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Federal gov't expands funding for renewable tech

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Last year, President Barack Obama announced that his FY 2014 budget will include a competitive grant program for states in an effort to develop renewable technologies and cut energy waste.

Here are highlights of the administration’s energy efficiency program:

  • $200 million for a “Race To The Top” type program that incentivizes states and local governments to become energy efficient
  • One-time funding from the federal government for green initiatives such as updating utility regulations; improving the energy grid; and sharing data across multiple stakeholders
  • Increase spending on renewable energy and energy efficiency research by about 50 percent to a total of $2.77 billion
  • Cut tax breaks for the oil industry
  • Increase funding for wind energy research
  • Decrease funding for new nuclear-power technologies and clean coal technology
  • Ask Congress to create a new trust fund for advanced vehicle research, funded with $2 billion in royalties from oil and gas drilling on federal property.

The Department of Energy currently has a $2 billion loan initiative that finances research into alternative technologies. However, the Obama administration’s green tech program has been a source of controversy due to taxpayer funding of bankrupt companies such as Solyndra, a solar panel manufacturer, and more recently, Fisker Automotive, an electric car manufacturer.

According to some observers, Obama’s plan is biased against natural gas and clean coal. Since the president first took office in 2009, the Environmental Protection Agency has made it harder for drilling companies to conduct fracking operations in areas that have natural gas reserves. The White House has also made it difficult for coal operators to monetize clean technologies such as liquefied fuel as well as filters that reduce emission.

Last year, the U.S. Air Force released details of its Energy Strategic Plan which calls for an operational shift toward energy efficiency and use of renewables. However, congressional oversight has also revealed that the Pentagon grossly overpays for biofuels as opposed to obtaining much cheaper conventional fuel.

Republicans and Democrats on Capitol Hill are going over similar proposals. Congress is considering the following, among others:

  • Allow renewable energy companies to have greater access to tax-advantaged structures
  • Eliminate tax breaks for oil and gas
  • Increase renewable fuels in vehicles
  • Promoting new measures to boost energy efficiency
  • Create tax incentives for commercial and consumer energy efficiency
  • Create tax incentives for international competitiveness and financing

If congress passes legislation creating tax incentives for commercial and consumer energy efficiency, it will lead to robust sales for some green tech manufacturers. Companies that can make energy efficient products will receive tax-preferred treatment by the marketplace.

Similarly, energy efficiency loan providers, such as Safe Bidco, should generate added interest from companies, homeowners, agencies, and local government. This week, the federal government announced higher efficiency standards for electricity distribution transformers. Given that many state governments, particularly blue states, are struggling to obtain tax revenue in this economy, most are likely to secure loans in order to upgrade their energy infrastructure.

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