Industry meetings kick off GEA expo; Gov’t offers both clarity and confusion on geothermal taxes; IRS releases notice on PTC; Proposed EPA emissions standards; Potential gov’t shutdown

GEA is kicking off its annual Geothermal Energy Expo this week with a Geothermal International Meeting and GEA Members Meeting this Sunday in Las Vegas; GEA will be live blogging from the Geothermal Event of the Year. Meanwhile in DC, developments this week provide both clarity and confusion on the impact of federal taxes toward geothermal energy. The IRS has issued a notice on PTC requirements. EPA releases proposed emissions standards for new power plants. A government shutdown could affect agencies’ productivity after Monday.

GEA's annual Geothermal Energy Expo kicks off this week (photo from 2011 Expo)
GEA’s annual Geothermal Energy Expo kicks off this week (photo from 2011 Expo)


Geothermal International Meeting and GEA Members Meeting to Kick Off Expo Activities in Las Vegas, GEA Live Blogging from Geothermal Event of the Year
Impact of Federal Taxes on Geothermal Energy Spirals in Clarity and Confusion
IRS Issues Notice on PTC Requirements
EPA Releases Proposed Emissions Standards for New Power Plants
Government Shutdown Could Affect Agencies Starting Next Week

Geothermal International Meeting and GEA Members Meeting to Kick Off Expo Activities in Las Vegas, GEA Live Blogging from Geothermal Event of the Year
Every year, the GEA’s Geothermal Energy Expo® hosts the world’s largest gathering of vendors providing support for geothermal resource exploration, characterization, development, production and management.  It provides a unique opportunity for exhibitors to showcase their projects, equipment, services and state of the art technology to the geothermal community. This year’s GRC Annual Meeting and GEA Geothermal Energy Expo is at the MGM Grand Hotel and Resort in Las Vegas, September 29 through October 2, 2013.

The events will be packed with opportunities for companies and individuals seeking participation or guidance in the U.S. market voice and international market activities.

The East Africa Geothermal Partnership Workshop and Planning Session is one of the first activities, and will be 11am to 1pm on Sunday, September 29 at MGM Grand Hotel’s Room 104/105. This is an open meeting. Karl Gawell, GEA Executive Director will make introductions, and John Garrison Senior Energy Advisor, USAID Bureau for Africa will review the USAID Power Africa Initiative. John Hammond Acting EAGP Director & Senior Director, U.S. Energy Association will lead discussion on the East Africa Geothermal Partnership. The group will discuss Accomplishments & Current Activities Future Plans. Steve Hirsch, Senior Technical Advisor to EAGP will provide a East Africa Country Brief Review: Overview of Geothermal Barriers & Opportunities in Key Countries. Focus of concluding Discussion will be on how EAGP can better serve and communicate with the U.S. geothermal industry.

GEA’s Annual Members Meeting and Board Elections will be 1-3pm on Sunday, September 29th in the MGM Grand Room 104-105. GEA leadership will discuss the past year and will engage in a discussion about how to move the industry forward in the year ahead. This is the opportunity for all GEA members to have their voices heard. In addition, the GEA Board has approved five nominations for elected seats on the GEA Board of Directors. The meeting is open to GEA members and the public is welcome to listen. Following the meeting, at 3pm, there will be a short Welcome Meeting with GEA Members for the visiting Turkish Delegation.

GEA will be adding live updates to GeoEnergyWire at Geoenergist.wordpress.com. Check for updates between September 29 and October 2.

Impact of Federal Taxes on Geothermal Energy Spirals in Clarity and Confusion
By Karl Gawell, GEA ED — This past week has seen both clarity and confusion on how federal taxes will impact geothermal and other renewable power projects. The Internal Revenue Service (IRS) issued new guidance to help address how the current law works, and then Congressional leaders sought to put tax reform back on the agenda for Congress.

First, the clarity: The IRS notice clarifies beginning of construction requirements for the renewable energy production tax credit (PTC) or the investment tax credit (ITC). Notice 2013-60 provides a method for taxpayers to satisfy both the continuous construction and continuous efforts tests. It also makes the master contract provision in Notice 2013-29 applicable for safe harbor purposes and allows taxpayers to transfer a facility after construction has begun without disqualifying it for the PTC or ITC.

Now for the confusion: House Republican leadership bolstered the prospects of a major tax code overhaul proposal by linking it to legislation to lift the nation’s debt limit. Little is known about what such a proposal would or could include. The House Ways and Means Committee has engaged in a public and bipartisan process examining tax reform, but has not yet produced consensus legislation based on that process. As a result, any linkage on the debt limit may have to be to an agreed process for consideration of a bill yet to be written.

How Congress will proceed on renewable tax incentives is at best unclear. So far, various legislation has been introduced that would take entirely different approaches.

For example, Rep. Jan Schakowsky, D-Ill., introduced legislation that would permanently extend the renewable energy PTC, H.R. 2539, the Prioritizing Energy Efficient Renewables (PEER) Act. The bill would also eliminate the tax credit for intangible drilling costs, the domestic manufacturing tax credit for oil and gas and the percentage depletion credit for oil and gas wells.

Taking a different approach, Rep. Mike Fitzpatrick (R-Pa.) introduced bill H.R. 2987 to extend the PTC through 2014, then reduce it by 10 percent a year until hitting 60 percent in 2018, after which it would expire in 2020.

According to North American Wind Power, the American Wind Energy Association (AWEA) is looking to include an extension of the PTC as part of upcoming Capitol Hill discussions on tax reform. They will be facing some stiff opposition. Two dozen conservative groups, including Americans for Prosperity, Heritage Action and FreedomWorks, sent a letter to Congress calling for an end to the wind PTC when it expires at the end of this year. “If Congress is serious about comprehensive tax reform that lowers rates for everyone, then special provisions like the PTC that clutter the tax code should be first on the chopping block,” they wrote.

With some 60 different tax provisions expiring, there is sure to be pressure to do something from a wide range of interests. In some offices, talk has begun about the need for a possible tax extenders bill towards year’s end. Even if tax reform proceeds, it may take months to reach completion, making an extender’s bill an option whether Congress proceeds with tax reform or not.

Nothing can be certain in Washington about how Congress will proceed. Perhaps Ben Franklin was only half right when he opined that “in this world nothing can be said to be certain, except death and taxes.” See also the next story on this page — IRS Issues Notice on PTC Requirements — and IRS Notice 2013-60 (Irs.gov, PDF).

IRS Issues Notice on PTC Requirements
On September 20, the IRS issued a new notice clarifying the “begin-construction” requirement for both the production tax credit (PTC) under Section 45 of the Internal Revenue Code and the investment tax credit (ITC) under Section 48. GEA member Stoel Rives LLC explains that the notice focuses on three areas — “continuous construction,” “master contract rule,” and “transfers after construction begins” on its Web site, Stoel.com.

Developers had previously said the “continuous work requirement” for the tax incentive was unclear. IRS says it will consider the requirement to be met on any project placed in service by December 2015, while developers whose projects go into service after 2015 will still have to show continuous work. Projects qualify if they have started significant physical work or have incurred at least 5% of the project cost. Keith Martin, Chadbourne & Parke LLP told GEA: “The notice may cause developers to shift back to the physical work test rather than try to incur at least 5% of the project cost this year.” The IRS notice is available at Irs.gov, PDF.

EPA Releases Proposed Emissions Standards for New Power Plants
On September 20, the U.S. Environmental Protection Agency announced its proposed limits on carbon pollution generated by any new U.S. power plant. In a press release EPA mentions its efforts to reflect public opinion in its proposed standards, saying “more than 2.5 million public comments, including those from the power sector and environmental groups” were received. In implementation, EPA would also need to consider the wide variety of energy usage state-to-state as the agency issues its guidelines to states, which will then submit plans on how to reach carbon dioxide emissions goals (Eenews.net.

A 2009 EPA determination concluded that greenhouse gas pollution threatens Americans’ health and welfare, in large part by influencing long-lasting changes in climate that can have a range of negative effects. In a Huffingtonpost.com op-ed, EPA Administrator Gina McCarthy, who comes from a public health background, outlines the health concerns of climate change which are part of the reasoning behind the regulations. “Beyond the costs of property destruction and disaster relief, there are significant public health risks and costs from climate change,” McCarthy states. “Warmer temperatures spurred by carbon pollution worsen smog and pollen levels. This can lead to more asthma attacks and other respiratory problems. The nation’s asthma rates have already doubled over the past 30 years.”

McCarthy explained how the proposed standards are based on a cost-effective model. “Since 1970, every $1 invested to comply with Clean Air Act standards has returned $4-8 in economic benefits. We estimate that by 2020, benefits from the Clean Air Act will outweigh the costs by a ratio of 30 to 1. These standards were developed the same way, based on proven technologies and common sense approaches.”

President Obama has said EPA would head emissions standards for existing power plants, not just new facilities, by 2014. However, this current proposal applies only to future power plants. The proposal for a nationwide rule to standardize emissions first came out in March 2012 (Geo-energy.org, PDF) and was in the meantime been referred to by the President as part of his Climate Action Plan, as outlined in his June 25 speech in DC (Geo-energy.org, PDF).

Specifically, the proposal states new large natural gas-fired turbines would be limited to 1,000 pounds of CO2 per MWh. A September 20 EPA news release (Yosemite.epa.gov) outlines further limits: “new small natural gas-fired turbines would need to meet a limit of 1,100 pounds of CO2 per megawatt-hour. New coal-fired units would need to meet a limit of 1,100 pounds of CO2 per megawatt-hour, and would have the option to meet a somewhat tighter limit if they choose to average emissions over multiple years, giving those units additional operational flexibility.”

EPA’s comment period will be open for 60 days following publication in the Federal Register. See “How to Comment on the 2013 Proposed Carbon Pollution Standard for New Power Plants,” Epa.gov

Government Shutdown Could Affect Agencies Starting Next Week
Congress and President Obama are in the process of talks to pass a government funding extension, with current appropriation laws scheduled to run out on Monday, September 30. Agencies and analysts are assessing the affects of a potential shutdown. Jeff Spross at Thinkprogress.org writes, “For instance, EPA oversees environmental permits for construction projects at the regional and local level. That permitting halted under the last shutdown [in 1995 and 1996]. One fifth of federal contracts in the D.C. area alone — worth $3.7 billion — went on hold in 1995-1996, and employees of contractors were reportedly furloughed without pay. Permits for the drilling and processing of oil and natural gas stopped. Clean up of 609 toxic waste sites ground to a halt, and 2,400 Superfund workers were sent home.”

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