sc^riptioⁿ^of^the^re^que^st^{s a}^nd^$4^{00 m}^illio^{n IRS a}^l^l^o^c^a^tioⁿ^{is prov}ⁱ^d^e^d^a^t^htt^p^://a^p^p^s1.e^e^r^e^.^eⁿ^e^r^gy^.g^ov^/ⁿ^e^w^s/
^ne^w^s^_de^ta^il.c^f^m^/^ne^w^s^_id=¹¹⁵⁷^5.
¹⁰⁵^T^h^is^pr^ov^is^io^{n is}ⁱ^d^eⁿ^tic^a^l^t^o^s^e^c^t^ion¹⁵⁰⁶^of^H^.^R^.⁶^pa^s^s^e^{d by}^the^H^ous^e^oⁿ^D^e^c^e^m^b^e^r^{6, 2}⁰⁰⁷^.^S.A^m^{dt. 384}¹
ⁱⁿ^cl^ud^ed^anⁱ^d^en^tⁱ^cal^p^r^o^vⁱ^sⁱ^oⁿ⁽^§¹⁵⁰⁵⁾^.^Ho^w^e^ver,^t^h^{e a}^m^en^d^m^en^t^w^a^{s d}^e^f^e^at^ed^oⁿ^{a cl}^ot^u^r^{e vo}^t^e^andⁱ^t^w^a^{s n}^o^t^f^u^rt^h^e^r
^coⁿ^sⁱ^d^ered^.
¹⁰⁶^T^h^e^pr^e^v^ious^ta^x^c^r^e^d^{it r}^a^te^f^o^r^C^R^EB^s^w^a^s^se^{t a}^s^the^r^a^te^tha^t^w^o^u^l^{d pe}^r^m^{it is}^s^u^aⁿ^c^e^of^C^R^E^B^s^w^ithout^dis^c^o^unt
^an^dⁱⁿ^{terest co}^{st t}^o^th^e^issu^er.
¹⁰⁷^H^.^R^e^pt.¹¹^0-²^14.^Re^ne^w^a^ble^Eⁿ^e^r^gy^an^{d E}ⁿ^e^r^gy^C^o^ns^e^r^v^a^tion^T^a^x^Ac^{t of}²⁰⁰⁷^.^J^u^ne²⁷^,²⁰^07.^p.⁴⁰^.
¹⁰⁸^Joint^Com^m^itte^e^{on T}^a^x^a^tion.^E^s^tⁱ^m^a^t^ed^R^evenu^e^E^f^f^ect^{s o}^f^t^h^{e T}^a^{x P}^r^o^vⁱ^sⁱ^oⁿ^s^C^oⁿ^t^aⁱⁿ^e^dⁱⁿ^H.^R^.⁵³⁵¹^.^Fe^b^r^ua^ry
^{27, 20}⁰⁸^.^h^ttp:^//w^w^w^.hous^e^.^g^o^v^/^j^c^t/x^-^20-⁰⁸^.p^df^.
¹⁰⁹^E^x^ecu^tⁱ^v^{e O}^f^fⁱ^{ce o}^f^t^h^{e P}^r^esi^d^ent.^Of^fⁱ^{ce o}^f^M^aⁿ^a^g^e^m^eⁿ^t^an^d^B^udget^.^S^t^at^emen^t^o^f^A^d^mⁱⁿⁱ^st^r^a^tⁱ^oⁿ^P^o^lⁱ^c^y^oⁿ^H.^R^.
⁵³⁵^1.^Fe^brua^ry^26,²⁰⁰⁸^{. p}^.²^.^h^t^t^p^://w^w^w^.^w^hite^hous^e^.^g^o^v^/^om^b/le^gis^l^a^tiv^e^/^s^a^p/110-^2/^s^a^phr53^51-r^.^p^d^f^.
¹¹⁰^E^x^ecu^tⁱ^v^{e O}^f^fⁱ^{ce o}^f^t^h^{e P}^r^esi^d^ent.^Of^fⁱ^{ce o}^f^M^aⁿ^a^g^e^m^eⁿ^t^an^d^B^udget^.^S^t^at^emen^t^o^f^A^d^mⁱⁿⁱ^st^r^a^tⁱ^oⁿ^P^o^lⁱ^c^y^oⁿ^H.^R^.
²⁷⁷⁶^and^H.^R^.³²²¹^.^A^u^gu^st^3,²⁰⁰⁷^.^p.^2.^ht^t^p^:/^/^www^.^eⁿ^e^r^g^y^.^go^v/^medⁱ^a/^S^A^P^_^on^_^H^R²⁷⁷^6_^an^d_^H^R³²²¹^.^p^d^f
¹¹¹^{U.S. C}^ong^re^{ss. House}^.^C^o^m^m^itte^e^{on W}^a^y^s^a^{nd Me}^aⁿ^s.^Re^ne^w^abl^e^Ene^r^gy^a^nd^Ene^r^gy^C^o^ns^e^r^v^a^tio^{n T}^a^x^Ac^{t of}
²⁰⁰^7.⁽^H^.R^e^p^{t. 11}^0-²¹⁴⁾^p.³⁹^.

Table 3. Clean Renewable Energy Bonds History
^{Public Law}^Bond^{Authorization}^{Requests for Bon}^{d A}^uthority^{Allocation Date}
^{P.L. 109-5}⁸^$80^{0 million}^$2.6^billi^on^{Nov. 20, 2}⁰⁰⁶
^(§1303)
^{P.L. 109-4}³²^$40^{0 million}^$89^{8 million}^{Feb. 8, 20}⁰⁸
^(§202)
^{P.L. 110-3}⁴³^$80^{0 million}^—^—
^{(Div. B}^,^§107)
The Emergency Economic Stabilization Act (P.L. 110-343, Div. B, Title III) requires nearly $17.0
billion in revenue offsets, primarily to support incentives for renewables (Title I) and efficiency ¹¹²
(Title II). Debate over the revenue offset provisions in H.R. 1424 directly paralleled the House
and Senate floor debates over similar proposals in other key bills during the first session (H.R.
3221 and H.R. 6) and second session (H.R. 5351 and H.R. 6049). In those debates, opponents
argued that the reduction in oil and natural gas incentives would dampen production, cause job
losses, and lead to higher prices for gasoline and other fuels. Proponents counter-argued that
record profits show that the oil and natural gas incentives were not needed and that the new
incentives would help spur the development of “green” jobs.

Under a renewable energy portfolio standard (RPS), retail electricity suppliers (electric utilities)
must provide a minimum amount of electricity from renewable energy resources or purchase
tradable credits that represent an equivalent amount of renewable energy production. The
minimum requirement is often set as a percentage of retail electricity sales. More than 28 states
have established an RPS, with most targets ranging from 10% to 20% and most target deadlines ¹¹³
ranging from 2010 to 2025. Most states have established tradable credits as a way to lower
costs and facilitate compliance. State RPS action has provided an experience base for the design
of a possible national requirement.

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¹¹³^T^h^e^Fe^de^ra^{l Ene}^r^g^y^Re^g^u^la^tory^Com^m^{ission (FERC) p}^o^{sts a}^ta^lly^of^sta^t^e^RP^S^a^c^tion^tha^t^{is u}^pda^te^{d re}^g^u^la^rly^.
^h^ttp^:^//www^.ferc.g^o^v^/^mark^et-o^v^e^r^s^ig^h^t/m^k^t^-electric/^o^v^ervⁱ^e^w^/^e^lec-o^v^r-rp^s.p^d^f^.

Opponents often contend that state RPS policies are not worth implementing because the
incremental costs of renewable energy may lead to substantial increases in electricity prices. RPS
proponents often counter by presenting evidence that renewable energy costs would be modest
and arguing that RPS creates employment, reduces natural gas prices, and produces ¹¹⁴
environmental benefits.
The renewable energy electricity production tax credit (PTC) is the single most important form of
federal support for state RPS policies. The PTC can “buy-down” the cost of renewable energy by
about $20/mwh on a long-term levelized cost basis. Thus, assumptions about the future ¹¹⁵
availability and level of the PTC can have a major impact on planning for state RPS policies.
Otherwise, federal agency involvement with state RPS programs has primarily involved support ¹¹⁶
for planning and analysis.
RPS proponents contend that a national system of tradable credits would enable retail suppliers in
states with fewer resources to comply at the least cost by purchasing credits from organizations in
states with a surplus of low-cost production. Opponents counter that regional differences in
availability, amount, and types of renewable energy resources would make a federal RPS unfair
and costly.
During the first session of the 110^th Congress, RPS action began with Senate floor consideration
of S.Amdt. 1537 to H.R. 6. The amendment proposed a 15% RPS target. The proposal triggered a
lively debate, but was ultimately ruled non-germane. In that debate, opponents argued that a
national RPS would disadvantage certain regions of the country, particularly the Southeastern
states. They contended that the South lacks a sufficient amount of renewable energy resources to
meet a 15% renewables requirement. They further concluded that an RPS would cause retail
electricity prices to rise for many consumers.

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^e^m^s/^rep^o^r^t^s^/⁶¹⁵⁸⁰^.^p^d^f^.^T^hⁱ^s^su^rve^y^o^f²⁸^st^at^{e R}^P^S^co^st^p^r^oj^ectⁱ^o^{n st}^u^dⁱ^{es f}^o^un^d^t^w^o^t^h^at^estⁱ^m^at^ed^rat^eⁱⁿ^creases
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^T^h^e^study^c^onc^lude^{s tha}^t^“^w^he^{n c}^o^m^b^ine^d^w^{ith p}^o^ssible^na^tura^{l g}^a^{s pric}^e^re^duc^ti^{ons a}ⁿ^{d c}^o^rre^sp^on^dⁱ^ng^g^a^{s bill}
^saviⁿ^g^s,^t^h^{e o}^v^eral^l^co^stⁱ^m^p^act^s^{are even}^m^o^re^m^o^d^e^st^.^”
¹¹⁵^DOE^.^L^a^w^r^en^{ce Ber}^k^el^e^y^N^a^tⁱ^o^nal^L^a^b^o^r^at^o^r^y^.^W^e^{ighing t}^h^e^Cost^{s an}^{d Be}^ne^fits^of^St^ate^Re^ne^wa^ble^s^Portfo^lio
^S^t^an^da^rd^{s: A}^C^o^mpa^r^a^tⁱ^{ve A}ⁿ^a^l^y^sⁱ^s^o^f^St^a^t^e-L^evel^P^o^lⁱ^{cy Imp}^a^c^t^P^r^o^j^ectⁱ^oⁿ^s^.^Ma^r^c^{h 200}^{7. p. 50}^.^h^t^t^p^://e^e^t^d.l^b^l.g^o^v^/^e^a^/
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^pre^p^a^r^e^d^v^a^{rious st}^udie^s^of^sta^t^e^{RPS pr}^og^ra^m^s^a^{nd a}^c^tiv^itie^{s. EIA ha}^{s pre}^p^a^r^e^d^st^ud^ie^{s proje}^c^tⁱⁿ^gⁱ^m^pa^c^t^{s o}^f^RP^S
^p^r^op^o^s^al^{s on}^el^ect^ri^ci^t^y^an^dⁿ^a^t^u^r^a^l^{gas p}^rⁱ^ces.^S^o^m^e^o^f^t^h^{ese E}^I^A^st^u^dⁱ^{es are ci}^t^e^d^uⁿ^d^e^{r t}^h^e^b^e^l^o^w^sectⁱ^oⁿ^on^“F^ed^eral
^{RPS D}^e^ba^te^.”

RPS proponents countered by citing an EIA study that examined the potential impacts of the 15%
RPS proposed in S.Amdt. 1537. It indicated that the South has sufficient biomass generation, both
from dedicated biomass plants and existing coal plants co-firing with biomass fuel, to meet a 15%
RPS. EIA noted further that the estimated net RPS requirement for the South would not make it
“unusually dependent” on other regions and was in fact “below the national average
requirement.... ” Regarding electricity prices, EIA estimated that the 15% RPS would likely raise
retail prices by slightly less than 1% over the 2005 to 2030 period. Further, the RPS would likely
cause retail natural gas prices to fall slightly over that period.
In House floor action on H.R. 3221, an RPS amendment (H.Amdt. 748) was added by a vote of
220 to 190. The bill subsequently passed the House by a vote of 241 to 172. The RPS amendment
would set a 15% target for 2020, of which up to four percentage points of the requirement could
be met with energy efficiency measures. Key points and counterpoints of the Senate debate were
repeated. On the House floor, RPS opponents also contended that biomass power technologies
were not yet ready for commercial use and that certain usable forms of biomass were excluded.
Proponents acknowledged that there is a need to expand the definition of biomass resources, and
offered to do so in conference committee.
On December 6, 2007, the House approved the same RPS provision as section 1401 of the
omnibus energy bill, H.R. 6. However, the Senate passed H.R. 6 without an RPS provision. Thus,
the Energy Independence and Security Act (P.L. 110-140) did not contain an RPS. (For more
details see CRS Report RL34116, Renewable Energy Portfolio Standard (RPS): Background and
Debate Over a National Requirement, by Fred Sissine.)
Major wind developments in Europe have expanded from land-based operations to include some
offshore coastal areas. Proposals to develop offshore wind have emerged in the United States as ^th
well. During the 109 Congress, a major debate erupted over safety, economic, and
environmental aspects of a proposal by Cape Wind Associates to develop a 420-megawatt
offshore wind farm in Nantucket Sound, south of Cape Cod, Massachusetts. Cape Wind and other
proponents say the project is a safe, clean way to develop renewable energy and create jobs.
Opponents of the project have collaborated to create the Alliance to Protect Nantucket Sound.
The Alliance says that the project poses threats to the area’s ecosystem, maritime navigation, and
the Cape Cod tourism-based economy.
EPACT (§388) placed regulatory responsibility for offshore wind developments with the Minerals
Management Service (MMS) of the Department of the Interior. In 2006, MMS announced that an
environmental impact statement (EIS) would be prepared for the project. In February 2007, Cape ¹¹⁷
Wind submitted its draft EIS to MMS. MMS released its Draft Environmental Impact ¹¹⁸
Statement in January 2008. The study found that environmental, fishery, and marine
transportation impacts would range from negligible to minor. On-shore visual impacts would be

¹¹⁷^Ca^pe^Wⁱ^{nd ha}^s^poste^d^its^dra^f^{t EIS a}^t^htt^p^://w^ww^.c^a^p^e^w^ind.org^/^a^r^tic^le¹³⁷^.htm^.
¹¹⁸^MMS.^Dra^f^t^Eⁿ^vi^ron^m^en^t^a^l^Impa^ct^S^t^a^t^emen^t^A^v^a^ila^ble^{on t}^h^e^M^M^{S w}^e^bsite^a^t^http^://w^ww^.^m^m^s^.gov^/of^f^s^hore^/
^R^e^ne^w^a^ble^E^ne^r^g^y^/^D^E^I^S^/^V^ol^um^e%^20I^%^20-^%²^0C^a^p^e^%^20W^ind%²⁰^D^E^I^S^/^C^a^p^e^%^20W^ind%^20D^EI^S.^pdf^.

moderate. After the report was released, MMS began a two-month review and comment period.
Also, the Coast Guard Act of 2006 (P.L. 109-241, §414) directs the Coast Guard to determine the
status of navigational safety aspects for the Cape Wind Project. The parties to the debate are
waiting for the final results of the EIS and Coast Guard study.
There is also a concern that tall wind turbines create false radar signals that may disrupt civilian ¹¹⁹
and military radar equipment. This led to federal actions to temporarily halt several wind farm
developments. The Defense Authorization Act for FY2006 directed the Department of Defense
(DOD) to study the issue and report to Congress. In 2006, the Sierra Club filed suit to compel ¹²⁰
DOD to complete the radar study. DOD released the report in late 2006, and allowed most of
the delayed projects to resume action. However, the report concluded that some mitigation
strategies would have to be conducted on a case-by-case basis and that the development of
additional mitigation measures would require further research and validation.
The impact of wind turbines on wildlife has also become a focus of concern. H.R. 3221 (§7231-
7234) would have required the Department of the Interior to form a committee to recommend
guidance to minimize and assess impacts of land-based wind turbines on wildlife and wildlife
habitats. State and federal laws (and regulations) would not be preempted. However, this
provision was not included in the final version of H.R. 6 that was enacted as the Energy
Independence and Security Act (P.L. 110-140).
Technology that generates electricity from marine sources—including ocean waves, tides, and
river currents—has reached the pre-commercial stage. Tax incentives and other programs have
been established in Florida, Maine, and New Jersey to encourage commercial development. MMS
has authority under EPACT (§388) to regulate development of ocean energy resources on the
outer continental shelf (OCS). The Federal Energy Regulatory Commission (FERC) has asserted
its authority to regulate these technologies, which it considers to be forms of hydropower. As
these technologies develop to commercial scale, environmental issues are likely to arise, over
which several other agencies appear to have regulatory jurisdiction. As technologies advance and
new incentives become available, the regulatory struggle between MMS and FERC, and the ¹²¹
potential regulatory roles of other agencies, may grow in importance.
The 110^th Congress,¹²² took two major actions to promote marine and hydrokinetic power
technologies. First, the Energy Independence and Security Act (P.L. 110-140) directs DOE to
create an R&D program focused on technology that produces electricity from waves, tides,
currents, and ocean thermal differences (§633). A report to Congress is required. Further, DOE is

¹¹⁹^Moreⁱⁿ^f^o^rm^a^{tion on}^this^is^s^u^e^is^a^v^a^ila^ble^{on D}^O^E^’s^w^e^bs^ite^a^t^ht^tp://w^w^w^.ee^r^e^.^eⁿ^e^r^gy^.g^ov^/^w^inda^ndhy^dro/
^wⁱ^ndpow^e^r^ing^a^m^e^rⁱ^ca^/ne^_^is^s^u^e^s^_ⁱ^nte^r^f^e^r^e^nc^e^.^a^s^p.
¹²⁰^T^h^e^r^e^por^{t is}^a^v^a^ila^ble^a^t^h^ttp:^//w^w^w^.def^eⁿ^s^e^link^.^m^il/pubs^/^pdf^s^/^Wⁱ^ndFa^r^m^R^e^por^t.p^d^f^.
¹²¹^For^m^o^r^e^inf^o^r^m^a^{tion, s}^e^e^C^R^S^R^e^por^{t R}^L³³⁸⁸^3,^Issu^{es A}^f^f^ectⁱⁿ^{g T}ⁱ^da^l^,^Wa^ve,^aⁿ^d^Iⁿ^-S^t^r^ea^{m Genera}^tⁱ^o^{n P}^r^o^j^ect^s^,
^by^Nⁱ^c^L^a^ne^.
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^g^u^a^r^aⁿ^te^e^d^loaⁿ^s^aⁿ^d^dir^e^c^t^r^e^v^e^nue^s^f^r^o^m^O^u^te^r^C^ontiⁿ^eⁿ^ta^l^She^l^f⁽^O^C^S⁾^le^a^s^e^s^{to f}^und^o^cean^en^ergy^d^e^vel^o^p^m^en^t^.
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^a^pprov^e^d^by^the^Se^na^te^{, b}^u^{t it}^w^a^{s dro}^ppe^d^{in c}^onf^e^r^eⁿ^c^e^c^o^m^m^itte^e^.

instructed to award grants to institutions of higher education (or consortia thereof) to establish
National Marine Renewable Energy Research, Development, and Demonstration Centers (§634).
The FY2008 Consolidated Appropriations Act (P.L. 110-161) provided $9.9 million for DOE’s
Water/Marine Energy Technology Program. The FY2009 Continuing Appropriations Act (P.L.

110-329) provides funding through March 9, 2009, at the same level as FY2008.

Second, P.L. 110-343 (Div. B, §102) expanded the renewable energy electricity production tax
credit to include production from marine and hydrokinetic sources. The credit is set at 1 cent/kwh
for the 2008 tax year. The window of eligibility will be open for three years, through the end of

2011.

Renewable fuel is defined to include ethanol, biodiesel, and certain other sources. Ethanol is the
only one produced in large quantity.
In the United States, ethanol is produced mainly from corn grown on farms.¹²³ It is most often
used as a 10% blend with gasoline. Ethanol’s high cost has been a key barrier to increased
commercial use. This barrier has been addressed mainly by a 51-cent per gallon tax credit for fuel ¹²⁴
use. Also, there has been a debate over the net energy benefit of using corn ethanol. National ¹²⁵
ethanol production was estimated at 6.48 billion gallons in 2007. However, due to ethanol’s ¹²⁶
lower heat content, this is equivalent to about 4.34 billion gallons of gasoline, or about 285,000
barrels of oil per day (b/d).
The U.S. Department of Agriculture (USDA) estimates that 20% of the 2006 corn crop was used
to produce ethanol. The rapid growth in agriculture-based biofuel production generated a sharp
upturn in corn, grain, and oilseed prices in late 2006. At the end of 2006, corn ethanol plant
capacity expansion was on record pace. The rapid growth in production and plant capacity has

¹²³^Ethaⁿ^o^{l is}^the^m^a^jor^f^a^r^m^-^b^a^s^e^d^r^e^ne^w^a^ble^f^u^e^l^{. C}^o^rⁿ^pr^ov^ide^s⁹⁸^%^of^e^t^ha^nol^pr^o^duc^ti^on.^Bⁱ^o^d^ie^s^e^{l is}^a^not^he^r
^im^por^ta^{nt f}^a^r^m^-^b^a^s^e^d^f^u^e^l^{, pr}^odu^c^e^d^m^a^inl^y^f^r^o^m^s^o^y^b^e^aⁿ^{oil. H}^o^w^e^v^e^r^,^a^nnua^{l pr}^od^uc^tio^{n is}^ne^a^r^ly^99%^le^s^s^thaⁿ^tha^t
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^Re^ne^w^able^Eⁿ^e^r^gy^Pr^o^duc^ti^on^{, b}^y^R^a^ndy^Sc^hne^pf^.
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¹²⁵^DOE.^U^.^S.^Et^ha^nol^Pr^od^uc^tio^{n T}^o^tale^{d 6}^.⁴⁸^Bill^io^{n G}^a^ll^onsⁱⁿ²⁰⁰⁷^{. Ma}^r^c^h¹²^{, 20}⁰⁸^.
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raised concerns that further acceleration of ethanol production may pose more challenges, ¹²⁷
including the development of pipeline capacity and the potential for more food price increases.
Supporters argue that ethanol displaces petroleum imports, thus improving energy security. They
further contend that its use can lead to lower emissions of air pollutants and greenhouse gases,
especially if higher-percentage blends are used. Opponents argue that various federal and state
incentives for ethanol distort the market and provide “corporate welfare” for corn growers and
ethanol producers. Further, they assert that the energy and chemical inputs that fertilize corn and
convert it into ethanol actually increase energy use and emissions. However, proponents counter-
argue that ethanol provides modest energy and emissions benefits relative to gasoline.
Cellulosic ethanol can be produced from dedicated fuel crops, such as fast-growing trees and
switchgrass. Switchgrass grows well on marginal lands, needing little water and no fertilizer. This ¹²⁸
allows its growing area to be much larger than that for corn. Cellulosic feedstocks may be
cheaper and more plentiful than corn, but they require more extensive and costly conversion to
ethanol. Both DOE and USDA are conducting research to improve technology and reduce costs.
The United States and Canada have pilot production facilities. Canada has one commercial-scale
plant in operation, and the first U.S. commercial plants are expected to start operating in 2009.
Section 202 of the Energy Independence and Security Act of 2007 (P.L. 110-140) extends and
increases the RFS. The standard requires minimum annual levels of renewable fuel in U.S.
transportation fuel. The previous standard was 5.4 billion gallons for 2008, rising to 7.5 billion by ¹²⁹
2012. The new standard starts at 9.0 billion gallons in 2008 and rises to 36 billion gallons in

2022. Starting in 2016, all of the increase in the RFS target must be met with advanced biofuels,

defined as cellulosic ethanol and other biofuels derived from feedstock other than corn starch—¹³⁰
with explicit carve-outs for cellulosic biofuels and biomass-based diesel.
The law gives the EPA Administrator authority to temporarily waive part of the biofuels mandate,
if it were determined that a significant renewable feedstock disruption or other market
circumstance might occur. Renewable fuels produced from new biorefineries will be required to
reduce by at least 20% the life cycle greenhouse gas (GHG) emissions relative to life cycle
emissions from gasoline and diesel. Fuels produced from biorefineries that displace more than

¹²⁷^{For m}^o^re^inf^o^rm^a^{tion o}ⁿ^re^ne^w^a^ble^eⁿ^e^r^g^y^initia^tiv^e^sⁱⁿ^the²⁰⁰⁸^f^a^r^m^{bill prop}^osa^l^{s, se}^e^{CRS Re}^p^o^{rt RL}³⁴¹³^0,
^Re^ne^w^able^Eⁿ^e^r^gy^P^o^lic^yⁱⁿ^the²⁰⁰⁸^Far^m^B^ill^,^by^T^o^m^C^a^pe^ha^r^t^.
¹²⁸^For^m^o^r^e^inf^o^r^m^a^{tion a}^b^o^u^t^usⁱⁿ^g^c^e^llulosⁱ^c^bi^om^a^s^s^f^o^r^e^t^ha^nol^p^r^od^uc^tio^{n, s}^e^e^C^R^S^R^e^p^o^r^t^R^L³²⁷¹²^,^A^g^ri^cu^l^t^u^r^e-
^Bas^e^{d Re}^ne^w^able^Eⁿ^e^r^gy^Pr^o^duc^tion^{, by}^R^a^ndy^Sc^hne^pf^.
¹²⁹^T^h^e^pr^e^v^ious^s^t^aⁿ^da^r^d^w^a^s^s^e^{t by}^s^e^c^tion¹⁵⁰¹^of^the^Ene^r^g^y^P^o^lic^y^A^c^{t of}²⁰⁰⁵⁽^E^P^A^C^T^{, P}^.^L^.¹^09-⁵⁸⁾^.^A^c^tua^l
^p^r^od^u^c^tⁱ^oⁿ^h^a^d^b^een^exceedⁱⁿ^{g E}^P^A^C^T^t^a^rget^s.
¹³⁰^T^h^e^{RFS inc}^l^ude^{s a}ⁿ^“^a^d^v^a^nc^e^d^biof^ue^{ls m}^a^nda^te^,”^w^h^ic^{h be}^gⁱ^{ns w}^{ith 600}^m^{illion g}^a^llo^{ns in}²⁰⁰⁹^a^{nd rise}^{s to}²¹
^billi^{on g}^a^llo^{ns i}ⁿ²⁰²²^{. T}^h^e^c^e^llul^o^sic^e^t^ha^no^{l p}^o^rti^on^of^the^a^d^v^a^nc^e^d^bi^of^ue^{ls m}^a^nda^te^st^a^r^{ts w}^{ith 1}^{00 m}^illio^{n g}^a^llons
^{in 2}⁰¹⁰^aⁿ^{d rise}^{s t}^o¹⁶^billi^{on g}^a^l^l^{ons i}ⁿ²⁰^22.

80% of the fossil-derived processing fuels used to operate a biofuel production facility will
qualify for cash awards. Several studies are required on the potential impacts of the RFS
expansion on various sectors of the economy.
In February 2008, the Senate Committee on Energy and Natural Resources held an oversight ¹³¹¹³²
hearing on the new RFS. Both leaders of the Committee, the Chairman and the Ranking ¹³³
Member, expressed concern that the RFS set by the Energy Independence Act may need
changes in order to be implemented effectively. One major focus of concern is that the law may
unintentionally preclude new technologies and feedstock sources, such as woody biomass from
federal lands, urban and commercial waste, and biocrude from algae. (For more details on issues
related to the RFS, see CRS Report RL34265, Selected Issues Related to an Expansion of the
Renewable Fuel Standard (RFS), by Brent D. Yacobucci and Tom Capehart.)
Table 7 shows baseline EIA data for U.S. oil use and Persian Gulf Imports in 2006 and EIA ¹³⁴
projections for selected future years through 2030. The table also shows ethanol production ¹³⁵
estimates for the current RFS of 36 billion gallons by 2022. At its peak in 2022, the current
RFS would displace an estimated 1.57 million barrels per day (mbd), or about 59% of projected
Persian Gulf imports for that year.
The Bush Administration’s Biofuels Initiative, part of the Advanced Energy Initiative (AEI), was
designed to increase funding for cellulosic ethanol development with the goal of accelerating its ¹³⁶
commercial use. In 2006, DOE formed a joint research effort between its Office of Energy
Efficiency and Renewable Energy (EERE) and the Office of Science to develop cellulosic ¹³⁷
biotechnology that would enable the production of 60 billion gallons per year. The research

¹³¹^U^.^{S. Se}^na^te^{. C}^o^m^m^itte^e^{on E}ⁿ^e^r^gy^a^{nd N}^a^tur^a^{l R}^e^s^our^c^e^s^.^T^h^{e E}ⁿ^erg^y^Ma^rket^E^f^f^ect^{s o}^f^t^h^{e R}^ecent^l^y^-P^a^ssed
^R^eⁿ^e^w^a^b^l^{e Fu}^el^St^an^da^rd^.^H^e^a^rⁱⁿ^g^he^{ld Fe}^br^ua^r^y^{7, 20}⁰⁸^{. ht}^tp:/^/eⁿ^e^r^g^y^.^se^na^te^.g^ov^/^p^u^b^lic^/
ⁱⁿ^d^e^x.^cfm^?^F^u^se^A^c^tⁱ^oⁿ⁼^Heariⁿ^gs.^H^eariⁿ^g&He^ariⁿ^g_^ID=1⁶⁷⁶^.
¹³²^T^h^e^Chaⁱ^rm^aⁿ^’s^s^t^a^t^em^eⁿ^{t is}^a^v^aⁱ^la^ble^on^the^C^o^m^m^itte^e^’^s^w^e^bs^ite^,^a^t^htt^p^://e^ne^rg^y^.^s^e^na^te^.g^ov^/^publ^ic^/
^inde^x^.^c^f^m^?^Fus^e^A^c^tion=^P^r^e^s^s^R^e^l^e^a^s^e^s^.D^e^t^a^il&^P^r^e^s^s^R^e^l^e^a^s^e^_id=²³⁵⁴⁴^5&^Mo^nt^h=^2&^Y^e^a^r⁼^2008&^P^a^r^t^y⁼^0.
¹³³^T^h^e^Ra^nk^ing^Me^m^b^e^r’s^s^t^a^t^em^eⁿ^{t is}^a^v^a^ila^ble^on^the^C^o^m^m^itte^e^’^s^w^e^bs^ite^{, a}^t^http://e^ne^rgy^.^s^e^na^te^.g^o^v^/public^/
^inde^x^.^c^f^m^?^Fus^e^A^c^tion=^P^r^e^s^s^R^e^l^e^a^s^e^s^.D^e^t^a^il&^P^r^e^s^s^R^e^l^e^a^s^e^_id=²³⁵⁴⁴^7&^Mo^nt^h=^2&^Y^e^a^r⁼²⁰⁰⁸^.
¹³⁴^T^o^f^a^c^ilita^te^c^o^m^p^a^r^{ison, a}^{ll f}ⁱ^g^u^re^{s in the}^ta^ble^a^r^e^show^{n i}ⁿ^te^rm^{s of}^m^illions^of^ba^rre^{ls pe}^{r da}^y^,^m^bd.
¹³⁵^T^h^e^{RFS sc}^eⁿ^a^r^{io is i}^d^eⁿ^tif^ie^d^b^y^{its ultim}^a^t^e^ta^rg^e^t^{, e}^x^pr^e^s^se^{d in}^billi^ons^of^g^a^{llons pe}^{r y}^e^a^r^of^e^t^h^a^nol^pro^duc^ti^on
ⁱⁿ^{a cert}^aⁱⁿ^f^u^t^u^{re y}^ear.^T^h^{e et}^h^aⁿ^o^l^fⁱ^gu^{res i}ⁿ^Ta^b^l^{e 7}^w^e^re^c^onv^e^r^te^{d f}^r^om^billions^of^g^a^{llons pe}^{r y}^e^a^r^{to m}^illions^of
^ba^r^r^e^ls^pe^r^da^y^.^T^h^ey^a^s^s^u^m^e¹⁰⁰^%^c^o^rⁿ^e^t^haⁿ^o^{l, w}^ith^67%^of^the^he^a^t^c^onteⁿ^{t of}^g^a^s^o^line^by^v^o^lum^e^.
¹³⁶^T^h^{e W}^hⁱ^t^e^Ho^u^s^e,^Fac^t^S^h^e^e^t^:^Pr^e^s^ideⁿ^{t Bus}^h^’^s^F^our^-^P^ar^{t Pl}^an^to^C^onfr^o^{nt H}ⁱ^gh^G^a^s^o^lⁱ^ne^Pr^ic^e^s^{, A}^p^r^il^{26, 20}⁰⁵^,
^a^t^http^://w^w^w^.^w^hite^hous^e^.^g^o^v^/^ne^w^s^/^r^e^l^e^a^s^es^/200^6/^04/²⁰⁰⁶⁰⁴²^5-2^.^htm^l^.
¹³⁷^DOE,^Fac^t^s^h^e^e^t^on^{a Sc}^ie^ntific^R^oadm^ap^for^Ce^ll^ulos^ic^Eth^aⁿ^o^l^,^p.^{1. A}^ssumⁱ^ng^tha^t^the⁶⁰^b^illi^{on g}^a^llons^pe^{r y}^e^a^r
^{is prov}^ide^d^by^e^t^ha^nol^{, tha}^t^w^oul^{d be}^e^q^ua^{l t}^o³^.^{9 m}^illioⁿ^ba^rre^ls^p^e^{r da}^y^o^f^e^t^ha^{nol. Usi}ⁿ^g^the^f^a^c^t^tha^t^e^t^haⁿ^o^l^ha^s
⁽^c^onti^nue^d.^..)

plan aims for biotechnology breakthroughs to increase the quantity of biomass (e.g., switchgrass)
per acre and to breed the plants to have more cellulose. The plan would cut costs through
biorefinery breakthroughs that reduce the number of conversion steps and shift the process from ¹³⁸
chemical steps to biological steps.
As Table 4 shows, DOE’s FY2009 budget request would have provided $225.0 million for
DOE’s Biomass Program that supports the Biofuels Initiative and the RFS goals. This would have
been a $26.8 million increase from the $198.2 million appropriated for FY2008. However, the
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act (P.L. 110-329)
continues FY2009 funding at the FY2008 level through March 6, 2009. It does not provide for a
funding increase.

The law has four key tax incentive provisions for biofuels. Section 201 makes a 50% tax
deduction available for the cost of building facilities that produce cellulosic biofuels, with the
incentive available for four years (end of 2012). Section 202 extends for one year (end of 2009)
the $1.00 per gallon production credit for biodiesel and the 10 cents per gallon credit for small
biodiesel producers. Also, it extends the $1.00 per gallon production credit for biomass-derived ¹⁴⁰
diesel fuel. Section 207 extends the alternative refueling stations credit for one year, through
the end of 2009. The credit value is set at 30%, with a cap at $30,000. Section 203 clarifies that
the production incentives in sections 201, 202, and 207 are available only for fuels produced in
the United States.

This section discusses the potential for renewable energy to reduce carbon dioxide (CO²)
emissions by displacing fossil fuel use.

In most cases renewable energy appears to release less carbon dioxide (CO²) than fossil fuels.¹⁴¹
Thus, renewables are seen as a key long-term resource that could substitute for significant
amounts of fossil energy that would otherwise be used to produce vehicle fuels and electricity.

^(...c^on^tin^ue^d)
^a^bout⁶⁷^%^of^the^he^a^t^c^o^nteⁿ^t^of^g^a^s^o^line^by^v^o^lum^e^yⁱ^e^l^ds^aⁿ^e^s^tim^a^t^e^of^{2.6 m}^illion^ba^rre^ls^of^oil^e^quiv^a^le^{nt pe}^r^da^y^.
^Se^e^http:^//w^w^w^.e^r^.^doe^.g^ov^/N^ew^s_Iⁿ^f^o^r^m^a^tion/N^e^w^s^_R^oom^/²⁰⁰^6/^Bⁱ^of^ue^ls^/f^ac^ts^he^e^t^.htm^.
¹³⁸^DOE,^Fac^t^s^h^e^e^t^on^{a Sc}^ie^ntific^R^oadm^ap^for^Ce^ll^ulos^ic^Eth^aⁿ^o^l^{, p.}^2.
¹³⁹^A^s^u^m^m^a^r^y^of^the^pr^ov^is^ions^is^a^v^a^ila^ble^{on t}^h^e^Se^na^te^Fi^na^nc^e^Co^m^m^itte^e^w^e^bsite^a^t^http:/^/f^inaⁿ^c^e^.^se^na^te^.g^ov^/
^s^ite^pa^g^e^s^/^le^g^/^L^E^G^%²⁰²⁰⁰⁸^/¹⁰⁰²^08%²⁰^Ec^on^om^ic^%^20Sta^biliz^a^tio^n%^20S^um^m^a^r^y^.pdf^.
¹⁴⁰^S^ectⁱ^o^{n 20}²^elⁱ^mⁱⁿ^at^{es a p}^r^evi^o^{us gap}ⁱⁿ^t^h^{e cred}ⁱ^t^f^o^{r b}ⁱ^o^dⁱ^e^sel^an^d^agri^-bⁱ^o^dⁱ^esel^an^{d i}^t^b^r^o^a^d^eⁿ^s^t^h^{e ran}^g^{e o}^f
^e^lig^ible^pr^oc^e^s^s^e^s^tha^t^c^aⁿ^be^us^e^d^to^pr^od^uc^e^r^e^ne^w^a^ble^die^s^e^l^f^u^el.
¹⁴¹^Becau^{se ren}^e^w^a^b^l^{e en}^erg^yⁱ^s^o^f^t^eⁿ^d^e^vel^o^p^e^d^f^o^{r en}^erg^y^secu^ri^t^y^,^ai^{r p}^o^l^l^u^tⁱ^on^redu^ctⁱ^oⁿ^,^o^r^o^t^h^e^{r purp}^o^s^es,ⁱ^tⁱ^s^an
^exa^m^p^l^{e o}^f^{a “n}^o^-regret^s^”^st^rat^e^g^y^f^o^{r CO}²^em^is^sⁱ^{on r}^e^duc^tio^ns^{. W}ⁱ^{nd a}^{nd s}^o^la^r^eⁿ^e^r^g^y^ha^ve^z^e^r^{o C}^O²^e^m^issioⁿ^sⁱⁿ
^o^p^e^ratⁱ^oⁿ^bu^t^m^a^yⁿ^eed^an^en^{ergy st}^o^r^{age b}^ack-u^p^sy^st^e^m^(su^c^h^{as b}^a^t^t^e^ri^{es o}^r^f^u^el^cel^l^s^{) t}^h^at^d^o^re^quⁱ^r^{e f}^o^ssi^l^f^u^el^u^s^e.
^W^h^eⁿ^biom^a^s^s^is^de^v^e^lope^{d a}^s^aⁿ^eⁿ^e^r^gy^c^r^{op, the}^C^O²^emⁱ^ssi^oⁿ^s^{are n}^{ear zero}^b^ecau^{se each}ⁿ^e^w^cr^o^p^ab^s^o^rb^{s t}^h^e
^s^a^m^e^am^{ount of}^e^m^is^sⁱ^ons^a^s^a^r^e^re^le^a^s^e^d^by^c^o^m^bus^ting^the^pre^vⁱ^ous^c^r^o^p^—u^nle^s^s^f^e^rtiliz^e^r^is^us^e^d^.

The potential percentage of renewable energy substitution can depend on many factors, including ¹⁴²
energy prices, energy demand growth, technology cost, and market penetration. As renewable
energy production displaces fossil fuel use, it would also reduce CO² emissions in direct ¹⁴³
proportion, except perhaps for biofuels and biopower.
In general, the combustion of biomass for fuel and power production releases CO² at an intensity
that may be close to that for natural gas. However, the re-growth of biomass material, which
absorbs CO², often offsets this release. Hence, net emissions occur only when combustion is
based on deforestation. In a “closed loop” system, biomass combustion is based on rotating
energy crops, there is no net CO² release unless fertilizer is used, and any fossil fuel
displacement, including decreased natural gas use, would tend to reduce CO² emissions.

Since 1988, the federal government has initiated programs to support renewable energy as a CO²
mitigation measure at DOE, USDA, EPA, the Agency for International Development (AID), and
the World Bank. AID and the World Bank have received funding for renewable energy-related
climate actions through foreign operations appropriations bills.
States have undertaken a variety of programs that support renewables to curb CO². These
programs often have reasons other than climate change for supporting renewables. California and ¹⁴⁴
New York are notable examples that have sizable programs for R&D and market deployment.
These programs are funded in large part by a surcharge on electricity use, often identified as a ¹⁴⁵
public goods charge. As noted in a previous section of this report, many states have enacted a
renewable portfolio standard. However, a growing number of states have also undertaken climate ¹⁴⁶
programs that specifically include renewables as one mitigation measure. Many local ¹⁴⁷
governments have also undertaken climate programs that include renewables as a component.
The proposed Lieberman-Warner Climate Security Act (S. 3036) was introduced during the ¹⁴⁸
second session. It would have established a cap-and-trade system to reduce greenhouse gas

¹⁴²^T^h^{e u}^s^{e o}^f^en^erg^y^e^f^fⁱ^ci^en^c^y^mea^s^u^r^{es can}^h^a^{ve a si}^gnⁱ^fⁱ^can^t^e^f^f^ect^oⁿ^eⁿ^erg^y^p^rⁱ^{ces an}^d^d^e^m^aⁿ^d^grow^t^h^.
¹⁴³^N^on-^biom^a^s^s^r^e^new^a^ble^s^a^l^s^o^te^{nd t}^o^r^e^d^u^c^e^e^m^is^sⁱ^ons^of^othe^r^aⁱ^r^-^bor^ne^p^o^lluta^nts^t^h^a^t^c^a^u^s^e^ur^ba^{n s}^m^og^{, a}^cⁱ^d
^ra^{in, a}ⁿ^{d w}^a^te^{r pollut}ⁱ^oⁿ^.
¹⁴⁴^C^a^lif^or^nia^’^s^r^e^ne^w^a^ble^eⁿ^e^r^gy^pr^og^r^a^m^is^a^t^http:^//w^w^w^.e^ne^r^g^y^.^c^a^.^g^o^v^/^r^e^new^a^ble^s^/^,^aⁿ^{d its}^c^lim^a^t^e^pr^og^r^a^m^is^a^t
^http:^//w^w^w^.c^li^m^a^te^c^h^a^nge^.c^a^.^g^{ov/; f}^o^r^m^o^r^e^a^{bout N}^e^w^Y^o^r^k^’^s^r^e^ne^w^a^ble^eⁿ^e^r^gy^pr^og^r^a^m^g^o^to
^http:^//www^.pow^e^r^na^tura^lly^.org^/.
¹⁴⁵^T^h^{e Dat}^a^b^a^{se o}^f^S^t^at^{e In}^cen^tⁱ^v^es^f^o^{r Ren}^e^wab^l^{e E}ⁿ^erg^y^(DS^I^RE^{) h}^a^{s i}ⁿ^f^o^rm^atⁱ^oⁿ^ab^ou^t^vi^rt^u^a^l^l^y^al^l^st^at^{e ren}^e^w^a^b^l^e
^eⁿ^e^r^gy^prog^ra^m^s^a^t^http://w^ww^.d^sire^usa^.^org^/^.
¹⁴⁶^For^m^o^r^e^inf^o^r^m^a^{tion s}^e^e^C^R^S^R^e^por^{t R}^L³³⁸¹^2,^C^l^im^ate^C^h^an^ge^:^Ac^tion^by^State^s^{To A}^ddr^e^s^s^G^r^e^e^nho^us^e^G^a^s
^Emissioⁿ^s^,^by^J^ona^thaⁿ^L^.^R^a^m^s^eur^.
¹⁴⁷^Iⁿ^f^o^r^m^a^{tion a}^bou^{t l}^o^c^a^l^g^o^v^e^rⁿ^m^e^{nt pr}^og^r^a^m^s^is^a^v^a^ila^ble^f^r^om^th^e^EP^A^w^e^bs^ite^a^t^http:/^/w^w^w^.e^pa^.^g^ov^/
^c^lim^a^t^e^c^h^aⁿ^g^e^/^w^y^c^d/sta^t^e^a^ndloc^a^l^g^o^v^/loc^a^l^.htm^{l a}^{nd f}^r^om^Citie^{s f}^o^{r Clim}^a^t^e^P^r^ote^c^tio^{n Ca}^m^p^aⁱ^gⁿ^{of the}^In^te^rna^tio^na^l
^Counc^il^f^o^{r L}^o^c^a^l^Envⁱ^ronm^eⁿ^ta^l^Initia^tiv^e^s^a^t^htt^p^://w^w^w^.ic^l^eⁱ^.org^/ⁱ^nde^x^.^p^hp?^id=³⁹¹^.
¹⁴⁸^S.³⁰³⁶^w^a^{s in}^tro^d^u^ced^to^rep^l^{ace S. 2}¹⁹¹^{. A}ⁿ^attem^p^{t to}^tak^e^u^p^{S. 3}⁰³⁶^f^a^iled^oⁿ^{a clo}^t^u^r^{e v}^o^te.^A^d^d^itioⁿ^a^l
^de^s^c^rⁱ^ptio^{n of}^the^r^e^ne^w^a^ble^eⁿ^e^r^gy^pr^ov^is^ions^aⁿ^{d t}^h^e^Se^na^te^f^l^oo^r^pr^oc^e^s^s^is^pr^ov^ide^d^{in C}^R^{S R}^e^p^o^r^t^R^L³³⁸³^1,^th
^Ene^r^gy^Effic^ie^nc^y^an^{d Re}^ne^wa^ble^Ene^r^gy^Le^gⁱ^slati^oⁿⁱⁿ^the¹¹⁰^C^ongr^e^s^s^,^by^Fr^e^d^Sis^sⁱ^ne^{, L}^y^{nn J}^.^C^unn^ing^h^a^m^{, a}^nd
⁽^c^onti^nue^d.^..)

emissions. The bill contained several provisions for energy efficiency and renewable energy.
Revenue from the auctioned allowances could be used for multiple purposes, including
accelerated deployment of renewable energy, energy efficiency, and other new energy
technologies. Each year, nearly 40% of the revenue from auctions would go to efficiency and
renewables. Compared with S. 3036, the proposed Boxer substitute to the bill would have
established an even broader array of incentives for the deployment of energy efficiency and
renewable energy measures. Eight of the 17 titles in the substitute contained such measures,
including grants, worker training, incentives to facility developers, and leverage for private
financing to support international partnerships.

)
DOE’s FY2008 budget request sought $1,236.2 million for DOE’s Energy Efficiency and
Renewable Energy (EERE) programs. In H.R. 2641, the House approved $1,873.8 million for
EERE and the Senate Appropriations Committee recommended $1,715.6 million for EERE. The
Consolidated Appropriations Act of 2007 (H.R. 2764) subsumed H.R. 2641, and the enacted law
included $1,723.7 million for EERE. (Details of the FY2008 appropriations are available in the
“Key Policy Issues—Department of Energy” section of CRS Report RL34009, Energy and Water
Development: FY2008 Appropriations, by Carl E. Behrens et al.)
At the end of its first session, the 110^th Congress enacted a major omnibus energy bill focused on
improving energy efficiency and increasing the availability of renewable energy. Highlights of the
major provisions enacted are:
• Corporate Average Fuel Economy (CAFE). Title I sets a target of 35 miles per
gallon for the combined fleet of cars and light trucks by model year 2020.
• Renewable Fuels Standard (RFS). Title II sets a modified standard that starts at

8.5 billion gallons in 2008 and rises to 36 billion gallons by 2022.

• Appliance and Lighting Standards. Title III legislates new standards for broad
categories of incandescent lamps (light bulbs), incandescent reflector lamps, and
fluorescent lamps. Further, a required target is set for lighting efficiency, and
energy efficiency labeling is required for consumer electronic products.
Efficiency standards are set by law for external power supplies, residential
clothes washers, dishwashers, dehumidifiers, refrigerators, refrigerator freezers,
freezers, electric motors, residential boilers, commercial walk-in coolers, and

^(...c^on^tin^ue^d)
^Mark^G^u^re^v^itz.

commercial walk-in freezers. Further, DOE is directed to set standards by
rulemaking for furnace fans and battery chargers.
(For more details about the provisions in P.L. 110-140, see CRS Report RL34294, Energy
Independence and Security Act of 2007: A Summary of Major Provisions, by Fred Sissine).
The enacted version of the farm bill (H.R. 6124; “Food, Conservation, and Energy Act of 2008”) ¹⁴⁹
became law on June 18, 2008. The law contains provisions that extend and/or expand upon
renewable energy (and energy efficiency) provisions of the Farm Security Act of 2002 (P.L. 107-
171). Several programs for grants, loans, and tax incentives were put in place to support
renewable energy (and/or energy efficiency). (For more details, see CRS Report RL34130,
Renewable Energy Policy in the 2008 Farm Bill, by Tom Capehart.)
As Table 4 shows, DOE’s FY2009 budget request sought $1.255 billion for DOE’s Energy
Efficiency and Renewable Energy (EERE) programs. P.L. 110-329 (H.R. 2638) provides
continuing appropriations through March 6, 2009, at the FY2008 level. The law provides an
additional $250 million to the DOE Weatherization Assistance Program and provides $7.5 billion
for a $25 billion loan to help U.S. automakers retool facilities to produce advanced technology
energy-efficient vehicles. The law covers appropriations through March 6, 2009.
Division B of the Emergency Economic Stabilization Act (P.L. 110-343) contains the text of the
Senate-passed version of H.R. 6049, which provides several tax incentives for efficiency and
renewables. The Senate crafted its substitute to H.R. 6049 as a response to the House-passed
version of the bill and to Administration-expressed concerns about House provisions for
renewable energy bonds and revenue offsets. The highlights of key provisions enacted into law
are as follows:
• Renewable Electricity Production Tax Credit (PTC). The credit for wind farms is
extended for one year, through the end of 2009. Other equipment are eligible for
two years, through 2010. Newly eligible marine technologies are eligible for
three years, through 2011.
• Solar Investment Tax Credits (ITC) for Residential and Commercial Sectors. The
law extends the existing 30% credit for each sector for eight years, through the
end of 2016.

¹⁴⁹^T^h^e^H^ous^e^a^nd^Se^na^te^ov^e^r^r^ode^aⁿ^A^d^mⁱ^nis^t^r^a^tion^v^e^{to to}^eⁿ^a^c^t^th^e^Foo^d^{, C}^ons^e^r^v^a^tion^,^aⁿ^d^Ene^r^g^y^A^c^{t of}²⁰⁰⁸
^(P.L^{. 11}^0-2^34,^H.R.²⁴¹⁹⁾^oⁿ^Ma^y^{22, 20}^08.^Due^t^o^a^te^c^hⁿⁱ^c^a^l^e^{rror tha}^t^le^f^t^one^title^ou^{t of}^the^c^o^p^y^v^e^toe^d^by^the
^P^r^e^s^ideⁿ^{t, a}^s^e^c^o^{nd i}^d^eⁿ^tic^a^l^bill^,^H^.^R^.⁶¹²⁴^w^a^s^pa^s^s^e^{d by}^{both c}^h^am^be^r^s^{. U}^pon^the^P^r^e^sⁱ^d^eⁿ^t’^s^v^e^{to of}^H^.^R^.⁶¹^24,^the
^H^ous^e^ov^e^r^r^ode^t^h^e^v^e^to^by^a^v^o^t^e^of³¹⁷^to¹⁰^{9 a}ⁿ^{d t}^h^e^Se^na^te^ov^e^r^r^ode^the^v^e^to^by^a^v^o^te^of^{80 to}^{14. H}^.^R^.⁶¹^{24 w}^a^s
^en^act^ed^{as P}^.^L^.¹¹⁰^-²⁴⁶^.

• Clean Renewable Energy Bonds (CREBs). The law authorizes a new round of
state and local bond issuances, with a total national value of $800 million.
• Energy Conservation Bonds. The law authorizes a new state and local program,
with a total national value of $800 million.
• Revenue Offsets. The cost of incentives are offset by a freeze in certain oil and
natural gas deductions, a reduced foreign tax credit for certain foreign oil and gas
income, reduced deductions for certain securities transactions, a change in the
Federal Unemployment Tax Act (FUTA) surtax, and an increase of the Oil Spill
Liability Trust Fund tax.
In the 110^th Congress, more than 460 bills with provisions for energy efficiency or renewable
energy were introduced. A general description of the renewable energy provisions in those bills,
including those enacted into law, is available in CRS Report RL33831, Energy Efficiency and ^th
Renewable Energy Legislation in the 110 Congress, by Fred Sissine, Lynn J. Cunningham, and
Mark Gurevitz. The report also groups the bills by policy and issue areas, provides a table that
identifies recent action on the bills, and discusses recent action.
Table 4. DOE Renewable Energy Budget for FY2006-FY2009
^{(selected progr}^a^ms,^{$ mi}^llions⁾
^Progr^{am FY20}⁰⁶^FY20⁰⁷^FY20⁰⁸^FY20⁰⁹^Request^FY20⁰⁹^House^FY20⁰⁹^Senate
^{Biomass & Biorefinery Systems}^$89.8^$19^9.7^$19^8.2^$22^5.0^$25^0.0^$23^5.0
^—Cellulos^{ic Ethanol Auction}^10.4^0.0^5.0^0.0 ^{— —}
^Solar^Energy^Tech^nology^81.8^157.^{0 168.}⁵^156.^{1 220.}^{0 229.}⁰
^{—Photovolta}^ics^58.8¹³^{8.4 136.}⁷^137.¹^{— 156.}⁸
^{—Concentrating Solar}^7.3^15.7^29.7^19.0^—^50.0
^{—Solar Heating & Lighting}^1.4^3.0^2.0^0.0^—^22.2
^Wind^Energy^Tec^hnology^38.3^{48.7 49.5}^{52.5 53.0 62.5}
^Geothermal^Tech^nology^22.8^{5.0 19.8}^{30.0 50.0 30.0}
^Water/Marine^Tec^hnology^0.5^0.0^9.9^{3.0 40.0 30.0}
^{Subtotal, Renew. Technologi}^es^233.²^407.^{0 445.}⁹^466.^{6 613.}^{0 586.}⁵
^Inter^national^Renewables^3.9^{9.5 0.0}^{0.0 7.0 0.0}
^Tribal^Energy^4.0^{4.0 5.9}^{1.0 6.0 6.0}
^Renewables^Prod’n^Ince^ntive^5.0^{4.9 5.0}^{0.0 5.0 5.0}
^{Asia Pacific Partner. (Renew.)}^0.0^—^0.0^7.5^0.0^0.0
^{Subtotal, Renew. Deploymen}^t^12.9^{18.4 10.9}^{8.5 18.0 11.0}
^{Subtotal, Renewables}^246.¹^425.^{4 456.}⁸^475.^{1 631.}^{0 597.}⁵
^Hydrogen^Tech^nologies^153.⁵^189.^{5 211.}¹^146.^{2 170.}^{0 175.}⁰
^Vehicle^Technologies^178.⁴^183.^{6 213.}⁰^221.^{1 317.}^{5 293.}⁰

^Progr^{am FY20}⁰⁶^FY20⁰⁷^FY20⁰⁸^FY20⁰⁹^Request^FY20⁰⁹^House^FY20⁰⁹^Senate
^Building^Technologies^68.2^103.^{0 109.}⁰^123.^{8 168.}^{0 176.}⁵
^Industrial^Tech^nologies^55.9^{55.8 64.4}^62.1^100.^{0 65.1}
^Federal^Energy^Manage^ment^19.0^{19.5 19.8}^{22.0 30.0 22.0}
^{Subtotal, Efficiency R&D}^475.⁰^551.^{4 617.}³^575.^{2 785.}^{5 731.}⁶
^Facilit^{ies (Nat. Renew. Lab)}^26.1^107.⁰^76.2^14.0^33.0^37.0
^Program^Managem^ent^115.²^110.^{2 114.}⁹^141.^{8 147.}^{6 136.}⁸
^{—Weatherization/State}^Grants^278.⁷^263.^{5 271.}³^{50.0 300.}^{0 251.}²
^{—Renewables}^Deployment^12.9^{18.4 10.9}^{8.5 18.0 11.0}
^—Cong.^{-Directed Assistance}^a^—^{0.0 186.}⁷^{0.0 134.}^{7 124.}²
^{—Prior Year Balances}^—^—^-0.7^-0.7^-0.7^0.0
^{Federal Assistance Subtotal}^316.⁹^281.^{7 468.}¹^{57.8 452.}^{0 386.}⁴
^{Total Appr}^op^{riation, EE & R}^E^1,16^6.1^1,45^{7.2 1,72}^2.4^1,25^5.4²⁵³^{1.1 1,92}^8.3
^{Office of Electricity Delivery & E}^nergy^b^158.²^134.^{4 138.}⁶^134.^{0 149.}^{3 166.}⁹
^Reliabi^{lity (OE)}
^Sources:^DOE^{FY2009 Congres}^{sional Budget Request}^{, vol. 3, February 2}⁰⁰^{8; DOE FY2}⁰⁰^{7 O}^peratin^{g Plan;}
^{Congressional Record, December 17,}²⁰^{07 (Book II), H.R. 276}^{4, Divisi}^{on C. For more details}^{, see CRS Report}
^RL340^09,^{Energy and Water Development: FY2008 Appro}^priations^{, by}^{Carl E. Behren}^{s et al.}
^a.^{In FY20}^{06, t}^{here was}^$1^59.0^milli^{on in congressionally-directed fu}^{nds spr}^{ead over E}^{ERE acco}^unts.
^b.^{The Distributed E}^{nergy Progra}^m^{was moved from E}^{ERE to O}^Eⁱⁿ^FY2006.
Table 5. Production Tax Credit Value and Duration by Resource
^{Credit Period for}^{Facilities P}^l^{aced in}
^{Energy Resou}^rce^{Credit Amount f}^{or 2008}^(cents/kwh)^{Service after August 8, 2005}
^(years)
^{Wind 2.1}¹⁰
^Closed-Lo^{op Biomass}^2.1¹⁰
^{Open-Loop Biomass}^{1.0 10}
^{(includes agricultural livestock}
^{waste nut}^{rient facilities)}
^{Geothermal 2.1}¹⁰
^{Solar (pre-200}^{6 facilities only)}^2.1¹⁰
^{Small Irrigation Power}^1.0¹⁰
^Increm^{ental Hydropower}^1.0¹⁰
^{Municipal Solid Waste}^{1.0 10}
^{(includes landfill gas and trash}
^{combustion facilities)}
^Source:^{Joint Committee on Ta}^{xation. Technical Ex}^{planation of}^{H.R. 7060, The ”Re}^newable^Ener^{gy and Job}
^{Creation Tax Act of 2}⁰⁰^{8,”a Sch}^{eduled for Consideration by the}^{House of Repre}^{sentatives on}^Sep^tember^25,
²⁰⁰^{8.” (JCX-75-0}^{8) Septem}^ber²^{5, 20}^{08. p.}^{7. http://www.house.g}^ov/jct/^x-7^5-08.pdf.

Table 6. Production Tax Credit Claims, History and Projections
^{($ mill}^ions)
^Credit^{PTC Claims}^Deflator^{PTC Claims}^Number
^{Year Public}^Law^Lapse^{($ cu}^rrent)^{($ 2007)}^{($ 2007)}^{of States}
^(months)^{with RPS}
^History
¹⁹⁹^{5 P.L.}^102-4⁸⁶ ^3.2^0.77¹¹^4.2²
¹⁹⁹^{6 P.L.}^102-4⁸⁶ ^9.3^0.78⁵⁹^11.9³
¹⁹⁹^{7 P.L.}^102-4⁸⁶ ^9.4^0.79⁹⁶^11.7⁶
¹⁹⁹^{8 P.L.}^102-4⁸⁶ ^13.9^0.80⁹³^17.2⁹
^{P.L. 102-4}⁸⁶,
¹⁹⁹⁹^{P.L. 106-1}⁷⁰ ^{6 month}^s^28.9^0.81⁹⁹^35.3¹¹
²⁰⁰^{0 P.L.}^106-1⁷⁰ ^50.1^0.83⁶⁵^59.9¹²
²⁰⁰^{1 P.L.}^106-1⁷⁰ ^70.6^0.85⁶²^82.5¹²
²⁰⁰^{2 P.L.}^107-1⁴⁷ ^{2 month}^s^131.⁶^0.87²⁶^150.⁸¹³
²⁰⁰^{3 P.L.}^107-1⁴⁷ ^142.⁸^0.89⁰³^160.⁴¹³
²⁰⁰^{4 P.L.}^108-3¹¹ ^{9 month}^s^207.³^0.91³⁴^227.⁰¹⁸
²⁰⁰^{5 P.L.}^108-3¹¹ ^333.²^0.94²⁷^353.⁵²¹
^Total^{, History}^1,00^0.40^1,11^4.3
^{JCT Future Estimates}
²⁰⁰^{6 P.L.}^109-5⁸ ⁹⁰⁰^0.97^{39 924}²³
²⁰⁰^{7 P.L.}^109-5⁸ ⁹⁰⁰^1.00⁰⁰⁹⁰⁰²⁴
²⁰⁰^{8 P.L.}^109-4³² ^1,00⁰^1.01⁹³⁹⁸¹²⁸
²⁰⁰⁹^1,60⁰^1.03⁹⁹^1,53⁹
²⁰¹⁰^1,20⁰^1.06⁰⁶^1,13¹
^Total^{, Future}
^Estimates^5,60⁰^5,47⁵
^Source:^{Historical data on PTC claims for 19}^{95 t}^hroug^{h 2}⁰⁰⁵^we^{re obtained from}^{Mr. Curtis Carl}^{son, Office of}
^{Tax Analysis, Department}^{of the}^{Treasury. Es}^{timates of PTC claims for 2}⁰⁰⁵^th^rough²⁰¹⁰^{were ob}^{tained by}
^{combining estimates f}^{rom the}^{Joint Committee on Taxation for t}^h^e^{PTC provisions in P.L. 109-5}^{8, P.L. 109-4}^32,
^{and P.L. 110-3}^43.

Table 7. Renewable Fuels Compared with Persian Gulf Imports
^{(millions of barre}^{ls per d}^a^y,^m^bd)
^{Oil Use or Oil Use Eq}^{uivalent (mbd)}^a^{As a Percent o}^f^Persian^{Gulf Impo}^rts
^Year
^{Total Oil}^{Persian Gulf}^{7.5-in 2}⁰¹²^36-in-2⁰²²^{7.5-in 2}⁰¹²^36-in-2⁰²²
^Use^Imports^(EPACT)^{(P.L. 11}^0-1⁴⁰⁾
²⁰⁰⁵^20.6^{6 2.59}^0.17^0.17^6.6%^6.6%
^Actual
²⁰⁰⁶^20.4^{5 2.67}^0.24^0.24^9.0%^9.0%
^Actual

²⁰⁰^{7 20.5}²^2.72^0.20^0.20^7.4%^7.4%
²⁰⁰^{8 20.5}⁷^2.76^0.24^0.37^8.7%^13.4%
²⁰⁰^{9 20.4}⁰^2.57^0.27^0.46^10.5%^17.9%
²⁰¹^{0 20.6}⁶^2.63^0.30^0.52^11.4%^19.8%
²⁰¹^{1 20.8}⁷^2.69^0.32^0.55^11.9%^20.4%
²⁰¹^{2 21.0}⁴^2.75^0.33^0.57^12.0%^20.7%

²⁰¹^{7 21.3}⁰^2.70^—^0.91^—^33.7%

²⁰²^{2 20.8}³^2.65^—^1.57^—^59.2%
^Sources:^{For Total Oil Use and Persian Gulf}^{Imports, see}^EIA,^En^{ergy In}^{formation Administration.}^{Annual Ene}^rgy
^{Outlook 2008.}^{Oil use data were}^{obtained from Sup}^{plemental Tabl}^{e 10. Those data wer}^{e conver}^{ted with the}
^{equivalence t}^{hat one}^quad^{per ye}^{ar is app}^{roximately equal to 0.}⁵¹^{06 million barrels pe}^{r day, from E}^{IA Monthly}
^Energ^{y Review, December}²⁰^06,^{Table A3: Appro}^{ximate Heat Co}^{ntent of Petroleum}^Consum^ption^{. Persian Gulf}
^oil^{import data were obtained f}^{rom Suppleme}^{ntal Table 1}^{17. For t}^{he 7.5-in-2}⁰¹^{2 re}^newable^{fuel sta}^{ndard (RFS),}
^{see P.L. 109-5}^{8 (EPACT), §150}^{1. For new RFS “36-in-2}⁰²^{2” standa}^{rd, see P.L. 110-1}^{40 (}^Ene^{rgy I}^ndependen^ce
^{and Security Act of}²⁰^{07). Note t}^{hat all displacements assu}^{me 1}⁰⁰^%^etha^{nol, with 67% of t}^{he h}^{eat c}^{ontent of}
^{gasoline by volume. The etha}^{nol figures also reflect the}^conversion^{that 4}²^{gallons eq}^{ual one bar}^rel.
^a.^{The etha}^{nol figures for}^7.5-in-20¹²^{(EPACT), and 36-in-2}⁰²^{2 (P.L. 110-}¹⁴^{0) assu}^{me 1}⁰⁰^%^corn^etha^{nol, with}
^{67% of}^the^{heat conte}^{nt of gasoline by}^{volume. The etha}^{nol figure}^{s also reflect the con}^{version that}⁴²
^{gallons equal one bar}^rel.
^Fr^ed^Sissi^ne
^Sp^{ecialist i}ⁿ^En^er^g^y^P^o^lic^y
^f^sⁱ^s^sⁱⁿ^e^@^c^rs^.l^oc.g^ov^{, 7}^-⁷⁰³⁹