Generally, public entities may only issue tax-exempt bonds for governmental purposes. The Internal Revenue Code specifies certain limited categories of tax-exempt bonds that may be issued for private activities that Congress expressly determined over the years to have a significant public purpose (even with private involvement). With a couple of limited exceptions, these categories of tax-exempt private activity bonds do not currently apply to decarbonizing activities and projects. This draft legislation proposes an expansion in the scope of tax-exempt private activity bonds to include a wide variety of decarbonizing activities and projects.
This legislation expanding eligibility for tax-exempt private activity bonds to decarbonizing projects and activities has been adapted from legislation that was originally proposed by Senator Dianne Feinstein in 2010 as S.3336 (111th Congress). The scope of eligible activities and projects has been expanded beyond renewable generation projects to include carbon capture and sequestration projects, energy storage projects, and advanced biofuels facilities. In addition, the scope of renewable energy projects covered has been expanded to include any source that does not emit greenhouse gases, which would include nuclear energy.