WASHINGTON, DC, October 8, 2007 (ENS) - The federal government is supporting clean energy projects using innovative technologies with a loan guarantee program finalized Thursday by the Department of Energy. The program is based on the Energy Policy Act of 2005.
Energy Secretary Samuel Bodman has invited 16 project sponsors, who submitted pre-applications last fall, to submit full applications for loan guarantees.
These projects include advanced technologies involving the uses of biomass, fossil energy, solar, industrial energy efficiency, electricity delivery and energy reliability, hydrogen, and alternative fuel vehicles.
"Loan guarantees aim to stimulate investment and commercialization of clean energy technologies to reduce our Nation's reliance on foreign sources of energy," Bodman said. "Finalizing this regulation for the Department's Loan Guarantee program puts Americans one step nloser to being able to use new and novel sources of energy on a mass scale to reduce emissions and allow for vigorous economic growth and increased energy security."
The final regulation provides that the Department may issue guarantees for up to 100 percent of the amount of a loan, subject to the EPAct limitation that DOE may not guarantee a debt instrument for more than 80 percent of the total cost of an eligible project.
Under the final rule, if DOE issues a guarantee for 100 percent of a debt instrument, the loan must be issued and funded by the Treasury Department's Federal Financing Bank.
Bodman says DOE's intent is to only issue loan guarantees if borrowers and project sponsors pay the "credit subsidy cost," that is the long-term cost to the federal government of the loan guarantee. So, DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of these loan guarantees. Also, the borrower must have a "significant equity stake" in the project.
The final rule is the result of a public rulemaking process, which began May 16, 2007.
Congress currently is considering the Energy Department's Fiscal Year 2008 Budget request for $9 billion in loan guarantee authority and $8.4 million to run the Loan Guarantee office.
Today's announcements build on months of action by DOE to implement its loan guarantee program. In August 2006, DOE issued a solicitation inviting pre–applications for up to $2 billion in loan guarantees. By the December 31, 2006 deadline for this solicitation, DOE received
The 16 pre-applicants invited today to submit full loan guarantee applications for review were selected from among 143 pre–applications requesting more than $27 billion in loan guarantee protection for project costs estimated at more than $51 billion.
The 16 projects and sponsors invited to submit full applications are:
Following funding and authorization for the program in February 2007, DOE established a Credit Review Board to make recommendations to the Secretary of Energy on loan guarantees; named an office director and technical and financial experts to work in the Loan Guarantee program office; and developed guidelines for the financial and technical review of loan guarantee applications.
Copyright Environment News Service (ENS) 2007. All rights reserved.
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