Developers of anaerobic digestion projects, including the vendors who supply them, were anxiously awaiting the outcome of the Congressional debate surrounding extension of the “Bush-era” tax cuts. The reason was “Section 1603” of the 2009 American Resource Recovery Act, which provides a 30 percent credit for investment in a qualified advanced energy manufacturing project for the production of renewable energy. Anaerobic digestion projects are a qualified manufacturing facility in Section 1603. “The technology has to be eligible and you need to have a complete system that has been certified by a professional engineer once it has become operational,” says Steve Smith of quasar energy group, an AD project developer and technology supplier based in Cleveland, Ohio that has tapped into the tax credit successfully. “This is a meaningful tool for us. There is no way our company could have moved forward this fast without it.” One caveat with Section 1603 is that the biogas must be used for electricity production versus other end uses such as biomethane for vehicle fuel.
Smith adds that another benefit that went through with the tax cut extension was a 100 percent “bonus depreciation” for any facility put into service between September 8, 2010 and December 31, 2011. “At midnight on January 1, 2012, the depreciation drops to 50 percent. Basically this provision provides a tax deferral.”
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