This presentation describes the federal incentives under the Stimulus Bill for renewable energy, energy efficiency, carbon capture and storage, and alternative transportation fuels. There are significant incentives available for these and other related developing technologies and companies engaged in these projects.

1. A Green New Deal?
The Stimulus Bill, Climate Change, and
Opportunities for Renewable Energy
and Other Green Technologies
Scott D. Deatherage
Partner, Thompson & Knight LLP
scott.deatherage@tklaw.com

2. President Obama on
New Approach to Energy
[T]he possibilities of renewable energy are limitless.
We’ve heard promises about it in every State of the
Union for the last three decades. But each and every
year, we become more, not less, addicted to oil ─ a
19th-century fossil fuel.
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3. Climate Change Regulation Timeline
2005
1992 EU
UNFCCC ETS
2009-2010
2003
1997 2007 2008
2006
--US Climate
Regional
Kyoto --Mass v. US Pres.
--California Bill
Change
Protocol Greenhouse EPA Election
--Western
Legislation
Gas --Lieberman-
Climate Initiative 2009
--Post-Kyoto
Initiative Warner US GHG
Climate
Voted Out Reporting
Change
of Sen. Regulation
Treaty
Comm.
--Greenhouse
Gas Reporting
Legislation
--Midwestern
Greenhouse Gas
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Reduction Accord

4. What to Expect This Year
Nationwide Renewable Energy Portfolio Standard Bill
Requiring 10% by 2012 and 25% by 2025 of electricity to come
►
from renewable energy sources
Climate Change Bill
Cap and trade program to limit greenhouse gas emissions
►
EPA issued proposed greenhouse gas emission reporting rule
►
to be finalized by June 2009
If Congress does not act, Obama Administration may do so
under the Clean Air Act after U.S. Supreme Court decision in
Massachusetts v. EPA
EPA to allow California and other states to set limits on
►
greenhouse gas emissions from vehicles
May lead to EPA rules on greenhouse gas emissions under
►
Clean Air Act
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5. What Will This Mean?
Carbon-Constrained Economy
Greenhouse gas emissions will be limited and every
►
stage of industrial and commercial activity will be
evaluated for modification to reduce these emissions or
reduce energy use
Second Industrial Revolution
Biggest change since the industrial revolution
►
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6. Understanding the Business Between
Incentivized Activity and Climate Change
Renewable
Energy
Carbon Alternative
Energy
Transportation
Efficiency
Credits Fuels
Carbon Capture
and Storage
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7. Potential Future Carbon Market
US market predicted to rise quickly to $150 to
$300 billion
Global market by 2020 predicted by some to rise to $2 to
$3 trillion
No one knows what actually size may be
Probability it will be very large
Thus, individuals and firms that understand this and act on
accordingly may find tremendous business opportunities
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8. “Stimulus Bill” or the American Recovery and
Reinvestment Act of 2009 (ARRA)
Four Main Areas
Renewable Energy: wind, solar, biomass, geothermal,
►
etc.
Energy Efficiency: Use less electricity, fossil fuels, etc.
►
Carbon Capture and Storage: capture CO2 primarily and
►
store or sequester underground (where it originated)
Alternative Transportation Fuels: ethanol, biodiesel,
►
natural gas, hydrogen, electricity, etc.
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9. Magnitude of Energy-Related Incentives
Appropriations for projects is about $35 billion
Other funds may be obligated from other sources
Tax incentives are not included in this number
Loan Guaranty program equals $6 billion in government
funds but is designed for a ten-fold private multiplier and
this would equal $60 billion in total loans
Clean Renewable Energy Bonds and Energy Conservation
Bonds equal $4 billion
Beyond the DOE, the Treasury Department has the
authority to approve grants in lieu of tax credits, and no
limit is place on this program
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10. Tax Incentives
Extends deadlines for § 45 Production Tax Credits
(PTC)
Wind projects extended through Dec. 31, 2012
►
Biomass, geothermal, landfill gas, waste-to-energy,
►
hydropower, and marine renewables projects extended
through Dec. 31, 2013
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11. Tax Incentives
Project investors in projects previously qualifying for §
45 PTCs may elect to take § 48 Investment Tax Credits
(ITCs)
Current law allows § 45 PTC to be taken over a 5 or 10 year
►
period (10 years for wind)
Current law allows § 48 ITC to be taken in the year the project is
►
placed in service (30% credit for solar, fuel cell, small wind
property; 10% credit for other qualifying technologies)
ARRA provides that technologies previously qualifying for the
►
PTC (including wind, biomass, geothermal, landfill gas, waste-
to-energy, hydropower, and marine facilities) may now claim a
credit equivalent to the 30% ITC
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12. ARRA Allows the Treasury Dept. to
Issue a Grant in Lieu of Tax Credits
Treasury will provide grants in lieu of § 48 ITCs
Projects eligible for § 45 PTCs can be converted to
ITCs to qualify for grant program
Construction must begin prior to 12/31/2010
►
Projects must be placed in service before:
►
2013 for wind (30% credit)
2014 for biomass, geothermal, landfill gas, waste-to energy,
hydropower & marine renewables (30% credit)
2017 for fuel cell, solar, small wind (30% credit)
2017 for geothermal, microturbine, combined heat & power
and geothermal heat pump property (10% credit) 12

13. Broadening of Opportunity
for Public Financing
ARRA eliminates a limitation on § 48 tax credits that
they be reduced if the property is financed with tax
exempt bonds or other public money
This increases the ability to use public money to fund
qualifying projects and still obtain relevant tax
credits
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14. Investment Tax Credit for Advanced
Energy Manufacturing
Investment Tax Credit for Investments in Advanced Energy
Manufacturing Equipment, 30% of investment, includes
manufacturing facilities and related equipment for:
Solar
►
Wind
►
Geothermal
►
Fuel Cells
►
Microturbines
►
Electric/hybrid Cars, Batteries & Equipment
►
Renewable Grids / Smart Grids
►
Carbon Capture & Sequestration
►
Renewable Fuels Refining or Blending
►
Energy Conservation Technologies
►
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15. Loan Guarantees
Renewable energy loan guarantees of $6 billion in appropriated
funds should support at least $60 billion in loans “Rapid
Deployment” loan guarantees for renewable energy power
generation using current commercial technology, including:
Renewable energy systems that generate electricity or thermal
energy, and facilities that manufacture related components; and
Demonstration or pilot projects using leading-edge biofuel
technology that is likely to become commercialized and reduce
life-cycle greenhouse gas emissions
Transmission projects also covered
Loan guarantees for biofuel projects limited to $500 million
Construction must commence by Sept. 30, 2011
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16. Electric Transmission
Funding for transmission modernization and smart
grid
$4.5 billion to DOE for expenses necessary for electricity
►
delivery and energy reliability activities:
Grid modernization, security and reliability
Energy storage R&D and demonstration
Energy efficiency measurement
Diversifying sources of ancillary services
Advancing use of wide-area smart grids
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17. Fossil Energy Funds
Grants for fossil energy R&D
$3.4 billion for the Fossil Energy Research and
►
Development program, including:
$800 million for selections under DOE’s clean coal round III
(which includes petroleum coke fuel input);
$1.52 billion in competitive solicitation for a range of
industrial carbon capture and energy efficiency
improvement projects, including a small allocation for
innovative concepts for beneficial CO2 reuse.
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18. Examples of Federal Funding of
State and Local Programs
ARRA flows $11.3 billion dollars through state and
local governments for renewable energy and
energy efficiency
Weatherization program to provide $5 billion to
states for low-income families
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19. Examples of Federal Programs
Federal buildings energy efficiency = $4.5 billon
Department of Defense
$4.24 billion in funding to improve, repair and modernize
►
DOD facilities, renovate Army barracks, and invest in the
energy efficiency of DOD facilities
$120 million for energy conservation projects, energy
►
upgrades, and construction of alternative energy
projects, such as wind and solar, at military installations
in the United States
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20. EPA Funds
$211 million announced by EPA for state, local,
and tribal governments and nonprofits to
implement clean diesel projects that reduce
particulate and nitrogen oxide emissions
$100 million for Brownfield sites (could be already
spent)
$200 million underground storage tank cleanups
$600 million Superfund Cleanups
$4 billion Clean Water Act Revolving Fund
$2 billionand Drinking Water Revolving Fund
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21. Opportunities for Oil and Gas Companies for Carbon
Credit Projects
One of the Largest Number of
Carbon Credits Issued
under the Kyoto Protocol
Rang Dong Offshore Oil Field,
Vietnam
Flared natural gas captured and
piped to shore for use
UN CDM Executive Board
recently granted 4.43 million
Certified Emission Reductions
(carbon credits) in CO2e
Value on European Climate
Exchange--approximately 15
euros per CER
€ 66 million or US $ 103 million
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22. Carbon Capture and Storage
Alliance Bernstein Report
One of the activities that will be
►
required to meet global CO2 reduction
goals.
Injection of CO2 of 7 billion cf by 2015,
►
70 bcf by 2020, and 500 bcf by 2030;
and 60 gigatonnes of CO2 by 2030.
Injected for enhanced oil and gas
►
recovery (could increase yield by 11
million bbl/day).
Injected for coal-bed methane recovery
►
(increase yield of gas by 3,000 trillion
cubic feet).
Enhanced oil and gas recovery would
offset significant portion of cost of
capturing CO2.
An enormous number of carbon
credits could be generated for use or
sale if a CDM method is adopted.
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23. GHG Reduction Projects That May Generate
Carbon Credits
Energy efficiency, such as
Fuel switching, e.g., coal to
replacing boilers at refinery;
natural gas, or biomass for
Renewable Energy—wind,
fossil fuels;
solar energy, geothermal,
Capture and flaring or other use and hydropower;
of coal-bed methane; Cogeneration;
Capture of CO2 from LNG,
Biofuels from waste oils (no
gas processing plants, coal-
approval yet for a biofuel from
fired power plants and
agricultural crops); injection for enhanced oil
and gas recovery, enhanced
Projects related to biofuel
natural gas recovery from
production (e.g., burning of deep coal seams, or into
bagasse to produce electricity); deep saline aquifers.
Landfill gas to produce
electricity or to put in natural
gas pipeline;
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24. Scott D. Deatherage
Partner
1722 Routh Street
Suite 1500
Dallas, Texas 75201
214-969-1206
Scott.Deatherage@tklaw.com
Blog Sites:
quot;The New Carbon Cyclequot;
http://lawandenvironment.typepad.com/newcarboncycle/
and
quot;Law and the Environmentquot;
http://lawandenvironment.typepad.com/
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