US Treasury Awards Half A Billion For Green Energy

by Leroy Baker, Tax-News.com, New York

02 September 2009

Treasury Secretary Tim Geithner and Energy Secretary Steven Chu have announced USD502m in the first round of awards from an American Recovery and Reinvestment Act program that provides cash assistance to energy production companies in place of earned tax credits.

"The Recovery Act is investing in our long-term energy needs while creating jobs in communities around the country," explained Geithner, continuing:

"This renewable energy program will spur the manufacture and development of clean energy in urban and rural America, allowing us to protect our environment, create good jobs and revitalize our nation's economy."

Chu added: "These grants will help America's businesses launch clean energy projects, putting Americans back to work in good construction and manufacturing jobs. The initiative will help double our renewable energy capacity over the next few years and make sure America leads the world in creating the clean energy economy of the future."

Created under Section 1603 of the Recovery Act, the program is expected to provide more than USD3bn in financial support for clean energy projects by providing direct payments in lieu of tax credits. These payments will support an estimated 5,000 bio-mass, solar, wind, and other types of renewable energy production facilities in all regions of the country over the life of the program.

The Treasury Department opened the application process for the 1603 program on July 31, 2009. The first awards, granted on September 1, have been made in half the statutorily mandated turnaround time of 60 days, the Treasury revealed this week.

The Recovery Act authorized the Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.

Previously, these companies could file for a tax credit to cover a portion of the renewable energy project's cost; under the new program, applicants would agree to forgo tax credits down the line and take an immediate reimbursement of a portion of the property expense.

Last month, the Treasury and Energy departments announced a program to award USD2.3bn in tax credits to manufacturers of advanced energy equipment under Section 1302 of the Recovery Act, known as the Advanced Energy Manufacturing Tax Credit.

These projects will be ranked based on a number of criteria, including job creation, reduction of air pollutants and greenhouse gas emissions, technological innovation, and speed of implementation. Companies can file applications for the first round of credit awards through October 16, 2009 and credits are available for two years or until the funding limit has been reached.

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