U.S. Department of Energy - Energy Efficiency and Renewable Energy
Federal Energy Management Program
IRS Allocates $800 Million in Clean Renewable Energy Bonds
November 29, 2006
The U.S. Internal Revenue Service (IRS) announced on November 20th that it
has allocated $800 million in "tax-credit" bonds for a total of 610
renewable energy projects to be located throughout the United States.
Unlike normal bonds that pay interest, tax-credit bonds pay the
bondholders by providing a credit against their federal income tax.
In effect, the new tax-credit bonds, called "Clean Renewable Energy
Bonds," will provide interest-free financing for certain renewable
energy projects. Since the federal government essentially pays the
interest via tax credits, the IRS needed to allocate such credits in
advance to the lending authorities, which can be state or local
governments or electrical cooperatives. The IRS allocated the Clean
Renewable Energy Bonds under a new program established by the Energy
Policy Act of 2005. See Internal Revenue Bulletin 2006-10, which was issued on
The new bond allocations range from $23,000 to $31 million and are set
aside for 434 solar energy facilities, 112 wind power installations,
36 landfill gas facilities, 14 hydropower plants, 13 biomass power
plants, and one refined coal production facility. Of course, each of
these projects may require other forms of financing and will probably need
approval from permitting authorities, so it is unlikely that all 610
projects will actually be built. The IRS had to select the projects
from among 709 applications for 786 projects, for which the lending
authorities requested a total of $2.6 billion in bond allocations.
See the IRS press release.