There is a little secret in the renewable energy sector that many don’t know about – New Markets Tax Credits. These tax credits provide incentives for private investors to help fund projects that create jobs and diversify economics, and were extended for another year as part of the American Tax Relief Act.
Congress first established the program in 2000 to stimulate investment and economic growth in low-income and under-served rural and urban communities that are often overlooked by conventional capital markets. Investors receive a seven-year, 39-percent federal tax credit as incentive to finance loans and investments in businesses and economic development projects in distressed communities. They are not restricted to energy projects.
According to CEO Charles Spies, CEI Capital Management is a national leader in awarding New Markets Tax Credits, having invested nearly three-quarters of a billion dollars in the last nine years. CEI Capital Management has its own triple bottom line investment criteria, where projects must benefit the local community, demonstrate economic gain and have a positive impact on the environment.
Last year, CEI Capital Management allocated $20.7 million in new markets tax credits to the $275 million Burgess BioPower Plant in rural Berlin, New Hampshire. Built on the site of a defunct paper mill, the plant will produce 75 megawatts of power from 759 thousand tons of sustainably grown wood annually. The project currently employs about 300 construction jobs and is on track to sustain 40 jobs in management and plant operations plus hundreds more in the woods associated with harvesting and transporting biomass.
Another project receiving new markets tax credits include a new wood pellet manufacturing plant near Westervelt Company in Alabama. The plant will produce 280,000 metric tons of wood pellets that will be used to produce alternative fuel. Once again, the plant provides good paying jobs to a struggling rural area. A more well-known project to the alternative industry is ZeaChem, whose demonstration facility in Boardman, Oregon produces biofuels and chemicals from wood and other ag wastes. ZeaChem was also awarded credits.
Spies noted that current projects will remain fully funded but should the program not be renewed beyond 2013, the loss would mean other job-creating programs, including those that provide domestic fuel and maintain sustainable forestry practices will need to find other sources of funding. He concluded by adding that during this fragile economic recovery, it’s more important than ever to continue the program.