Senators John Kerry and Barbara Boxer today filed an emissions cap-and-trade bill to serve as the Senate’s version of Waxman Markey. The advance copy available here has not yet been assigned a bill number and is not yet available through Thomas.
The bill is more flexible on cap-and-trade than Waxman Markey and is thought to signal the administration’s willingness to deal of key terms in order to get some kind of emissions control bill passed.
Our friends at Biofuels Digest have offered a modest proposal for the problem of finding funding for biofuels and bioenergy projects: asset-backed securities.
It would work by having a bank loan funds to a project. The bank would then pool its loan with other renewable energy loans from other banks. A finance company (either newly-formed or perhaps government-backed) with then issue securities to investors that represent a participation in the performance of the pool of loans. Banks participating in the pooling process would be required to pay a premium into a insurance-like fund that, in turn, would guarantee a portion of the loans.
It’s a creative approach and one that we would support if it were available, but as it’s describe it would require an act of Congress (quite literally) to get off the ground. A public-financed securitization vehicle, like Fannie Mae and Freddie Mac for mortgages, can only be created by Congressional authorization.
There is a private market solution, however, but it would still require the participation of a number of sizeable funds. It would be possible for a group of funds or some very well-financed investors to form a holding company that could buy pools of renewable energy loans and then sell publicly-traded securities that represent participation interests in those loans. The holding company would likely be covered by the Investment Company Act and investors buying securities in the process would have an experience similar to that of a standard mutual fund.
All that would be required is the financial backing and the leadership to bring such an entity into existence.
Our weekly compilation of renewable energy news and information from around the Web.
The Saudi Arabia of Biomass
Is North Dakota the Saudi Arabia of Biomass? It was Shane Goettle, commissioner of the North Dakota Department of Commerce who used this colorful term to describe the state at a the Norther Plains Bioeconomy Conference on September 22 in Fargo, N.D. Goettle said the state leads the nation in biomass production capacity and is the top producer of 16 different commodities.
Goettle said that the state has several energy assets, including the largest deposit of lignite coal in the world, the fifth largest oil production state in the nation, and the leader in the nation of wind energy potential. “You would be heavy pressed to find a state that is more readily poised to engage in the country’s energy future,” he said. “The fact that we have such tremendous biomass potential is getting the attention of significant investors, companies and players in the world.”
The North Dakota legislature has created EmPower ND, a statewide energy policy commission to build on a comprehensive energy policy for North Dakota.
The goal of of EmPower ND is to grow all energy industries in the state—renewable and traditional. Goettle said the program is unique in nature. “We’ve got all of the energy industry leaders together to hammer out a policy they we can initially agree on, and go to the legislature and our government leaders to move all of North Dakota’s energy interests forward. It’s not easy work, but I’m very proud of this 14-member commission.”
So far, during 2009 the North Dakota legislature has passed nine pieces of energy legislation supported by EmPower, including tax breaks for renewable energy devices, income tax credits for soybean and canola crushing costs, a combined renewable energy and biomass incentive programs with $3 million in funding, and a biofuels blender pump incentive program with up to $2 million in funding.
Political Favors?
The Wall Street Journal reported last week that Fisker Automotive Inc., a start-up company based in California, will receive a $529 million government loan to build an $89,000 hybrid vehicle in Finland. The announcement follows a $465 million government loan to Tesla Motors Inc., which is hoping to manufacture a $109,000 British-built electric Roadster. Tesla is a California startup focusing on all-electric vehicles, with a number of celebrity endorsements that is backed by investors that have contributed to Democratic campaigns. Fisker is reportedly backed by Al Gore.
The awards to Fisker and Tesla have prompted concern from companies that have had their bids for loans rejected, and criticism from groups that question why vehicles aimed at the wealthiest customers are getting loans subsidized by taxpayers.
“This is not for average Americans,” said Leslie Paige, a spokeswoman for Citizens Against Government Waste, an anti-tax group in Washington. “This is for people to put something in their driveway that is a conversation piece. It’s status symbol thing.”
DOE officials spent months working with Fisker on its application, touring its Irvine, Calif., and Pontiac, Mich., facilities and test-driving prototypes. Matt Rogers, who oversees the department’s loan programs as a senior adviser to Energy Secretary Steven Chu, said Fisker was awarded the loan after a “detailed technical review” that concluded the company could eventually deliver a highly fuel-efficient hybrid car to a mass audience. Fisker said most of its DOE loan will be used to finance U.S. production of a $40,000 family sedan that has yet to be designed.
Subsidies for Non-Renewable Fuels?
Biodiesel Magazine is reporting that a recent study by the Environmental Law Institute concluded that existing subsidies for fossil fuels provide twice the value in governmental incentives to fossile fuels than to renewable fuels. The study claims that fossil fuels benefited from approximately $72 billion over the seven-year study period, while subsidies for renewable fuels totaled only $29 billion. More than half the subsidies for renewables—$16.8 billion—were attributable to corn-based ethanol. Of the fossil fuel subsidies, $70.2 billion went to traditional sources—such as coal and oil—and $2.3 billion went to carbon capture and storage, which is designed to reduce greenhouse gas emissions from coal-fired power plants. The focus of the study was that these energy subsidies favored energy sources that emit higher levels of greenhouse gases over sources that emit fewer greenhouse gases.
Cash is King
Popular investing website, Seeking Alpha, carried a lengthy report on the economics of renewable energy investing. Among its findings:
In a development little-noticed in the U.S. media, JP Morgan Chase has placed a bet in the coming carbon trading market by making an offer for European carbon-trading firm EcoSecurities Group plc. The management of EcoSecurities Group yesterday announced that it was backing JP Morgan’s bid to be acquired.
EcoSecurities provides a range of consulting services, including emissions abatement and project management in the field of carbon offsets. JPMC’s bid of 129 million pounds (roughly $200 million U.S.) represents a 17% premium over the price offered by a competing bidder. Shares in EcoSecurities have risen roughly 35% since July.
Carbon trading in the U.S. currently exists only on a voluntary basis and carbon offset projects in the U.S. are not eligible for offset trading in the European offset market. JPMC’s investment represents, to at least some degree, a bet by that firm that carbon trading in some form will one day reach the U.S.
The Department of the Treasury, along with the Department of Energy, yesterday announced that they had surpassed $1 billion in grants for renewable energy investments under Section 1603 of the Recovery Act.
The Recovery Act of 2009 expanded the investment tax credit allowed for certain types of investment in renewable energy under Section 48 of the Internal Revenue Code. In general, that program gives entities that invest in qualified renewable energy projects a tax credit equal to 30% of the qualified investment.
Section 1603 of the Recovery Act allows investors who are eligible to receive the investment tax credit to “monetize’ that tax credit through a direct cash grant from Treasury. Under the Recovery Act, the grant is required to be made within 60 days from receipt of a qualifying application, but officials have been quick to point out that all of the grants issued so far have been issued in fewer than 60 days.
After several weeks to review the bill, producers are responding with mixed, but mostly positive, praise for S.B. 1589, according to Biodiesel Magazine.
As industry leaders responded to Biodiesel Magazine’s questions about the proposed changes, some strongly disagreed with NBB’s applause of the measure in Washington to convert from a blender excise tax credit to a producer excise tax credit. “I don’t understand their wanting to change that,” said one NBB member, who asked not to be named. “I don’t see the sense or the advantage in it.”
The source indicated that producers who sell B100 are able to keep their books clean because they don’t file any claims with the Internal Revenue Service. This allows them to bill the $1 per gallon credit into their sale price and let distributors, who blend the fuel, deal with the paperwork. “It usually takes about 10 days for us to get paid by our customers,” said the source. “When you’re dealing with the federal government, 45 days is good.”
Delays in repayment impact producers who must tie up more of their own capital while they wait for cash. “I understand that it’s a cash flow issue,” said Bobby Heiser of Bulldog Biodiesel. “But most of the time we’re the blender of record anyway, so we’re already dealing with the IRS. The way that this change will make it easier for us will be by eliminating B99.”
Management at Lake Erie Biofuels, a plant with a 45 MMgy capacity in Erie, Pa., agreed. “We sell maybe a couple of truckloads of B100 while B99 makes up almost 90 percent of our total sales,” said Michael Noble, director of operations at LEB. “Changing the excise tax will be better for our customers, but it doesn’t change our position.”
Most analysis was positive, however, with the only constant criticism being that the extention (at five years) was too short.
We are happy to announce that our own Jonathan B. Wilson has been appointed the Chair of the Renewable Energy Committee of the American Bar Association’s Public Utility Section.
The Renewable Energy Committee will be composed of lawyers interested in the development and growth of the renewable energy industry. Committee members include both general counsels and private practitioners in the space. The Committee will write a summary of renewable energy legal developments twice each year and present their work at the Executive Council meeting of the Section. The two reports will be compiled into an annual report that is published and distributed to all of the Section’s 4,000+ members.
Membership in the Committee is limited to members of the American Bar Association who are also members of the Public Utility Section.
To join the ABA, please visit the Public Utility Section page and clink on the link to “Enroll Today.” If you are an ABA Member and would like to join the Public Utility Section, please click on the link to “Join Us.”
Members of the Renewable Energy Committee will also have access to the Committee’s LinkedIn Group for easy access to other Committee Members and Members-only research materials and forms.
If you are an attorney practicing in the renewable energy space we encourage you to join the Renewable Energy Committee so that you can take advantage of, and contribute to, these resources.
Update 3:23
I’m signing off. Our friends at the DOE did a valiant job but it was clearly a challenge to provide detailed answers to questions where the fundamental basis of the program is unclear. The premise of the Section 48C program is that it is possible for applicants to identify all of the details and inputs applicable to their projects and all of the energy and GHG-reducing outputs attributable to their projects. This is a an outrageous task as only the largest and most well-funded project sponsors can expect to have that level of detail available before a project starts.
The best the average applicant can do is to take a good shot at answering all of the questions, providing the best documentary evidence available and providing a narrative that tells the story well. Good luck to those who try!
Update 2:52
If the applicant’s facility is manufacturing an item that is a part of a renewable energy facility, the applicant is supposed to compare the applicant’s device to the total cost of the energy-producing facility (see line 11). The applicant’s AAMC is basically a percentage that is equal to the applicant’s device in comparison to the total cost of the energy producing-facility. Again we are reminded the read the Guidance.
Update 2:51
In response to several questions about how to provide data for the applicant data input sheet, the speaker’s answer is to “use the data that is most reflective” and to explain how the data was selected in the Formal Application narrative.
Update 2:48
Although it is not stated in the written guidance, when the applicant data sheet refers to “fiscal year” they are referring to the U.S. Government’s fiscal year which ends September 30.
Update 2:37
The speaker doesn’t like the questions he’s getting and is actually berating the audience for submitting questions that have already been asked before. He’s reading through questions silently, only to respond that they have already been answered (but without identifying the redundant question or how it has already been asked).
After a few minutes of this, one of the speakers in Golden suggested that they answer the redundant questions anyway. This seem to be picking up now.
Update: 2:33
The webinar was scheduled to run for 3 hours but it has now concluded and we’re covering questions. The speakers are deferring all tax questions and only covering items relating to the Formal Application.
The speakers have confirmed that the slides will be available online and the audio is being recorded for later use.
Update 2:27
We’re now walking through the spreadsheets for applicant data input. The speaker is covering the rules already covered by the guidance without a lot of color on how to apply the rules for specific situations.
Update 2:17
Go-to-webinar is back online again. Speakers are now walking through the application process.
Update 2:10
DOE says that the electronic copy of the formal application on CD needs to include an ‘electronic signature. Unfortunately, they haven’t said what an electronic signature means and they don’t indicate if one is required if the application is submitted by email.
I’ve now given up on seeing the slides. My session of go-to-webinar crashed and the site won’t let me sign back on again.
Update 2:05
Following ten minutes of some truly ponderous ‘hold’ music we were introduced to a small army of DOE representatives. Unfortunately the slide show keeps crashing, so I haven’t been able to catch their names.
The Department of Energy is hosting a webinar today for persons who submitted preliminary applications for Section 48C credits prior to yesterday’s deadline. The webinar does not seem to be open to the general public but I will be live blogging the event from 2 to 5 pm eastern today.
The Department of Energy has announced $354 million in energy efficiency block grants to 22 states.
Energy Secretary Steven Chu announced today that the funding from the American Recovery and Reinvestment Act is being awarded to support energy efficiency and conservation activities. Under the Department of Energy’s Efficiency and Conservation Block Grant (EECBG) program, these states will implement programs that lower energy use, reduce carbon pollution, and create green jobs locally.
“This funding will allow states across the country to make major investments in energy solutions that will strengthen America’s economy and create jobs at the local level,” said Secretary Chu. “It will also promote some of the cheapest, cleanest and most reliable energy technologies we have – energy efficiency and conservation – which can be deployed immediately. Local communities can now make strategic investments to help meet the nation’s long term clean energy and climate goals.”
States receiving funding today include: Alabama, Arizona, Arkansas, California, Connecticut, Georgia, Illinois, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Hampshire, New York, Rhode Island, Texas, Washington, Wisconsin, and Wyoming.
Today’s awards to the State Energy Offices will be used to support state-level energy efficiency priorities, along with funding local conservation projects in smaller cities and counties. At least 60 percent of each state’s award will be passed through to local cities and counties not eligible for direct EECBG awards from the Department of Energy. The EECBG Program was funded for the first time by the American Recovery and Reinvestment Act and provides formula grants to states, cities, counties, territories and federally-recognized Indian tribes nationwide to implement energy efficiency projects locally.
Powered by WordPress