Sen. Tom Carper (D-DE), along with Sens. Olympia Snowe (R-ME), Sherrod Brown (D-OH), and Susan Collins (R-ME), introduced a bill yesterday to provide financial incentives for the investment, development and production of offshore wind.  Among other things, the Carper-Snowe-Brown-Collins offshore wind bill would extend the production tax credit (PTC) for offshore wind farms until 2020.  The sponsoring Senators are also working on additional legislation to support and expand offshore wind initiatives. 
 
In other wind power related news on Capitol Hill, Sen. Chuck Schumer (D-NY) and others introduced a bill which would require all projects funded by stimulus package dollars to rely solely on American-built products.  The Senators also sent a letter to Treasury Secretary Tim Geithner pushing for a moratorium on all stimulus payouts for clean energy projects until Congress considers the bill.  Under the current stimulus law, the "Buy American" provision - which requires that a project rely primarily on American-built products - applies only to "public works."  The Schumer bill would extend the Buy American requirement to all renewable energy projects, including every wind farm that is being or proposed to be built with stimulus assistance.  Denise Bode, the CEO of the American Wind Energy Association (AWEA) issued a sharply-worded response to the bill, arguing that it would "torpedo one of the most successful job creation efforts" of the stimulus, in part because American manufacturers do not yet have the capacity to produce 100% of the required wind turbine components. 

Today, Matt Rogers, a senior advisor to Energy Secretary Steven Chu, testified before the Senate Energy and Natural Resources Committee and strongly challenged Senator Schumer's characterization of DOE's use of stimulus dollars. He expressed the view that the senators' proposed legislation would actually eliminate American jobs.  He challenged the study underlying the proposed legislation as "misleading" and "factually false" because it only focused on the overseas headquarters of companies and failed to specifically account for actual job creation in the United States.

Yesterday, freshman Alaska Senator Mark Begich (D) called for ratification of the Law of the Sea Treaty and introduced a package of seven bills addressing a variety of Arctic policy issues.  The energy and shipping related measures in the package include:
 
Arctic OCS Revenue Sharing Act (S. 1560) - gives Alaska natives the same 37.5% share of royalties from offshore oil and gas production in federal waters that Gulf of Mexico states currently receive.  This is similar to the measure introduced by senior Alaska Sen. Lisa Murkowski (R) last week.
Arctic Climate Change Adaptation Act (S. 1566) - provides funding for Alaskans to adapt to the impacts of climate change, including clean energy development.
Arctic Ambassador Act (S. 1563) - creates a new U.S. Ambassador to the Arctic Council.
Arctic Marine Shipping Assessment Implementation Act (S. 1564) - provides funding to replace the U.S. icebreaker fleet and build new forward operating Coast Guard air bases, as well as other measures to ensure safe and reliable maritime transportation in the Arctic region.
Arctic Oil Spill Research and Recovery Act (S. 1561) - calls for more research to improve oil spill prevention and response in the Arctic.
Arctic Science, Coordination and Integration Act (S. 1562) - requires a new study to create a comprehensive strategy to coordinate Arctic research and make recommendations to Congress. 
 
The bills are available through Thomas.  You can view Sen. Begich's press release here.

The U.S. Department of the Treasury announced this afternoon that it is now accepting applications for the renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Applications must be filed electronically. Find further information on Treasury's guidance regarding this program here.

The U.S. Department of the Treasury has issued much-anticipated guidance for Treasury's renewable energy grant program. That grant program provides a cash grant for the development of certain renewable energy projects, including offshore wind projects, equal to 30% (or 10% for certain non-wind energy technologies) of the eligible costs of the project. The Treasury grant is available in lieu of the Internal Revenue Code (IRC) § 45 production tax credit and the IRC § 48 investment tax credit. Find further information on Treasury's guidance here.

U.S. Energy Secretary Chu yesterday announced that Massachusetts will receive $25 million from the federal stimulus package to build the first commercial facility in the United States capable of testing large wind turbine blades.  DOE's press release notes that the ability to produce turbine blades longer than 50 meters domestically will energize large-scale wind power project development, highlighting that one of the important benefits of the site is its "proximity to substantial offshore wind resources."

Senator Mary Landrieu (D-LA) told Environment & Energy Daily [subscription required] that she plans to work with senators from other energy-producing states to address "excessive" increases in taxes and other costs associated with oil and gas production, including production on the OCS in the Gulf of Mexico, in the Obama Administration's proposed budget. Sen. Landrieu noted that raising costs of production could limit development of domestic energy supplies; however, her stance on these provisions places her at odds with Rep. Nick Rahall (D-WV), Chairman of the House Natural Resources Committee, who already endorsed this part of the budget.

House Natural Resources Committee Chairman Nick Rahall (D-WV) praised President Obama's fiscal year 2010 budget in a news release, claiming that under it "taxpayers [will] receive a fair return for the extraction of oil and natural gas resources on public lands." The budget's proposals implement ideas that Rahall has advocated for and introduced in the past: "Last Congress, I introduced legislation to reform the royalty collection program, encourage the diligent development of federal oil and gas leases, and require energy companies to pay their fair share for the use of public resources.  I am heartened that the President's budget includes all of these initiatives, and also correctly identifies our public lands as an immense potential resource for the development and deployment of domestic alternative energy," Rahall said

The Office of Management and Budget ("OMB") released the President's budget today, outlining the Administration's spending priorities for fiscal year 2010.  The overall budget allocation for the Department of the Interior, which includes the Minerals Management Service, is $12 billion.  The fact sheet for Interior states the budget will help "promote energy security with a focus on clean renewable sources and strategies to address climate change."  On the revenue side, the budget "includes provisions to encourage responsible development of oil and gas resources, and closes loopholes that have given oil companies excessive royalty relief."  Specifically, it calls for "using a new excise tax on offshore oil and gas production in the Gulf of Mexico to close loopholes" that have provided such relief.  It notes that the new tax would not begin until 2011, "after the economy has had time to recover."   The budget outline also makes reference to charging user fees for the processing of oil and gas drilling permits on federal lands as well as adjusting royalty rates to secure a greater return on production.  This budget provides an outline for Congress to utilize as it developments a federal budget for fiscal year 2010.  Both the House and the Senate will start to work on the individual appropriations bills later in the Spring.

On February 17, 2009, President Obama signed into law the “American Recovery and Reinvestment Act” (“ARRA”), a $787.2 billion spending and tax cut stimulus package.  The following is a summary of the major provisions in the ARRA that may impact offshore wind energy projects.

Production Tax Credit Extension. Internal Revenue Code (“IRC”) § 45 allows a production tax credit (“PTC”) for production of electricity at a “qualified facility” using “qualified energy resources.”  PTCs are generally available during the 10-year period beginning on the date that a qualified facility is placed in service. The amount of the available PTC is the product of the amount of electricity produced and an inflation-adjusted amount published annually by the IRS.

A qualified facility must be placed in service before specified dates. The ARRA extended by 3 years, from January 1, 2010 to January 1, 2013, the date before which a wind facility must be placed in service to be treated as a qualified facility. 

Election to Claim ITC in Lieu of PTC.  Under IRC § 48, an investment tax credit (“ITC”) is available with respect to “energy property.”  Prior to the ARRA, the term “energy property” did not include wind facilities.  The ARRA expands the ITC to allow taxpayers to make an election to claim with respect to wind facilities (in lieu of a PTC), an ITC equal to 30% of the taxpayer’s basis in the wind facility.  The ITC is claimed during construction of the wind facility and/or in the year that the wind facility is placed in service (as compared to the PTC which provides a credit over the 10-year period after a wind facility is placed in service) 

Repeal of ITC Subsidized Energy Financing Reduction. The amount of the available ITC is 30% of a taxpayer’s basis in a wind facility.  The ARRA amended the ITC so that no reduction in the amount of the tax credit is required for energy property constructed using subsidized energy financing or private activity bonds, the interest on which is tax-exempt. Subsidized energy financing includes financing under a federal, state, or local program a principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy.

Treasury Grant In Lieu of PTC or ITC. In lieu of claiming PTCs or ITCs with respect to wind facilities, the ARRA provides that a grant may be obtained from the Department of Treasury. To qualify for the Treasury grant, either (i) the property must be placed in service during 2009 or 2010 or (ii) construction must begin in 2009 or 2010 and must be completed before January 1, 2013. The amount of the grant is the 30% of a taxpayer’s basis in a wind facility.

Increased Funding for Clean Renewable Energy Bonds. Under current law, the amount of “New Clean Renewable Energy Bonds” available under IRC § 54C is limited to $800 million. The ARRA increases the bond limitation by $1.6 billion.

Innovative Technology Loan Guarantee Program. The ARRA appropriates $6 billion to pay the costs of guarantees made under § 1705 of the Energy Policy Act of 2005, as amended. Eligible projects under § 1705 must commence construction no later than September 30, 2011 and include wind facilities.  Unlike previous loan guarantees made under the Energy Policy Act of 2005, those made under § 1705 do not require the facility to employ new or significantly improved technologies.

For additional information on impacts of the ARRA on other forms of renewable energy, please click here.