the same, per unit of energy produced, as the current electricity
tax credits. One kilowatt-hour of energy, whether it is electricity
or thermal energy, is equivalent to 3,412 Btu. (This conversion
factor can be found in any thermodynamics textbook and is
familiar to engineers all over the world. Although in the U.S. it
is not common to measure thermal energy in kilowatt-hours, in
Europe the kilowatt-hour is the conventional unit of measure for
both thermal energy and electricity.)
Rationale
By limiting PTCs to electricity only, we are significantly
limiting our ability to shift to a low-carbon sustainable future.
There are substantial opportunities to expand the use of
renewable resources to meet thermal energy needs (i.e., space
heating, air conditioning, domestic hot water, and process
heating and cooling). There is support for this concept. For
example, renewable thermal energy PTCs were included in
S.1370, the Clean Energy Investment Assurance Act of 2007,
sponsored by Senators Maria Cantwell, D-Wash.; John Kerry,
D-Mass.; and Gordon Smith, R-Ore. A renewable thermal energy
PTC would provide an extremely important incentive to invest
in these systems, accelerating our nation’s transition to a low-carbon future.
TITLE II: EXPANSION OF TAX-EXEMPT BONDING
Background
The Internal Revenue Code (U.S.C. 26 Section 142) provides
for exempt facility bonds for financing a range of facilities with
public benefits, including airports; facilities furnishing water, electric
energy or gas; and “local district heating or cooling facilities.”
The latter is defined as “a pipeline or network (which may be
connected to a heating or cooling source) providing hot water,
chilled water, or steam to two or more users for residential,
What the Act Does
The Act enables tax-exempt bonds to be used for financing
district energy plant and building connection assets as well as
distribution piping.
Rationale
The capital costs of district energy systems include not only the
piping distribution systems but also the plant facilities for producing
thermal energy and the equipment for transferring thermal
energy to building heating and cooling systems. Potential plant
investments provide key opportunities for increased efficiency, use
of renewable energy and reduced carbon emissions. By reducing
interest costs, tax-exempt financing reduces debt service costs and
thus stimulates increases in the application of these low-carbon
systems and the public benefits they provide.
TITLE III: ENERGY SUSTAINABILITY AND EFFICIENCY GRANTS
FOR INSTITUTIONS
Background
The Energy Independence and Security Act of 2007
authorized the Energy Sustainability and Efficiency Grants
for Institutions program. In conjunction with efforts to
appropriate funds for this program, TREEA would amend
the authorization to eliminate constraints that impair the
effectiveness of the program.
What the Act Does
The Act:
• raises the cap on the program’s grants to $20 million (while
increasing the local cost-share requirement from 40 percent to
70 percent);
• increases caps on technical assistance grants (while retaining
local cost-share requirements);
• increases the authorized annual funding for the grant program
to $500 million;
• extends program eligibility to not-for-profit district energy
systems; and
• extends the time period of the grant and loan program through
FY 2015.
Rationale
The increase in the cap will enable grants to larger projects
with greater efficiency gains, and the increase in authorized
funding will result in an increased number of beneficial projects.
These increases are consistent with the characteristics of projects
submitted in response to a U.S. Department of Energy solicitation
using $156 million in American Recovery and Reinvestment Act
funds. In this solicitation, which was oversubscribed by a 25-to- 1
ratio, the maximum requested federal share was $60 million, with
an average of more than $10 million. The time extension will allow
Congress to appropriate funds to this program – which remains
to be done. These changes will expand the ability of this program
to reduce greenhouse gas emissions, create jobs, increase grid
reliability and enhance energy security.
Analysis of Impacts
SCOPE OF THE ANALYSIS
This analysis addresses the impacts of Title I, which is anticipated
to affect both the district energy sector and the industrial sector. Title
II impacts will be entirely within the district energy sector. Title II is
largely expected to stimulate borrowing that would otherwise not
occur, so there is not expected to be significant foregone interest
income tax revenue. Title III amends the authorization for a program
created by the Energy Independence and Security Act of 2007, but
will have no impact unless and until funds are appropriated.
The analysis focuses on four types of impacts:
1. Project economics – How will the provision affect the economics of representative projects such that it provides an appropriate and effective incentive to invest?
2. Extent of impact – How many and what kinds of projects will
occur as a result of the provision?
3. Scoring – What level of investment will be stimulated by the provision, and what are the projected costs to the U.S. Treasury?
4. Primary energy and greenhouse gas reduction – What level of
reductions will occur in primary energy consumption and greenhouse gas emissions?
