Washington Legislature Passes Bill to Expand the Energy Freedom Program
May 6, 2009 - Stoel Rives, LLP
On May 4, 2009, Governor Christine Gregoire signed two bills into law. Bill 5921 creates a new Clean Energy Leadership Council for the State of Washington. Bill 2289 expands the Energy Freedom Program from a biofuels-focused program to include energy efficiency, renewable energy and pioneering renewables technologies. It also allows private entities to participate, permits the use of federal funds (including funding opportunities through the American Recovery and Reinvestment Act ("ARRA")) and creates additional accounts to fund renewable projects. Both acts take effect immediately.
In 2006, the Washington legislature established the Energy Freedom Program and the Energy Freedom Account to promote research into and development of a local biofuels industry, and to support the local growth of biofuels crops. In 2007, responsibility for the Energy Freedom Program and the Energy Freedom Account was transferred to the Washington Department of Community, Trade and Economic Development ("CTED"), and the Green Energy Incentive Account was created.
From the Energy Freedom Account, CTED was permitted to provide up to $5 million on any single project to fund up to 50% of the total project cost. Qualifying projects were those that could convert farm products, wastes, cellulose or biogas directly into electricity or biofuel, or other coproducts associated with such conversion. Appropriations could be made from the Energy Freedom Account to the Green Energy Incentive Account for the purposes of developing alternative fuel stations, plug-in hybrid projects and hydrogen vehicle demonstration projects.
Clean Energy Leadership Council
With the goal of leveraging Washington's energy infrastructure and making Washington a center for clean energy technology and green jobs, the legislature will convene a Clean Energy Leadership Council to create a strategy and recommendations for growing the clean energy technology sector locally. The Clean Energy Leadership Council will be supported by the Energy Policy Division of CTED and by Washington State University. The Clean Energy Leadership Council will consist of at least 23 people from the public and private sectors, including legislators, the director of CTED and one or more representatives from each of the following: (1) the Pacific Northwest National Laboratory, (2) a venture capital firm that invests in clean energy; (3) a professional services firm; and (4) clean energy companies.
The Clean Energy Leadership Council has the authority to engage national experts to identify Washington's competitive advantages in research and development, or deployment of clean energy solutions. The Clean Energy Leadership Council will submit preliminary recommendations to the Governor and the legislature by December 1, 2009, and the final report is due December 1, 2010. Once the strategy has been developed, it will be used to assess all applications for federal funds, and the Clean Energy Leadership Council must be consulted before any ARRA funds are committed by CTED to clean energy projects.
Expanded Energy Freedom Program and Energy Freedom Account
Pursuant to the new act, the Energy Freedom Program is no longer limited to projects related to biofuels or alternative fuels; it now encompasses clean energy projects, local energy efficiency, renewable energy improvements and innovative energy technology markets. A "clean energy" project is a project identified by the Clean Energy Leadership Council. "Energy efficiency" is defined to mean any installation or modification that reduces energy consumption. Insulation, double glazing, automated control systems and weather caulking are examples of qualifying projects. A "renewable energy improvement" is any energy-producing device, such as solar panels, small wind systems, biomass and geothermal systems. When reviewing applications, either a grant or a loan may be awarded to a qualifying project if it:
ARRA and other federal funds may be deposited into the existing Energy Freedom Account. If any funds are loaned out from the Energy Freedom Account, the repayments and interest generated by the Account can only be used for qualifying projects.
Green Energy Incentive Account
The Green Energy Incentive Account will provide up to $50,000 (limited to 50% of the total project cost) for refueling projects using alternative fuels. Upon later appropriations, the Green Energy Incentive Account may be used to fund pilot projects for plug-in hybrids and demonstration projects developed in partnership with state universities for hydrogen vehicle refueling.
Energy Recovery Act Account
As part of the expanded Energy Freedom Program, a new account?the Energy Recovery Act Account?has been established as another means of funding innovative and sustainable industries for renewable energy and energy efficiency technology. Expenditures from this account may be used for loans, loan guarantees and grants related to renewable energy projects or programs that require interim financing to complete project development and implementation. Companies with novel, near-commercial or commercial clean energy technologies are also eligible, as are companies with energy efficiency technologies that have a viable repayment stream from reduced utility costs.
Repayments of principal and interest derived from loans made from the Energy Recovery Act Account must be redeposited into the account. The legislature's intent is to create a program that will survive the initial expenditures and continue to be a revolving funding source for renewable energy, clean energy technology and energy efficiency projects.
If you have questions about any of these programs or other ARRA issues, or would like to discuss the possibility of your local project applying for Energy Freedom Program or ARRA funds, please contact:
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