This report describes the background and primary policy issue areas affecting renewable energy, including budget and funding, tax incentives, electricity regulatory initiatives, renewable fuels, and climate change. For renewable energy, these policies included a focus on the production of both liquid fuels and electricity. By the time that the Energy Policy Act of 2005 (EPACT) was enacted, a variety of tax, grant, loan, and regulatory provisions had been established for renewable fuels. Action in the 110th Congress

Economic and environmental concerns—namely energy security, international competitiveness, high energy prices, air pollution, and climate change—are now driving policy proposals to support renewable energy R&D and market deployment. 110-140 ) and the Consolidated Appropriations Act ( P.L. 110-161 ) increased support for renewable energy. 110-343 , Division B) provided several billion in tax incentives for renewables. The Continuing Appropriations Resolution for FY2009 ( P.L. Biofuels and Other New Program Authorizations

Several biofuels programs authorized by EPACT have not been funded, including sugar cane ethanol (§208), biodiesel (§757), advanced biofuels (§1514), and cellulosic ethanol (§942, §1511, §1512). P.L. 2638, Continuing Appropriations Resolution

On September 24, 2008, the House substitute to the Senate substitute to the proposed Department of Homeland Security Appropriations Act, 2008 ( H.R. P.L. Also, the law has several incentives for biofuels. The renewable energy incentives include $5.8 billion for the renewable energy electricity production tax credit (PTC), $1.9 billion for business solar (and fuel cell) credits, $1.3 billion for residential solar tax credits, and $267 million for clean renewable energy (tax credit) bonds. 110-343 , Division B, §101 and§102) extended the PTC for windfarms for one year, through the end of 2009. 1424 . The Emergency Economic Stabilization Act of 2008 ( P.L. B, §103) extends the business solar tax credit at the 30% level for eight years, through the end of 2016. 6 . H.R. 110-140 ). Cellulosic feedstocks may be cheaper and more plentiful than corn, but they require more extensive and costly conversion to ethanol. Renewable Fuel Standard (RFS)

			New Goals Set By the Energy Independence Act

Section 202 of the Energy Independence and Security Act of 2007 ( P.L. The new standard starts at 9.0 billion gallons in 2008 and rises to 36 billion gallons in 2022. 110-329 ) continues FY2009 funding at the FY2008 level through March 6, 2009. It does not provide for a funding increase. 110-246) Provisions

The enacted version of the farm bill ( H.R. The law contains provisions that extend and/or expand upon renewable energy (and energy efficiency) provisions of the Farm Security Act of 2002 ( P.L. 110-329 ( H.R. The cost of incentives are offset by a freeze in certain oil and natural gas deductions, a reduced foreign tax credit for certain foreign oil and gas income, reduced deductions for certain securities transactions, a change in the Federal Unemployment Tax Act (FUTA) surtax, and an increase of the Oil Spill Liability Trust Fund tax.
Renewable energy can be used to produce liquid fuels and electricity. A variety of funding, tax incentives, and regulatory policies have been enacted to support renewables as a means for addressing concerns about energy security, air pollution, international competitiveness, and climate change. This report reviews the background for renewables and describes the current congressional debate.
Budget and funding issues are key concerns. The Energy Policy Act of 2005 authorized several new renewable energy demonstration and deployment programs, but most of them have not been funded. Further, the Energy Independence and Security Act of 2007 (P.L. 110-140) authorized several new renewable energy programs that have not yet received appropriations. The Consolidated Appropriations Act for 2008 (P.L. 110-161) increased Department of Energy (DOE) renewable energy funding by $31.4 million (7%). The Continuing Appropriations Resolution for FY2009 (P.L. 110-329, H.R. 2638) continues DOE funding at the FY2008 level through March 6, 2009.
Tax policies are also at issue. The interaction of the federal renewable energy electricity production tax credit (PTC) with state renewable portfolio standard (RPS) policies has forged a strong incentive for wind energy development. The Emergency Economic Stabilization Act of 2008 (P.L. 110-343 [Division B], H.R. 1424) extends the PTC for wind farms for one year (three years for most other renewables) through the end of 2009, provides $800 million for a new category of clean renewable energy (tax credit) bonds, and extends for eight years the 30% level for the business solar tax credit and the 30% residential solar tax credit. Further, the law repeals nearly $17.7 billion in tax subsidies for oil and natural gas and reduces certain other financial incentives that will be used to offset the cost of the tax incentives for renewable energy ($9.1 billion) and energy efficiency ($3.6 billion).
The ethanol fuel issue intensified for much of the 110th Congress. Corn ethanol production climbed rapidly, but appeared to be causing food price increases. Concerns about rising food prices and apparent limits to the long-term potential for corn ethanol have brought a focus on cellulosic ethanol. Cellulosic sources avoid many limits on corn and appear to have much lower net CO2 emissions, but they require an extensive and costly conversion process. P.L. 110-140 set a new renewable fuels standard (RFS), which starts at 9.0 billion gallons in 2008 and rises to 36 billion gallons in 2022. P.L. 110-343 (H.R. 1424) and the farm bill (P.L. 110-246, H.R. 6124) contain several tax incentives and other provisions for biofuels.