I finally got around to reading “Division B – Energy Improvement and Extension Act of 2008″, the second part of the “Emergency Economic Stabilization Bill”, aka the $700 billion bailout. This section runs from pages 44 – 97, which still leaves 72 pages for pork in Division C, which I will cover in an upcoming post. I already reviewed Division A, the financial section of the bill.

This section was harder to read because most of the changes involved things like this, taken verbatim from the first page:

“(1) Elimination of increased market value test – section 45(c)(7)(A)(i) (defining refined coal), as amended by section 108, is amended-
(A) by striking subclause (IV),
(B) by adding “and” at the end of subclause (II) and,
(C) by striking “, and” at the end of subclause (III) and inserting a period.”

Basically I think that means that there is a section in section 45 of the original bill that has a fourth subclause removed, an “and” added to a second subclause, and a shortened third subclause – but what that means and what is in the clauses…I have no idea. And as usual stuff is all over the place out of order.

So after much difficulty I think I have boiled down what exactly is important in this section, and I’ll do my best to outline it below. (all terms effective as of 12/31/2008 unless otherwise noted). Note: Credits refer to getting money back from the government as incentive for doing something, not all the credits outlined here have explicit values because many were defined in the original energy bill and not repeated in the amendments.

TYPES OF ENERGY CREDITS:

Refined Coal (aka “Clean Coal”):

• There is a one year extension on refined coal credits which now goes until 1/1/2010 with some restrictions: as long as it isn’t used for steel power.
• The credit is increased to 30% of all expenses rather than 20%, but only if 75% or more carbon is captured, and the credits favor those with the highest carbon capture and universities doing research.
• There is a two year extension for other stuff (coal facilities, I think), but it doesn’t say specifically what those are, just that the credit goes to 1/1/2011.
• There is a clarification of what exactly a “Trash Facility” is, although it is hardly a clarification to go from: “a facility that burns” to “a facility (other than a facility described in paragraph (6)) which uses…”
• There is now $350 million ($350,000,000,000) dollars to be used for coal credits.
• There is a tax on extracting coal (excise tax) that is extended four years to 12/31/2018, and is increased to 8.25%, this tax funds the “Black Lung Trust Fund”
• The “Black Lung Trust Fund” can borrow money from the Treasury if it needs to and can issue an I.O.U to the Fed for 1 year if it can’t pay all benefits promised to recipients. This loan comes from the public debt.
• Sometimes the higher tax is refunded: if the coal is shipped out of the US, if the tax return was between 1990 and 2008, or if the coal producer files a claim and asks the Fed for a waiver 30 days from when the bill was in acted (no later than 11/2/08, 30 days from 10/3/08)

Biomass (anything made from stuff that used to be alive):

• Biomass facilities now can include new units that add to their total output.
• Celluosic Biofuel is no longer just Ethanol, and ethanol is removed from the text to make it more general.
• Biodiesel and Renewable Diesel have their credits extended until 12/31/2009 and the rate of the credit increases to $1.00. (but the excise tax for diesel increases to $1.00 as well, except for renewable diesel)
• Agridiesel is now defined as being made from mustard seeds and (this is new) camelina.
• Jet Fuel can qualify as renewable if made of certain mixtures of stuff, and will get credits.
• This only affects biomass produced in the US for use in the US, and the same goes for the rest of the materials as well (retroactive to May 2008)

Hydropower:

• There is a change in the definition of a non-hydroelectric dam: it now needs to meet all environmental standards and control floods but cannot be used for electricity.

Marine Renewables:

• Marine Hydrokinetic includes things like tides, currents, waves, lakes, rivers, irrigation, canals, and other man-made things but NOT including dams.
• Any facility that produces at least 150 kilowatts and was created between now and 1/1/2012 will qualify for credits.
• Properties with Microturbines now get credits extended to 12/31/2016 rather than expiring on 12/31/2008

Solar:

• Solar tax credits are now good until 1/1/2017 rather than 1/1/2009

Fuel Cell:

• Fuel Cell tax credits are now good until 12/31/2016 rather than 12/31/2008
• Alternative Fuel credits are now extended from September 30th 2009 to December 31st 2009.

Combined Heat and Power:

• There has been a new type of credit and facility defined: a property that uses the same energy source for generation of electricity and heat and which has an energy efficiency of at least 60%, and which is created before 1/1/2017, now gets credits.

Wind:

• Small wind energy properties is defined more clearly as a property that has a turbine with a capacity of 100 kilowatts or less and is created before 12/31/2016.
• Small wind properties will now get a credit up to $4,000

Geothermal:

• Credits for geothermal heat pump syste
  ms are extended to 12/31/2016 rather than expiring on 12/31/2008.

Residential Energy Efficient Properties:

• The tax credit for residential efficient properties is also extended to 12/31/2016 rather than ending at the end of this year.
• The tax credits will be:
  • 30% of expenses due to wind power plus $500 per kilowatt but no more than $4,000. If there is joint occupancy in a building that increases to $1,667 per kilowatt but no more than $13,333.
  • 30% of geothermal expenses, and $2,000 for the property as long as it meets “energy star” requirements. If joint occupancy this increases to $6,667 for the property – but the credit cannot exceed the total tax owed. (if it does then you just carry over the credit to next years taxes)

Steel Fuel:

• The credit went from $2/barrel to $4.375 per ton and will apply for ten years.

Carbon and Carbon Dioxide:

• If you invest in Carbon Mitigation the amount used for credits has been increased form $1.3 billion to $2.55 billion. (2,550,000,000,000), but that has to to be split among “gasification” projects, and “other advanced” projects in specified amounts.
• Restrictions: you must capture (and sequester) 65% of all carbon emitted to qualify for credits.
• For all carbon dioxide that you capture and sequester (that would otherwise be in the atmosphere) you will get a credit of $20 per metric ton if it is disposed of in “secure geological storage” (underground) and $10 per metric ton if you inject it into oil and natural gas recovery projects (use it for more energy) – and you must capture at least 500,000 metric tons per year (which increases with inflation)
• The Secretary (which one it doesn’t say) and the Directory of the EPA will decide where there is “safe” storage so the carbon doesn’t accidentally get into the air.
• The National Institute of Science and the Treasury will conduct research to see what type of have the greatest impact in reducing carbon emissions and will report with their findings in two years. The National Institute of Sciences gets $1,500,000,000 ($1.5 billion) for this project.

Shale and Tar:

• The tax on refining shale and tar is increased from to 1/1/2014

Oil:

• There is 3% reduction in the income for domestic oil, gas, or any products made from them (meaning a 3% increase in taxes) that begins 12/31/2008. So in order to help curb our dependence on foreign oil, the congress decided to tax US oil and gas companies an additional 3%. This doesn’t make much sense.
• This tax now applies to both US and foreign oil that is designated for use in the US (they are treated the same) OK, so much for my argument above, add in this line and now tax all oil and gas.
• The “Oil Spill Liability Trust Fund” tax is increased to $0.08 (8 cents) per barrel before 1/1/2017, and $0.09 for all petroleum products after 12/31/2016. This is only valid until 12/31/2017, then the trust fund disappears.

TECHNOLOGY:

Electric Cars:

• “Plug in drive” electric cars now get a credit if they have a battery that lasts longer than four hours.
• This credit is $2500 initially, plus $47 per kilowatt hour of batter power beyond four hours but no more than $7,500 total for cars under 10,000 pounds. This amount increases as the weight of the vehicle increases up to $15,000 for anything over 26,000 lbs – but can’t exceed the total tax owed, and only goes to tax payers who buy the car for their own use. (leases don’t count for the lessee, but the owner gets the credit as long as they disclose this to the lessee)
• This credit will phase out beginning the second quarter after we have a quarter of 250,000 electric cars sold, or 12/31/2014.
• All electric cars must meet California’s low emissions standards as well as the EPA’s guidelines.

Bicycle Commuters:

• If you ride your bike to work you can get a tax credit that reimburses your bike purchase costs, repair costs, or storage costs – as well as $20 per month for each month you regularly use the bike. (This starts 12/31/2008)

Non-Business Energy Property (appliances):

• If you have a stove that uses biofuel and has an efficiency rating of 75% you get a credit.
• If you have a water heater that has a thermal efficiency of 90% you get a credit.
• If you have an air conditioner or heat pump that meets the tested standards at 95 degrees Fahrenheit you get a credit
• If you have a dishwasher that meets the efficiency standards you get $45 for things produced in 2008-2009 that use no more than 324 kilowatt hours, or $75 if it’s made in 2008-2010 and only uses 307 kilowatt hours.
• Clothes washers get you a credit of $75 for 2008, or $125 for 2009, and $250 in 2010 with higher standards.
• Refrigerators give you $50 for 2008 models, $75 for 2009 models, and $100 for 2010 models with higher restrictions and possibly $200 with highest restrictions.
• The total (aggregate) of these appliance credits will not exceed $75 million ($75,000,000,000) and begins in 12/31/2007.
• If you have an asphalt or metal roof that improves the energy efficiency of your building you get a credit.
• Commercial buildings don’t get credits but get a tax deduction until 12/31/2013.
• If you build a new energy efficient home you get a tax credit extended to 12/31/2009.

Smart Meters:

• A smart electric meter is one that checks your usage every hour (24 times in a day) and reports the usage to the utility company so they an alter their supply. If you use one of these then you get a credit.

Buildings:

• “Green Buildings” that meet the qualifications get credits extended to 9/30/2012.
• Certain reuse and recycling plants get special deductions if: 50% of the property is used for recycling, and the refuse decreases sufficient amounts. (the owner/taxpayer can opt out of this deduction)
• Homemade recycling centers get the same deductions but they have to be made after 8/31/2008 and they can only recycle certain things l
  ike: scrap plastic, scrap glass, scrap textiles, scrap rubber, scrap packaging, recovered fiber, scrap metals, and electronic scrap. (your compost pile doesn’t count)

BONDS:

Clean Renewable Energy Bonds:

• There is a new “Clean Renewable Energy” bond that is created.
• The government can sell up to $800 million of them ($800,000,000)

Qualified Energy Conservation Bonds:

• Bond issued if 100% of the project goes to “qualified conservation purposes” and is issued by a state or local government.
• These bonds are decreased to 70% of their predefined value with a limit of $800,000,000 ($800 million) to be spent on them nationally. (each state gets a portion of the $800 million based on it’s population, and this can only go to counties (or Indian Territories) that have 100,000 or more people.
• To get these bonds the states must be doing research to develop ethanol, capture carbon dioxide, increase the efficiency of current non-fossil fuels, or reduce energy in buildings (green building technology)

RANDOM (Not related to fuel at all):

• There are more things that Brokers need to report when they cash in customer securities, and report things more often for more transactions than before.
• They must also be more transparent with the transfer of securities.

Conclusions:

There are tons of tax credits for energy savings – and an informed consumer could save thousands of dollars on their taxes if they knew about all the credits and deductions. I am sure there are hundreds of other similar programs for things we do every day that would also qualify for tax credits and deductions.

In one of the next posts I will cover the final section (Division C) of the stimulus package and get fully into all the earmark spending that was tacked on.

Check out Parts A, and C of the Bailout here:

• Division A: Emergency Economic Stabalization
• Division C: Tax Extenders and Alternative Minimum Tax Relief

Related posts:

1. What’s in the $700 Billion bailout plan – The Emergency Economic Stabilization Bill of 2008
2. $700 Billion Bailout: What Alternatives Do We Have?

Tagged as: Politics and Government