New Clean Renewable Energy Bonds
New clean renewable energy bonds (CREBs) are tax credit bonds the proceeds of which are used for capital expenditures incurred by governmental bodies, public power providers, or cooperative electric companies for a “qualified renewable energy facility.”
Qualified renewable energy facilities include those that generate electricity from the following resources: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, marine renewable, and trash combustion facilities.
CREBs have been authorized since 2005. New CREBs replaced CREBs in 2008; the 2008 legislation reduced the amount of the credit to 70% of the amount deemed necessary to enable the New CREBs to be marketed at par.
The American Recovery and Reinvestment Act provides for a one-time $1.6 billion additional limitation, allocable by the U.S. Department of Treasury as one-third to state, local, and tribal governments, one-third to public power providers, and one-third to electric cooperatives. The Internal Revenue Service is not currently accepting applications for allocations, having essentially allocated the full amount of New CREBs. If allocations are unused, they may become available in the future.
Similar to the option described above for QECBs, after March 18, 2010, issuers of New CREBs may elect to receive a direct payment from the U.S. Treasury equivalent to and in lieu of the nonrefundable tax credit that would otherwise be provided to the bondholder.
Application to Energy Financing Programs
New CREBs could provide funding for projects to be owned by a public entity, municipal utility, or cooperative electric company, but may not finance improvements owned by or for the direct benefit of private parties.