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In Ohio, the Air Quality Development Authority issues bonds for air pollution control projects. Landfill gas utilization projects are eligible for this funding.

Ohio

• Air Pollution Control Project Tax Exemptions
• Energy Conversion Facilities Tax Exemption
• Advanced Energy Grant Program and Energy Loan Fund

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Air Pollution Control Project Tax Exemptions

Many states offer tax incentives to encourage efforts that reduce emissions of a variety of air pollutants. Because landfill gas utilization projects reduce emissions of methane and volatile organic compounds, states can extend their air pollution control project tax exemptions to landfill gas utilization projects.

In Ohio, a LMOP State Partner, the Air Quality Development Authority (OAQDA), issues bonds for air pollution control projects. To be eligible, the project must improve air quality through pollution control, pollution prevention, energy efficiency, or innovative technology. Landfill gas utilization projects in Ohio are eligible for this funding. When applied to landfill gas utilization, OAQDA allows the funding to be used for both the collection and energy recovery components of the project. OAQDA can issue tax-exempt or taxable bonds; eligibility is determined on a project-by-project basis.

There are a series of benefits of financing a landfill gas project through OAQDA bonds, including:

• Terms of up to 40 years, depending on the useful life of the equipment.
• Any real property comprising an air quality project is exempt from real estate taxes and assessments as long as the OAQDA bond remains outstanding.
• All tangible personal property purchased or acquired in relation to an air quality project is exempt from sales and use taxation.
• Interest income on bonds issued by OAQDA is exempt from taxation by the state.
• OAQDA financing can cover a broad range of project costs. They have provided bond support for projects ranging from $20,000 to $350 million.

Energy Conversion Facilities Tax Exemption

Since 1978, Ohio has provided tax exemptions for energy conversion, solid waste conversion (i.e., the use of waste to produce energy and the utilization of such energy), and thermal efficiency improvements. This incentive rewards corporations for investing in qualified types of energy conservation and reduces businesses’ tax liability. Several landfill gas projects have already successfully used the Conversion Facilities Tax Exemption to reduce costs by limiting tax liability.

Commercial and industrial businesses that install and operate qualified facilities for energy conversion, solid waste conversion, or thermal efficiency improvement are eligible for the tax exemption. The exemption covers energy technologies including, but not limited to, solar thermal electric systems, photovoltaic systems, and wind, biomass, and waste recovery systems.

To receive the Conversion Facilities Tax Exemption, businesses must file an application with the State Tax Commission for an improvement certificate. The application includes a narrative description of the facility and a list of the energy improvements to be incorporated into the facility. Once the State Tax Commission issues an improvement certificate, the certified improvement is exempt from property taxation, the state sales and use tax, and the state franchise tax.

Advanced Energy Grant Program and Energy Loan Fund

Ohio’s Advanced Energy Grant Program and Energy Loan Fund, issued by the state’s Office of Energy Efficiency (OEE), provides reduced interest rate loans to businesses and individuals who invest in products, technologies, and services that use renewable energy. Established under the state’s 1999 electric restructuring act, the program is funded by a monthly charge (approximately 9 cents) added to the electric bills of customers of the five participating electric utilities in Ohio. Collections for the Fund started in January, 2001. Approximately $100 million will be raised by 2011, at which time the surcharge will be eliminated.

The Fund’s Renewable Energy Financial Assistance Program provides funding through approved financial institutions for the purchase and installation of the following renewable energy technologies: solar energy (photovoltaic cells), wind energy (wind turbines), and other renewable energy systems (including landfill gas energy systems). Eligible projects now include technologies, providers, activities, management practices or strategies that facilitate the generation or use of electricity and that reduce energy consumption or support the production of clean, renewable energy. Loans range from $5,000 to $500,000. Residential, commercial, and institutional customers are eligible for these loans, which became available in the first quarter of 2002. Borrowers must apply to one of the 186 financial institutions on the Ohio Treasurer of States’ list of eligible interim depositories for state funds. Only these institutions are qualified to participate in this program. This list is available at http://www.odod.state.oh.us/cms/uploadedfiles/CDD/OEE/ELFParticipatingLenders.pdf (PDF, 2 pp., 60 KB)

If your project meets the program’s requirements, you should apply to one of the approved financial institutions for the loan and apply to the OEE for “Energy Efficiency Project” approval. The technical documentation and application are available at www.odod.state.oh.us/CDD/oee/ELFGrant.htm.