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Stimulus Package to Boost Renewable Energy and Clean Technologies Industry
Recovery Act


On February 17, 2009, President Barack Obama signed into law the American Recovery and Reinvestment Act of 2009 (Recovery Act). Many of the provisions in this Recovery Act, which constitutes the largest single economic stimulus program in U.S. history, open up new sources of funding and procurement opportunities for renewable energy facilities, energy infrastructure and energy efficiency programs. The clean-energy provisions are a central piece of the Recovery Act. Out of a total of $787 billion in spending and tax incentives, the Recovery Act directs approximately $43 billion to renewable energy and clean technology-related programs and includes approximately $22 billion in energy-related tax incentives.1

Funding levels unprecedented but details “TBD”

While the Recovery Act presents significant opportunities for clean technology companies—including grants for research and development, loans and loan guarantees for commercialization, funding increases for government procurement, tax incentives for investment in clean energy, and tax credits for consumers purchasing clean energy products—many critical details regarding the process for accessing the funds remain “TBD.” Recovery Act programs will be administered through multiple federal agencies and, importantly, a large portion of the funds will be distributed through state and local governments. Much of the funding will be funneled through programs that will parallel existing Department of Energy (“DOE”) grant programs and funding mechanisms but are likely to involve new regulatory standards, solicitation procedures and reporting requirements.

This Alert provides a preliminary roadmap to Recovery Act programs and highlights resources for clean technology companies, investors and other market participants. Table I of this Alert (“Federal Financing Opportunities”) describes grant and loan/loan guarantee opportunities relevant to clean technology companies; Table II (“Federal, State and Local Procurement Opportunities”) describes opportunities for clean technology companies to sell into the government marketplace; and Table III (“Tax Incentives”) describes changes to key federal tax incentives, such as production and investment tax credits.

Since many details regarding Recovery Act programs are yet to be announced, interested parties may wish to register to receive email updates. (See “Where to Register for Announcements and Updates.”)

Timing of funding announcements

On February 19, 2009, Secretary of Energy Steven Chu announced a sweeping reorganization of the Department of Energy to expedite disbursement of Recovery Act funds. Secretary Chu noted, “We need to start this work in a matter of months, not years.”2 Further, Secretary Chu wants to accelerate the funding process for programs with existing award pipelines.3

The Office of Management and Budget (OMB) has instructed federal agencies to begin posting funding opportunity announcements within thirty days of the enactment of the Recovery Act.4 These opportunities will be posted at www.grants.gov. To date, a specific timeline for loan and loan guarantee announcements has not been published. Cooley’s clean technologies practice group recommends that companies determine how their strategic objectives align with federal policy priorities and be prepared to move quickly to define proposals and projects that map to such priorities. OMB has also instructed agencies to engage in “aggressive outreach” to potential applicants.

Next steps on federal energy policy

The Recovery Act is only an initial step in the Administration’s first term energy agenda. The Administration’s broader energy plans are expected to include the following:

  • California Waiver: The U.S. Environmental Protection Agency (EPA) has been directed to reconsider and is expected by many observers to grant California’s request to impose more restrictive greenhouse gas emissions standards.5 More than a dozen other states have adopted or will adopt California’s proposed stricter restrictions, which would require automakers to cut emissions by 30 percent in new cars and light trucks by 2016.
  • Energy Bill: Congress is expected to pass an energy bill in the second or third quarter of 2009. Provisions under consideration include increased national fuel-efficiency standards and adoption of a national renewable-portfolio standard requiring utilities to source a certain percentage of their electricity from renewable sources.6
  • Climate Change Legislation: The President has signaled his support for a federal cap-and-trade system to reduce greenhouse gas (GHG) emissions and has stated a GHG reduction target of 1990 levels by 2020 and an additional 80% by 2050.7 (These targets are similar to those adopted by the State of California under AB 32—See Cooley Alert (December 2008)).
I. Federal Financing Opportunities
Innovative Technology Loan Guarantee Program

Department of Energy

Authorize loans/loan guarantees for renewable energy systems, electric power transmission systems, and leading edge biofuel projects. Projects must commence construction no later than September 30, 2011. $6 billion
Electricity Delivery and Energy Reliability

Department of Energy

Support electricity delivery and energy reliability activities to: modernize the electric grid, including demand responsive equipment; enhance security and reliability of the energy infrastructure; increase energy storage research, development, demonstration and deployment; and facilitate recovery from disruptions to the energy supply. $11 billion
Fossil Energy Research and Development

Department of Energy

Support carbon capture and sequestration technology demonstration projects, including:

  • $1 billion for Fossil Energy Research and Development programs;
  • $800 million for Clean Coal Power Initiative; and
  • $1.52 billion competitive solicitation for a range of industrial carbon capture and energy efficiency projects.
$3.4 billion
Energy Efficiency and Renewable Energy Research

Department of Energy

Support energy efficiency and renewable energy research, development, demonstration, and deployment activities to foster energy independence, reduce carbon emissions, and cut utility bills. Includes $800 million for biomass and $400 million for geothermal. $2.5 billion
Advanced Battery Loans and Grants

Department of Energy

Support the U.S.-based manufacturing of advanced batteries and components, including advanced lithium ion batteries, hybrid electrical systems, component manufacturers, and software designers. To be awarded to manufacturers of advanced battery systems and vehicle batteries that are produced in the United States. $2 billion
Advanced Research Projects – Energy (ARPA-E)

Department of Energy

Support grant program for research and development to overcome the long-term and high-risk technological barriers in the development of energy technologies. $400 million
Electric Transportation

Department of Energy

Create new grant program to encourage electric vehicle technologies. $400 million
Research, Development, Test, and Evaluation

Department of Defense

Support research, development, test and evaluation into using renewable energy to power weapons systems and military bases. $300 million

II. Federal, State, and Local Procurement Opportunities
Energy Efficiency and Conservation Block Grants

Department of Energy

Help state and local governments make investments that make them more energy efficient and reduce carbon emissions. $3.2 billion State and local
Weatherization Assistance Program

Department of Energy

Help low-income families reduce their energy costs by weatherizing their homes and making the country more energy efficient. $5 billion State and local
State Energy Program

Department of Energy

Assist state energy conservation plans. $3.1 billion State
Alternative Fuel Vehicles Pilot Grant Program

Department of Energy

Help state and local governments purchase efficient alternative fuel vehicles to reduce fuel costs and carbon emissions. $300 million State and local
Federal Buildings Fund

Department of the Treasury

Support measures necessary to convert General Services Administration facilities to High-Performance Green Buildings. $4.5 billion Federal
Energy-Efficient Federal Motor Vehicle Fleet Procurement

Department of the Treasury

Support capital expenditures and necessary expenses of acquiring motor vehicles with higher fuel economy, including: hybrid, electric, and plug-in hybrid vehicles. $300 million Federal
State and Tribal Assistance Grants

Environmental Protection Agency

Help states and tribes access clean and safe drinking water. Twenty percent of funds are dedicated to green infrastructure, water or energy efficiency improvements, or other environmentally innovative projects. $6.4 billion State and tribal
Diesel Emissions Reduction

Environmental Protection Agency

Provide grants and loans to state and local governments for projects that reduce diesel emissions, benefiting public health and reducing global warming. Includes technologies to retrofit emission exhaust systems on school buses, replace engines and vehicles, and establish anti-idling programs $300 million State and local
Training and Employment Services

Department of Labor

Support research, labor exchange and job training projects that prepare workers for careers in energy efficiency and renewable energy. $500 million Federal and state
Assisted Housing Stability and Energy and Green Retrofit Investments

Department of Housing and Urban Development

Provide grants and loans to HUD-sponsored low-income housing for energy retrofit and green investments. $250 million State and local
Operation and Maintenance

Department of Defense

Improve, repair, restore, modernize, and invest in energy efficiency for military facilities, including barracks. $3.84 billion Federal
Health Program

Department of Defense

Improve, repair, and modernize, and invest in energy efficiency for military medical facilities. $400 million Federal
III. Tax Incentives
§ 45 Production Tax Credit (“PTC”) Wind Extended through 2012
§ 45 PTC Geothermal, biomass, hydropower, marine and hydrokinetic, municipal solid waste Extended through 2013
§ 48 Investment Tax Credit(“ITC”) Solar, geothermal, fuel cells, microturbine, small wind, combined heat and power Eliminates rule reducing credit for financing from subsidized energy bonds or private activity bonds. Removes $4K annual credit cap on small wind property.
§ 48 ITC Wind, geothermal, biomass, hydropower, marine and hydrokinetic, municipal solid waste With respect to facilities otherwise eligible for § 45 PTC, allows taxpayers to elect 30% ITC instead.
§ 45 PTC, § 48 ITC, ARRA § 1603 Wind, geothermal, biomass, hydropower, marine and hydrokinetic, municipal solid waste, solar, geothermal, fuel cells, microturbine, small wind, combined heat and power In lieu of tax credit, authorizes Secretary of Treasury to make grant equal to 30% of credit basis of property otherwise eligible for § 45 PTC or § 48 ITC (10% in the case of geothermal, microturbine, or combined heat and power property).
§ 54C New Clean Renewable Energy Bonds State and local governments, certain utilities, and clean renewable energy bond lenders Creates $1.6 billion in new funding to be used in financing renewable energy production facilities eligible for § 45 PTC.
§ 54D Qualified Energy Conservation Bonds State and local governments Creates $2.4 billion in new funding and expands program to cover grants, loans, and other repayment mechanisms to implement green community programs.
§ 142(i) High-Speed Intercity Rail Facility Bonds State and local governments Expands eligible facilities to include facilities using vehicles capable of attaining maximum speed over 150 miles per hour.
§ 25C Nonbusiness Energy Property Credit Residential qualified energy efficiency property Extends provision through 2010, increases credit rate to 30%, replaces lifetime caps with $1,500 aggregate cap for property placed in service in tax years beginning in 2009-10, modifies efficiency standards for qualifying property, and makes expenditures from subsidized energy financing eligible for credit.
§ 25D Residential Energy Efficient Property Credit Residential solar, geothermal, small wind, and fuel cell property Eliminates (i) credit caps for solar hot water, geothermal, and wind property and (ii) reduction in credits for property funded from subsidized energy financing.
§ 30C Alternative Fuel Vehicle Refueling Property Credit Motor vehicles running on electricity or clean-burning fuels For business property placed in service in tax years beginning in 2009-10, increases maximum credit to $200K for qualified hydrogen refueling property and $50K for other property. For nonbusiness property that is not hydrogen refueling property, maximum credit is increased to $2K. Credit rate is increased from 30% to 50%, except in case of hydrogen refueling property.
§ 30 Credit for Certain Plug-in Electric Vehicles, § 30B Alternative Motor Vehicle Credit, § 30D Plug-In Electric Drive Motor Vehicle Credit Plug-in, electric drive motor vehicles Creates new 10% credits for (i) low-speed vehicles, motorcycles, and 3-wheeled vehicles and (ii) certain conversions of nonqualified vehicles into qualified vehicles. Caps § 30B credit at $7,500 regardless of vehicle weight, eliminates credit for low-speed plug-in vehicles and vehicles weighing 14K pounds or more, and replaces aggregate vehicle credit limit with a per-manufacturer vehicle credit limit. Provides that credits may reduce the AMT.
§ 132 Qualified Transportation Fringe Benefits Employers providing, and employees receiving, qualified transportation fringe benefits Increases monthly exclusion for employer-provided transit and vanpool benefits to same level as exclusion for employer-provided parking (in 2009, up to $230 per month).
§ 48C Credit for Investment in Advanced Energy Property Manufacturing of certain renewable energy or energy efficient property Creates new 30% investment tax credit for property used in a project that re-equips, expands, or establishes manufacturing facility for production of types of renewable energy or energy efficient property. Authorizes $2.3 billion in credits.

If you have questions about this Alert, please contact one of the following attorneys:

Elias Blawie Palo Alto, CA
Jim Fulton Palo Alto, CA
Gordon Ho Palo Alto, CA
Craig Jacoby San Francisco, CA
Jim LInfield Broomfield, CO
Patrick Mitchell Boston, MA
Kevin Mullen Washington, DC

Circular 230 Disclosure

The following disclosure is provided in accordance with the Internal Revenue Service’s Circular 230 (21 CFR Part 10). Any tax advice contained in this Alert is intended to be preliminary, for discussion purposes only, and not final. Any such advice is not intended to be used for marketing, promoting or recommending any transaction or for the use of any person in connection with the preparation of any tax return. Accordingly, this advice is not intended or written to be used, and it cannot be used, by any person for the purpose of avoiding tax penalties that may be imposed on such person.


1 Website for accountability and transparency of the American Recovery and Reinvestment Act of 2009. Recovery.gov. “Where is Your Money Going?” (accessed February 25, 2009).

2 Press Release from the U.S. Department of Energy. DOE Secretary Chu Announces Changes to Expedite Economic Recovery Funding. February 19, 2009. (accessed February 25, 2009).

3 Interview with Secretary of Energy Steven Chu. Stephen Power. “‘We’ve Got to Do This.’” Wall Street Journal. February 6, 2009. (accessed February 25, 2009).

4 Memorandum for the Heads of Departments and Agencies. Peter R. Orszag, Director of the Office of Management and Budget. “Initial Implementing Guidance for the American Recovery and Reinvestment Act of 2009.” (accessed February 25, 2009).

5 For the President’s request for the EPA to assess whether its decision to deny a waiver based on California’s application was appropriate in light of the Clean Air Act, see the Memorandum for the Administrator of the Environmental Protection Agency, “State of California Request for Waiver Under 42 U.S.C. 7543(b), the Clean Air Act,” January 26, 2009 (accessed February 25, 2009).

6 President’s energy plan agenda (accessed February 25, 2009).

7 For example, see the President’s remarks to the Bi-Partisan Governors Climate Summit (accessed February 25, 2009).

Where to Register for Announcements and Updates

All federal agencies and departments must post their plans for using Recovery Act funds—as well as announcements for grant competitions, allocations of formula grants, and awards of competitive grants using those funds—on the Recovery Act’s official website: www.recovery.gov.

To receive federal government updates:

Cooley plans to publish additional Cooley Alerts as critical new information and developments regarding the Recovery Act arise. To receive Alerts regarding major legislative and regulatory developments and event announcements relevant to the Clean Technology sector, register at cooley.com.



Additional Information

* USA Today: Temperature Inversions
* EPA: Woodstoves
* HPBA: EPA-Certified Woodburning Fact Sheet (PDF, 2 pp., 1.35MB)

This page was last updated on Tuesday, December 02, 2008.

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How do surface temperature inversions form? The most common manner in which surface inversions form is through the cooling of the air near the ground at night. Once the sun goes down, the ground loses heat very quickly, and this cools the air that is in contact with the ground. However, since air is a very poor conductor of heat, the air just above the surface remains warm. Conditions that favor the development of a strong surface inversion are calm winds, clear skies, and long nights. Calm winds prevent warmer air above the surface from mixing down to the ground, and clear skies increase the rate of cooling at the Earth’s surface. Long nights allow for the cooling of the ground to continue over a longer period of time, resulting in a greater temperature decrease at the surface. Since the nights in the wintertime are much longer than nights during the summertime, surface inversions are stronger and more common during the winter months. A strong inversion implies a substantial temperature difference exists between the cool surface air and the warmer air aloft. During the daylight hours, surface inversions normally weaken and disappear as the sun warms the Earth’s surface. However, under certain meteorological conditions, such as strong high pressure over the area, these inversions can persist as long as several days. In addition, local topographical features can enhance the formation of inversions, especially in valley locations.

How do inversions impact air quality? Surface temperature inversions play a major role in air quality, especially during the winter when these inversions are the strongest. The warm air above cooler air acts like a lid, suppressing vertical mixing and trapping the cooler air at the surface. As pollutants from vehicles, fireplaces, and industry are emitted into the air, the inversion traps these pollutants near the ground, leading to poor air quality. The strength and duration of the inversion will control AQI levels near the ground. A strong inversion will confine pollutants to a shallow vertical layer, leading to high AQI levels, while a weak inversion will lead to lower AQI levels. A large contributor to poor air quality during the winter is residential wood burning. Wood smoke contains much higher amounts of particulate pollution than smoke from oil- or gas-fired furnaces. In some areas of the country, local governments issue burn bans to curtail the use of woodstoves and fireplaces under certain weather and pollution conditions during the winter.

A Healthier Wood Stove Wood smoke contains a mixture of gases and fine particles that can aggravate heart or respiratory problems in people of all ages but especially children, the elderly, and those with chronic conditions. Use a properly installed, vented, EPA-certified wood stove and have it cleaned and inspected annually. Learn More


[My note – there is also a list on this page of wood burning stove rebates and incentives by some states.]

state or local air pollution agency



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Manufacturing and Services

The Manufacturing and Services (MAS) unit of the International Trade Administration (ITA) is dedicated to enhancing the global competitiveness of U.S. industry, expanding its market access, and increasing its exports. (more) (MAS Overview at a Glance)

Recent News in MAS

International Visitor Spending Hits All Time High: Travelers Pump $12.7 Billion into U.S. Economy

Washington (Nov. 6) – The U.S. Department of Commerce today announced that 5.6 million international visitors traveled to the United States in August 2008, an increase of 6 percent over August 2007. International visitors spent a record $12.7 billion in August 2008, a 20 percent increase over August 2007. (more)

Gutierrez Announces Record Tourism in 2007

Commerce Secretary Carlos M. Gutierrez announces an all time record for international tourism.

Washington (March 10)—In remarks to the National League of Cities, Commerce Secretary Carlos M. Gutierrez announced that 2007 set an all time record for international tourism, with visitors pumping $122 billion into the U.S. economy from over 56 million international visitors supporting 8.5 million American jobs. “This is yet another record-breaking year for the US travel and tourism industry and another year in which it produced a healthy trade surplus,” Gutierrez said.
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