Energy Efficiency and Renewable Energy Legislation in the 110th Congress

Congressional research reportSep 29, 2009

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Order Code RL33831

Energy Efficiency and

Renewable Energy Legislation

in the 110th Congress

Updated September 29, 2008

Fred Sissine

Specialist in Energy Policy

Resources, Science, and Industry Division

Lynn J. Cunningham

Information Research Specialist

Knowledge Services Group

Mark Gurevitz

Information Research Specialist

Knowledge Services Group

Energy Efficiency and Renewable Energy Legislation

in the 110th Congress

Summary

This report reviews the status of energy efficiency and renewable energy

legislation introduced during the 110th Congress. Most action in the second session

is focused on the FY2009 budget request and legislation that would extend or modify

selected renewable energy and energy efficiency tax incentives.

The House-passed version of H.R. 6049 (Title I) included several tax incentives

for efficiency and renewables. The cost of the bill was fully offset, to satisfy House

paygo requirements. The revenue offsets created a debate that triggered a veto threat

from the Administration and led to the failure of initial Senate attempts to pass the

bill. Then the Senate crafted, and passed, a substitute to H.R. 6049, with similar

energy tax provisions. The Senate-passed substitute contains some differences from

the House-passed version of H.R. 6049. The Administration expressed concerns

about renewable energy bonds and revenue offsets, but otherwise endorsed the Senate

bill. Subsequently the House passed H.R. 7060, which moves energy provisions

closer to those in the Senate bill. However, differences remain over provisions for

efficiency and renewables, fossil energy, and revenue offsets.

First, in contrast to the Senate bill, H.R. 7060 would exclude Clean Renewable

Energy Bonds, Energy Conservation Bonds, and the new homes tax credit. Also,

H.R. 7060 would extend the existing homes credit to the end of 2009, instead of the

end of 2008. H.R. 7060 would extend the production tax credit for non-wind sources

for 2.75 years, instead of 2 years, and the credit would be capped at 35% after 2009.

H.R. 7060 would allow utilities to become eligible for the credit. Also, H.R. 7060

would put a different structure and lower cap ($5,200 instead of $7,500) on the credit

for plug-in electric vehicles than the Senate bill. Second, the Senate bill includes

some fossil energy incentives that the House objects to and, thus, H.R. 7060 excluded

those provisions. Third, H.R. 7060 would fully offset the cost of all (energy and nonenergy) provisions, while the Senate bill only offsets energy provisions. In the

Senate, a unanimous consent request to bring up H.R. 7060 was rejected.

The Senate adopted the House-passed substitute to the Senate substitute to H.R.

2638, which provides continuing appropriations for FY2009 at the FY2008 levels.

Also, the bill would provide an additional $250 million to the DOE Weatherization

Program and provide $7.5 billion for a $25 billion loan to help U.S. automakers

retool facilities to produce more energy-efficient vehicles. The House-passed

supplemental appropriations bill (H.R. 7110) would fund a $3 billion green schools

initiative at the Department of Education and provide an additional $500 million

above H.R. 2638 funding for efficiency and renewables programs at DOE.

More than 450 bills on energy efficiency and renewable energy have been

introduced. About one-third of these bills are focused on renewable fuels and about

one-third would provide a tax incentive for investment, energy production, fuel use,

or fuel reduction. For each bill listed in this report, a brief description and a

summary of action are given, including references to committee hearings and reports.

This report will be updated periodically.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Tax Incentives Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

House Passes H.R. 5351 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

House Floor Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Revenue Offsets Debate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Renewable Electricity Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Biofuels Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Transportation Efficiency and Conservation . . . . . . . . . . . . . . . . . . . . . 9

Buildings Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Equipment Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Senate Passes H.R. 3221, with Text of S. 2821 . . . . . . . . . . . . . . . . . . . . . . 11

Senate Floor Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Renewable Energy Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Energy Efficiency Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

House Passes H.R. 6049, with Full Offsets . . . . . . . . . . . . . . . . . . . . . . . . . 12

Senate Unable to Proceed to H.R. 6049 . . . . . . . . . . . . . . . . . . . . . . . . 13

Senate Unable to Proceed to H.R. 6049, with Text of S. 3125 . . . . . . 13

Senate Unable to Proceed to S. 3335 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

House Passes H.R. 6899 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Senate Passes H.R. 6049, with Substitute Text and Partial Offsets . . . . . . . 14

House Passes H.R. 7060, with Full Offsets . . . . . . . . . . . . . . . . . . . . . . . . . 15

FY2009 Budget . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Congress Adopts H.R. 2638, Continuing Appropriations . . . . . . . . . . . . . . 16

House Passes H.R. 7110, Supplemental Appropriations . . . . . . . . . . . . . . . 16

DOE FY2009 Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Energy Efficiency and Renewable Energy (EERE) . . . . . . . . . . . . . . . 17

Electricity Delivery and Energy Reliability . . . . . . . . . . . . . . . . . . . . . 21

Other FY2009 Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Environmental Protection Agency (EPA) . . . . . . . . . . . . . . . . . . . . . . 22

Department of Agriculture (USDA) . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Climate Security Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Lieberman-Warner Climate Security Act (S. 3036) . . . . . . . . . . . . . . . . . . . 23

Boxer Substitute Amendment to S. 3036 . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Senate Action on S. 3036 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Food, Conservation, and Energy Act of 2008 (“2008 Farm Bill”) . . . . . . . . . . . 26

Key Programs Extended, Expanded, and Added . . . . . . . . . . . . . . . . . . . . 26

Tax Incentives for Biofuels Extended . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Enacted Funding-Related Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

FY2008 DOE Appropriations (P.L. 110-161) . . . . . . . . . . . . . . . . . . . . . . . 27

DOE Budget Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

House Action (H.R. 2641) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Senate Action (S. 1751) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Enacted Law (P.L. 110-161, H.R. 2764) . . . . . . . . . . . . . . . . . . . . . . . 28

Other FY2008 Appropriations Bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Energy Reserve Fund in the Budget Resolution . . . . . . . . . . . . . . . . . . . . . 29

House Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Senate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Conference Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

FY2007 Appropriations (P.L. 110-5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Public Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

House Bills (with Senate Companions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Senate Bills (with House Companions) . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

Alternative Minimum Tax and Extenders Tax Relief Act (S. 2886) . . . . . 153

Renewable Energy Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Energy Efficiency Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153

Congressional Hearings, Reports, and Documents . . . . . . . . . . . . . . . . . . . . . . 160

Hearings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

House . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

Senate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

CRS Reports and Memos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . 173

Climate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173

Transportation: Fuels and Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . 174

109th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

Government Accountability Office (GAO) Reports . . . . . . . . . . . . . . . . . 174

List of Tables

Table 1. Selected Tax Incentives Bills Compared . . . . . . . . . . . . . . . . . . . . . . . . . 3

Table 2. Tax Incentives Bills Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Table 3. Energy Efficiency and Renewable Energy Programs . . . . . . . . . . . . . . 19

Table 4. EPA Energy Efficiency Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Table 5. Action on Energy Efficiency and Renewable Energy Legislation,

110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Table 6. Energy Efficiency and Renewable Energy Bills by Topic,

110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Energy Efficiency and Renewable Energy

Legislation in the 110th Congress

Introduction

This report summarizes action on more than 450 energy efficiency and

renewable energy bills introduced during the 110th Congress.1 These bills cover a

wide range of policy and issue areas that include appropriations, authorizations,

budget, research and development (R&D), grants, loans, financing, regulation

(including a renewable fuel standard), tax incentives, goals, plans, impacts, and the

environment/climate change.2 Most of these bills have focused on grants and tax

incentives. The bills also cover a range of sectors and topics that include buildings,

defense, education, federal lands and energy management, farms, American Indians,

and international activities. Thus far, the sector of international activities has

generated the greatest number of bills. Table 5 groups the bills by topic.

The bills can also be categorized by type of renewable resource, type of energy

efficiency measure, and technology. They cover a broad range of energy efficiency

measures and technologies, including distributed generation, net metering, equipment

and appliance standards, fuel economy standards, and transportation efficiency. Most

of these bills address transportation and fuel economy. These bills also cover a broad

range of renewable energy resources and technologies, including alcohol fuels,

biofuels, biodiesel, biopower, biomass, geothermal, hydrogen, hydropower, solar, and

wind. So far, the fuels area has generated the greatest number of bills.

For each bill listed in this report, a brief description and a summary of action are

given, including references to committee hearings and reports.

Tax Incentives Bills

The Congress has considered several bills that would extend or modify selected

renewable energy and energy efficiency tax incentives. This section describes the

provisions of, and action on, selected key tax incentives bills.

This report is intended to complement CRS Report RL33599, Energy Efficiency Policy:

Budget, Electricity Conservation, and Fuel Conservation Issues, and CRS Report RL33588,

Renewable Energy Policy: Tax Credit, Budget, and Regulatory Issues, both by Fred Sissine.

Bills on climate change are discussed in CRS Report RL33846, Greenhouse Gas

Reduction: Cap-and-Trade Bills in the 110th Congress, by Larry Parker and Brent D.

Yacobucci.

CRS-2

Summary

First, selected provisions of three key bills are compared, as shown in Table 1

below. The Jobs, Energy, Families, and Disaster Relief Act of 2008 (S. 3335)

contains a broad range of energy efficiency and renewable energy tax incentives. On

July 30, 2008, an effort to invoke cloture on a motion to proceed to S. 3335 failed by

a vote of 51 to 43. The provisions of that bill are very similar to those of the

Renewable Energy and Jobs Creation Act of 2008 (H.R. 6049), which the House

passed on May 21, 2008. A Senate effort to invoke cloture on a motion to proceed

to H.R. 6049 failed by a vote of 50 to 44; and an effort to invoke cloture on a Senatemodified version of the bill failed by a vote of 52 to 44. The energy tax provisions

of the Clean Energy Tax Stimulus Act (S. 2821, Title X of H.R. 3221) were

somewhat different from provisions in the other two bills. In particular, there were

fewer incentives for energy efficiency.

Second, a brief chronological review of action on tax incentives bills is

provided. That section begins with Table 2, below, which provides a timeline of the

key legislative action. More details on each bill featured in that table follow the

timeline.

CRS-3

Table 1. Selected Tax Incentives Bills Compared

H.R. 6049

(House)

H.R. 6049

(Senate)

H.R. 7060

(House)

Renewable Energy

Electricity Production Tax Credit

Extension for Wind

+extend geothermal, biomass, hydro,

landfill gas, muni. waste; add marine

+ 35% cap (non-wind) after 2009

+ electric utilities eligible

1 year

3 years

2 years

2.75 years

yes

Business Solar Tax Credit Extension

+small wind

+ electric utilities eligible

+ offset alternative minimum tax

6 years

yes

8 years

yes

8 years

yes

Residential Solar Credit Extension

+ lift credit cap

+ small wind, ground source

geothermal

+ offset alternative minimum tax

6 years

yes

8 years

yes

8 years

yes

Clean Renewable Energy Bonds

$2 billion

$800 million

Biofuels Production and Distribution

yes

New Homes Tax Credit

1 year

Existing Homes Tax Credit

2 years

1 year

1.25 years

Commercial Buildings Deduction

5 years

Appliance Tax Credit

3 years

2 years

3 years

Energy Conservation Bonds

$3 billion

$800 million

Transportation Incentives

+plug-in electric vehicles

+biodiesel/renewable diesel

yes

$5,000

1 year

yes

$7,500 cap

1 year

yes

$5,200 cap

1 year

Smart Meters/Grid Depreciation

10-year

Green Bonds

4 years

yes

Energy Efficiency

Revenue Offsets

Offsets include reducing subsidies for

oil companies, offshore

compensation, or by delaying tax

benefits for the companies operating

overseas, or other measures

CRS-4

Table 2. Tax Incentives Bills Timeline

Date

House Action

Senate Action

H.R. 5351: Renewable Energy and Energy Conservation Tax Act

Feb. 27

The bill had $16.7 billion in

incentives for efficiency and

renewables (EE&RE) and $18.0

billion in revenue offsets. The

House passed it by vote of 236 to

182.

No Senate action.

H.R. 3221 (S. 2821: Clean Energy Tax Stimulus Act)

April 10

In 2007, H.R. 3221 passed the

House as an energy policy bill.

H.R. 3221 was superseded by H.R.

6, which was later enacted as P.L.

110-140.

On April 10, the Senate took up

H.R. 3221 with the intent to

convert it into a housing bill. The

text of S. 2821was incorporated

by vote of 88 to 8 as an

amendment to the substitute to

H.R. 3221. No offsets were

included. The Senate adopted the

amended bill by vote of 84 to 12.

May 13

House objected to the energy tax

title of the Senate-passed version

and passed an amended housing

bill without an energy tax title.

No further effort to add energy

tax provisions to the housing bill.

H.R. 6049: Renewable Energy and Job Creation Act

(S. 3125: Energy Independence and Tax Relief Act)

May 21

H.R. 6049 had $16.9 billion in

incentives for EE&RE and $54.3

billion in total revenue offsets.

House passed the bill 263 to 160.

June 10

Senate cloture motion to proceed

on House-passed version of H.R.

6049 failed by vote of 50 to 44.

June 17

S. 3125 had nearly identical tax

provisions to those in H.R. 6049,

but without offsets. With the

intent to take up S. 3125 as a

substitute to H.R. 6049, a second

cloture motion on H.R. 6049

failed by vote of 52 to 44.

S. 3335: Jobs, Energy, Families, and Disaster Relief Act

July 30

Bill had $16.3 billion for EE&RE

and $54.1 billion in total offsets.

Senate cloture motion failed by

vote of 51 to 43.

CRS-5

Date

House Action

Senate Action

H.R. 6899: Comprehensive Energy Security Act (Energy Tax Incentives Act)

Sept. 16

Title VIII of the bill, the Energy

Tax Incentives Act, has $17.8

billion in incentives for EE&RE

and an equal amount in revenue

offsets. House passed the bill 236

to 189.

H.R. 6049: Senate Version, with Energy Improvement and Extension Act

In the Senate substitute

amendment to H.R. 6049,.Title I

— the Energy Improvement and

Extension Act — has $17.8

billion in incentives for EE&RE

(and $0.4 billion for carbon

sequestration) and an equal

amount in revenue offsets. Senate

approved the energy tax

amendment 93 to 2, and passed

the entire tax bill 93 to 2.

Sept. 23

H.R. 7060: Renewable Energy and Job Creation Tax Incentives Act

Sept. 26

The House response to the Senate

substitute to H.R. 6049 was a new

bill. Title I of H.R. 7060 would

provide $15 billion in incentives

for EE&RE, and an equal amount

in revenue offsets. The House

approved the bill 257 to 166.

On September 29, 2008, a

unanimous consent request to

bring up H.R. 7060 was rejected.

S. 3125 (Title I) has nearly identical provisions to those of H.R. 6049, as noted

in Table 1. H.R. 6049 passed the House on May 21, 2008, by a vote of 263 to 160.

On June 10, 2008, a Senate cloture motion to proceed to H.R. 6049 failed by a vote

of 50 to 44. On June 17, 2008, with the intent to take up S. 3125 as a substitute to

H.R. 6049, a second cloture motion on H.R. 6049 failed by a vote of 52 to 44.

However, the Majority Leader moved to reconsider the vote, and H.R. 6049 is still

under consideration in the Senate.

Title X of the Foreclosure Prevention Act (H.R. 3221), which passed the Senate

on April 10, 2008, incorporates the text of the Clean Energy Tax Stimulus Act (S.

2821) with provisions for the eight incentives noted in Table 1. However, the House

objected to the inclusion of energy tax incentives in the housing bill, H.R. 3221.

H.R. 5984 has energy tax incentives identical to those in H.R. 3221 (S. 2821). Title

IV of the Alternative Minimum Tax and Extenders Tax Relief Act (S. 2886), has a

scaled-back version of the incentives in H.R. 3221 (S. 2821), but has not progressed

to floor action. The Renewable Energy and Energy Conservation Tax Act (H.R.

5351), which passed the House by a vote of 236 to 182 on February 27, 2008,

includes 16 incentives for renewable energy and energy efficiency. A description of

the key bills follows.

CRS-6

House Passes H.R. 5351

On February 12, 2008, the House Committee on Ways and Means approved

H.R. 5351, the proposed Renewable Energy and Energy Conservation Tax Act of

2008.3 This bill is similar to H.R. 2776,4 which the House passed during the first

session — but it was not sent to the Senate.5 On February 27, 2007, the House

passed H.R. 5351 by a vote of 236-182.6 Due to a proposal to obtain revenue offsets

by reducing subsidies for oil and natural gas, the Administration threatened to veto

the bill.7 The Senate took no action on the bill.

H.R. 5351 would have extended or re-established several tax incentives that

would support renewable electricity production, biofuels production, transportation

efficiency and conservation, buildings efficiency, and equipment efficiency. These

new incentives would have included $8.9 billion in renewable energy production

(electricity and fuels) tax incentives and $7.8 billion in energy efficiency

(transportation and buildings/equipment) tax incentives. The renewable energy

incentives would have included $6.6 billion for the renewable energy electricity

production tax credit (PTC), $634 million for residential solar tax credits, $621

million for business solar (and fuel cell) credits, and $640 million for clean

renewable energy (tax credit) bonds.8 (For more about the background and debate

on the renewable energy incentives, see the discussion below, and see CRS Report

RL34162, Renewable Energy: Background and Issues for the 110th Congress, by

Fred Sissine.)

House Committee on Ways and Means. H.R. 5351 Renewable Energy and Energy

Conservation Tax Act of 2008. February 25, 2008. This document has a summary and cost

estimate for each provisions of the bill. [http://waysandmeans.house.gov/media/pdf/110/

februarybillsummary.pdf].

The Joint Committee on Taxation published a description of the provisions in H.R. 2776.

It is available at [http://www.house.gov/jct/x-35-07.pdf].

In the engrossment of H.R. 3221, the adopted rule (H.Res 615) provided that the text of

H.R. 2776, as passed (221-189) by the House, be added at the end of H.R. 3221as Division

B, and H.R. 2776 was tabled. After informal House-Senate negotiations over the Housepassed bill (H.R. 3221) and the Senate-passed bill (Senate amendment to H.R. 6), the House

passed (235-181) a substitute amendment to the Senate amendment to H.R. 6. The House

substitute contained virtually all of the tax incentives in H.R. 2776. Senate floor action to

adopt the House substitute failed on a cloture vote (53-42). The ensuing Senate amendment

(S.Amdt. 3850) did not include the tax incentives. This bill was adopted by both chambers

and enacted as P.L. 110-140.

H.Res. 1001 provided the rule that brought the bill to the floor.

The White House. Office of Management and Budget. Statement of Administrative Policy

on H.R. 5351. [http://www.whitehouse.gov/omb/legislative/sap/110-2/saphr5351-r.pdf]

The Joint Committee on Taxation scores the estimated costs of the tax provisions at

[http://www.house.gov/jct/x-20-08.pdf]. The Congressional Budget Office provides a

summary of the scored costs at [http://www.cbo.gov/ftpdocs/90xx/doc9001/hr5351.pdf].

CRS-7

The bill proposed to offset the cost of those incentives primarily by reducing

two subsidies for oil and natural gas production. Also, there would have been some

revenue offset derived from a provision to close the “Hummer” tax credit loophole.

House Floor Debate. In the House floor debate,9 opponents of H.R. 5351

argued that the proposed repeal of oil and natural gas subsidies (§301 and §302)

would raise gasoline prices and lead to higher energy costs generally. Further, they

contended that such a repeal would cause a decline in oil industry jobs. Also, some

opponents argued that the proposed 35% cap on the renewable energy production tax

credit would severely impair the ability of the credit to stimulate the development of

new wind farms.10

Proponents argued that the repeal would focus mainly on the five largest oil

companies, which have recently made historical record-breaking profits and, thus, do

not need the subsidies. Further, they contended that the subsidies currently favor

conventional fuels and that the bill would help to bring support into a more equal

balance. Proponents also argued that the incentives would spur the development of

greater numbers of “green jobs” and help reduce greenhouse gas emissions.11 (For

more details about the proposed revenue offsets, see the discussion below, and see

CRS Report RL33578, Energy Tax Policy: History and Current Issues, by Salvatore

Lazzari.)

Revenue Offsets Debate. Title III of H.R. 5351 proposes $18.0 billion in

oil and natural gas revenue offsets to support $16.7 billion in new incentives for

renewables (Title I) and efficiency (Title II).12 The first subsidy is the 6% deduction

for domestic oil and natural gas producers (IRS §199). Title V of the bill would

repeal that deduction for certain large integrated oil companies. For other companies,

it would freeze the deduction at the 6% level. This is a scaled-back version of the

proposal in H.R. 2776 that would have repealed the deduction for all companies.13

The second proposal would restrict oil and gas companies from claiming foreign tax

credits by changing the method used to calculate “Foreign Oil and Gas Extraction

Congressional Record. February 27, 2008. p. H1091-H1131.

The Administration has threatened to veto the bill, stating its opposition to repeal of the

oil industry subsidies and to proposals for clean renewable energy (tax credit) bonds and

qualified energy conservation bonds. Executive Office of the President. Statement of

Administration Policy on H.R. 5351. February 26, 2008. 2 p. [http://www.whitehouse.gov/

omb/legislative/sap/110-2/saphr5351-r.pdf].

Many of these points were also stated in a letter from the Speaker of the House to the

President. Office of the Speaker. Pelosi, Hoyer, Clyburn and Emanuel Send Letter to

White House on House-Passed Energy Legislation. Press Release. February 28, 2008. 2

p. [http://speaker.house.gov/newsroom/pressreleases?id=0544]

H.R. 5351 also includes $1.83 billion for “New York Liberty Zone” tax credits for

transportation infrastructure projects proposed in the Administration’s FY2009 budget. For

more discussion of the revenue offset provisions, see CRS Report RL33578, Energy Tax

Policy: History and Current Issues, by Salvatore Lazzari.

Joint Committee on Taxation, Description of the Tax Provisions in H.R. 2776, p. 62-66.

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Income.” This is identical to the provision in H.R. 2776.14 The revenue offset

provisions are the most controversial part of the bill.

Debate over the revenue offset provisions in H.R. 5351 directly parallels the

House and Senate floor debates over similar proposals for H.R. 6 during the first

session. In those debates, opponents argued that the reduction in oil and natural gas

incentives would dampen production, cause job losses, and lead to higher prices for

gasoline and other fuels. Proponents counter-argued that record profits show that the

oil and natural gas incentives were not needed and that the new incentives would help

spur the development of “green” jobs.

Renewable Electricity Production. The bill proposes four incentives for

electricity production: the production tax credit, two solar investment tax credits, and

new clean energy (tax credit) bonds.

Renewable Energy Electricity Production Tax Credit (PTC). For

business owners, the PTC of two cents per kilowatt-hour for windfarms and other

power facilities would be extended for three years, through the end of 2011 (§101).15

For 2010 and 2011, the credit would be capped at 35% of a project’s value. Also,

marine/hydrokinetic facilities would become eligible for the credit (§102). Such

facilities produce electricity from river currents or from ocean waves, tides, and

temperature differences (ocean thermal energy).16

Solar Tax Credits. For business property owners, the 30% investment tax

credit would be extended for eight years for the installation of solar, geothermal, fuel

cell, and microturbine equipment (§127). Further, the credit would be allowed to

offset the alternative minimum tax. Also, public utilities would become eligible for

the credit.

For home owners, the 30% investment tax credit for residential solar electric,

solar hot water, and fuel cell equipment would be extended for six years, through the

end of 2014 (§106).17 Further, the annual cap on the credit would be increased from

$2,000 to $4,000. Also, residential wind equipment and ground source heat pumps

would become eligible for the credit.

New Clean Renewable Energy (Tax Credit) Bonds. Certain non-taxpaying entities are eligible under current law, through the end of 2008, to be

Joint Committee on Taxation, Description of the Tax Provisions in H.R. 2776, p. 67-72.

For more background, see CRS Report RL34162, Renewable Energy Issues for the 110th

Congress, by Fred Sissine.

For more discussion of marine/hydrokinetic energy, see CRS Report RL33883, Issues

Affecting Tidal, Wave, and In-Stream Generation Projects, by Nic Lane.

For a description of the existing solar investment tax incentives, and the debate over their

proposed extension, see CRS Report RL34162, Renewable Energy Issues for the 110th

Congress.

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“qualified issuers” of clean renewable energy bonds (CREBs).18 The bill would

authorize an additional $2 billion in authority for CREBs to be issued through end

of 2009. Taxpayers holding the CREBs on a credit allowance date would be entitled

to a tax credit.19 The amount of the tax credit would be determined by multiplying

the bond’s credit rate by the face amount on the holder’s bond.

Biofuels Production. For biofuels producers, the bill has two tax

incentives.20 First, a new production tax credit of 50 cents per gallon would be

created for cellulosic fuel ethanol (§213). It would be available through the end of

2010. That credit would be available in addition to the existing 51 cents per gallon

ethanol credit and the 10 cents per gallon small producer credit. Second, the existing

$1.00 per gallon production credit for biodiesel and the 50 cents per gallon credit for

small biodiesel producers would be extended for two years, through the end of 2010

(§211). Also, the provision clarifies that the $1.00 per gallon production credit for

renewable diesel would be limited to fuel produced only from biomass.21

For biofuels distributors, the existing investment tax credit for alternative

refueling stations would be extended for two years, through the end of 2010 (§202).

Further, the credit value would be increased from 30% (capped at $30,000) to 50%

(capped at $50,000). Also, section 212 would clarify that the production incentives

in sections 213, 211, and 202 would be available only for fuels produced in the

United States.

Transportation Efficiency and Conservation.

For automobile

manufacturers, the bill would establish a new tax credit for each qualified plug-in

hybrid vehicle placed in service (§201). The base amount of the credit would be

$4,000. If the vehicle’s battery capacity exceeds five kilowatt-hours (kwh), the credit

would be increased by $200 for each additional kwh, up to a maximum of $6,000.

Each company that reaches 60,000 plug-in hybrid vehicles in sales would have the

credit terminated at the end of the following business quarter.

Employers would be allowed to provide a tax deductible fringe benefit to

employees that use a bicycle to commute to work (§221). The benefit would be

available to offset bicycle storage cost and other commuting costs.

For businesses, an existing tax benefit (criticized by some as a “loophole”) for

fuel-inefficient sport utility vehicles and other heavy vehicles would be eliminated

Qualified issuers include state and local governments, American Indian tribes, public

power providers (non-profit electric utilities), and cooperative electric companies. For more

background about CREBs, see CRS Report RL34162, Renewable Energy Issues for the 110th

Congress.

For more background, see CRS Report RL34162, Renewable Energy Issues for the 110th

Congress.

For more information about biofuels incentives, see CRS Report RL33572, Biofuels

Incentives: A Summary of Federal Programs, by Brent D. Yacobucci.

However, diesel produced by co-processing biomass with petroleum or other feedstocks

would be eligible for the 50 cents per gallon tax credit for alternative fuels.

CRS-10

(§203). The tax benefit would be retained for trucks and vans that are designed

strictly for business use. Further, the tax benefit would be retained for certain heavy

vehicles needed for farming and heavy freight transportation. Also, the tax benefit

would be extended to lighter-weight and more fuel-efficient vehicles needed for

farming and heavy freight transportation.

Buildings Efficiency. For states, local governments, and tribal governments,

a new category of tax-exempt “qualified energy conservation bonds” would be

created to support “green” community initiatives that involve energy efficiency,

renewable energy, mass transit, and other measures that reduce greenhouse gas

emissions (§231).22 Proceeds from the bonds must be spent within a three-year

period. The program’s total national bond authority would be capped at $3.6 billion.

Five categories of projects would be eligible for bond support. One category would

be for reducing energy use in public buildings by 20%. The second category would

include research support for cellulosic ethanol, carbon dioxide (CO2) sequestration,

and other technologies to improve energy efficiency in buildings and transportation.

The third category would cover public transit (mass commuting) facilities. The

fourth category would include demonstration projects for green buildings, biomass

conversion to fuel, peak-load power reduction, and CO2 sequestration. The fifth

category would cover public education about energy efficiency.

For home owners, a recently expired investment tax credit for residential energy

efficiency equipment and building shell measures would be re-established and

extended through the end of 2009 (§232). Also, energy-efficient biomass fuel stoves

would become eligible for a tax credit worth up to $300.

For commercial building owners, the existing investment tax deduction for the

installation of energy efficiency equipment and building shell measures would be

extended for five years, through the end of 2013 (§233).

Equipment Efficiency. For manufacturers of energy-efficient appliances, an

expired tax credit would be re-established and extended for nearly three years,

through the end of 2010 (§234). Depending on the level of efficiency achieved, each

energy-efficient dishwasher produced would be eligible for a credit that ranges from

$45 to $75. For each clothes washer, the available credit would range from $75 to

$250. For each refrigerator, the credit would range from $50 to $200. The total tax

benefit that could be claimed by each company would be capped at $75 million.

For electric utilities, the installation of “smart electric meters” would benefit

from a shortened depreciation period of five years (§235). The meter must be

capable of providing time-of-use data and “net metering” services for home owners

Joint Committee on Taxation, Description of the Tax Provisions in H.R. 2776, p. 44-46.

The Committee describes “Qualified Energy Conservation Bonds” as a type of qualified

private activity bonds, which permit states and local governments to “act as conduits

providing tax-exempt financing for certain private activities.” The definition includes

exempt facility bonds that can be used to finance certain transportation, utility, educational,

and “qualified green building and sustainable design projects.”

CRS-11

and occupants.23 Also, the device must provide energy use data to the utility

company.

Senate Passes H.R. 3221, with Text of S. 2821

On April 3, 2008, the Clean Energy Tax Stimulus Act of 2008 (S. 2821) was

introduced, with extensions and modifications of eight tax incentives for renewable

energy and energy efficiency. This bill was an attempt to offer a less comprehensive

and therefore less expensive version of the House-passed bill, H.R. 5351. The Joint

Committee on Taxation estimated that the incentives would reduce revenue to the

U.S. Treasury by about $8.3 billion over 11 years.24 There were no revenue offsets

in the bill.

Senate Floor Action. The Senate took up H.R. 3221 with the intent to

convert it to a housing stimulus bill. S.Amdt. 4419 incorporated the text of all of the

energy tax provisions of S. 2821. It was adopted as a second degree amendment to

S.Amdt. 4387, the Senate substitute to H.R. 3221 entitled as the Foreclosure

Prevention Act of 2008. S.Amdt. 4419 was adopted by vote of 88 to 8. The amended

substitute, S.Amdt. 4387, to H.R. 3221 was adopted by a vote of 84 to 12 on April

10, 2008, with the energy tax provisions of S. 2821 incorporated as Title X.

The House took up the Senate-passed version of H.R. 3221 on May 8, 2008.25

The House objected to including energy, and other non-housing provisions, in the

bill. On May 13, 2008, the House passed an amended version of H.R. 3221, renamed

as the Housing Rescue and Foreclosure Prevention Act, without the energy tax

provisions.

On June 19, 2008, the Senate took up the House-passed version of H.R. 3221

under unanimous consent. S.Amdt. 4983 was introduced as a substitute for titles I

through V of the House version of the bill. On June 20, 2008, S.Amdt. 5020 was

introduced as a second degree amendment to S.Amdt. 4983. S.Amdt. 5020 contains

the text of S. 2821. There was no further action on S.Amdt. 5020. The Senate

approved H.R. 3221 without energy tax provisions.

Renewable Energy Incentives. S. 2821 would have extended or modified

four renewable energy tax incentives. The business renewable energy electricity

production tax credit (PTC) would have been extended for one year, through the end

of 2009 (§101). Also, the PTC would have been expanded to include marine and

hydrokinetic power. Further, in cases when a utility is part owner of the facility, the

credit would have been allowed to reduce the cost of power sold to utility customers.

Net metering is an arrangement wherein the occupant may generate power on the premises

and sell it to the utility company.

Joint Committee on Taxation. Estimated Revenue Effects of the Tax Provisions in H.R.

3221. April 18, 2008. See [http://www.house.gov/jct/x-33-08.pdf].

On May 7, 2008, H.R. 5984 was introduced with energy tax provisions nearly identical

to those in Title X of the Senate-passed version of H.R. 3221. However, there was no

further action on H.R. 5984.

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For business solar and fuel cell property, the 30% investment tax credit (ITC) would

have been extended for eight years, through the end of 2016 (§102). The 0.5 kilowatt

cap for fuel cell property would have been removed. Utilities would have become

eligible to claim the ITC. Also, a 10% credit for microturbines would have been

established. For residential solar property, the 30% ITC would have been extended

for one year, through the end of 2009 (§103). The $2,000 cap for solar electric

property would have been removed. A new round of $400 million in clean renewable

energy bonds (CREBs) would have been authorized for issuance before the end of

2009 (§104).

Energy Efficiency Incentives. S. 2821 would also have extended or

modified four energy efficiency tax incentives. For homeowners, the 10% ITC for

energy efficiency improvements to existing homes would be extended for one year,

through the end of 2009 (§201). Pellet stoves would have been included as eligible

equipment. For contractors and developers of new energy-efficient homes, the ITC

would have been extended for two years, through the end of 2010 (§202). For

commercial buildings, the tax deduction for energy-efficiency improvements would

have been extended for one year, through the end of 2009 (§203). The maximum

deduction would have been increased to $2.25 per square foot. Building subsystems

would have been eligible for a partial deduction of $0.75 per square foot. For

manufacturers, the credit for energy-efficient appliances (dishwashers, clothes

washers, and refrigerators) would have been extended for three years, through the end

of 2010 (§204).

House Passes H.R. 6049, with Full Offsets

On May 21, 2008, the Energy Tax and Extenders Act of 2008 (H.R. 6049) was

passed by the House, with very similar renewable energy and energy efficiency

provisions to those in H.R. 5351. This $54.0 billion omnibus tax incentives bill

contained nearly $15.4 billion of energy efficiency and renewable energy tax

provisions, which are very similar to those of H.R. 5351. The proposal in H.R. 5351

to derive offsets for its energy provisions mainly by reducing oil and gas subsidies

was highly controversial. In contrast, H.R. 6049 would derive offsets to cover energy

and other tax provisions from two different sources: a policy change on deferred

compensation paid by certain people employed in offshore companies ($24.3 billion)

and a delayed phase-in of a 2004 law that would liberalize the foreign tax credit limit

for certain taxpayers ($30.0 billion).26

H.R. 6049 would have extended or re-established several tax incentives that

would support renewable electricity production, biofuels production, transportation

efficiency and conservation, buildings efficiency, and equipment efficiency. Key

selected incentive provisions and extensions are summarized in Table 1. Overall,

the bill would have included $10.1 billion in renewable energy production (electricity

Committee on Ways and Means. H.R. 6049 Energy and Tax Extenders Act of 2008

(Summary). May 16, 2008. p. 12. [http://waysandmeans.house.gov/media/pdf/110/bill.pdf]

More details are available in Joint Committee on Taxation. Description of the Chairman’s

Mark of H.R. 6049. May 14, 2008. p. 171. [http://waysandmeans.house.gov/media/pdf/110/

DCM6049.pdf]

CRS-13

and transportation biofuels) tax incentives and $5.3 billion in energy efficiency (plugin hybrid vehicles and buildings/equipment) tax incentives. The renewable energy

incentives would have included $7.0 billion for the renewable energy electricity

production tax credit (PTC), $1.4 billion for business solar (and fuel cell) tax credits,

$666 million for residential solar tax credits, and $538 million for clean renewable

energy (tax credit) bonds.27 (For more about the background and debate on the

renewable energy incentives, CRS Report RL34162, Renewable Energy: Background

and Issues for the 110th Congress.)

Senate Unable to Proceed to H.R. 6049. On June 6, 2008, a motion to

proceed to consideration of H.R. 6049 was made in the Senate. Subsequently, a

cloture motion on the motion to proceed to H.R. 6049 was presented. On June 10,

2008, by vote of 50 to 44, cloture was not invoked on the motion to proceed to the

bill.

Senate Unable to Proceed to H.R. 6049, with Text of S. 3125. On

June 12, 2008, a second cloture motion was filed in the Senate on a motion to

proceed to H.R. 6049. The purpose of the second cloture motion was to bring up the

text of S. 3125,28 the “Energy Independence and Tax Relief Act of 2008,” a substitute

for H.R. 6049.29 As Table 1 shows, the energy tax provisions in Title I are nearly

identical to those of H.R. 6049. Two notable differences are eight-year extensions

of the business (§103) and residential (§104) solar tax credits, instead of the six-year

extensions proposed in H.R. 6049, and a one-year extension proposed for energy

efficiency measures in existing homes (§142), instead of the two-year extension

proposed in H.R. 6049. Title II proposes changes to the Alternative Minimum Tax;

Title III contains several miscellaneous tax provisions; and Title IV contains

controversial revenue offset provisions. On June 17, 2008, Senate floor action halted

when the second cloture motion on the motion to proceed to H.R. 6049 failed by a

vote of 52 to 44. Subsequently, the Senate Majority Leader moved to reconsider the

vote by which cloture was not invoked. On July 29, 2008, there was a motion by the

Majority Leader to reconsider the vote by which cloture was not invoked on the

motion to proceed to the bill, which was agreed to by unanimous consent. Upon

reconsideration, cloture on the motion to proceed to the bill was not invoked, by a

vote of 53 to 43.

Senate Unable to Proceed to S. 3335

The Jobs, Energy, Families, and Disaster Relief Act of 2008 (S. 3335) has very

similar renewable energy and energy efficiency provisions to those in H.R. 6049.

Title I would extend several tax incentives for renewable energy (Subtitle A, Part 1),

The Joint Committee on Taxation scores the estimated costs of the tax provisions at

[http://www.house.gov/jct/x-42-08.pdf].

A staff summary of S. 3125 and preliminary estimates of the revenue effects are posted

on the Committee on Finance website at [http://finance.senate.gov/sitepages/

legislation.htm].

The June 12, 2008, press release is on the committee’s website at [http://finance.senate.

gov/press/Bpress/2008press/prb.061208%20Baucus%20extenders%20tax%20package.pdf].

CRS-14

biofuels and transportation (Subtitle B), and energy efficiency (Subtitle C). As

shown in Table 1, the proposed incentives are very similar to those of H.R. 6049.

Notable differences include eight-year extensions of the business (§103) and

residential (§104) solar tax credits, instead of the six-year extensions proposed in

H.R. 6049, and a one-year extension proposed for energy efficiency measures in

existing homes (§142), instead of the two-year extension proposed in H.R. 6049. On

July 30, 2008, an effort to invoke cloture on a motion to proceed to S. 3335 failed by

a vote of 51 to 43.

House Passes H.R. 6899

Title VIII of the Comprehensive American Energy Security and Consumer

Protection Act of 2008 (H.R. 6899) has very similar renewable energy and energy

efficiency provisions to those in H.R. 6049 (see Table 1). It would extend several

tax incentives for renewable energy (Subtitle A, Part 1), biofuels and transportation

(Subtitle B), and energy efficiency (Subtitle C). Notable differences include eightyear extensions of the business (§103) and residential (§104) solar tax credits,

instead of the six-year extensions proposed in H.R. 6049, and a one-year extension

proposed for energy efficiency measures in existing homes (§142), instead of the

two-year extension proposed in H.R. 6049. On September 16, 2008, the House

passed the bill by a vote of 236 to 189.

Senate Passes H.R. 6049, with Substitute Text and Partial

Offsets

On September 23, 2008, the text of EIEA was brought to the Senate floor as a

substitute amendment (S.Amdt. 5633) to H.R. 6049. The amendment was adopted

by vote of 93 to 2. A perfecting amendment (S.Amdt. 5635) with about $130 billion

in additional non-energy tax incentives, including a modification to the alternative

minimum tax, was adopted by vote of 83 to 12. That amendment contained only a

partial offset to the estimated cost of its provisions. The amended substitute was

adopted by vote of 93 to 2.

The President’s Statement of Administration Policy on the Senate amendments

to H.R. 6049 expresses strong opposition to the revenue offsets provisions and to the

clean renewable energy (tax credit) bonds.30 However, in contrast to the Housepassed version of H.R. 6049, and most other previous bills that proposed to extend

the energy tax credits, the Administration does not threaten to veto this bill.

The energy tax portion (Energy Improvement and Extension Act, (EIEA) of the

Senate-passed substitute to H.R. 6049 has $17.8 billion in renewable energy and

The White House. Executive Office of the President. Office of Management and Budget.

Statement of Administration Policy on Senate Amendments to H.R. 6049 — Energy

Improvement and Extension Act of 2008 and Tax Extenders and Alternative Minimum Tax

Relief Tax Act of 2008. September 23, 2008. 2 p. [http://www.whitehouse.gov/omb/

legislative/sap/110-2/saphr6049-s.pdf]

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energy efficiency provisions.31 The Senate provisions are very similar to those in the

House-passed version of H.R. 6049 and to those in the draft House bill entitled

Energy Tax Incentives Act (ETIA, see Table 1 and text below). The Senate

substitute would extend several tax incentives for renewable energy, biofuels and

transportation, and energy efficiency. For the production tax credit, EIEA excludes

a 35% cap on non-wind sources (after 2009) that was in the House-passed bill.

However, it would trim the extensions for non-wind sources to 2 years, compared

with 3-year extensions in the House bill. Further, it would not allow utilities to

become eligible for the credit. EIEA would trim some other provisions: extending

the appliance credit for 2 years instead of 3 years, providing less than half the

authority for CREBs, and providing about one-fourth the authority for energy

conservation bonds. However, EIEA would extend the new homes credit

(retroactively) and it would provide a $7,500 cap on the credit for plug-in electric

vehicles, compared with $5,000 in the House bill. EIEA has five provisions to

provide revenue offsets: freezing an oil and gas subsidy, changing basis reporting for

stockbrokers, extending the Federal Unemployment Tax Act (FUTA) surtax,

adjusting foreign tax credits, and extending the oil spill liability trust fund.

House Passes H.R. 7060, with Full Offsets

On September 26, 2008, the House passed the Renewable Energy and Job

Creation Tax Incentives Act (H.R. 7060).32 The Statement of Administration Policy

on H.R. 7060 recommends that the President veto the bill.33 Title I of the bill would

provide about $15 billion in tax incentives for efficiency, renewables, and carbon

sequestration. As shown in Table 1, the energy tax provisions of H.R. 7060 differ

from those in the House-passed version of H.R. 6049 and those in the Senate-passed

substitute to H.R. 6049.

For non-wind resources, the production tax credit would be extended for 2.75

years, instead of the Senate proposal for two years. In agreement with the Senate, the

proposal to allow utilities to claim the credit was dropped. In disagreement with the

Senate, the proposal for a 35% cap would be retained. For the business and

residential solar tax credits, the provisions in H.R. 7060 are identical to those

approved by the Senate. Clean Renewable Energy Bonds and the new homes tax

credit are absent. H.R. 7060 proposes a 1.25-year re-establishment (through the end

of 2009) for energy efficiency measures in existing homes, instead of the one-year

extension (nine months retroactive, through the end of 2008) in the Senate bill. The

Energy Conservation Bonds are absent. The Green Bonds would be extended for

four years, in agreement with the Senate.

A provision for carbon sequestration would add $0.4 billion for a total estimated cost of

$18.2 billion.

The Committee on Ways and Means posted a summary of H.R. 7060 provisions at

[http://waysandmeans.house.gov/MoreInfo.asp?section=48]. The Joint Committee on

Taxation (JCT) posted a detailed description of provisions at [http://www.house.gov/

jct/x-75-08.pdf]. Also, JCT posted estimates of the revenue effects at

[http://www.house.gov/jct/x-76-08.pdf].

The Administration’s statement on H.R. 7060 is available at [http://www.whitehouse.gov/

omb/legislative/sap/110-2/saphr7060-h.pdf].

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The Committee summary states that the $15 billion cost of incentives would be

completely offset by using “revenue-raising provisions that have passed the Senate

with overwhelming support, including provisions that would: (1) prevent the

understatement of foreign oil and gas extraction income in calculating foreign tax

credits; (2) freeze the section 199 deduction for oil and gas companies at 6%; (3)

provide for broker reporting of customer’s basis in securities; (4) extend the FUTA

surtax for one year; (5) extend and increase funding for the Oil Spill Liability Trust

Fund; (6) close a tax loophole that allows individuals that work for certain offshore

corporations, such as hedge fund managers, to defer tax on their compensation, and

(7) delay a tax benefit for multinational corporations operating overseas that has yet

to take effect.”34

FY2009 Budget

Congress Adopts H.R. 2638, Continuing Appropriations

By a vote of 78 to 12, the Senate adopted the House substitute to the Senate

substitute to the proposed Department of Homeland Security Appropriations Act,

2008 (H.R. 2638). The House had previously adopted its substitute by a vote of 370

to 58. Division A — the Continuing Appropriations Resolution, 2009 — would

continue federal funding at FY2008 levels through March 6, 2009. Two provisions

of the resolution would provide additional funding for energy efficiency. Section 129

would provide $7.51 billion for a DOE Advanced Technology Vehicles

Manufacturing Loan Program authorized by the Energy Independence Act (P.L. 110140, §136[d]). The Program would support $25 billion in loans to domestic

automobile manufacturers and automobile part manufacturers to cover up to 30% of

the costs of re-equipping, expanding, or establishing a manufacturing facility in the

United States to produce advanced technology vehicles or components (automobiles

and parts that exceed fuel-efficiency standards). Recipients would be required to pay

employees and contractors prevailing wage rates, and the program would be

scheduled to expire in 2017. Section 130 would provide an additional $250 million

for the DOE Weatherization Assistance Program in FY2009. Those additional funds

would remain available until expended.

House Passes H.R. 7110, Supplemental Appropriations

On September 26, 2008, the House passed the Supplemental Appropriations Bill

for Fiscal Year 2009 (H.R. 7110) by a vote of 264 to 158. The bill would fund a

green schools initiative at the Department of Education (DOED) and provide

additional funding, above that in the Continuing Resolution (H.R. 2638), for

efficiency and renewables programs at DOE.

Chapter 4 (§1401) of H.R. 7110 would appropriate $3 billion to create a 21st

Century Green High-Performing Public School Facilities grant program at the

Committee on Ways and Means. H.R. 7060, Renewable Energy and Job Creation Tax Act

of 2008. Summary. p. 1.

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Department of Education (DOED). The purpose of the program would be to

modernize, renovate, and repair public school facilities. Subsection (k) on Green

Schools would require that local educational agencies use at least 25% of the grant

funding for modernization, renovation, or repairs that satisfy green building design

principles set by the U.S. Green Building Council’s Leadership in Energy and

Environmental Design (LEED) green building rating system, energy efficiency

criteria set by the EPA Energy Star Program, and/or other green design principles and

criteria. The local educational agencies would be required to report on their projects

to state educational agencies which, in turn, would be required to report to DOED.

By the end of 2010, DOED would be directed to submit a report to Congress.

Chapter 6 (Energy Development) would provide an additional $500 million in

FY2009 appropriations for DOE’s Office of Energy Efficiency and Renewable

Energy (EERE). The purpose of the additional funding is to accelerate the

development of technologies that would “diversify the nation’s energy portfolio and

contribute to a reliable, domestic energy supply.” An additional $100 million would

be provided to DOE’s Office of Electricity Delivery and Energy Reliability (OE) to

“modernize the electric grid, enhance security and reliability of the energy

infrastructure, and facilitate recovery from disruptions to the energy supply.” For the

cost of loans authorized by the Energy Independence Act (P.L. 110-140, §135) the

bill would provide $1 billion to remain available until expended. Of that amount, $5

million could be used only for administrative expenses to conduct the loan program.

The leveraged loan guarantee commitments would be capped at a total of $3.3 billion

in loan principal.

DOE FY2009 Request

The House Appropriations Committee recommends $2.5 billion for DOE’s

FY2009 Energy Efficiency and Renewable Energy (EERE) programs, about double

the DOE’s request and $800 million more than the FY2008 figure. The Senate

Appropriations Committee recommends about $1.9 billion.

Energy Efficiency and Renewable Energy (EERE). The President’s

2008 State of the Union address set out goals to strengthen energy security and

confront global climate change, and stated that “... the best way to meet these goals

is for America to continue leading the way toward the development of cleaner and

more energy-efficient technology.”35 As part of that effort, the Administration

proposes to continue its support for the Advanced Energy Initiative (AEI, an element

of the American Competitiveness Initiative), which aims to reduce America’s

dependence on imported energy sources. The AEI includes hydrogen, biofuels, and

solar energy initiatives that are supported by programs in EERE.36

The White House. State of the Union 2008. [http://www.whitehouse.gov/news/releases/

2008/01/print/20080128-13.html]

U.S. Executive Office of the President, Budget of the United States Government, Fiscal

Year 2007, Appendix, p. 390. Also see DOE, FY2007 Congressional Budget Request:

Budget Highlights, p. 41.

CRS-18

According to the FY2009 budget document, the Hydrogen Initiative has a longterm aim of developing hydrogen technology, and to “enable industry to

commercialize a hydrogen infrastructure and fuel cell vehicles by 2020.” The

Biofuels Initiative seeks to make cellulosic ethanol cost competitive by 2012 using

a wide array of regionally available biomass sources. The Solar America Initiative

aims to “... accelerate the market competitiveness of photovoltaic systems using

several industry-led consortia which are focused on lowering the cost of solar energy

through manufacturing and efficiency improvements.”37 Further, the proposed

FY2009 federal budget sets a goal of making solar power “cost-competitive with

conventional [sources of] electricity by 2015.”38

As Table 3 shows, DOE’s FY2009 request contains $1,255.4 million for the

EERE programs. Compared to the FY2008 appropriation, the FY2009 request would

reduce EERE funding by $467.0 million, or 27.1%. Three proposed cuts would

comprise most of this reduction. First, the request would eliminate $186.7 million

in congressionally directed assistance. Second, it would reduce Facilities

construction spending by $57.3 million.39 Third, the request would cut $227.2

million in funding to terminate the Weatherization Assistance Program, citing a

higher benefit-cost ratio for technology programs than for the Weatherization

Program.40 A major study of the program’s benefits and costs in 1989 was published

in 1993. In 2007, DOE launched a plan for a comprehensive review of program

benefits and costs based on data collected during program year (PY) 2006.41 At

February 2008 hearings on the FY2009 DOE budget request, concerns were raised

about DOE’s proposed termination of that program.42

U.S. Executive Office of the President, Budget of the United States Government, Fiscal

Year 2009, Appendix, p. 393.

Ibid., p. 59.

Facilities funding for construction tends to be provided in a lump sum. No major

construction projects would have been cancelled as a result of this proposed reduction.

DOE states that “EERE’s Energy Efficiency portfolio has historically provided

approximately a 20 to 1 benefit to cost ratio. In comparison, Weatherization has a benefit

cost ratio of 1.53 to 1.” DOE, FY 2009 Congressional Budget Request, vol. 3, p. 44.

The 1993 study and the 2007 plan are discussed in DOE. Oak Ridge National Laboratory.

National Evaluation of the Weatherization Assistance Program: Preliminary Evaluation

Plan for Program Year 2006. February 2007. p. 1.

The Senate Committee on Energy and Natural Resources held a hearing on the DOE

FY2009 Budget Request on February 6, 2008. [http://energy.senate.gov/public/

index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=1673]. The House Committee on

Energy and Natural Resources held its hearing on February 7, 2007.

[http://energycommerce.house.gov/membios/schedule.shtml]

CRS-19

Table 3. Energy Efficiency and Renewable Energy Programs

($ millions)

Program

Local Gov./Tribal Tech.

Demonstration Program

Hydrogen Technologies

Biomass & Biorefinery Systems

Solar Energy

— Photovoltaics

Wind Energy

Geothermal Technology

Water Power (Hydro/Ocean)

Subtotal, Renew. & Hydrogen

Vehicle Technologies

Building Technologies

Industrial Technologies

Federal Energy Management

Subtotal, Efficiency R&D

Facilities & Infrastructure

Program Management

R&D Subtotal

Federal Assistance

— Weatherization Grants

— State Energy Grants

— Renewables Deployment

Federal Assistance Subtotal

EISA Assistance Program

Cong.-Directed Assistanceb

Prior Year Balances

Total Appropriation

Office of Electricity Delivery &

Energy Reliability (OE)a

FY2007

FY2008

FY2009

Request

House

Appns

Cmte

—

50.0

50.00

$189.5

196.3

157.0

138.4

48.7

5.0

$211.1

198.2

168.5

136.7

49.5

19.8

$146.2

225.0

156.1

137.1

52.5

30.0

$170.0

250.0

220.0

—

53.0

50.0

175.0

235.0

229.0

—

62.5

30.0

5.00

-15.00

9.00

—

9.50

-20.0

0.0

596.5

183.6

103.0

55.8

19.5

361.8

107.0

110.2

1,175.5

9.9

657.0

213.0

109.0

64.4

19.8

406.3

76.2

114.9

1,254.3

3.0

612.8

221.1

123.8

62.1

22.0

429.0

14.0

141.8

1,197.6

40.0

30.0

783.0 761.5

317.5 293.0

168.0 176.5

100.0

65.1

30.0

22.0

615.5 556.6

33.0

37.0

147.6 136.8

1,579.1 1,541.9

-10.0

-21.5

-24.5

8.5

-34.9

-8.0

-58.9

4.0

-10.8

-37.2

204.6

58.8

18.4

281.7

—

0.0

—

1,457.2

227.2

44.1

10.9

282.2

—

186.7

(0.7)

1,722.4

0.0

50.0

8.5

58.5

—

0.0

-0.7

1,255.4

250.0 201.2

50.0

18.0

11.0

318.0 262.2

500.0

0.0

134.7 124.2

-0.7

0.0

2,531.1 1,928.3

-48.8

0.0

-7.0

-55.8

-500.0

-10.5

0.7

-602.8

134.4

138.6

134.0

149.3

Senate

Appns SenateCmte House

166.9

17.7

Sources: DOE FY2007 Operating Plan; Joint Explanatory Statement on the Consolidated Appropriations Act

of 2008 (Cong. Record, Dec. 17, 2007, p. H15587 and H15940); DOE FY2009 Request; House Appropriations

Committee draft report; S.Rept. 110-416.

a. The Distributed Energy Program was moved from EERE to OE in FY2006.

b. In FY2006, there was $159.0 million in congressionally-directed funds spread over EERE accounts. For

FY2008, the House approved (H.Rept. 110-185, part 2) $104.3 million for congressionally directed

assistance to be taken from available funds. The Senate Appropriations Committee recommended $90.3

million in assistance, to be provided from a separate (new) account line.

CRS-20

In contrast to the Administration’s request, the House Appropriations

Committee recommends $2,531.1 million for DOE’s EERE programs in FY2009.

This would be a $808.7 million (47%) increase over the FY2008 appropriation and

a $1,275.7 million (102%) increase over the DOE request. Compared with the

request, the Committee recommendation would embrace a $381.5 million increase

for R&D programs. Further, the Committee would provide $259.2 million more for

energy assistance programs, of which $250.0 million would go to the Weatherization

Program — in sharp contrast to DOE’s proposal to eliminate it. Also, the Committee

recommends $500.0 million for new assistance programs authorized by the Energy

Independence and Security Act (EISA, P.L. 110-140).

As a major initiative, the Committee recommends $500.0 million as “initial

program investment” for several new programs authorized by EISA. The Energy

Efficiency and Conservation Block Grant Program (EISA, §541-548) would receive

$295.0 million in start-up funding. The Renewable Fuel Infrastructure Program

(EISA §244) would get $25.0 million to begin grant-giving operations. The

Advanced Technology Vehicles Manufacturing Program (EISA §136[b]) would

receive $30.0 million for grants to help convert factories to produce more efficient

vehicles. Also, $1 billion in loan authority would be provided for the Advanced

Technology Vehicles Manufacturing Incentive Program (EISA §136[d]).

Aside from the $500.0 million initiative, some additional EISA-related funding

would be provided under the technology programs. The most notable examples are

$25 million for the production of advanced biofuels (EISA §207) under the Biomass

and Biorefinery Program and $33 million for zero net energy commercial buildings

(EISA §422) under the Buildings Program.

The committee recommends $134.7 million for Congressionally-Directed

Assistance.

In addition to funding recommendations, the House Appropriations Committee

report includes three policy directives for DOE. First, DOE would be required to

report annually on the return on investment for each of the major EERE program

funding accounts. Second, DOE would be directed to make up to $20 million of

EERE funds available for “projects at the local level capable of reducing electricity

demand.” Each project would involve multiple technologies and public-private

partnerships. Priority would go to projects that have a substantial local cost-share,

help reduce water use, or curb greenhouse gas emissions. Third, DOE would be

required to implement “an aggressive program” of minority outreach at Historically

Black Colleges and Universities and at Hispanic Serving Institutions to deepen the

recruiting pool of scientific and technical persons available to support the growing

renewable energy marketplace.

CRS-21

The Senate Appropriations Committee recommends $1,928.3 million for

EERE,43 which is $205.9 million (12.0%) more than the FY2008 appropriation and

$672.9 million (53.6%) more than the request.

Compared with the House Appropriations Committee report, the Senate

Appropriations Committee recommends $602.8 million, or 23.8%, less for EERE

programs. The main difference ($450.0 million) is that the House Appropriations

Committee proposes an increase of $500.0 million for a new EISA Federal

Assistance Program, while the Senate Appropriations Committee proposes an

increase of $50.0 million for a new Local Government/Tribal Technology

Demonstration Program. Further, the Senate report recommends less funding than

the House report for several technology programs. Relative to the House Committee

report figures, the Senate Committee report’s proposed decreases for renewable

energy R&D include Geothermal (-$20.0 million), Bioenergy (-$15.0 million), and

Water Energy (-$10.0 million). The major decreases for energy efficiency include

Weatherization (-$48.8 million), Industrial Technologies (-$34.9) million, and

Vehicle Technologies (-$24.5 million).

The Senate Appropriations Committee recommends $124.2 million for

Congressionally-Directed Projects.

In general, both committee reports recommend higher funding levels than the

request. In particular, each includes more than $200 million for the Weatherization

Program. Both committees disagree with the DOE request to fund the Asia Pacific

Partnership,44 and neither committee recommends funding it. Both committees call

for the Biomass program to emphasize the use of non-food sources for the

development of biofuels. The Senate Committee report further stresses R&D efforts

to focus on algae as a biofuels source.

Electricity Delivery and Energy Reliability. The FY2009 request includes

$134.0 million for the Office of Electricity Delivery and Energy Reliability (OE).

The House Appropriations Committee recommends $149.3 million, which is $15.3

million more than the request. The Senate Appropriations Committee recommends

$166.9 million, which is $17.7 million more than the House Appropriations

Committee recommends. For OE congressionally directed projects, the House

Committee report calls for $5.3 million, while the Senate Committee report seeks

$12.9 million.

The Senate Appropriations Committee report directs that $59.5 million of a proposed

$72.9 million increase for the Solar Energy Program, will be provided by a transfer from the

Basic Energy Sciences Program under the Office of Science.

DOE Request, p. 482-483. The Asia Pacific Partnership (APP) is a multinational

undertaking that the federal government supports through several agencies. The Department

of State is the lead agency for APP. DOE’s request for APP in FY2009 would support new

renewable power generating capacity, best manufacturing practices for targeted industries,

and best design and construction practices for buildings and efficient appliance standards.

During debate over the FY2008 request for EERE, the Administration threatened to veto the

appropriations bill, in part, due to the lack of funding for APP.

CRS-22

Other FY2009 Requests

Environmental Protection Agency (EPA). EPA’s Climate Protection

Programs (CPP) involve energy efficiency and clean energy measures to reduce

greenhouse gas emissions from power plants and mobile sources. EPA’s FY2009

request for CPP is $98.4 million, which is $10.3 million less than the FY2008

appropriation.45 Table 4 shows the differences between the FY2008 appropriation

and the FY2009 request.

Table 4. EPA Energy Efficiency Funding

($ millions)

FY2006

Appn.

FY2007

Appn.

FY2008

Appn.

FY2009

Request

Difference

CPP - Sci. & Tech.

19.7

14.6

18.3

11.4

-6.9

CPP - Env. Prog. &

Management

83.7

91.3

90.4

87.0

-3.4

Totals

103.3

105.9

108.7

98.4

-10.3

Source: EPA FY2009 Budget Request and FY2008 Budget Request.

Department of Agriculture (USDA). The FY2009 budget document states

that the Administration’s 2007 farm bill proposal “... provides more than $1.6 billion

in new renewable energy funding and targets programs to cellulosic ethanol

projects.”46 In its FY2009 request document, the USDA states that, “While

discretionary funding is not being requested, the Administration’s farm bill proposal

includes funding for renewable energy/energy efficiency loans and grants, and

biomass research and development grants.47 (For more details, see CRS Report

RL34130, Renewable Energy Policy in the 2007 Farm Bill.)

EPA’s FY2009 Budget Request is at [http://www.epa.gov/ocfo/budget/2009/2009cj.htm].

FY2009 Budget of the U.S. Government. Appendix. p. 120.

USDA. FY2009 Budget Summary and Annual Performance Plan. February 2008. p. 44.

[http://www.obpa.usda.gov/budsum/fy09budsum.pdf].

CRS-23

Climate Security Act

The Climate Security Act (S. 3036) failed on a cloture vote. It would have

established a cap-and-trade system to reduce greenhouse gas emissions. Eight of the

bill’s 17 titles contain provisions for energy efficiency and/or renewable energy.

Lieberman-Warner Climate Security Act (S. 3036)

S. 3036 would have established a mandatory cap-and-trade system at the

Environmental Protection Agency (EPA) that aims to reduce overall emissions of

carbon dioxide and other greenhouse gases (GHG) by 66% from 2005 levels in 2050.

The system would control emissions through the annual distribution of emissions

permits or “allowances.” Each allowance would represent an authorization to emit

one metric ton of carbon dioxide equivalent. The bill would legislate an upper limit

(“ceiling” or “cap”) that controls total emissions by fixing the number of allowances

that would be distributed each year. Thus, the number of allowances would cap the

annual emissions by “covered” entities. Each covered entity would be required to

submit one allowance to EPA for each ton of carbon dioxide equivalent that it emits.

The covered entities would include major processors and users of fossil fuels, such

as petroleum refiners and importers, natural gas processing facilities, and facilities

that use more than 5,000 tons of coal per year. Total emissions would be reduced by

gradually shrinking the cap on the number of allowances distributed each year. A

covered entity that would have a high cost to reduce emissions could buy, or “trade,”

allowances with an entity that has a lower cost to curb emissions.48

The bill would employ three ways of distributing the allowances. Initially, in

2012, about 35% of the allowances would be distributed to entities in covered

sectors, about 35% would go to non-covered entities (such as state and local

governments), and about 30% would be sold through auctions. In succeeding annual

distributions, the share of allowances to covered entities would gradually decline to

zero. Meanwhile, the annual share of auctioned allowances would grow. Revenue

from the auctioned allowances would be used for multiple purposes. One purpose

would be to accelerate deployment of new energy technologies, including energy

efficiency and renewable energy technologies.

The auctions would be conducted by an independent Climate Change Credit

Corporation (§4201). Each year, 52% of the auction proceeds would be used to

support energy technology deployment programs (§4302). Thirty-nine (39)

percentage points of that 52% would be used for energy efficiency and renewable

energy incentive programs (§4401). The breakdown of the 39% for efficiency and

renewables programs includes 16.4% for zero- or low-carbon energy technologies

deployment (§4402), 3.1% for fuel from cellulosic biomass (§4404), 6.2% for an

advanced technology vehicle manufacturing incentive (§4405), and 13.0% for

sustainable energy (§4406).

For more details on S. 2191 and S. 3036, see CRS Report RL34515, Climate Change:

Comparison of S. 2191 as Reported (now S. 3036) with Proposed Boxer Amendment.

CRS-24

Other sections of the bill that would encourage or support energy efficiency and

renewable energy technologies include state allocation for electric energy savings

(§3401), natural gas energy savings (§3501), rural energy (§4502), worker training

(§4601-§4606), appliance efficiency standards (§5101-§5102), and building

efficiency standards (§5201-§5202).

Boxer Substitute Amendment to S. 3036

Chairman Boxer of the Senate Committee on Environment and Public Works

circulated a “Dear Colleague” letter announcing a proposed substitute amendment

to S. 3036. The substitute contains a similar structure for the cap-and-trade system

put forward in S. 3036. However, the proposed amendment differs from S. 3036 in

some key aspects. As noted in the letter:

... This substitute reflects an enormous contribution from Senators on both sides

of the aisle, and I am happy to tell you it is deficit neutral, [and] it provides a

very large tax cut to assist consumers with their energy bills.... In addition to

providing the needed assistance to consumers, the revenues are used to fund the

technologies that are needed to bring about a transition to clean energy. 49

Compared with S. 3036, the Boxer substitute proposes a broader array of

incentives for the deployment of energy efficiency and renewable energy measures.

Eight of the 17 titles contain such measures. The key provisions are

Title I. Subtitle B would direct EPA to conduct an “early action”

program for clean technology deployment that provides grants for

energy-efficient buildings, super-efficient equipment and appliances,

and clean medium-duty and heavy-duty hybrid fleets.

Title IV. Subtitle D would create a Climate Change Technology

Board (CCTB) that would use auction-generated funds to accelerate

the commercialization and diffusion of low-carbon and zero-carbon

technologies and practices.

Title V. EPA would use auction-generated funds to support an

efficiency and renewable energy worker transition training program;

emission allowances to support transition assistance to

carbon-intensive manufacturers; and allowances for transition

assistance to owners and operators of fossil fuel-fired electricity

generators.

Title VI. EPA would use allowances to reward local electricity and

natural gas companies for consumer efficiency programs, and use

auction revenues to make grants for public transit improvements and

travel demand reductions. DOE would provide incentives to states

to update building efficiency codes. EPA would use auction

revenues to fund the energy efficiency block grant program in P.L.

110-140.

Title VIII. The Climate Change Technology Board would distribute

allowances as incentives to qualified owners of efficient buildings,

Dear Colleague Letter by Chairman Boxer. May 16, 2008.

CRS-25

retailers and distributors of super-efficient equipment, owners and

operators of efficient manufacturing facilities, and owners-operatorsdevelopers of facilities that harness renewable energy.

Title IX. The Board would use auction proceeds to create incentives

for low-carbon and zero-carbon electricity technology. EPA would

deposit auction revenues in a fund to support start-up of DOE’s

Advanced Research Projects Agency (ARPA-E).

Title XI. EPA would distribute allowances as an incentive for hybrid

commercial vehicles used in fleet programs. Auction revenues

would support the Advanced Technology Vehicles Manufacturing

Incentive Program created in P.L. 110-140. EPA would distribute

allowances as an incentive to certain cellulosic biofuels producers.

EPA would create a regulatory standard that requires transportation

fuel providers to reduce emissions per unit of energy content.

Title XIII. Auction revenues would be used to leverage private

financing that supports international partnerships to deploy clean

energy technologies.

Senate Action on S. 3036

S. 3036 was introduced to replace S. 2191 on May 20, 2008. A cloture motion

on the motion to proceed to S. 3036 was presented in the Senate on May 22, 2008.

On June 2, 2008, debate over the cloture motion focused on the potential cost of the

bill. The cloture motion was approved by vote of 74 to 14. A 30-hour debate on the

bill was approved, but all amendments, including the Boxer Amendment, were

disallowed until after the 30-hour debate.

On June 2, 2008, the Administration issued a Statement of Administration

Policy on S. 3036. In that document, the Administration threatens to veto the bill

because it

... would raise fuel prices and raise taxes on Americans without accomplishing

the important goals the Administration shares... [and]... the bill would raise

approximately $6.2 trillion in constant dollars ($11.8 trillion with inflation)

through the auction of GHG emission allowances to owners and operators of

utilities and factories who would have to purchase allowances to stay in

business.50

Alternatively, the Administration’s document contends that several U.S. programs

are underway to address climate change and that additional policies could be adopted

that would be sufficient to “... spur investment in new technologies needed to reduce

greenhouse gas emissions without unreasonable burdens on consumers and workers.”

Proponents of the bill have argued that — in addition to reducing emissions —

S. 3036 would be deficit neutral, create new jobs, and spur the economy by investing

in new technology.

The White House. Executive Office of the President. Office of Management and Budget.

Statement of Administration Policy on S. 3036 — Lieberman-Warner Climate Security Act.

June 2, 2008. [http://www.whitehouse.gov/omb/legislative/sap/110-2/saps3036-s.pdf]

CRS-26

On June 3, 2008, floor debate began. On June 6, 2008, a cloture motion to

proceed to a vote on S. 3036 failed by a vote of 48 to 36. There was a report a total

of 54 Senators had expressed support for the bill.51

Food, Conservation, and Energy Act of 2008

(“2008 Farm Bill”)

The House and Senate overrode an Administration veto to enact the Food,

Conservation, and Energy Act of 2008 (P.L. 110-234, H.R. 2419) on May 22, 2008.

Due to a technical error that left one title out of the copy vetoed by the President, a

second identical bill, H.R. 6124 was passed by both chambers. Upon the President’s

veto of H.R. 6124, the House overrode the veto by a vote of 317 to 109 and the

Senate overrode the veto by a vote of 80 to 14. H.R. 6124 was enacted as P.L. 110236. The enacted “2008 Farm Bill” extends, expands, and adds to several energy

efficiency and renewable energy provisions of the Farm Security Act of 2002.

Key Programs Extended, Expanded, and Added

The enacted 2008 “farm bill” expands and extends the provisions in the energy

section of the 2002 farm bill, and provides additional funding. The law makes several

changes to the programs in the energy title. For example, the Section 9006 program

is combined with the Energy Audit and Renewable Energy Development Program

under a new “Renewable Energy for America Program.” The law also creates new

programs, including a Biomass Crop Assistance Program, to provide financial

assistance to producers for growing biomass crops and developing conversion

facilities; and the Agricultural Bioenergy Feedstock and Energy Efficiency Research

and Extension Initiative, to provide competitive grants projects that focus on farmsited biomass crop research and extension. The latter initiative is under the law’s

research title (Title VII) and includes other bioenergy research programs. The

enacted law continues programs for federal purchase of biobased products under the

Biobased Markets Program. Mandatory spending for the law’s agriculture-based

energy programs is projected at $0.6 billion for the period from FY2008 through

FY2012 and at $0.9 billion for the entire period from FY2008 through FY2017. (For

more details, see CRS Report RL33934, Farm Bill Legislative Action in the 110th

Congress.)

Tax Incentives for Biofuels Extended

Title XV lowers the ethanol production tax credit from 51 cents to 45 cents per

gallon, starting in the first year after which annual ethanol production reaches 7.5

billion gallons. The cellulosic biofuel producer credit is set at $1.01 per gallon, with

special provisions for small cellulosic ethanol producers. Also, the ethanol import

U.S. Senate. Committee on Environment and Public Works. Historic Senate Vote

Provides a New High Water Mark for Global Warming Legislation. June 6, 2008.

[http://epw.senate.gov/public/index.cfm?FuseAction=Majority.PressReleases&ContentR

ecord_id=5e97eab6-802a-23ad-46f6-0e67f0428ce4&Designation=Majority]

CRS-27

tariff is extended. (For more details, see CRS Report RL33934, Farm Bill

Legislative Action in the 110th Congress.)

Enacted Funding-Related Bills

FY2008 DOE Appropriations (P.L. 110-161)

DOE Budget Request. The Administration’s Advanced Energy Initiative

(AEI, part of the American Competitiveness Initiative) “aims to reduce America’s

dependence on imported energy sources.” The AEI includes hydrogen, biofuels, and

solar energy initiatives that would be supported by programs in DOE’s Office of

Energy Efficiency and Renewable Energy (EERE). The Hydrogen Initiative aims to

“facilitate a decision by industry to commercialize hydrogen infrastructure and fuel

cell vehicles by 2015.”52 The Biofuels Initiative seeks to develop transportation

fuels, such as cellulosic ethanol. The Solar America Initiative’s goals are to cut the

cost of photovoltaics (PV) technology, increase its commercial use, and displace

natural gas use for electric power generation. The President’s 2007 State of the

Union address set out a goal to reduce gasoline use by 20% and to increase the

production of “alternative” fuels, including cellulosic ethanol, to 35 billion gallons

by 2017. To support the AEI and those fuels goals, the FY2008 EERE budget

request proposed significant increases for the Biofuels, Hydrogen, and Solar

programs. DOE’s FY2008 request seeks $1,236.2 million for the EERE programs.

At hearings on the FY2008 DOE budget request, concerns were raised about DOE’s

proposed termination of the Geothermal and Hydropower programs.53

House Action (H.R. 2641). The House Appropriations Committee report

(H.Rept. 110-185) includes funding for DOE’s Energy Efficiency and Renewable

Energy (EERE) Program. For FY2008, the Committee recommended $1,873.8

million for EERE, which is $637.6 million, or 52%, more than the DOE request.54

The Hydrogen R&D Program would be cut by $18.4 million. Key increases for

renewable energy R&D include Biomass/Biofuels ($70.7 million), Solar Energy

($51.7 million), Geothermal Energy ($44.3 million), and Hydro/Ocean Energy

($22.0 million). Major increases for energy efficiency R&D include Buildings ($60.0

million) and Vehicles ($59.3 million). The Committee also recommended large

increases for Facilities Construction ($188.7 million) and Weatherization grants

($97.0 million).55

U.S. Executive Office of the President, Budget of the United States Government, Fiscal

Year 2007, Appendix, p. 390. Also see DOE, FY2007 Congressional Budget Request:

Budget Highlights, p. 41.

Secretary Bodman’s Senate testimony is available at [http://energy.senate.gov/public/

_files/BodmanTestimony.pdf].

The DOE FY2008 budget document is available at [http://www.mbe.doe.gov/budget/

08budget/Content/Volumes/Vol_3_ES_New.pdf].

The National Renewable Energy Laboratory (NREL) is the premier national lab for solar

energy R&D and has major programs in hydrogen, biomass/biofuels, wind energy, and

(continued...)

CRS-28

Senate Action (S. 1751). The Senate Appropriations Committee

recommended $1,715.6 million for EERE, which is $158.3 million, or 8%, less than

the House Appropriations Committee recommended. Compared with the House

Appropriations Committee recommendations, the main difference is a decrease of

$195.7 million (zero funding) for Facilities Construction. Additional decreases for

renewable energy R&D include Hydro/Ocean (-$12.0 million), Solar Energy (-$20.0

million), and Geothermal Energy (-$19.3 million). Also, International Renewables

would be terminated (-$10.0 million). Under energy efficiency R&D programs,

Hydrogen would get an increase of $33.4 million.

Enacted Law (P.L. 110-161, H.R. 2764). Title III of Division C in the

Consolidated Appropriations Act for 2008 provides $1,722.4 million for FY2008,56

which is $486.2 million more than the request and $248.1 million more than the

FY2007 appropriation.57 Relative to FY2007, the FY2008 appropriation (adjusted

for the rescission) provides key increases of $25.0 million for Vehicles, $22.7 for

Weatherization, $17.5 million for Hydrogen, $14.8 million for Geothermal, $9.9

million for Water (Marine and Hydrokinetic) technologies, and $9.1 million for

Solar. The FY2008 appropriation also includes $30.9 million less for Facilities. This

reduction does not affect the level of funding for facilities operations. Instead, it

reflects a reduced level of spending on construction of new buildings. The main cuts

in FY2008 are $9.5 million less for International Renewables (which terminates the

program) and $5.4 million less for State Grants.

(For more details, see CRS Report RL34009, Energy and Water Development:

FY2008 Appropriations, coordinated by Carl E. Behrens.)

Other FY2008 Appropriations Bills

Division J of P.L. 110-161 contains the Department of State, Foreign Operations

and Related Programs Appropriations Act of 2008 (H.R. 2764). Title II directs the

Export-Import Bank (ExIm Bank) to channel at least 10% of its resources to

renewable energy and “environmentally beneficial” products and services.58 Also,

under Development Assistance in Title III, the law directs the U.S. Agency for

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vehicles. The large increase recommended for the Facilities Construction program includes

$8 million for solar R&D equipment, $13 million for infrastructure to test plug-in hybrid

vehicles, $77 million for NREL’s distributed energy systems integration facility, and $91

million to design and build a facility for biological and chemical research.

Prior to the enactment of P.L. 110-161, three continuing resolutions had been enacted for

FY2008 appropriation. P.L. 110-92 (H.J.Res. 52) extended appropriations through

November 16, 2007; P.L. 110-116 (H.R. 3222, Division B) extended appropriations through

December 14, 2007; and P.L. 110-137 (H.J.Res. 69) extended appropriations through

December 21, 2007.

Congressional Record, December 17, 2007 (Book II). p. H15913, H15914, and H15940.

The 0.91% DOE rescission is described in Book I, Section 312, on p. H15587.

Given the $68.0 million appropriation for ExIm Bank, the 10% minimum requirement

would amount to $6.8 million or more. Congressional Record, December 17, 2007 (Book

III). p. H16437.

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International Development (USAID) to provide $195 million for programs that

“promote energy efficiency and renewable and cleaner technology.”59

Division A of P.L. 110-161 contains the Agriculture, Rural Development, Food

and Drug Administration, and Related Agencies Appropriations Act of 2008. The

law provides $36 million for U.S. Department of Agriculture’s (USDA’s) Renewable

Energy Program. Of the $36 million, $16 million would be used to provide direct

grants and $20 million would be used to support $207 million in loan guarantees.60

Several appropriations bills included a provision that would require all new light

bulbs purchased by federal agencies to have either EPA “Energy Star” or Federal

Energy Management Program (FEMP) energy efficiency designation.

Energy Reserve Fund in the Budget Resolution

House Action. On January 18, 2007, the House passed the CLEAN Energy

Act (H.R. 6) by a vote of 264-163. The bill proposes to use revenue from certain oil

and natural gas policy revisions to create an Energy Efficiency and Renewables

Reserve aimed at reducing foreign oil dependence and serving other purposes.61 The

actual uses of the reserve would be determined at a later date by legislation that

would establish uses for the financial resources of the reserve.

In House floor debate on H.R. 6, opponents argued that the reduction in oil and

natural gas incentives would dampen production, cause job losses, and lead to higher

prices for gasoline and other fuels. Opponents also complained that the proposal for

the reserve does not identify specific policies and programs that would receive

funding. Proponents of the bill counter-argued that record profits show that the oil

and natural gas incentives were not needed. They also contended that the reserve

could be used to support a variety of R&D, deployment, and tax incentives for

renewable fuels, and that the specifics would evolve as legislative proposals come

forth for using resources from the reserve.62

On March 28, the House passed the concurrent resolution on the budget for

FY2007 and FY2008 (H.Con.Res. 99) by a vote of 216-210. The resolution provides

additional funding for energy (Function 270) above the President’s request that

Congressional Record, December 17, 2007 (Book III). p. H16438. The law follows the

Senate recommendation. The House bill called for $501 million to be available to promote

“clean energy” and protect biodiversity.

Congressional Record, December 17, 2007 (Book II). p. H15763. The House bill (H.R.

3161) proposed $46 million, including support for $350 million in loan guarantees. The

Senate bill (S. 1859) proposed $28.5 million. For more details on renewable energy in

agriculture, see CRS Report RL34130, Renewable Energy Policy in the 2007 Farm Bill, by

Randy Schnepf and Tom Capehart.

For more details about the reserve, see CRS Report RS22571, The Strategic Energy

Efficiency and Renewables Reserve in the CLEAN Energy Act of 2007 (H.R. 6), by Fred

Sissine.

Congressional Record, January 18, 2007, pp. H688 through H729.

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“could be used for research, development, and deployment of renewable and

alternative energy.” Section 207 would create a deficit-neutral reserve fund that

fulfills the purposes of H.R. 6 to “facilitate the development of conservation and

energy efficiency technologies, clean domestic renewable energy resources, and

alternative fuels that will reduce our reliance on foreign oil.”

Senate Action. On March 23, the Senate passed S.Con.Res. 21, its version

of the concurrent resolution on the budget for FY2007. In parallel to the House

resolution, Section 307 of S.Con.Res. 21 would create a deficit-neutral reserve fund

that could be used for renewable energy, energy efficiency, and “responsible

development” of oil and natural gas. Additionally, Section 332 would create a

deficit-neutral reserve fund for extension through 2015 of certain energy tax

incentives, including the renewable energy electricity production tax credit (PTC),

Clean Renewable Energy Bonds, and provisions for energy efficient buildings,

products, and power plants. Further, Section 338 would create a deficit-neutral

reserve fund for manufacturing initiatives that could include tax and R&D measures

that support alternative fuels, automotive technologies, energy technologies, and the

infrastructure to support the technologies. The House passed its version of

S.Con.Res. 21 on May 8, 2007.

Conference Report. Section 308 of the adopted report establishes a deficitneutral reserve fund for energy legislation. Section 308(a) applies only to the Senate,

with provisions similar to those in sections 307 and 332 of the Senate version.

Reserve fund uses will be allowed that “reduce our Nation’s dependence on foreign

sources of energy, expand production and use of clean alternative fuels and

alternative fuel vehicles, promote renewable energy development, improve electricity

transmission, encourage responsible development of domestic oil and natural gas

resources, or reward conservation and efficiency....” Further, such legislation may

include “tax legislation such as a proposal to extend energy tax incentives like the

production tax credit for electricity produced from renewable resources, the Clean

Renewable Energy Bond program, or provisions to encourage energy efficient

buildings, products, and power plants.”

Section 308(b) applies only to the House, with language similar to Section 207

of the House version. Reserve fund uses would be permitted for legislative actions

that “fulfill the purposes of section 301(a) of H.R. 6, the Clean Energy Act of

2007....”

FY2007 Appropriations (P.L. 110-5)

The Department of Energy (DOE), Environmental Protection Agency (EPA),

and Department of Agriculture (USDA) receive annual appropriations for energy

efficiency and renewable energy programs.63 In the 109th Congress, the

Several other agencies receive less regular appropriations for energy efficiency or

renewable energy projects and activities. These agencies have included Department of

State, Department of Defense (DOD), Department of Housing and Urban Development

(HUD), Department of Transportation, and Architect of the Capitol.

CRS-31

appropriations process for FY2007 was not completed. A continuing resolution (P.L.

109-383, H.J.Res. 102) provided funding through February 15, 2007.

In the 110th Congress, H.J.Res. 20 was introduced to continue FY2007

appropriations through the end of the fiscal year. It was enacted on February 15 as

P.L. 110-5. The law sets funding for DOE’s Energy Efficiency and Renewable

Energy (EERE) Programs at $1.47 billion, about $308 million above the FY2006

appropriation. Also, the law eliminates earmarks and sets conditions on the EPACT

Title 17 loan guarantee program, fixing a cap at $4 billion, prohibiting awards until

final regulations are issued, and requiring annual program evaluations by an

independent auditor.

DOE’s FY2007 operating plan was transmitted to the House and Senate

appropriation committees on March 16, 2007. It provides the detailed breakdown of

funding for EERE programs in FY2007.

H.R. 1591, the Emergency Supplemental Appropriations Bill, would have

amended the FY2007 appropriations provided in P.L. 110-5 and DOE’s FY2007

Operating Plan. The total amount appropriated by P.L. 110-5 would have remained

unchanged. However, the bill would have provided $22.8 million for EERE’s

Geothermal Energy Program, an increase of $17.8 million over the $5.0 million

provided in DOE’s Operating Plan. Also, the bill would have provided $229.5

million for the Weatherization Grants Program, an increase of $25.0 million over the

$204.5 million provided in DOE’s Operating Plan. However, the President vetoed

the bill.

Table 5. Action on Energy Efficiency and

Renewable Energy Legislation, 110th Congress

Bill

Conference Action

S.Con.Res. 70

H.R. 2419

S. 2739