Qualified Energy Conservation Bonds

Incentive type: 
Energy Efficiency
Technologies: 

Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Municipal Solid Waste, Hydrokinetic Power, Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal, Energy Efficiency Technologies.

Sectors: 
Tax Exempt
Amount: 

Amounts vary.

Contact Information: 

Timothy Jones (202-317-6980) or David White (202-317-4562) of the IRS Office of Associate Chief Counsel.

Qualified Energy Conservation Bonds (QECBs) are taxable bonds issued by state, local, or tribal governments  to finance qualifying energy conservation projects.  QECBs provide a federal income tax credit to bond holders on quarterly credit allowance dates, thus reducing the interest burden on the issuer of the bond.  Taxpayers holding QECBs on a credit allowance date can claim federal tax credits of 70% of the full rate set by the Treasury Department.

ARRA increased the national QECBs limitation for calendar years 2009 and 2010.

QECBs allocation is based on each state\'s relative share of total population and Ohio\'s 2009 allocation is $119.2 million.

States with a municipality or county with a population of 100,000 or more must allocate to that local government the same share of the state allocation as the local government\'s population represents relative to the total state population. A local government may reallocate its share back to the state. A bond qualifies as a QECB if all bond proceeds are used for qualified conservation purposes, the bond is issued by a state or local government, and the issuer designates the bond as a QECB.

Qualified conservation purposes include:

  • capital expenditures that will reduce energy consumption in publicly owned buildings by at least 20%, fund green community programs, or support rural development involving the production of electricity from renewable sources;

  • research expenditures that support the development of cellulosic ethanol or other non-fossil fuels, technologies for the capture and sequestration of carbon dioxide, increasing the efficiency of existing technologies for producing non-fossil fuels, automobile battery technologies to reduce fossil fuel consumption in transportation or technologies to reduce energy use in buildings;

  • mass commuting facilities;

  • demonstration projects that promote commercialization of green building technology, conversion of agricultural waste, advanced battery manufacturing technologies, technologies to reduce peak electricity consumption or technologies for the capture and sequestration of carbon dioxide emitted from fossil fuels that produce electricity; and

  • public education campaigns to promote energy efficiency.