Congress included major clean energy innovation investments and relief for our clean energy industries in its critical last-minute omnibus budget bill and separate coronavirus relief legislation. While not perfect, the accompanying clean energy innovation provisions in the omnibus tax and spending package represents a significant step by Congress on national energy and climate policy. The bill includes a short-term extension of clean energy tax credits and $35 billion in technology innovations for clean energy and energy storage technologies, as well as finalizing a major agreement to remove the super-pollutant HFCs for our products.
“Congress’s action on the spending legislation marks important, bipartisan progress on climate and clean energy as we enter the new year,” says Josh Craft, government relations manager for Utah Clean Energy. “This legislation provides important relief for Utah’s clean energy industries during the pandemic and offers a major boost of funding for energy innovation in solar, storage, and electric vehicles that power innovation in our robust clean energy economy. This represents the kind of progress we can make when we sit down and work together to address our climate and energy challenges.”
Highlights of the bill include:
- Extension of renewable energy tax credits:The legislation extends the residential and commercial investment tax credits for solar energy systems at 26% for two years, with the phase out continuing after that. It also extends the production tax credit for renewable energy systems at 60% for one year (important for wind and geothermal), although it extends the PTC for offshore wind systems at 30% for a full five years. It did not, however, authorize the “direct pay” provisions that would allow tax credits to be converted into cash payments support by many in the industry.
- $35 billion for Energy Innovation Research, Development, and Deployment (RD&D) Programs: The bill authorizes $35 over 5 years for research and deployment for solar energy ($1.5 billion), wind energy ($625 million), geothermal ($850 million), hydropower and marine power ($933 million), energy storage ($1.08 billion), grid modernization initiatives ($2.36 billion), carbon capture storage at power plants ($6.2 billion), and nuclear power ($6.6 billion). It also includes a boost for the Advanced Research Project Agency for Energy (ARPA-E) program.
- Advanced Vehicles, Fuel Cells, and Bioenergy Research, Development, and Deployment (RD&D) Programs:The bill also expands the RD&D for the Sustainable Transportation R&D program that funds fuel cell, vehicle, and bioenergy technologies, increasing funding to $830 million each year. It does not, however, include an extension of the electric vehicle tax credit which many had called for.
- Energy Efficiency Provisions:The legislation makes the energy efficiency tax deduction for commercial building owners permanent and extends the $2,000 home energy efficiency tax credit for a year. The bill also makes some important changes to update the Weatherization Assistance Program (WAP) by making it easier to help residents with health and safety and to include solar power as a weatherization measure. The legislation did leave out some helpful provisions from previous Senate energy legislation that would have allowed cities and states to voluntarily implement stronger building energy codes and updated the efficiency requirements for the residential energy efficiency tax credits.
- Phaseout of HFCs:The legislation codifies a major agreement to phase out the “superpollutant” hydrofluorocarbons (HFCs), a major greenhouse gas that is often found in air conditioners and refrigerators. The step is expected to avoid 0.5 degrees C of additional climate warming by the end of this century.
- Renewable Energy on Public Lands:The legislation includes a directive to the Department of the Interior to set a goal of creating 25 gigawatts of solar, wind, and geothermal production on public lands by 2025.
- Special Note on Geothermal: The bill is especially significant for geothermal, as it includes geothermal systems in the PTC extension, and it doubles funding for the FORGE geothermal R&D program that funds the Utah enhanced geothermal project.