On Oct. 3, 2008 the Energy Improvement and Extension Act of 2008 was signed into law. The act amends the Internal Revenue Code to extend and modify expiring provisions related to energy production and conservation and to provide for revenue enhancements. H.R. 1424 includes $18 billion of energy-related tax incentives covering a ten year period.
Some provisions support tax incentives for renewable energy and proposes replacing the current complicated mix of temporary incentives with a comprehensive unified approach that is carbon-weighted, is technology-neutral, and provides long-term certainty. Specific sections of interest to the industry include:
Section 106 – Extends through 2016 the tax credit for residential energy efficient property. Eliminates the limitation on the tax credit for solar electric property. Allows a residential energy tax credit for 30 percent of small wind energy and geothermal heat pump property expenditures.
Section 201 – Includes cellulosic biofuel within the definition of biomass ethanol plant property for purposes of bonus depreciation.
Section 202 – Extends through 2009 income and excise tax credits for biodiesel and renewable diesel used as fuel. Increases the rates of such credits.
Section 203 – Disqualifies foreign-produced fuel that is used or sold for use outside the United States from the income and excise tax credits for alcohol, biodiesel and alternative fuel production.
Section 204 – Extends through 2009 the excise tax credit for alternative fuel and fuel mixtures. Requires such fuels to include compressed or liquefied biomass gas and to meet certain carbon capture requirements.
Section 205 – Allows a new tax credit for new qualified plug-in electric drive motor vehicles. Limits the amount of such credit based upon the gross vehicle weight rating of such vehicles. Terminates such credit after 2014.
Section 206 – Allows an exclusion from the heavy truck excise tax for idling reduction devices and advanced insulation used in certain heavy trucks and trailers.
Section 207 – Extends through 2010 the tax credit for alternative fuel vehicle refueling property expenditures. Includes electricity as a clean-burning fuel for purposes of such tax credit.
Section 208 – Provides for the treatment of certain income and gains from alcohol, biodiesel, and alternative fuels and mixtures as qualifying income for publicly traded partnerships.
Section 301 – Allows a new tax credit for investment in qualified energy conservation bonds for capital expenditures to reduce energy consumption in public buildings, implement green community programs, develop alternative and renewable energy sources, and promote mass commuting facilities.
Section 302 – Extends through 2009 the tax credit for non-business energy property expenditures. Includes energy-efficient biomass fuel stoves as property eligible for such tax credit. Modifies tax credit standards for water heaters, geothermal heat pumps, and energy efficiency improvements.
Section 303 – Extends through 2013 the tax deduction for energy efficient commercial buildings.
Section 304 – Extends through 2009 the tax credit for residential energy efficiency improvements.
Section 305 – Modifies the tax credit amounts for energy efficient household appliances produced after 2007.