On July 27 the House-Senate Conference Committee passed the Energy Policy Act H.R. 6 that will likely be approved by both Houses of Congress and sent to the President for signature early next week. The legislation included several SWANA supported provisions for renewed and expanded tax credits for landfill gas (LFG), electricity generation and direct use projects, and tax credits for waste-to-energy (WTE).
According to the new bill, facilities that produce electricity from LFG and WTE will receive a two year placed in service extension from January 1, 2006 to December 31, 2007. Originally, this window would have expired at the end of this year. Additionally, the payout was extended from 5 years to 10 years. This significant change will allow many more facilities to qualify for the tax credit and will double the pay-out term from the prior version of the credit. The credit amount of 0.75 cents (0.9 cents inflation adjustment) per kWh remains the same.
"Expansion of the section 45 tax credits for electricity produced by landfill gas and WTE facilities was the most important legislative priority of SWANA in our advocacy in support of the Energy Bill" said John Skinner, Ph.D. Executive director and CEO. "We expect these provisions to significantly increase the production of electricity from these renewable energy resources" Skinner added.
The WTE provisions were also clarified. The new legislation states that new units at solid waste combustion facilities that increase the electricity output and are placed in service after October 22, 2004 are eligible for the tax credit. Additionally, the definition of LFG facility was clarified, consistent with IRS interpretation, making the Section 45 credits applicable to new LFG to energy systems at facilities where older units received the Section 29 Credits.
The Section 29 tax credits for direct use of LFG as a fuel were changed to a General Business Credit. Limitations of the General Business Credit result in a fairly modest financial incentive for direct use of LFG. However, qualified facilities will be able to claim $3 per barrel of oil equivalent (b.o.e.) adjusted for inflation from 1979. Qualified Facilities must be placed in service before January 1, 1993 or after June 30, 1998 and before Jan. 1 2010.
Other items of note are the creation of Clean Renewable Energy Bond (CREB). These bonds offer tax exempt financing of capital expenditures for facilities that qualify for the section 45 tax credit (including LFG and WTE). There is national limitation of $800 million that can be allocated for these bonds.
The legislation included a measure that calls on the Department of Treasury and the Department of Energy to carry out a study of the energy conservation implications of recycling and to identify tax incentives that encourage recycling. The study is required to be completed one year from the enactment of this legislation.
Regrettably, the Recycling Investments Saves Energy (RISE) provisions that would have provided a 15 percent tax credit for equipment used in the processing and sorting of recyclable materials were not included in the House-Senate Conference Committee approved legislation.
"While the RISE provisions were not included in the final Energy Bill, support of these provisions by the US Senate represented an important first step in advancing a more environmentally sound energy policy in the U.S.," said Skinner. "SWANA will continue to work towards passage of legislation that endorses recycling as an integral part of energy policy," Skinner added.
About SWANA: For over 40 years, SWANA, The Solid Waste Association of North America, has been the leading professional association in the solid waste management field. SWANA's mission is "to advance the practice of environmentally and economically sound management of municipal solid waste." SWANA serves over 7,000 members and thousands more industry professionals with technical conferences, certifications, publications and a large offering of technical training courses.
The Solid Waste Association of North America (SWANA) is an organization of more than 10,000 public and private sector professionals committed to advancing from solid waste management to resource management through their shared emphasis on education, advocacy and research. For more than 60 years, SWANA has been the leading association in the solid waste management field. SWANA serves industry professionals through technical conferences, certifications, publications and a large offering of technical training courses.