WASHINGTON — Rep. Ron Kind, D-Wis., has introduced legislation that would allow new clean renewable energy bonds to be used to finance qualified biogas property.

The bill, introduced June 23 by Kind, a member of the House Ways and Means Committee, has been referred to that taxwriting committee as well as the House Committee on Science and Technology.

The legislation defines “qualified biogas property” as a place where microorganisms called anaerobic digesters convert biomass into a gas that is at least 52% methane, which can be captured and used as fuel. Biomass is defined in the tax code as any organic material other than oil, natural gas, or coal.

These properties also can employ other biological, chemical, thermal, or mechanical processes during conversion, provided they use anaerobic digesters. In addition, the legislation also would allow new CREBs to be used to finance facilities that are used to clean and condition the gas product.

Kind’s bill would direct the Treasury Department, in conjunction with the National Renewable Energy Laboratory, to conduct a study of biogas. The study would compare biogas to natural gas, identify the optimum methods for producing high-quality biogas, and recommend ways to expand biogas production to meet the nation’s growing energy needs.

Historically, CREBs have been taxable tax-credit bonds that provide tax credits to investors. But they have failed to gain significant traction among muni issuers, partly because they are hard to sell.

However, the program received a boost from the Hiring Incentives to Restore Employment Act enacted in March, which allowed CREBs to be sold as direct-pay taxable bonds similar to Build America Bonds.

These programs, under which issuers sell taxable debt and receive direct subsidy payments from the federal government, have become popular in the muni market, in stark contrast to tax-credit bonds.

The American Recovery and Reinvestment Act enacted in February 2009 authorized an additional $1.6 billion of new CREBs, bringing the total authority to $2.4 billion.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.