Pennsylvania Creates a $500 Million Alternative Energy Fund

July 23, 2008

Pennsylvania Governor Edward Rendell has approved a bill that establishes a $500 million fund to support alternative energy projects. Special Session House Bill 1 authorizes the Commonwealth Financing Authority to borrow $500 million, most of which will be split into six funding sources relating to energy efficiency and renewable energy: $80 million in grants and loans for solar energy projects; $100 million in grants, loans, and rebates for up to 35% of the cost of solar energy projects at residences and small businesses; $165 million in grants and loans for alternative energy projects, excluding solar energy, at businesses and local government facilities; $25 million for wind and geothermal energy projects; $40 million to help start-up businesses involved in energy efficiency technologies; and $25 million in grants and loans to improve the energy efficiency of new and existing homes and small business buildings. An additional $65 million will go toward pollution control technologies and to help low-income families pay their energy bills.

The bill defines alternative energy projects as projects that employ alternative fuels; biomass, wind, solar, and geothermal energy sources; waste energy; waste coal; clean coal technologies; and other energy sources included in the state's Alternative Energy Portfolio Standards Act. It also includes facilities that manufacture products or parts for alternative energy, alternative fuels, energy efficiency, or energy conservation, as well as research and development facilities for alternative energy and alternative fuels. Last but not least, it includes projects "for the development or enhancement of rail transportation systems that deliver alternative fuels or high-efficiency locomotives." The bill places no time limit on the payout of the various funds, and it pays off the debt by drawing $40 million per year from the state's general fund for the next 30 years. See the article from the EERE Network News on the state's Alternative Energy Portfolio Standards Act.

In addition to the $500 million fund, the bill creates a Consumer Energy Program that is funded at $15 million for the next 3 fiscal years, then gradually decreases to $8 million by the 2015-2016 fiscal year, for a total of $100 million. Of that, $92.5 million will support loans, grants, and rebates for up to 25% of the cost of energy efficiency improvements to homes and small businesses, while $5 million will support low-interest loans for energy efficiency improvements to homes. An additional $50 million will be available over the next 8 years to support tax credits for 15% of the cost of alternative energy projects, capped at $1 million per year for each project. See the governor's press release and the full text of the bill (PDF 250 KB). Download Adobe Reader.

Governor Rendell also approved two bills on July 10 that relate to biofuels. House Bill 1202 could add as much as 1 billion gallons of advanced biofuels to the state's fuel supply. It requires all retail diesel fuel sold in the state to contain 2% biodiesel, once the in-state production of biodiesel reaches 40 million gallons per year, increasing incrementally to a 20% biodiesel requirement, once the in-state production of biodiesel reaches 400 million gallons per year (but only if vehicle manufacturers approve the use of 20% biodiesel). Likewise, all retail gasoline sold in the state must contain 10% ethanol, once the in-state production of cellulosic ethanol reaches 350 million gallons per year. The state already has a biodiesel production capacity of 60 million gallons per year, so the 2% biodiesel requirement could go into effect soon, if production is high enough. To encourage biodiesel production, Special Session Senate Bill 22 will offer a subsidy of 75 cents per gallon of biodiesel produced, capped at $1.9 million per year for each producer. The bill also expands a hybrid vehicle rebate program to include plug-in hybrids and other alternative fuel vehicles. See the governor's press release and the full text of HB 1202 (PDF 42 KB) and SB 22 (PDF 20 KB).