Qualified Energy Conservation Bonds (QECBs) may be used by state, local and tribal governments to finance certain types of energy projects. QECBs are qualified tax credit bonds and, in this respect, are similar to Clean Renewable Energy Bonds (CREBs).

QECBs were first created under P.L. 110-343 with a national limit of $800 million. The program was expanded with an additional $2.4 billion under P.L. 111-5 for a total available authority of $3.2 billion. Similar to the new CREBs, these tax credit bonds (TCBs) offer a credit rate that is 70% of the credit rate offered on old CREBs and other TCBs. The authority to allocate QECBs does not expire.

QECBs are allocated to states based on the state’s share of total U.S. population (click here to view the New Mexico allocations). The District of Columbia and the possessions of the U.S. are considered states for QECBs. Large local governments, defined as any municipality or county with population of greater than 100,000, are eligible for a direct allocation. Counties that contain a large city can be eligible if its population less the large city population is still greater than 100,000.

These bonds are to be used for capital expenditures for the purposes of

(1) reducing energy consumption in publicly owned buildings by at least 20%;
(2) implementing green community programs;
(3) rural development involving the production of electricity from renewable energy resources; or
(4) programs listed above for CREBs.

Also included are expenditures on research facilities and research grants, to support research in

(1) development of cellulosic ethanol or other nonfossil fuels;
(2) technologies for the capture and sequestration of carbon dioxide produced through the use of fossil fuels;
(3) increasing the efficiency of existing technologies for producing nonfossil fuels;
(4) automobile battery technologies and other technologies to reduce fossil fuel consumption in transportation; and
(5) technologies to reduce energy use in buildings.

Energy saving mass commuting facilities and demonstration projects are also included in the list of qualified purposes.

The advantage of these bonds is that they are issued with a 0% interest rate, and the Federal government pays all interest costs. New Mexico will receive bonding authority relative to its proportion of the national population (including a special “large city” set-aside for Albuquerque).

Expected Allocation of
Qualified Energy Conservation Bonds for 2009

% of

Population

QECB

Allocation

* 2008 Population - US Census Estimates

Bonds must be issued by October 27, 2012