US Treasury DOE launch program replacing tax credits with direct payments for biofuel projects

In Washington, US Treasury Department and the US Department of Energy announced $3 billion for direct payments in lieu of tax credits in support of an estimated 5,000 biomass, solar, wind, and other types of renewable energy production facilities.

The Treasury has also provided guidance for businesses will need to submit a successful application, including terms and conditions, and a sample application. The Recovery Act authorized Treasury to make direct payments to companies that create and place in service renewable energy facilities beginning January 1, 2009.

Previously, these companies could file for a tax credit to cover a portion of the renewable energy project’s cost; under the new program, applicants would agree to forgo tax credits down the line in favor of an immediate reimbursement of a portion of the property expense. In 2006, approximately $550 million in tax credits were provided to 450 businesses.

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