On May 12, 2010, Senators Kerry and Lieberman introduced the 985 page American Power Act (the “APA”). While the central elements of this proposed legislation are the provisions to regulate greenhouse gas emissions and to encourage the development of nuclear power–topics that will be covered in other F&J Client Alerts–the APA does contain a number of provisions designed specifically to encourage the development of a renewable energy industry in this country. In addition to those provisions, the APA further incentivizes the development of renewable energy projects by limiting greenhouse gas emissions and creating an emissions allowance program. However, the APA does not include a national renewable portfolio standard, which is a long sought after goal of the renewable energy industry.

The substantive sections bearing on the renewable energy industry are outlined by section below:

• Increases Size of Loan Guarantee Program. The APA increases the federal commitment to guarantee loans to develop projects using innovative technologies which will reduce greenhouse gas emissions. The federal commitment was increased by $53 billion of which $35.5 billion is committed to nuclear power facilities. As a result, there will be an additional federal commitment of $17.5 billion available to guarantee loans for renewable energy systems. (Section 1102)
• Funds A Loan Program to Assist Rural Consumers Achieve Energy Cost Savings and Reduction of Greenhouse Gases. The APA establishes a program to provide low cost loans to customers of not-for-profit electric suppliers who have borrowed money from the Rural Utilities Service (e.g. public power districts, electric cooperatives). Loans are to be granted and administered by those suppliers. Provision is made to verify energy savings and for the use of contractors to perform such verifications. (Section 1602)
• Directs Allocation of Emission Allowance to States to Support State Renewable Energy and Energy Efficiency Programs. The APA establishes programs designed to permit States and Indian tribes to receive emissions allowances for years 2012-2021, which they can use to generate resources to support State programs to increase energy efficiency and to encourage deployment of renewable energy facilities, and to further Smart Grid initiatives. The APA provides a formula for allocation of the allowances between the States based in part on population and relative energy use. (Section 1603)
• Establishes Supplemental Funding for Clean Energy Research and Development. The APA provides that, beginning no later than September 30, 2012 and through calendar year 2049, emission allowances will be distributed on a competitive basis to appropriate research and development entities to promote the development and deployment of clean energy technology. Clean energy technology includes technology that produces energy from solar, wind, geothermal, biomass, tidal wave, ocean or other renewable energy resources. Further, the APA amends the Clean Air Act to provide the formula for such allocation.(Section 1801; Section 781 of the Clean Air Act)
• Increases Tax Credit Program for Projects to Support Investment in New or Expanded Manufacturing Facilities. The APA amends the Internal Revenue Code to increase the 30% tax credits available by $5.0 billion of credits to encourage construction and expansion of manufacturing projects that will grow green energy manufacturing infrastructure in this country. (Section 4003)
• Permits the Secretary of Education to Award Grants for Programs of Study Focused on Renewable Energy and other Emerging Careers and Jobs. The APA permits the Secretary of Education to award grants to partnerships between local educational agencies, post-secondary institutions and representatives of the community to develop, implement and disseminate programs of study in career areas relating to clean energy, renewable energy, energy efficiency, climate change mitigation and climate change adaptation. Partnerships that use online learning and other innovative means to deliver the program of study and that focus on low-performing students and special populations are given priority in applying for grants. (Section 4101)
• Establishes an Online Clearinghouse for Information Related to Renewable Energy Sectors. The APA directs the Secretary of Labor to establish an Internet-based clearinghouse open to the public that aids career and technical education and job training programs for solar energy systems, wind energy systems, energy transmission systems, geothermal systems of energy and heating and energy efficiency technical training. In addition, the clearinghouse is required to contain information on processes needed to understand renewable energy systems. The clearinghouse would be available on the websites of the Departments of Education, Energy and Labor. (Section 4102)
• Directs the Secretary of Labor to Establish a Clean Energy Construction Careers Demonstration Project. The APA requires that within 180 days after enactment, the Secretary of Labor shall, by regulation and through issuance of appropriate guidance, establish a program that promotes middle class careers and quality employment in the green construction sector and advances efficiency and performance of construction projects that are funded by the APA. The program may include a requirement that contractors and subcontractors hire a minimum percentage of targeted workers for construction projects that are funded under the APA. (Section 4103)
• Establishes an Offset Credit Program for Domestic Emissions Reductions.The APA provides that, within 60 days after enactment of the APA, the Secretary of Agriculture and the Administrator of the Environmental Protection Agency (the “Administrator”) are to establish the Greenhouse Gas Emission Reduction and Sequestration Advisory Committee to advise on scientific and technical matters related to the offset program. The initial list of eligible offset project types related to the renewable energy industry are: landfill and natural gas systems and projects to avoid emissions from organic waste streams, including manure management, composting or anaerobic digestion projects. (Section 2001; Section 734 of the Clean Air Act)
• Establishes An Allocation of Emission Allowances. The APA amends the Clean Air Act to allocate emission allowances for, among other things, projects related to clean energy technology research and development (Section 1801), energy efficiency, and renewable energy.(Section 2101; Section 781 of the Clean Air Act)
• Studies on Impacts of Renewable Biomass Use. The Administrator, in consultation with the Secretaries of Agriculture and Interior, is required to study the impact of the use and combustion of renewable biomass (and gas or liquid fuel derivatives) on greenhouse gas emissions, environmental quality and resource conservation. A similar study is required on the impact of such use of biomass (and gas and liquid derivatives) on food production, including impacts on the cost of food and on each industry associated with the production of feed grains, livestock food and forest products. (Section 2501; Section 808 of the Clean Air Act)
• Definition of “Biomass”. The APA provides that the National Academy of Sciences will study and evaluate how sources of renewable biomass (a) contribute to increasing U.S. energy independence, (b) protect the environment and (c) reduce greenhouse gas pollution with the ultimate goal of evaluating the current definition of “renewable biomass”.(Section 2501; Section 809 of the Clean Air Act)

This article was prepared by Louis Sey Zimmerman (lzimmerman@fulbright.com or 512 536 4552), Travis J. Siebeneicher (tsiebeneicher@fulbright.com or 512 536 4585) and Girard P. Miller (girard.miller@fulbright.com or 612 321 2252) from Fulbright's Alternative Energy Practice Group.