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09/05/2007 01:38 PM
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Weekly Clean Energy Roundup:
September 5, 2007
Page 1
- Kyoto Parties Agree Loosely on Long-Term Emissions Goals
Illinois Governor Rod Blagojevich signed a law last week that requires the state's electric utilities to draw on renewable energy for 25% of their electricity needs by 2025. The renewable energy requirement starts at 2% of the power supply on June 1st, 2008, and ratchets up to 10% of the power supply on June 1st, 2015, then increases by 1.5% per year until 2025. The law requires 75% of the renewable power to come from wind energy. Other than wind power, the law also allows solar energy, biomass energy, hydropower that does not involve new construction or significant expansion of dams, and "other alternative sources of environmentally preferable energy."
The renewable energy requirement applies to electric utilities that serve at least 100,000 customers within the state. It allows those utilities to meet the requirements with renewable energy credits and gives preference first to projects within the state, then to projects in adjacent states, then to projects located elsewhere. The law also places limits on the cost impacts of the renewable requirement, allowing utilities to fall short of the requirement if the cost impact is too great.
The renewable energy requirement is part of a larger law that establishes the Illinois Power Agency, which has broad powers to develop electricity procurement plans; conduct competitive procurements; build electric power or cogeneration plants that use renewable energy, coal, or both, financed with bonds issued by the Illinois Finance Authority; and supply electricity at cost to municipal electric systems, governmental aggregators, and rural electric cooperatives. With those powers, the new agency will help large utilities plan their renewable power procurements while building some of the renewable power facilities needed to meet the requirement. See press release from the Environmental Law & Policy Center (PDF 26 KB) and the full text of the law, Public Act 095-0481 (PDF 412 KB).
Kentucky Governor Ernie Fletcher signed wide-ranging energy legislation last week that creates a variety of incentives for biofuels and renewable energy. House Bill 1 creates incentives of up to half the capital investment in a project that creates alternative fuel from biomass or that creates electricity from renewable energy sources. To qualify, a biofuel facility must involve a capital investment of at least $25 million and a renewable power facility must involve a capital investment of at least $1 million. If the renewable power facility uses solar energy, it must be at least 50 kilowatts in size, but other renewable power facilities must be at least 1 megawatt in size. The incentives can include an advanced disbursement of the labor costs on a new project; a reimbursement of up to 100% of the sales and use taxes on property bought during construction; and a tax credit of up to 100% of the income tax and limited liability entity tax owed by the company. Under certain conditions, companies can also assess 4% of employee gross wages, which the employees can then take as a credit against their income tax. The bill's incentives will be funded with the proceeds from $100 million in bonds.
The bill also expands an existing tax credit for biodiesel and adds new tax credits for other biofuels. The biodiesel tax credit of $1 per gallon is expanded to include renewable diesel, and the cap on the total tax credit is increased from $1.5 million to $5 million in 2008, and then further increased to $10 million in 2009. The bill creates separate new tax credits of $1 per gallon for ethanol produced from corn, soybeans, or wheat and for ethanol produced from cellulosic biomass, each of which includes a cap of $5 million. However, if some of the $5 million in cellulosic ethanol tax credits go unused, they can be used to increase the cap for the corn ethanol tax credit.
Among other features in the wide-ranging bill are the creation of the Governor's Office of Energy Policy; the creation of the Kentucky Alternative Fuel and Renewable Energy Fund to promote research and development; an effort to create a Center for Renewable Energy Research and Environmental Stewardship; a refund of sales and use taxes on machinery or equipment that improves a facility's energy efficiency by at least 15%; an effort to encourage the use of green building principles and energy saving contracts for state-owned buildings; an effort to shift half of the state-owned passenger vehicles to hybrids, alternative fuel vehicles, advanced lean burn vehicles, or fuel cell vehicles; an effort to encourage alternative fuel use in state vehicles; funds for new biofuels and biomass gasification research facilities at the University of Kentucky's Center for Applied Energy Research; and even a student loan forgiveness program for certain college graduates working in an energy-related field. See the 105-page bill and Governor Fletcher's 116-word press release.
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