In order to encourage a greater investment in renewable energy, the government has enacted an investment tax credit, also known as the ITC. This credit, which is issued in cash grants, encourages the development new types of renewable energies that aren't covered by existing laws. The ITC is more beneficial than the PTC for offshore wind power. Congress recently changed the tax code to allow offshore wind to be eligible for the ITC. America's future prosperity will depend on strong investment in renewable energy.
Subsidy subsidies
Some people are supportive of renewable energy subsidies. Others oppose them. The health benefits of the subsidies and the need for a low-carbon future are two reasons that many people favor them. Others believe they should end because renewable energy sources outperform traditional forms.
Subsidies for fossil fuel industries are huge. In FY 2017, renewable energy subsidies fell nearly 45% from their peak of FY 2017. However, this does not mean that renewable energy subsidies are dead. In fact, a recent report shows that fossil fuel subsidies are rebounding. The amount of fossil fuel subsidies has increased by almost 7 percent each year. This is due in part to the rising fuel consumption of developing countries which will continue to increase fossil fuel use.
Credit for investment taxes
The government's Renewable Energy Investment Tax Credit (ITC) program provides incentives for renewable energy projects. Current deadline to place solar projects into service is December 31, 2030. A new legislative recommendation will extend that deadline and offer incentives to solar projects that take longer to enter service. The ITC may go up to 4 percent for solar projects installed after December 31, 2036.
The tax incentives provided by the act include tax incentives for electric or hydrogen-powered vehicles, as well as energy efficiency and carbon sequestration. Additional grant programs can be found in the act for interregional transmission projects and offshore wind.
Treasury cash grant program
Government agencies can fund energy projects with the Treasury cash grant program for government-renewable energy policy. The cash grants are in lieu of the ITC and PTC so taxpayers do not need to claim them. To qualify for the cash grants, projects need to meet certain criteria. A project that does not meet these requirements could be disqualified. This is stated clearly in Treasury guidance materials.
Cash grants will be issued within 60 days of the submission. Treasury must approve and review applications for projects that won't be put into service in 2009/2010. Further, any additional information must not be submitted after ninety days from the date the project goes into service.
Renewable energy zones are being developed
Australia has always made renewable energy zone development a priority. These government-controlled statutory authorities are responsible for coordinating REZ projects, taking a holistic approach to planning and development, and working with communities to ensure benefits are shared. The powerful tool of REZs is grid-connected renewable power development.
The development of renewable energy zones requires significant public funding, which cannot be provided solely by the public sector. However, the government can intervene in the early stages to help reduce market risks and finance deployments. This also allows for private sector investment. Venture capital firms may also be able to finance large-scale deployment projects. However, most venture capital firms only have a three- to seven-year investment period.