{ "id": "R43453", "type": "CRS Report", "typeId": "REPORTS", "number": "R43453", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 623249, "date": "2020-04-29", "retrieved": "2020-04-29T22:23:54.474419", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "The renewable electricity production tax credit (PTC) is a per-kilowatt-hour (kWh) tax credit for electricity generated using qualified energy resources. The credit expires at the end of 2020, so that only projects that began construction before the end of 2020 qualify for tax credits. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC\u2019s stated expiration date. Whether the PTC should be extended, modified, or allowed to expire as scheduled is an issue Congress may choose to consider. \nMost recently, the PTC was extended in the Taxpayer Certainty and Disaster Tax Relief Act of 2019, Division Q of the Further Consolidated Appropriations Act of 2020 (P.L. 116-94). For wind facilities, the PTC was extended for one year. Previously, construction had to begin on qualifying wind facilities before the end of 2019, and facilities that began construction in 2019 could claim a PTC that was reduced by 60% from the full PTC amount. With the one-year extension, wind facilities starting construction in 2020 became PTC-eligible. The PTC is reduced by 40% from the full PTC amount for wind projects beginning construction in 2020. For nonwind facilities, P.L. 116-94 extended the start of construction deadline by two years, from December 31, 2018, to December 31, 2020. \nThe PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 12 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2019, closed-loop biomass and geothermal technologies qualified for the full credit amount of 2.5 cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine, and hydrokinetic) qualified for a half-credit amount, or 1.2 cents per kWh in 2019. Wind facilities starting construction in 2019 will qualify for 40% of the full credit amount, whereas wind facilities that start construction in 2020 will qualify for 60% of the full credit amount. Credit amounts are adjusted annually for inflation.\nThe Joint Committee on Taxation (JCT) estimates that in 2019, foregone revenues (or tax expenditures) for the PTC were $5.1 billion. Before P.L. 116-94 was enacted, the JCT estimated that tax expenditures for the PTC would be $19.3 billion between 2019 and 2023. It was later estimated that the PTC extension in P.L. 116-94 will reduce tax revenue by an additional $2.1 billion between 2020 and 2029. Extensions or modification of the PTC could increase or decrease the estimated tax expenditures associated with this provision. \nThe PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy-efficiency and emissions-reduction objectives. Subsidies delivered as nonrefundable tax incentives often require renewable energy developers to find \u201ctax-equity\u201d partners to provide equity investments in exchange for tax credits. The use of tax equity reduces the amount of the incentive that flows directly to the renewable energy sector.\nThere are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. Extensions of the PTC might also include modifications to the phaseout for wind. Modifications to the PTC could include options that could make it easier for certain projects to receive benefits directly, such as allowing the option of grants or direct payments in lieu of tax credits. Another option would be to make the PTC a permanent feature of the tax code.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R43453", "sha1": "3ac43831f87bebbf3cd4513051b0b1a495d22ac9", "filename": "files/20200429_R43453_3ac43831f87bebbf3cd4513051b0b1a495d22ac9.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R43453", "sha1": "e0c7214aa1125338b3fb07a9dd116f0381aea83a", "filename": "files/20200429_R43453_e0c7214aa1125338b3fb07a9dd116f0381aea83a.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4927, "name": "Renewable Energy & Efficiency" }, { "source": "IBCList", "id": 4935, "name": "Energy Tax" } ] }, { "source": "EveryCRSReport.com", "id": 592008, "date": "2018-11-27", "retrieved": "2019-12-20T20:28:34.214332", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "The renewable electricity production tax credit (PTC) is a per-kilowatt-hour (kWh) tax credit for electricity generated using qualified energy resources. For nonwind technologies, the credit expired at the end of 2017, so that only projects that began construction before the end of 2017 qualify for tax credits. After 2016, the PTC for wind remains available, at reduced rates, for wind facilities that begin construction before the end of 2019. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC\u2019s stated expiration date. Whether the PTC should be extended, modified, or allowed to expire as scheduled is an issue Congress may choose to consider. \nMost recently, the PTC for nonwind technologies was retroactively extended for tax year 2017 as part of the Bipartisan Budget Act of 2018 (BBA18; P.L. 115-123). The PTC for wind was last extended in the Consolidated Appropriations Act, 2016 (P.L. 114-113). This legislation had extended the PTC for two years, through 2016, for all eligible technologies. Additionally, the PTC for wind was extended an additional three years, through 2019, but at reduced credit rates for wind facilities beginning construction in 2017, 2018, or 2019. \nThe PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 11 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2017, closed-loop biomass, and geothermal technologies qualified for the full credit amount of 2.4 cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine, and hydrokinetic) qualified for a half-credit amount, or 1.2 cents per kWh in 2017. Wind facilities starting construction in 2017 qualified for 80% of the full credit amount. Credit amounts are adjusted annually for inflation.\nThe Joint Committee on Taxation (JCT) estimates that in 2018, foregone revenues (or \u201ctax expenditures\u201d) for the PTC were $4.8 billion. Between 2018 and 2022, under current law, tax expenditures for the renewable electricity PTC are estimated to be $25.8 billion. Extensions or modification of the PTC could increase or decrease the estimated tax expenditures associated with this provision. \nThe PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy-efficiency and emissions-reduction objectives. Subsidies delivered as nonrefundable tax incentives often require those wishing to use the credit find \u201ctax-equity\u201d partners to provide equity investments in exchange for tax credits. The use of tax equity reduced the amount of the incentive that flows directly to the renewable energy sector.\nThere are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. The extension could apply only to nonwind technologies. If the PTC is retroactively extended for nonwind technologies, the phaseout that currently applies to wind could be applied to nonwind PTC-eligible technologies. Another option would be to remove the phaseout that applies to wind starting in 2017. Other forms of PTC phaseout have been proposed in recent years, including elimination of the inflation adjustment factor. Another option would be to make the PTC a permanent feature of the tax code.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "https://www.crs.gov/Reports/R43453", "sha1": "9844fd7e4f1049102de66b5991b1f718e83bf376", "filename": "files/20181127_R43453_9844fd7e4f1049102de66b5991b1f718e83bf376.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "https://www.crs.gov/Reports/pdf/R43453", "sha1": "e02f544bdca793d2dda058db648d1a5b0da7741b", "filename": "files/20181127_R43453_e02f544bdca793d2dda058db648d1a5b0da7741b.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4927, "name": "Renewable Energy & Efficiency" }, { "source": "IBCList", "id": 4935, "name": "Energy Tax" } ] }, { "source": "EveryCRSReport.com", "id": 586034, "date": "2017-07-26", "retrieved": "2018-10-08T20:46:14.228818", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "The renewable electricity production tax credit (PTC) is a per-kilowatt-hour tax (kWh) credit for electricity generated using qualified energy resources. For nonwind technologies, the credit expired at the end of 2016, so that only projects that began construction before the end of 2016 qualify for tax credits. After 2016, the PTC for wind remains available, at reduced rates, for wind facilities that begin construction before the end of 2019. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC\u2019s stated expiration date. Whether the PTC should be extended, modified, or allowed to expire as scheduled is an issue Congress may choose to consider. \nMost recently, the PTC was extended as part of the Consolidated Appropriations Act, 2016 (P.L. 114-113). This legislation extended the PTC for two years, through 2016, for all eligible technologies. Additionally, the PTC for wind was extended an additional three years, through 2019, but at reduced credit rates for wind facilities beginning construction in 2017, 2018, or 2019. \nThe PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 10 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2016, wind, closed-loop biomass, and geothermal technologies qualified for the full credit amount of 2.3 cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine and hydrokinetic) qualified for a half-credit amount, or 1.2 cents per kWh in 2016. Credit amounts are adjusted annually for inflation.\nThe Joint Committee on Taxation (JCT) estimates that in 2016, foregone revenues (or \u201ctax expenditures\u201d) for the PTC were $3.4 billion. Between 2016 and 2020, under current law, tax expenditures for the renewable electricity PTC are estimated to be $25.7 billion. Extensions or modification of the PTC could increase or decrease the estimated tax expenditures associated with this provision. \nThe PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy-efficiency and emissions-reduction objectives. Subsidies delivered as nonrefundable tax incentives often require those wishing to use the credit find \u201ctax-equity\u201d partners to provide equity investments in exchange for tax credits. The use of tax equity reduced the amount of the incentive that flows directly to the renewable energy sector.\nThere are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. The extension could apply only to nonwind technologies. If the PTC is retroactively extended for nonwind technologies, the phaseout that currently applies to wind could be applied to nonwind PTC-eligible technologies. Another option would be to remove the phaseout that is scheduled to apply to wind starting in 2017. Other forms of PTC phaseout have been proposed in recent years, including elimination of the inflation adjustment factor. Another option would be to make the PTC a permanent feature of the tax code.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R43453", "sha1": "049e7e8f60e4565686857692eeb5bb19d1aecab5", "filename": "files/20170726_R43453_049e7e8f60e4565686857692eeb5bb19d1aecab5.html", "images": {} }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R43453", "sha1": "01e1a4cc07ea890d0f7ff9ef759e2deb7ceacd57", "filename": "files/20170726_R43453_01e1a4cc07ea890d0f7ff9ef759e2deb7ceacd57.pdf", "images": {} } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4927, "name": "Renewable Energy & Efficiency" }, { "source": "IBCList", "id": 4935, "name": "Energy Tax" } ] }, { "source": "EveryCRSReport.com", "id": 457193, "date": "2016-11-18", "retrieved": "2016-11-28T21:06:00.556190", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "The renewable electricity production tax credit (PTC) is a per-kilowatt-hour tax (kWh) credit for electricity generated using qualified energy resources. For non-wind technologies, the credit is scheduled to expire at the end of 2016, so that only projects that begin construction before the end of 2016 qualify for tax credits. After 2016, the PTC for wind remains available, at reduced rates, for wind facilities that begin construction before the end of 2019. Since the PTC is available for the first 10 years of production at a qualified facility, PTCs will continue to be claimed after the PTC\u2019s stated expiration date. Whether the PTC should be extended, modified, or allowed to expire as scheduled is an issue Congress may choose to consider. \nMost recently, the PTC was extended as part of the Consolidated Appropriations Act, 2016 (P.L. 114-113). This legislation extended the PTC for two years, through 2016, for all eligible technologies. Additionally, the PTC for wind was extended an additional three years, through 2019, but at reduced credit rates for wind facilities beginning construction in 2017, 2018, or 2019. \nThe PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended 10 times. On several occasions, the PTC was allowed to lapse before being retroactively extended. In addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2016, wind, closed-loop biomass, and geothermal technologies qualified for the full credit amount of 2.3-cents per kWh. Other technologies (open-loop biomass, small irrigation power, municipal solid waste, qualified hydropower, marine and hydrokinetic) qualified for a half-credit amount, or 1.2-cents per kWh in 2016. Credit amounts are adjusted annually for inflation.\nThe Joint Committee on Taxation (JCT) estimates that in 2015, foregone revenues (or \u201ctax expenditures\u201d) for the PTC were $2.6 billion. The two-year extension of the PTC for non-wind technologies enacted in P.L. 114-113 was estimated to cost $1.4 billion over the 10-year budget window. Additionally, the 5-year extension with phaseout of the PTC for wind enacted in P.L. 114-113 was estimated to cost $14.5 billion over the 10-year budget window. Since the PTC is available for the first 10 years of qualified production, these costs are in addition to costs associated with PTCs being claimed by existing facilities. \nThe PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy efficiency and emissions reduction objectives. Subsidies delivered as non-refundable tax incentives often require those wishing to use the credit find \u201ctax-equity\u201d partners to provide equity investments in exchange for tax credits. The use of tax-equity reduced the amount of the incentive that flows directly to the renewable energy sector.\nThere are a number of policy options that might be considered related to the PTC. For example, the PTC could be allowed to expire as scheduled. Alternatively, the PTC could be temporarily extended. The extension could apply only to non-wind technologies. If the PTC is extended for non-wind technologies, the phaseout that currently applies to wind could be applied to non-wind PTC-eligible technologies. Another option would be to remove the phaseout that is scheduled to apply to wind starting in 2017. Other forms of PTC phaseout have been proposed in recent years, including elimination of the inflation adjustment factor. Another option would be to make the PTC a permanent feature of the tax code.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R43453", "sha1": "c2e3501420eef9c364f77bc2c1f73a95eecb0531", "filename": "files/20161118_R43453_c2e3501420eef9c364f77bc2c1f73a95eecb0531.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R43453", "sha1": "bee69c599af10577d2f41ff7d6f66ebe61e20107", "filename": "files/20161118_R43453_bee69c599af10577d2f41ff7d6f66ebe61e20107.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 4780, "name": "Energy & Natural Resources Trade & Economics" }, { "source": "IBCList", "id": 4927, "name": "Renewable Energy & Efficiency" }, { "source": "IBCList", "id": 4935, "name": "Energy Tax" } ] }, { "source": "EveryCRSReport.com", "id": 442950, "date": "2015-07-14", "retrieved": "2016-04-06T18:48:10.088805", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "The renewable electricity production tax credit (PTC) expired on January 1, 2015. The renewable electricity PTC is a per-kilowatt-hour tax (kWh) credit for electricity generated using qualified energy resources. Whether the PTC should be extended, modified, or remain expired may be considered in the 114th Congress. The PTC was initially enacted to promote the development of renewable energy resources, and it has been extended multiple times in an effort to continue advancing this policy goal. While some Members of Congress support extension or modification of the PTC, others say that the PTC should be allowed to expire. Extension of the PTC may be considered as part of \u201ctax extenders\u201d legislation.\nThe PTC for wind and closed-loop biomass was first enacted in 1992. When first enacted, the PTC was scheduled to expire on July 1, 1999. Since 1999, the PTC has been extended nine times. On four occasions, the PTC was allowed to lapse before being retroactively extended. Including the present expiration, the PTC has been allowed to lapse five times.\nIn addition to being extended, the PTC has also been expanded over time to include additional qualifying resources. In 2014, wind, closed-loop biomass, and geothermal technologies qualified for the full credit amount of 2.3-cents per kWh. Other technologies (open-loop biomass, small irrigation power, landfill gas, trash, qualified hydropower, marine and hydrokinetic) qualified for a half-credit amount, or 1.1-cents per kWh in 2014. Credit amounts are adjusted annually for inflation.\nThe Joint Committee on Taxation (JCT) estimates that in 2014, foregone revenues (or \u201ctax expenditures\u201d) for the PTC were $1.2 billion. Between 2014 and 2018, the JCT estimates that foregone revenues associated with the PTC for renewable electricity will total $16.4 billion, with another $0.1 billion each for Indian coal and refined coal over that same time period. Because these estimates are based on current law, any policy that extends or expands the PTC will increase the amount of foregone revenue. \nThe PTC has been important to the growth and development of renewable electricity resources, particularly wind. Tax incentives for renewables, however, may not be the most economically efficient way to correct for distortions in energy markets or to deliver federal financial support to the renewable energy sector. Tax subsidies reduce the average cost of electricity, increasing demand for electricity overall, countering energy efficiency and emissions reduction objectives. Subsidies delivered as non-refundable tax incentives often require those wishing to use the credit find \u201ctax-equity\u201d partners to provide equity investments in exchange for tax credits. The use of tax-equity reduced the amount of the incentive that flows directly to the renewable energy sector.\nSeveral policy options for the PTC have been proposed in recent years. These include (1) allowing the PTC to remain expired (current law); (2) temporarily extending the PTC (as was done as part of the Tax Increase Prevention Act of 2014 (P.L. 113-295)); (3) temporarily extending the PTC but providing some form of phase-out (the PTC Certainty and Phaseout Act of 2013 (H.R. 2987)); (4) eliminating the inflation adjustment factor to phase-out the PTC then repealing (the Tax Reform Act of 2014 (H.R. 1) or the PTC Elimination Act (H.R. 1901)); (5) permanently extending the PTC and making refundable (the President\u2019s FY2016 Budget); or (6) fundamentally reforming the PTC to provide a \u201ctechnology neutral\u201d incentive (the Baucus Energy Tax Reform discussion draft from 2013).", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R43453", "sha1": "48325d7aa52207ba186e047c824aedb6911149ea", "filename": "files/20150714_R43453_48325d7aa52207ba186e047c824aedb6911149ea.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R43453", "sha1": "2025936e9dd331ea5bb0451080ede37b16910803", "filename": "files/20150714_R43453_2025936e9dd331ea5bb0451080ede37b16910803.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 3905, "name": "Energy Tax Policy" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc805083/", "id": "R43453_2014Oct02", "date": "2014-10-02", "retrieved": "2016-03-19T13:57:26", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20141002_R43453_32228306e64fd8df852fbd1249e397281d4acce1.pdf" }, { "format": "HTML", "filename": "files/20141002_R43453_32228306e64fd8df852fbd1249e397281d4acce1.html" } ], "topics": [] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc332957/", "id": "R43453_2014Apr07", "date": "2014-04-07", "retrieved": "2014-08-27T12:47:05", "title": "The Renewable Electricity Production Tax Credit: In Brief", "summary": "This report provides a brief overview of the renewable electricity production tax credit (PTC). The first section of the report describes the credit. The second section provides a legislative history. The third section presents data on PTC claims and discusses the revenue consequences of the credit. The fourth section briefly considers some of the economic and policy considerations related to the credit. The report concludes by briefly noting policy options related to the PTC.", "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20140407_R43453_89928549339465060d533642cd272dc3b577f97c.pdf" }, { "format": "HTML", "filename": "files/20140407_R43453_89928549339465060d533642cd272dc3b577f97c.html" } ], "topics": [ { "source": "LIV", "id": "Electricity", "name": "Electricity" }, { "source": "LIV", "id": "Alternative energy sources", "name": "Alternative energy sources" }, { "source": "LIV", "id": "Energy tax credits", "name": "Energy tax credits" } ] } ], "topics": [ "Appropriations", "Economic Policy", "Energy Policy" ] }