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IRS Section 29 (redesignated to IRS Section 45J and IRS Section 45K) Nonconventional Fuel Credits
| What are Section 29 Credits ? |
Section 29 of the Internal Revenue Code
was established by Congress through the
Crude Oil Windfall Profit Tax Act of 1980,
which stemmed from the energy crisis of the
1970’s. Its purpose then, as today, is to
encourage the production of domestic
energy while reducing U.S. reliance on
energy imports, and to promote the
development and use of new technologies
to meet America’s growing energy needs.
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| How much are credits worth ? |
Section 29 accomplishes its purpose by
providing for a production tax credit of
approx. $3.00 per barrel of oil equivalent
(adjusted for inflation), for certain types of
gas or solid, alternative fuels produced from
alternative energy sources. |
Section 29:
Congressional
Intent |
The original Congressional intent
of Section 29 by promoting the application
of technologies and processes resulting in
increased consumption of domestic U.S.
energy sources and reduced reliance on
foreign oil and coal. |
| 2005 Energy Bill |
The Section 29 tax credits for direct use of LFG as a fuel were changed to a General Business Credit. Limitations of the General Business Credit result in a fairly modest financial incentive for direct use of LFG. However, qualified facilities will be able to claim $3 per barrel of oil equivalent (b.o.e.) adjusted for inflation from 1979. Qualified Facilities must be placed in service before January 1, 1993 or after June 30, 1998 and before Jan. 1 2010. |
| Carryback and Carryforward |
Carryback and Carryforward of Section 29 Credits (§§ 1321-22). The Act allows a one-year carryback and 20-year carryforward of unused Section 29 credits for producing fuel from nonconventional sources. |
| Coke and Coke Gas - Steel Producers |
In addition, the Act expands the Section 29 credit to apply to coke and coke gas produced in certain facilities placed in service before January 1, 2010. The credit amount for coke or coke gas is $3.00, indexed for inflation using 2004 as the base year. The amount of credit-eligible coke produced may not exceed an average barrel-of-oil equivalent of 4,000 barrels per day. |
Landfill Gas - Section 29 Update - Now Section 45 (As Quoted From LMOP)
The U.S. EPA Landfill Methane Outreach Program (LMOP) is pleased to provide its Partners and friends information about an energy bill that includes some significant tax provisions that affect renewable energy projects, including landfill gas (LFG) energy projects. Signed into law on August 8, 2005, the Energy Policy Act of 2005 makes a number of changes to the section 45 renewable electricity production tax credit, including:
-Extending the placed-in-service window by two years, from December 31, 2005 to December 31, 2007, for facilities that produce electricity from LFG;
-Extending the credit period from 5 to 10 years for new facilities originally placed in service after the date of enactment; and
-Eliminating the credit for any facility which produces electricity from LFG if the LFG was generated at a facility that currently or at any time in the past qualified for the section 29 tax credit (i.e., double-dipping not allowed).
The bill also designates the old section 29 tax credit for direct-use of LFG as a fuel as new section 45K. As part of the general business credit under section 38, the credit may now be carried back one year or forward 20 years (starting in 2006).
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The IRS Section 29 (45j/k)
As the price of oil goes above $50 per barrel, the credit is phased out.
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LFG Landfill Gas is considered a nonconventional fuel. In its filtered form, the CO2 can be used by industry and the methane can be used to generate electricity, run evaporator units, or put back into natural gas pipelines.
Companies Like Ocean Ethanol Are Working on CO2 Conversion Technologies
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Modular Block:Ready for pressure testing and licensing/manufacturing. Click here for more info.
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