DOE Announces Final Rule for Loan Guarantee Program; Action to Help Clean Energy Development

On Oct. 4, Secretary of Energy Samuel W. Bodman announced that the U.S. Department of Energy (DOE) has issued the final regulations for the loan guarantee program authorized by Title XVII of the Energy Policy Act of 2005 (EPAct). DOE's action will pave the way for federal support of clean energy projects using innovative technologies and will spur further investment in these advanced energy technologies.

DOE also 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 closer 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 U.S. Treasury Department's Federal Financing Bank. While Congress must provide authority in an appropriations act for the loan guarantees that the department will issue, DOE's intent is to only issue loan guarantees if borrowers and project sponsors pay the "credit subsidy cost" for any loan guarantee they receive. Therefore, DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of these loan guarantees.

Review the final regulations and more about DOE's loan guarantee program at http://www.lgprogram.energy.gov.

This article originally appeared in the 10/01/2007 issue of Environmental Protection.

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