News From My Backyard: Renewable Energy Bills Fly Through Oregon House

The Oregon State House passed a package of expansive tax credits and mandates on Thursday that are designed to compliment the proposed Renewable Energy Standard and position the state as a leader in renewable energy.

The House unanimously approved an expansion of tax credits promoting renewable energy and energy efficiency for both businesses and individuals. Legislation intended to jumpstart the biofuels industry in Oregon with a mix of production incentives and blending requirements also passed the House with only four "No" votes. The bills now move to the Senate.

The three bills all received broad support from an unusual set of bedfellows: environmental advocates lobbied alongside the Oregon Farm Bureau, the Oregon Business Association and others to give the renewable energy package bipartisan momentum.

The biofuels bill, House Bill 2210, provides a package of incentives for the production of biofuels and the production and collection of biofuel feedstocks in Oregon. The bill also includes a renewable fuels standard that requires the blending of an increasing percentage of ethanol and biodiesel in gasoline and diesel sold in Oregon, provided that production of biofuels in Oregon grows to a sufficient size.

House Bill 2211 expands the popular and successful Business Energy Tax Credit (BETC) in Oregon. Currently, the credit provides a tax credit of 35% of eligible project costs up to a maximum of $3.5 million on renewable energy and energy efficiency projects. Businesses manufacturing components and technologies used in renewable energy and energy efficiency products are also eligible for the BETC. The BETC thus provides incentive for both the expanded use of renewable energy and energy efficiency, as well encouraging industries production renewable energy and energy efficiency products to locate manufacturing in Oregon.

HB 2211 would expand the BETC to cover 50% of eligible project costs and raise the maximum credit up to $10 million.

The BETC is already the largest business tax break on Oregon's books, with an estimated revenue impact of $23 million for the 2007-09 budget cycle. The proposed expansion would cost the state another $1.9 million in 2007-09, according to state estimates, increasing to more than $12 million in 2009-11.

The expansion of the BETC will position Oregon at the forefront of states courting new jobs in manufacturing in the renewable energy and energy efficiency sectors.

According to solar energy developers I have spoken to here in Oregon, the expanded BETC, along with revised and more liberal net metering and interconnection rules that will go into effect next year, will make solar installations up to two megawatts in size 'pencil out' financially in Oregon. The BETC will thus also help create a more robust solar energy industry in Oregon.

The third bill, HB 2212, expands the Residential Energy Tax Credit (RETC) for individuals. Currently, the RETC offers tax credits of up to $1,000 for installing energy efficient appliances and heating and cooling systems, up to $6,000 for solar photovoltaic systems, and up to $1,500 for other renewable energy systems, including small wind and solar hot water heating. However, an individual can claim the RETC for only one installation in any given calendar year.

HB 2212 would raise the maximum credit for energy efficient appliances and heating and cooling systems to $1,500 and the credit for wind, solar hot water, fuel cells and other renewable energy technologies up to $6,000 to match the current credit for solar photovoltaics. The bill would also allow an individual to claim a tax credit for more than one system in the same calendar year (for example, for both a solar photovoltaic system as well as for energy efficient appliances).

The three bills passed by the House are part of a package of legislation promoting renewable energy in Oregon proposed by Governor Kulongoski [see previous post]. The last remaining major component of that package is the proposed 25% by 2025 Renewable Energy Standard (RES). Hearings are beginning on the proposed RES next Tuesday, March 6th in the Oregon Senate Environment Committee [more on that soon]. You can find much more on the proposed Renewable Energy Standard here.

There's more on the bills that passed on Thursday at the Oregonian here.

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