The American Taxpayer Relief Act of 2012, extended several federal renewable energy credits for another year. However, with the constant uncertainty surrounding federal tax credits, along with severe state budget constraints, will the renewable energy industry be able to forge ahead based on tax incentives alone?
On the state level, at least, some jurisdictions are considering the idea of creating a “green bank” as a financial alternative for the renewable energy industry. “Green banks” are public-private partnerships “intended to provide low cost financing to clean energy projects,” according to a Forbes blog post by Ken Berlin of the Coalition for Green Capital. Connecticut established its own green bank in 2011.
In his State of the State address last week, New York Governor Cuomo proposed establishing a $1 billion green bank in the state. “The NY Green Bank would overcome a number of obstacles and uncertainties in the clean energy sector, including unstable federal funding and policy, uncoordinated action and disparate one-time subsidies at the state level, a lack of appropriate financial instruments, and apprehension in the investor community,” noted the Governor.
Connecticut established the first state green bank in the country. The bank, known as the Clean Energy Finance and Investment Authority “is a quasi-public clean energy finance authority that combines several existing state clean energy and energy efficiency funds, enables the new entity to make loans, and to leverage its capital with private capital, permitting private investment in and alongside the bank with the investors receiving a reasonable rate of return on their investments,” reports a Brookings Institution paper entitled State Clean Energy Finance Banks: New Investment Facilities for Clean Energy Deployment.
Only time will tell if the idea of establishing a green bank catches on with other states, but it is certainly starting to catch on in the Northeast..
For more information about federal and state renewable energy tax incentives, check out Bloomberg BNA’s Green Incentives Navigator.
In other developments . . .
The Louisiana Department of Revenue issued final regulations for the alternative fuel tax credit, according to a Bloomberg BNA Weekly State Tax Reportarticle.
By: Kathleen Caggiano
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