On October 3, 2008, Congress passed the Emergency Economic Stabilization Act, historic legislation providing some $700 billion in a far-reaching plan to rescue the nation's troubled financial system. Included within the bill is significant federal policy enacted for the benefit of the renewable energy industry - most specifically solar.
These tax credits were designed to create momentum for some of the companies already working on renewable energy technologies, expand the solar energy marketplace and enable more to participate in this growth industry - thereby creating hundreds of thousands of jobs - and narrowing the cost gap for solar power to compete with coal-produced electricity. According to the solar industry, this forward-thinking package should produce some 440,000 jobs and more than $230 billion in investments.
The Energy Improvement and Extension Act of 2008 includes an eight-year extension through 2016 of investment credits for solar energy, as well as breaks for wind, geothermal, and other alternative energy sources. It also provides businesses a 30 percent tax credit to offset the development costs of solar and other clean energy projects.
Other highlights of the package:
• Authorizes $800 million of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable, and trash combustion facilities
• Provides tax credits for retrofitting existing structures to make them more energy efficient
• Provides $1.5 billion in new tax credits for the creation of advanced coal electricity projects
• Establishes a new tax credit for plug-in electric drive vehicles
• Allows an employer to provide employees who commute to work by bicycle limited fringe benefits to offset the costs of traditional commuting
• Eliminates the $2,000 monetary cap for residential solar electric installations, creating a true 30 percent tax credit
In addition to the direct benefits of both lower prices for solar power and tax credits for using the solar power, the current payback periods between 10 to 15 years will most likely drop to just seven years in places like California where additional rebates and incentives are already offered.
The Energy Improvement and Extension Act of 2008 is a major first step in our nation's move towards energy independence by making clean, carbon-free energy options - powered by the sun, wind and waves - more accessible and affordable to millions of businesses, families, and communities.
President-elect Barack Obama has promised to ensure that 10 percent of our electricity comes from renewable sources by 2012 and 25 percent by 2025. This important bill could offset a potential need 10 to 20 years down the road for an environmental bailout package. In addition, with a committed government dedicated to helping our country reach energy independence, this bill will serve as a critical stepping off point for reaching that overall goal.
Michael Jordan, national practice lead and senior vice president of Jones Lang LaSalle's Energy and Sustainability Consulting practice, is an accomplished Six Sigma Master Black Belt specializing in corporate real estate business improvement. Visit the company's website at www.joneslanglasalle.com.