August 24, 2010
August 24, 2010
Sen. Kerry’s Energy Tax Bill Would Help Energy Storage Technologies
by Chad Marriott
Stoell Rives, LLP
NW Law Firm
On August 5, 2010, Sen. John Kerry (D-Mass.) introduced S.3738—the Clean Energy Technology Leadership Act of 2010—which would have some impact on the growth of energy storage technologies in the United States.
Among other things, the bill would provide for an extension and modification of the Advanced Energy Manufacturing Tax Credit (the “MTC”), a credit authorized under the American Reinvestment and Recovery Act aimed at stimulating and expanding the domestic manufacturing industry for clean energy technologies. The MTC is also referred to as Section 48C of the Internal Revenue Code (the “IRC”). The proposed modifications would extend the MTC to “statutory advanced energy property,” the definition of which includes property used exclusively to manufacture or fabricate fuel cell power plants and systems for the electrochemical storage of electricity (other than lead-acid batteries) for use in connection with electric grids.
Also noteworthy is that S.3738 is similar to the STORAGE 2010 Act, introduced by Sens. Bingaman (D-NM), Wyden (D-OR), and Shaheen (D-NH) in July. Click here for more on that bill. Both bills amend Section 54C of the IRC to allow grid-connected energy storage systems to qualify for Clean Renewable Energy Bonds (“CREBs”). In addition to including energy storage technology in the CREBs program, S.3738 would expand the program by increasing the national new clean renewable bond limitation by $3.5 billion in 2010; sixty percent (60%) of that amount must be allocated by the Department of the Treasury to public power providers, and forty percent (40%) must be allocated to electric cooperatives.
A major distinction between Sen. Kerry’s bill and the STORAGE 2010 Act is that Sen. Kerry’s bill does not add energy storage devices to the list of technologies eligible for the federal investment tax credit. The full text of the bill can be found here.
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Electric energy storage is the key to expanding wind power and improving its economics, and so, this federal research and development investment actually is probably a good step. It could easily be paid for by allowing oil drilling in the Alaskan National Wildlife Refuge, yielding huge new tax revenues from just ordinary income taxation of oil company profits. The latter would also be a project which would yield thousands of new high paying jobs, and also, lower the nation’s huge import bill. Other resource projects would include the Keystone XL pipeline which would pickup increased domestic crude oil production out of Montana and the Dakotas, and would also replace imports from the Middle East with Canadian oil imports. Another good step might be to offer companies working on the Alaskan natural gas pipeline a costless collar on the natural gas shipped on the line, say hypothetically offering a guaranteed minimum price of $5 to $6 for a cap of $8 to $9 per million Btu of gas delivered. Or, alternatively, offer to switch out federal automobile fleets from oil to natural gas, ensuring an end market for the alaskan gas by displacement.
Renewable energy supply can only partially offset the trend reduction in coal fired supplies, and so energy policy has to be much more than renewable tax credits. This is where the Democratic party has failed the country very badly since its filibusters in the early 2000s.