The FREE Act:

Detailed Summary

Promote the Production and Use of Renewable Energy

Create a 20 percent Federal Renewable Portfolio Standard:  Require each electric utility to obtain a percentage of the base amount of electricity it sells to electric consumers in any calendar year from new renewable energy or existing renewable energy. The percentage obtained in a calendar year shall not be less than 5 percent by 2007, 8 percent by 2009, 11 percent by 2011, 15 percent by 2013, and 20 percent by 2015 and thereafter.  This provision will also establish a renewable energy credit trading program to permit an electric utility that does not meet the standard to do so by purchasing renewable energy credits. 

Strengthen the federal energy purchase requirement:  Require the federal government to consume during any fiscal year no less than 5 percent of its energy from renewable energy sources by 2007, 11 percent by 2011, and no less than 20 percent by 2015.   

Create a school renewable energy grant program:  Establish a program to make grants to local schools and school districts to promote and facilitate the use of renewable energy sources in school facilities. 

Extend renewable electricity Production Tax Credit (PTC):  Extend until January 1, 2012 the renewable electricity production tax credit (PTC) for the following facilities: wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation power, landfill gas, and trash combustion.  The PTC currently expires on January 1, 2008. 

Extend and modify the commercial Investment Tax Credit (ITC) for solar, fuel cell and geothermal properties:  Extend the current 2-year, 30 percent investment tax credit (ITC) for solar equipment until January 1, 2016, reverting back to 10 percent after 10 years.  The solar ITC currently expires on January 1, 2008.  Extend the ITC for eligible fuel cell properties until December 31, 2015.  The fuel cell ITC currently expires on December 31, 2007.  Extend the ITC for geothermal properties until January 1, 2016, and increase the credit from 10 percent to 30 percent to match the solar credit, reverting back to 10 percent after 10 years.  The geothermal ITC currently expires on January 1, 2008 and is set continually at 10 percent.    

Extend the Investment Tax Credit (ITC) for residential energy efficient properties:  Extend until December 31, 2015 the current 2-year, 30 percent investment tax credit (ITC) for residential solar and fuel cell equipment.  This ITC currently expires on December 31,2007.     

Create a small wind Investment Tax Credit (ITC):  Create a 10-year, 30 percent investment tax credit that covers small wind systems used to power homes, farms and small businesses that generate 100 kilowatts of energy or less.  The credit would revert to 10 percent in 2016. 

Fund Renewable Energy Research

Fund geothermal research:  Provide $32.5 million for geothermal research.   

Require Energy Efficiency

Raise average fuel economy standards to 33 mpg by 2016:  Establish a corporate average fuel economy (CAFE) standard for passenger automobiles that is at least 33 miles per gallon by 2015.    

Repeal Subsidies to the Oil, Gas, and Nuclear Industries

Repeal nuclear subsidies:  Repeal three provisions in the Energy Policy Act of 2005 regarding the nuclear industry, saving about $3.5 billion: 

• Repeal the authorization of $1.25 billion for the Department of Energy to build a nuclear reactor to generate both electricity and hydrogen.
• Repeal the authorization for cost-overrun support of up to $2 billion total for up to six new nuclear power plants.
• Repeal the extension of the Production Tax Credit (PTC) to Advanced Nuclear Facilities.

Repeal oil and gas tax breaks:  Repeal the following provisions in the Energy Policy Act of 2005 regarding the oil and gas industry, saving about $2.6 billion: Repeal the election to expense certain refineries, a tax break to refineries that allows them to expense 50 percent of the cost of upgrading an existing refinery or building a new one.

• Repeal the treatment of natural gas lines as 15-year properties, which allows the cost of natural gas distribution lines to be recovered over 15 years instead of 20 years, as it was before passage of the Energy Policy Act.
• Repeal the treatment of natural gas gathering lines as 7-year properties, which allows the cost of natural gas gathering lines to be recovered over 7 years instead of 15, as it was before passage of the Energy Policy Act. 
• Repeal the rule change in the Energy Policy Act that re-defined independent producers as oil and gas companies that produce 75,000 barrels a day or less, as opposed to the 50,000 per day definition that was used prior to the Act’s passage.  Independent producers are eligible for certain tax breaks that larger oil and gas producers cannot receive.  This provision decreases the number of oil and gas producers eligible for tax breaks.    

Repeal other oil and gas subsidies:  Repeal the following provisions in the Energy Policy Act of 2005 regarding the oil and gas industries, saving about $6.8 billion:  

• Repeal royalty relief to oil companies for producing in marginal wells. 
• Repeal royalty relief to gas companies for drilling in deep wells in the shallow waters of the Gulf of Mexico.
• Repeal royalty relief for deep water production.
• Repeal the authorization for an inventory and analysis of oil and natural gas resources beneath all of the waters of the Outer Continental Shelf (OCS). 
• Repeal the authorization to expedite oil and gas leases and permit applications for land drilling. 
• Repeal the authorization for a research and development program intended to advance oil and gas production.     
• Repeal the authorization for a research and development program on production capacity of marginal wells.
• Repeal the authorization for a research and development program into ultra-deepwater and unconventional natural gas exploration and development. 
• Repeal the suspension of royalty payments for certain drilling off the shore of Alaska. 
• Repeal the provision that suspends royalty payments for certain drilling in the National Petroleum Reserve in Alaska.           

Suspend royalty relief:  Repeal provisions in federal law that exempt oil and gas companies from paying royalties or reduced fees for drilling on public lands, saving $5.8 billion.