Jonathan B. Wilson

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Legislation for Renewable Energy

Jonathan Wilson is an Atlanta attorney with more than 19 years of experience guiding growing private and public companies.  He currently serves as the outside general counsel of several companies and is the former general counsel of (NASDAQ: WWWW) and EasyLink Services (NASDAQ: ESIC).  He is also the founding chair of the Renewable Energy Committee of the American Bar Association's Public Utility Section.

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Monday, August 31, 2009

Wind Farms Set Wall Street Aflutter

Russell Gold, writing in the Wall Street Journal (sub. required), describes how the tax incentives available for renewable energy under the ARRA are juicing returns for investors in wind farms. 

He writes, "Bankers say this is the beginning of an active pipeline of new wind farm financing, as well as investment in large solar installations and geothermal facilities.  Project developers and Wall Street appear to be viewing the federal cash grant program as such a good deal, industry experts say, it may grow much larger than its Washington creators expected.  "The money is coming back," says Ethan Zindler, head of North American research at consultant new Energy Finance Ltd." 

4:26 pm edt 

Renewable Energy Around the Web: August 31, 2009
Check out our sister site's weekly compilation of renewable energy news and information from around the Web. 
8:24 am edt 

Saturday, August 29, 2009

California to Reverse-Auction Solar Power

In a first-of-its-kind move, the California Public Service Commission is proposing to require its investor-owned utilities to hold reverse auctions to determine the price they will pay for power from newly-developed solar generators between 1 and 20 MW.  (NY Times

Rather than have the PSC stipulate rates for solar power, the staff proposal, filed on Thursday, would require a series of auctions among the investor-owned utilities to determine the rate they would pay until such time as 1,000 MW of power had been installed.

According to Adam Browning, the executive director of Vote Solar, a San Francisco advocacy group, the reverse auction proposal fills a big hole in California's renewable energy program - photovoltaic projects that generate between one and 20 megawatts and can be built quickly and plugged into the existing transmission grid.

"With this program I think you'll see a lot of photovoltaic systems on otherwise unusable land, like railroad rights-of-way or wastewater plants that have lots of roof space," said Mr. Browning. "One other advantage of this type of policy is that it guarantees that only the people who make good business decisions are going to get these contracts."

Developers were generally positive towards the proposal. "Such an approach is very likely to spur a large volume of PV projects in the state," wrote Arno Harris, the chief executive of Recurrent Energy, a San Francisco-based solar developer, in an e-mail message.

An additional advantage to the proposal is that it would begin to develop data on the rates paid for solar power -- data that is not available today because most large solar projects negotiate confidential power purchase agreements. 

"One of the things this is likely to do is create some real valid data about the cost structure of distributed power plants," said Julie Blunden, vice president for public policy at SunPower.

Others expressed concern that the auction process might favor large developers or large projects to the detriment of smaller projects.

While the proposal remains to be implemented, it is a novel and creative way of solving the problem of introducing government stimulus without undercutting the competitive market.  As the NY Times piece notes, the Spanish solar market crashed last year when solar capacity hit the ceiling allocated by the government for incentives.  Once the incentives were gone, the value of solar fell to the floor.  A similar problem exists in any government-backed incentives program that artificially inflates the value of a particular good.

California's auction proposal encourages solar development but allows the market to set the price, thereby eliminating the risk of artificially inflating the price. 

6:55 am edt 

Wednesday, August 26, 2009

Real Estate Turns Around
Anecdotal evidence that the real estate market is rebounding:

"Signature Properties has been trying since 2005 to sell 4,000 finished lots in its Fiddyment Farm community, a former pasture and pistachio orchard northeast of Sacramento, California.

The developer sold 41 sites in April to Meritage Homes Inc. for $66,000 each, and another 41 in June to Hovnanian Enterprises Inc. for $68,000 apiece. This month, they got their best offer yet -- $103,500 each for 77 sites. "

"Signature Properties said no."

"We decided to build it out ourselves," said John Bayless, president of the Sacramento division of Signature Properties, a closely held developer in Pleasanton, California. "Our feeling is, ‘The tide's turning. Let's build ‘em.'"

7:22 am edt 

Monday, August 24, 2009

Renewable Energy Around the Web: August 24, 2009 7:26 am edt 

Sunday, August 23, 2009

New Legislation Encourages Natural Gas, Biomass
Maine Republican Senator Olympia Snowe, along with New Mexico Democrat Jeff Bingaman, have introduced a new bill that would provide tax incentives for the conversion of heating system from fuel oil to natural gas and biomass.

The Cleaner, Secure, Affordable Thermal Energy Act (S. 1643) was introduced in early August and referred to the Senate Finance Committee.  (You can track the status of renewable energy legislation on our legislative tracking page).

The Bill would create a 30 percent tax credit for costs associated with converting from a fuel oil to natural gas or biomass heating system. The credit is capped at $3,500 ($4,000 in the case of biomass stoves). To qualify, the replacement equipment must be energy efficientm meeting specified AFUE ratings.

The Bill would authorize bonus depreciation for property installed before 2012, in the case of business taxpayers, allowing them to immediately expense half the cost of qualifying property, depreciating the remaining balance over the typical cost-recovery period. The Bill would also allow school systems to finance natural gas and biomass conversions with Qualified Energy Conservation Bonds. 
7:03 am edt 

Friday, August 21, 2009

Sarah Palin Preaching Tort Reform
Sarah Palin has brought tort reform into the healthcare debate with another one of her facebook posts

She writes:

"President Obama's health care "reform" plan has met with significant criticism across the country. Many Americans want change and reform in our current health care system. We recognize that while we have the greatest medical care in the world, there are major problems that we must face, especially in terms of reining in costs and allowing care to be affordable for all. However, as we have seen, current plans being pushed by the Democratic leadership represent change that may not be what we had in mind -- change which poses serious ethical concerns over the government having control over our families' health care decisions. In addition, the current plans greatly increase costs of health care, while doing lip service toward controlling costs. "

I hope she takes the opportunity to explore loser-pays and related concepts as I've explored before

Anyone who thinks she's not running for office is simply not paying attention.  Palin has got a seat at the table on this debate and she's smartly using Web 2.0 tools to spread her message.

During the 2008 election Barack Obama was the only candidate to have mastered Web 2.0 tools to spread his message.  He was on Facebook and he was on LinkedIn.  By taking on these same tools, Palin is building a network of supporters, creating a virtual meeting place for them, and creating a free forum to communicate her views.

Because the Web is primarily a written medium she can use the platform to remedy the chief criticism leveled at her during the campaign -- that she is light on substance.  Her written posts are invariably well-written and footnoted.  She undoubtably has help from her staff, but that's fair game when you're a public figure.  Issue by issue she is building both a rapport and a resume to run again. 
9:01 pm edt 

Renewable Energy Legislation in Australia
The Australian legislature made new law yesterday with the passage of a bill that requires the generation of 20 percent of its electricity from renewable energy.  Sources said that the legislation could trigger up to $22 billion in investments to the sector.

The renewable energy law sets a statutory target of 9,500 gigawatt-hours (GWh) from renewable electricity sources in 2010, increasing to 45,000 GWh in 2020.

Related coverage: AP, Bloomberg, and WSJ.  

7:45 am edt 

Thursday, August 20, 2009

DOE Guidance on Qualified Advanced Energy Project Tax Credits

The U.S. Treasury Department and the Department of Energy ("DOE") last week issued guidance on the requirements for the new Qualified Advanced Energy Project ("QAEP") tax credits.

This program, which was created by the 2009 American Recovery and Reinvestment Act, provides a 30 percent federal income tax credit for investment in property which "re-equips, expands, or establishes a manufacturing facility" that produces renewable energy property. The QAEP credit is contained in Internal Revenue Code ("IRC") §48C.

Unlike most other renewable energy tax credits, a taxpayer wishing to claim the QAEP credit must be allocated an amount of credit by the Treasury Department, acting in consultation with DOE. The total amount of QAEP credit available for allocation is limited to $2.3 billion. The first round of allocations begins August 14, 2009 for 2009-2010. If less than $2.3 billion of credits are issued in the first round of allocations, an additional round of allocations will be made for 2010-2011

Applications for the first round of allocations are due on September 14, 2009.  I'll have a copy of our white paper on the application process available on by the end of the day.

7:57 am edt 

Wednesday, August 19, 2009

Is the FDIC Bankrupt?
Michael Shedlock (Mish), a blogger and investment banker, has calculated that the FDIC used the last of its funds on Friday's bank takeovers and is now out of money. 

That is not to say that the FDIC deposit insurance fund is short.  There is plenty of money left in the deposit insurance fund.  Rather, Mish's point is that the FDIC has expended the funds it had prior to Congress' authorization of an additional $100 billion just a few months ago.  The FDIC can keep on closing banks, but it will be spending money that it would not have were it not for that recent appropriation.

Are there more banks left to close?

Yes, yes and yes.  One writer, comparing data from the 1990-91 banking crisis, calculates that bank failures will continue through 2011 and that there could be as many as 1,000 additional bank failures, costing the FDIC nearly $900 billion. 
6:41 am edt 

Tuesday, August 18, 2009

Howard Dean Says Republicans "Want to Kill the President"
The scream-meister is at it again.  Doing his best to go over the top once more, DNC Chair Howard Dean accused Republicans of wanting to kill the President

In a radio interview the former Governor said, "the Republicans, they have no interest in this Bill (referring to health care).  They're using the 1994 playbook. Let's kill the bill and kill the president." 

I would be shocked, but after Speaker of the House Nancy Pelosi accused concerned town hall attendees of "carrying swastikas" and Majorithy Leader Harry Reid said that those frightened by Obamacare were "evil mongers" I seem to have lost the ability to be shocked.
4:56 pm edt 

In Memoriam: Robert Novak
Robert Novak died today at age 78, after a career of five decades in political reporting and commentary.

3:39 pm edt 

Monday, August 17, 2009

Senators Move to Separate Climate Change from Renewable Energy
At least four Senators have commented recently that the climate change provisions of Waxman-Markey should be separated from its renewable energy provisions.

Climate legislation would require 60 votes in the Senate. Most Republicans have said they oppose the cap-and-trade measure, and at least 15 of the Senate's 60-member Democratic majority have said the House-passed version would hurt the economy and needs to be revamped to win their support.

Senator Blanche Lincoln of Arkansas, along with Ben Nelson of Nebraska and North Dakota Senators Kent Conrad and Byron Dorgan have suggested that the climate measure be put off.

"We should separate the energy bill from the climate bill," Conrad said. ‘It needs to be done as soon as we can get it done," he said, referring to the energy legislation.

"The problem of doing both of them together is that it becomes too big of a lift," said Senator Lincoln in an interview last week. "I see the cap-and-trade being a real problem."
Senate Majority Leader Harry Reid has said that he would oppose separating climate change provisions from renewable energy.

Leaders of the Democratic-controlled Senate say they are sticking with their plan to combine a version of that bill with a separate measure mandating energy efficiency and the use of renewable sources such as solar and wind power. The legislation also provides for an extension of offshore oil and gas drilling in certain areas.

"I don't think we are going to take to the Senate floor a bill stripped of climate provisions," said Reid to reporters in Las Vegas on August 11. Reid has set a deadline of September 28 for committees to complete work on climate- change provisions.
3:31 pm edt 

Major Atlantic Storms Fail to Stir Energy Prices
AP is reporting that the first Atlantic storm of the 2009 hurricane season has not produced an appreciable change in energy prices. 
2:32 pm edt 

Sunday, August 16, 2009

What's Left of Obamacare?
So the Obama administration is now backing away from a 'public option' for financing healthcare insurance, and the provision in the bill that called for end of life counseling (which Sarah Palin derided as a 'death panel') has also been removed. 

Does anyone know what's left of Obamacare?  If it's not going to reduce healthcare costs (by driving down the cost of expensive treatments for the terminally ill that the President says amount to '80%' of the cost of healthcare) and if it's not going to provide a publicly-financed healthcare insurance alternative, what is it going to reform exactly? 

Backing down from a fight he cannot win it looks as though the President has reduced his own reform package to a nubbin of its prior self. 
6:02 pm edt 

Friday, August 14, 2009

Renewable M&A on the Rise
There may be a coming wave of mergers and acquisitions in the renewable energy space in India according to a new report out from Ernst & Young. 

According to the report, opportunities in renewable energy are attracting various types of developers and investors. Entities that are emerging as players include conventional energy developers looking to diversify into clean energy, large international utilities wishing to participate in the Indian opportunity, private equity-backed renewable energy development companies, and firms with existing renewable energy assets looking to expand their portfolio, among others. The Ernst & Young report sees all these players pursuing both organic and inorganic growth strategies. 

E&Y partner, Kuljit Singh, says, "In the near time frame, a significant number of assets are expected to change hands with some of the existing project owners refocusing efforts on core areas, raising financines by selling non-core assets and de-leveraging blance sheets."
7:32 am edt 

Thursday, August 13, 2009

Sarah Palin and 'Death Panels'
Sarah Palin responded to criticism from the White House in a new facebook post today. 

The President had referred to her earlier criticism of 'death panels' in the President's health care reform proposal, describing her cricism as 'wildly inaccurate'.

Palin's response was precise and factual:

"The provision that President Obama refers to is Section 1233 of HR 3200, entitled “Advance Care Planning Consultation.” [2] With all due respect, it’s misleading for the President to describe this section as an entirely voluntary provision that simply increases the information offered to Medicare recipients. The issue is the context in which that information is provided and the coercive effect these consultations will have in that context.

Section 1233 authorizes advanced care planning consultations for senior citizens on Medicare every five years, and more often “if there is a significant change in the health condition of the individual ... or upon admission to a skilled nursing facility, a long-term care facility... or a hospice program." [3] During those consultations, practitioners must explain “the continuum of end-of-life services and supports available, including palliative care and hospice,” and the government benefits available to pay for such services. [4]

Now put this in context. These consultations are authorized whenever a Medicare recipient’s health changes significantly or when they enter a nursing home, and they are part of a bill whose stated purpose is “to reduce the growth in health care spending.” [5] Is it any wonder that senior citizens might view such consultations as attempts to convince them to help reduce health care costs by accepting minimal end-of-life care? As Charles Lane notes in the Washington Post, Section 1233 “addresses compassionate goals in disconcerting proximity to fiscal ones.... If it’s all about obviating suffering, emotional or physical, what’s it doing in a measure to “bend the curve” on health-care costs?” [6]"

The numbers in the quotation above are footnotes to her post, all of which are available on the facebook post.

Whether you agree with her or note, it's refreshing to see a politician responding in writing.  You can't hide when you write.  If you've got the goods, you put them in a footnote and your case is made.  If you don't, well, you can't spin that.

On the point she makes, it is disturbing to see a healcare-related bill incentivize physicians to have 'end-of-life' consultations with patients in the context of measures that are intended to "bend the curve" of healthcare expense downward.  The message of the bill is clear: the policy is intended to encourage expense-reducing, life-shortening decisions.

You might not like the rhetoric of 'death panels' but the criticism is on-point.  When the government becomes the party paying the bill for healthcare, the government will ultimately decides who gets healthcare.  
12:46 pm edt 

Wednesday, August 12, 2009

Impact of S.B. 1589 on Alternative Fuel Tax Credits
An alert reader wrote to us yesterday, asking whether S.B. 1589, which would alter the way biodiesel receives incentives through tax credits, would have an impact on non-biodiesel alternative fuel credits.

Biodiesel currently qualifies for a $1 per gallon income tax credit under Section 40A(a)(2) of the Internal Revenue Code for neat biodiesel and biodiesel fuel mixtures. That provision defines biodiesel as fuel from plant or animal matter that meets the requirements of Section 211 of the Clean Air Act and the requirements of ASTM Standard D6751. Qualifying biodiesel must be either used as a fuel in the producer's business or sold at retail by the producer into a motor vehicle tank.  The Section 40A credits are included in taxable income under Section 87 of the Internal Revenue Code.

Because of the retail sale requirements of Section 40A(a)(2), many biodiesel producers claim instead a refundable biodiesel mixture excise tax credit of $1 per gallon tax credit for mixing their fuel with a taxable (fossil) fuel. This credit (sometimes called the biodiesel 'blender's' credit) is encapsulated in Sections 6426(c) and 6427(e)(1) of the Internal Revenue Code.  Biodiesel must meet the same Section 40A definitional requirements to qualify for the excise tax mixture credit, including the Clean Air Act ans ASTM standards. 

The biodiesel mixing credit requires that the producer obtain a certification (See IRC Section 6426(c)).  The credit applies whether the biodiesel mixer sells the mixture or burns the mixture in its own operations (See IRC Section 6427(e)(1)).  
The biodiesel income and excise tax credits are set to expire on December 31, 2009.

All of these biodiesel mixer credits, however, hinge upon the production of biodiesel that meets the definition in Section 40A(a)(2).

Producers of "alternative fuels", including liquid biomass fuel that does not meet the definition of biodiesel have been able to obtain a $0.50 per gallon tax credit under IRC Section 6426(d) (for alternative fuels sold or consumed by the producer as a fuel in a motor vehicle or motorboat) or under IRC Section 6426(e)(1) (for alternative fuels that are mixed with a taxable fuel like diesel or gasoline).

S.B. 1589, as currently drafted, would not amend Sections 6426(d) or (e), leaving them unchanged with respect to non-biodiesel ‘alternative' fuels and the applicable $0.50 per gallon credit. The alternative fuel credits are, however, slated to expire on December 31, 2009 so producers of those fuels will need to contact their Congressional representatives if they hope to see an extension of those credit programs.
8:34 am edt 

Tuesday, August 11, 2009

Renewable Energy Road Map

Growth Energy, an industry association of ethanol producers, has released a Renewable Energy Roadmap (link opens .pdf) for encouraging the industry and growing 'green jobs.'  The announcement came at the National Clean Energy Summit yesterday in Las Vegas. 

The Roadmap calls for:

* A national low carbon fuel standard to reduce emissions;

* Eliminating the regulatory limitation on ethanol in fuel (currently capped at 10%);

* Requiring all vehicles sold in the U.S. to be Flex Fuel;

* Increasing the number of flex fuel pumping stations and investing in infrastructure, including biofuel pipelines, to encourage biofuel manufacture; and

* Increasing information transparency by requiring disclosures on foreign oil usage.

9:21 am edt 

Monday, August 10, 2009

UK Waste-to-Energy Firm Looking for Funds
/ UK-based waste treatment company New Earth Group aims to raise 15 million pounds to diversify into power generation and says it can generate 20 percent-plus returns under new incentives, according to the NY Times.  

Britain has increased support for renewable electricity generated from biomass including wood and waste in a drive to cut dependence on imported gas and to fight climate change.  

In a fund-raising launched on Monday privately-owned New Earth Group said it could earn a 25-30 percent rate of return from investment in a typical 5-megawatt (MW) plant burning combustible gases produced from fermented or heated rubbish.

"These funds will allow New Earth to accelerate the growth of its waste treatment plants and ... recover renewable energy," said Bill Riddle, chairman, in a statement.

The company expects to sell up to 15 percent of its equity in order to raise 15 million pounds, under plans to build about 100 MW electricity-generating capacity.

8:41 am edt 

Sunday, August 9, 2009

Earthquake in Japan
CNN is reporting a 7.1 magnitude earthquake off the coast of Japan.
8:18 am edt 

Friday, August 7, 2009

National Biodiesel Board Applauds Biodiesel Tax Incentive Reform Act

The National Biodiesel Board has issued a press release applauding Senator Cantwell's Biodiesel Tax Incentive Reform and Extension Act. 

"Domestic production and use of biodiesel is consistent with an energy policy that values the displacement of petroleum with low-carbon, renewable fuels. This legislation will provide certainty to biodiesel producers and improve the form and function of the biodiesel tax incentive. We strongly support this proposal and commend Senator Cantwell and Senator Grassley for introducing this forward thinking legislation," said NBB CEO Joe Jobe.

5:08 am edt 

Bill Proposes Reform of Biodiesel Tax Incentives

Senators Maria Cantwell and Charles Grassley have introduced a new bill (S.B. 1589) that would reform the way biodiesel producers obtain tax incentives and extend the current tax incentives that expire at the end of 2009.

The Biodiesel Tax Incentive Reform and Extension Act of 2009 (which is not yet available online) would change the refundable excise tax from one that requires mixing biodiesel with a taxable fuel, to a $1 per gallon credit for the production of the biofuel itself.  The bill would also extend the tax credit program for five years.

The Senator's press release claims that the bill:

• Would eliminate potential abuses and simplify administration of the incentive for both taxpayers and the Internal Revenue Service (IRS). The bill changes the incentive from a blender credit to a production tax credit so that incentives are given for building the domestic production industry. The change would focus the benefits of the credit on the production capacity of these cleaner, greener fuels rather than on the activity of just blending them with petroleum diesel. By focusing on the production of the 100 percent bio-based fuel, this bill will shut down, once and for all, any remaining opportunity for the abuse known as "splash and dash," in which oil companies add a few drops of biodiesel to their petroleum diesel just to qualify for the tax credit.
• Provide the $1 per gallon tax credit for the production of biodiesel, renewable diesel and aviation jet fuel that complies with fuel standards and Clean Air Act requirements that define qualified fuels under current law.

• For small producers, those with an annual production capacity of less than 60 million gallons, the credit increases from $1 to $1.10 for the first 15 million gallons of biodiesel produced.

• Simplify the definition of "biodiesel" to encourage production from any biomass-based feedstock or recycled oils and fats.

• Simplify the coordination between the income tax credit and the excise tax liability to tighten compliance and reduce administrative burdens on taxpayers.

• Extend this tax credit for five years, giving needed financial predictability so that more facilities can be brought online in the United States.

4:54 am edt 

Monday, August 3, 2009

Report: World Running Out of Oil Fast
Dr. Fatih Birol, the chief economis of the International Energy Agency is claiming that the world is running out of oil at a faster rate than previously thought.  He argues that world oil production will peak in about 10 years and then begin declining.  World oil consumption, however, is predicted to continue increasing for several more decades. 
10:20 am edt 

Middle Class Tax Hikes to Pay for Healthcare
Over the weekend, Obama administration officials began to set expectations for a possible middle-class tax hike to pay for the cost of the Obama healthcare proposal. 

The move is probably the most obvious break with candidate Obama's promise not to raise taxes on the middle class. 
10:14 am edt 

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Jonathan B. Wilson is an Atlanta attorney at the law firm of Taylor English Duma LLP.  Jonathan B. Wilson provides legal advice to investors, companies and business executives involving corporate law, securities law, SEC matters, intellectual property, website and Internet legal issues, start-ups, limited liability companies, partnerships, 1934 Act matters, outsourcing, strategic alliance agreements, contracts, and other matters of importance to growing private and publicly-traded companies.