Signing the American Recovery and Reinvestment Act of 2009, President Barack Obama has included a new tax credit to encourage investment in efficient energy production equipment manufacturing facilities.

A new 30% investment tax credit is available for projects that establish, re-equip or expand manufacturing facilities for fuel cells, micro-turbines, renewable fuel refineries and blending facilities, energy saving technologies, smart grid technologies and solar, wind and geothermal technologies.

In addition, as part of the Act, close to $17 billion of funding for the Department of Energy (DoE) Office of Energy Efficiency and Renewable Energy (EERE).

The funding is a nearly tenfold increase for EERE, which is expected to use the bulk of the new funding in direct grants and rebates, although $2.5 billion will support its applied research, development and deployment activities, including $800 million for biomass.

A further $400 million will support the establishment of an agency to support innovative energy research.
Furthermore, the Act stipulates that $3.2 billion will go toward Energy Efficiency and Conservation Block Grants, which were established in the Energy Independence and Security Act of 2007, but were not previously funded, to support energy audit programmes and projects to install fuel cells and solar, wind, and biomass power projects at government buildings.

The economic stimulus bill also stipulates that $5 billion will go towards the improving domestic household efficiency and $4 billion to rehabilitate and retrofit public housing, including increasing the energy efficiency of units.

Federal buildings and fleets will also become greener under the new bill, with $4.5 billion to convert federal buildings into ‘high-performance’ green buildings likely to feature on-site generation.

The tax section of the Act provides greater tax credits for clean energy projects at homes and businesses and for the manufacturers of clean energy technologies. For homeowners, the Act increases a 10% tax credit for energy efficiency improvements to a 30% tax credit, eliminates caps for specific improvements (such as windows and furnaces), and instead establishes an aggregate cap of $1500 for all improvements placed in service in 2009 and 2010 (except biomass systems, which must be placed in service after the Act is enacted).