Tuesday, July 26, 2011

Sustainability: Tool box

Officials in NC now have one more strategy to add to their growing tool box when financing energy conservation projects; Qualified Energy Conservation Bonds (QECBs).  Effectively, QECB’s allow you to buy-down a 5% interest rate to 1.5% (the federal government provides a cash subsidy for 70% of the taxable interest rate).
These bonds can be used to finance expenditures related to:
1. Reducing energy consumption in publiclyowned buildings by at least 20 percent,
2. Implementing green community programs,
3. Rural development involving the production of electricity from renewable energy resources,
4. Any qualified facility……which include wind facilities, closedloop and openloop biomass facilities, geothermal or solar energy facilities, small irrigation power facilities, landfill gas facilities, trash to energy facilities, hydropower facilities and marine and hydrokinetic renewable energy facilities
5.  Expenditures with respect to research facilities, and research grants, to support research in –
a.       Development of cellulosic ethanol or other nonfossil fuels,
b.      Technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels,
c.       Increasing the efficiency of existing technologies for producing non
fossil fuels,
d.      Automobile battery technologies and other technologies to reduce fossil fuel consumption in transportation, or
e.      Technologies to reduce energy use in buildings
6. Mass commuting facilities and related facilities that reduce the consumption of energy, including expenditures to reduce pollution from vehicles used for mass commuting.
7. Demonstration projects designed to promote the commercialization of –
a.       Green building technology,
b.      Conversion of agricultural waste for use in the production of fuel or otherwise,
c.       Advanced battery manufacturing technologies,
d.      Technologies to reduce peak use of electricity, or
e.      Technologies for the capture and sequestration of carbon dioxide emitted from combusting fossil fuels in order to produce electricity.
8.       Public education campaigns to promote energy efficiency.

Given that this federal subsidy is structured a lot like the Low Income Housing Tax Credit Program (LIHTC) and that that program is arguably the most successful of all federal affordable housing programs, I see nothing but good fortune in tea leaves for it.

For more general information about QECBs, visit: http://www1.eere.energy.gov/wip/solutioncenter/webcasts/default.html (search for QECB)
Source: Mary Tiger, UNC Environmental Finance Center.

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