Summary of Energy Efficiency Provisions in the Domestic Manufacturing and Energy Jobs Act of 2010, discussion draft
On July 26, 2010, Sen. Carl Levin (D-Mich.), Chairman of the Ways and Means Committee, released a draft legislative text of the Domestic Manufacturing and Energy Jobs Act of 2010. This bill includes $6.5 billion in investment tax credits to spur modernization and retooling of U.S. manufacturing lines to produce advanced energy technologies. Additionally, the bill proposes to extend successful financing mechanisms, such as direct payment instead of tax credits, to stimulate investment in renewable energy and energy efficiency technologies.
Title I: Advanced Manufacturing
Section 102: Extension and modification of energy efficient appliance credit
This section would extend credits for manufacturers of certain energy efficient appliances through 2013. Appliances produced from 2011 onwards would be subject to stricter energy and water efficiency criteria.
Title II: Renewable Energy
Section 204: Property Assessed Clean Energy Bonds
This section would create a federal authorization for state and local governments to issue tax-exempt bonds as part of PACE-type financing programs for the residential sector. However, the text only specifically grants this authority in relation to solar and wind renewable energy or for energy storage systems. Nothing is set out in this provision regarding PACE financing programs for energy efficiency.
Title III: Energy Efficiency and Conservation
Section 301: Home Energy Conservation Bonds
Home Energy Conservation Bonds (HECBs) issued by states and municipalities would be used to fund grants and low-interest loans to homeowners, to be used for energy and water efficiency improvements, with a portion reserved for low-income households. HECBs would be ‘tax credit bonds’ – viz. bond purchasers would receive credits against their federal income tax in lieu of cash interest on the bonds; this saves the municipalities and states the expense of paying out the interest. The combined value of HECBs nationally could not exceed $2.4 billion; this limit would be apportioned out to states in proportion to their population.
Section 302: Residential Energy Efficient Property Credit
The tax credit cap for residential fuel cells would be increased to $1,500 per half-kilowatt hour of capacity, up from $500. Certain residential micro-CHP systems would become eligible for the 30% ITC credit as well.
Section 303: Energy Efficient Commercial Buildings Deduction
An enhanced deduction for historic commercial building efficiency retrofits would be created, offering $3/sf (instead of $1.80) for the entire building when meeting a range of efficiency criteria or $1/sf (instead of $0.60) for those meeting one of either interior lighting, HVAC and hot water, or building envelope. However such buildings would only have to achieve 30% reductions in energy use, rather than the 50% required of other commercial buildings seeking the deduction.
Buildings that do not meet the building envelope requirements for the energy efficient commercial buildings deduction, but whose roof exceeds the requirements of the 2001 ASHRAE 90.1 standard by 50% or more, would be considered to have met the building envelope requirement, except it would only be eligible for a $0.60/sf deduction rather than the normal $1.80/sf.
Section 304: Renewable Energy and Conservation Project Credit
A competitively-awarded tax credit for energy efficiency and renewable energy would be created. $2 billion worth of investment tax credits could be awarded, for 30% of an investment. Eligible energy efficiency expenditures would include improvements to manufacturing facilities, energy storage systems, or superconducting transmission lines. $850 million of the credit could be directed to energy efficiency improvements to manufacturing facilities, $500 million to energy storage and superconducting transmission lines, and the remainder towards certain renewable energy and biofuel projects. Awardees could choose to take a cash payment equal to 85% of the credit in lieu of the credit itself.
Title IV: Transportation
Section 401: Credit for Heavy Natural Gas and Hybrid Vehicles
A credit for heavy (greater than 8,500 pounds) natural gas and hybrid vehicles, worth 80% of the incremental cost of purchasing such vehicles over conventional counterparts, would be created. Mixed fuel vehicles would receive proportionally reduced credits.
Section 402: Alternative Fuel Vehicle Refueling Property
The alternative fuel vehicle refueling property credit would be extended through 2014 and would be clarified to explicitly include electric vehicle recharging equipment.
Section 403: Transportation Fringe Benefits
The mass transit fringe benefit would continue to be kept at parity with the parking fringe benefit through 2011, rather than declining at the end of 2010.
Section 404: Restructuring of New York Liberty Zone Tax Credits
This tax credit would be altered to provide certain tax credits related to mass transit projects relevant to the Lower Manhattan ‘Liberty Zone.’
Title VI: Studies and Reports
Provisions in this title would require reporting on the impacts and costs of tax incentives included in this act, both of a financial nature and in regards to the overall energy situation of the country.
