[Congressional Record (Bound Edition), Volume 155 (2009), Part 7]
[Senate]
[Pages 8918-8919]
[From the U.S. Government Publishing Office, www.gpo.gov]




          CREDIT FOR INVESTMENT IN ADVANCED ENERGY FACILITIES

  Mr. BINGAMAN. Mr. President, I rise for a colloquy with the chairman 
of the Finance Committee, Senator BAUCUS, to discuss section 1302 of 
the American Recovery and Reinvestment Act, ARRA, which the President 
signed into law on February 19, 2009 (Public Law 111-5). That section 
establishes a new tax credit, known as the section 48C credit, for 
investment in advanced energy facilities.
  I am very pleased that ARRA establishes this new credit. Because 
until now, all of our investment tax credits for renewable energy 
technologies have been concentrated downstream that is, at the 
commercial or individual consumer level. While those incentives have 
created some U.S. jobs, such as in installation, most advanced energy 
technologies that are installed in the United States continue to be 
manufactured overseas. One major driver for this overseas manufacturing 
is the significant tax incentives that other countries offer. For 
instance, Malaysia and the Philippines offer solar photovoltaic 
manufacturers income tax holidays, for 15 years in the case of 
Malaysia, while Germany offers them up to 50 percent of investment 
costs. As a result, the U.S. is far behind, and is falling further 
behind, in ``clean tech'' manufacturing. According to one recent study, 
Japan represents 45 percent of global solar cell production while the 
United States accounts for just 9 percent. And European manufacturers 
now account for more than 85 percent of the global wind component 
market.
  But just as the U.S. is losing ground in advanced energy 
manufacturing, we can anticipate rapid near- to mid-term growth in 
domestic demand for renewable energy technologies. This demand will be 
driven by numerous factors, including last year's extension of the 
commercial and residential investment tax credits through 2016; 
extension by ARRA of the production tax credit through 2013--2012 for 
wind; and declining product costs; anticipated enactment of national 
requirements for renewable electricity deployment; and anticipated 
enactment of a market-based system or tax to limit carbon emissions. 
But under the status quo, the corresponding growth in domestic demand 
would largely have been satisfied by imports.
  For that reason, I worked with my friend from Montana, Senator 
Baucus, to establish in ARRA the first tax credit for investment in 
advanced energy facilities those that manufacture property that enables 
Americans to harness renewable resources to generate energy, to make 
energy efficient improvements, and to reduce greenhouse gas emissions. 
I thank Senator Baucus for sharing my commitment to putting our country 
on the path to being a leader in advanced energy manufacturing.
  Mr. BAUCUS. I thank my colleague from New Mexico, the chairman of the 
Energy and Natural Resources Committee, for his dedication to this 
issue. I am pleased to have worked with Senator Bingaman, the chairman 
of the Finance Subcommittee on Energy, Natural Resources, and 
Infrastructure, on this new incentive. And I wholeheartedly agree with 
Senator Bingaman that we cannot allow the United States to miss the 
opportunity to add thousands of green manufacturing jobs. This new tax 
credit for investment in advanced energy facilities will level the 
playing field so that the U.S. can compete for these jobs, and I was 
pleased to include it in my chairman's mark when the Finance Committee 
considered this legislation.
  Under section 1302 of ARRA, the Treasury Secretary is authorized to 
award total credits of up to $2.3 billion for qualifying projects. 
Within 180 days of enactment, the Treasury Secretary, in consultation 
with the Secretary of Energy, is required to establish a program to 
consider and award certifications for projects that qualify for the 
credit. The bill enumerates selection criteria that the Treasury 
Secretary shall take into consideration. The Finance Committee 
developed these criteria with the Energy and Natural Resources 
Committee, and through the Chair, I would like to ask Senator Bingaman 
to explain the criteria and clarify how Congress intends the 
administration to implement this credit.
  Mr. BINGAMAN. I thank the Senator. At the outset, I note that this 
credit is a product of the Senate; it was not included in the 
preconference legislation that was passed by the House.
  Overall, we intend the credit to promote the manufacture of property 
that, until recently, has not been widely deployed in the United 
States. In particular, the credit is intended to benefit manufacturers 
of property (including component parts of property) that (a) harnesses 
renewable resources to produce energy; (b) enhances the efficient use 
of energy derived from conventional or renewable resources; or (c) 
reduces greenhouse gas emissions from energy produced by conventional 
resources.
  Treasury's creation of transparent scoring criteria will be critical 
for efficient delivery of the allocated credit amount, which, in turn, 
will drive efficient deployment of private capital.
  The new section 48C requires the Treasury Secretary to make awards 
only to projects for which there is a reasonable expectation of 
commercial viability. Commercial viability primarily considers 
readiness for deployment. It also considers capital requirements to 
reach end-consumers in a cost-effective manner. Projects that have 
immediate and fungible markets and are positioned to compete in those 
markets have greater commercial viability than those that will require 
significant additional market development. Additionally, in determining 
viability the Secretary should consider the potential scale of market 
applications, and therefore the project's broader impact.
  In allocating credits, section 48C directs the Secretary to consider 
five additional factors.
  First, the Secretary shall consider projects that will provide the 
greatest domestic job creation, both direct and indirect, during the 
credit period. Because of their potential to catalyze additional 
growth, ARRA's stimulus objective will be maximized if the program 
supports emerging sectors and technologies. Accordingly, the Secretary 
should consider job creation estimates that include some evaluation of 
the potential breadth and scale of the property's applications, 
including job creation potential of the property's supply chain, 
distribution, installation, and maintenance.
  Second, the Secretary shall consider projects that will provide the 
greatest net impact in avoiding or reducing air pollutants or 
anthropogenic emissions of greenhouse gases. Emissions from both the 
manufacturing project's operations and the installed energy property 
should be considered. Applicant projects should be compared to the 
existing most-likely alternatives, and also to alternative new 
competing property. We expect that the Treasury Secretary will consult 
with the Department of Energy in estimating direct

[[Page 8919]]

greenhouse gas emissions on a lifecycle basis for applicant projects. 
Additionally, the Treasury Secretary shall ensure that any potential 
project has received all Federal and State environmental authorizations 
or reviews necessary to commence construction of the project.
  Third, the Secretary shall look to projects that have the greatest 
potential for technological innovation and commercial deployment. This 
criterion will ensure that tax credits are directed to those projects 
that have the greatest opportunity to catalyze new technologies, and 
thus multiply the tax credit's impact. The Secretary might implement 
this standard by preferring projects that are first- or second-of-a-
kind, or that employ significantly improved technologies--i.e., those 
that will achieve significant improvements in cost or technology 
performance relative to existing solutions.
  Fourth, the Secretary shall prioritize projects that have the lowest 
levelized cost either of generated or stored energy, or of measured 
reduction in energy consumption or greenhouse gas emissions. Because it 
takes into account the installed system price and associated costs, 
such as financing and operation, levelized cost of energy is an 
accepted and common metric for comparing the cost of generating energy 
or saving energy across properties. In the case of property that 
generates or stores energy, the appropriate measure is levelized cost 
of generated or stored energy, which factors the cost per kilowatt 
hours of energy generated. In the case of property that conserves or 
more efficiently deploys energy, such as smart grid and metering 
technologies, or that reduces greenhouse emissions, the appropriate 
measure is levelized cost of measured reduction in energy consumption 
or greenhouse gas emissions, which factors the cost per kilowatt of 
energy saved or ton of carbon captured. Section 48C mentions the ``full 
supply chain'' and, in the case of reductions in energy consumption or 
greenhouse gas emissions, the Secretary should also consider emissions 
reductions in other parts of the supply chain that are enabled by the 
applicant project.
  Finally, the legislation directs the Secretary to consider projects 
that have the shortest project time from certification to completion. 
ARRA's overarching goal is to create jobs as quickly as possible; the 
credit is intended to benefit firms that are able to move quickly and 
with certainty.
  Through the Chair, I would like to ask Senator Baucus to confirm his 
agreement with my description of these factors.
  Mr. BAUCUS. I most certainly agree with the Senator's description and 
I thank him for his collaboration in developing this robust new tax 
credit.

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