WORLD TRADE  
ORGANIZATION  G/SCM/Q2/USA/45 
3 May 2011 
 (11-2270) 
Committee on Subsidies 
and Countervailing Measures Original:   English 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by JAPAN1 Regarding the New and Full  
Notification of the UNITED STATES2 
 
  The following communication, dated 2 May 2011, is being circulated at the request of the 
Delegation of the United States. 
 
_______________ 
 
 
Energy Conservation Programs – Transportation Sector
 
Question 1 
  Could the United States explain the eligibility requirements for participation and 
concrete [actual] beneficiaries under this progr amme?  Have automotive companies including 
General Motors, Chrysler or Ford benefited from the subsidy directly or indirectly?  Are foreign entities eligible for receiving subsidies under this programme? 
 
Reply
 
 
 The Department of Energy's Vehicle Technologies Program provides funds for research and 
development to a broad range of industry, academia , and other partners th rough open and competitive 
funding opportunities.  All types of entities, in cluding large and small businesses, universities, and 
other research institutions, are eligible to apply as prim e recipients.  Eligibility is not restricted to U.S. 
organizations, but activities pursued with Vehicle Technology funds must be implemented in the 
United States.  Each funding opportunity announcem ent includes a description of purpose and specific 
topic areas of interest, criteria against which proposal s will be evaluated, and in structions for applying 
to the funding opportunity.  The Department uses an established and robust merit review process to 
select projects for award, which is provided in the form of a cost-shared grant or cooperative 
agreement.  Through this open and competitive process, the Department has awarded funds for 
cost-shared projects with General Motors, Chry sler LLC, and Ford Motor Company, among many 
others in industry, academia, and the research community. 
 
                                                      
1 G/SCM/Q2/USA/40. 
2 G/SCM/N/155/USA. G/SCM/Q2/USA/45 
Page 2  
 
  Notified Programmes
 
Question 2 
 
 Regarding the listed programmes below, could the United States provide a clear 
explanation of the eligibility requirements for participation in the programmes and the number 
of recipients by specifying some major recipients ?  Are foreign entities eligible for receiving 
subsidies under these programmes? 
 1. Alternative Fuel Production Credit 
 
Reply
 
 
 A credit (or refundable payment) of $0.50 per gallon (or gasoline gallon equivalent) is 
provided for liquefied petroleum gas, P Series Fuels,  compressed or liquefied natural gas, liquefied 
hydrogen, certain liquid fuels derived from coal through the Fischer-Tropsch process, and liquid fuel 
(other than ethanol, methanol, biodiesel, or bl ack liquor) derived from biomass.  The credit (or 
payment) is available to the person selling the alte rnative fuel for use as fu el in a motor vehicle, 
motorboat, or airplane or the person producing a mixt ure of alternative fuel and diesel or other taxable 
fuel for sale or use as a fuel.  Foreign entities may r eceive the credit or payment.  The United States is 
unable to comply with the request to explain the number of recipients by specifying some major 
recipients because the identity of the persons rece iving benefits and the amount they receive are 
taxpayer information and disclosure of individual ta xpayer information is generally prohibited under 
U.S. law.  
2. New Technology Credit:  Solar, Geothermal, Fuel Cell, and Microturbine Property 
 Reply
 
 
 A 30-per cent non-refundable income tax cr edit is allowed for placing in service solar, 
geothermal, fuel cell, and microturbine property.  Alternatively, a person placing such property in 
service may receive a cash payment in lieu of the in come tax credit.  Foreign entities may receive the 
credit or payment.  A similar credit (but no paymen t) is allowed to individuals that purchase such 
property (other than microturbines) for personal use.   The United States is unable to comply with the 
request to explain the number of recipients by spec ifying some major recipients for the reasons set 
forth in response 2.1, above.  
3. Biodiesel Credit 
 Reply
 
 
 A credit (or refundable payment) of $1.00 per gallon is provided for biodiesel, with an additional $0.10-per-gallon non-refundable income  tax credit provided to small producers of 
biodiesel.  Generally, the credit (or payment) is avai lable to the person selling the biodiesel for use as 
fuel in a motor vehicle, motorboat, or airplane or the person producing a mixture of biodiesel and diesel or other taxable fuel for sale or use as a fuel .  However, the small producer credit is available 
only to the biodiesel producer.  Foreign entities may recei ve the credit or payment.  The United States 
is unable to comply with the request to explain the number of recipients by specifying some major 
recipients for the reasons set forth in response 2.1, above. 
  G/SCM/Q2/USA/45 
 Page 3 
 
 
  4. Credit for Electricity Production from  Renewable Resources and for Refined and 
Indian Coal 
 
Reply  
  A production tax credit of 1.5 cents per kilowa tt hour (adjusted for inflation since 1992) is 
allowed for electricity produced from certain renewa ble resources.  A credit is also allowed for coal 
that has been processed to reduce the pollution that results when th e coal is burned and for coal 
produced on Indian lands.  The credit is allowed to the person that produces and sells the electricity or 
coal.  Foreign entities may receive the credit.  The Un ited States is unable to comply with the request 
to explain the number of recipients by specifying so me major recipients for the reasons set forth in 
response 2.1, above. 
 
5. Credit for Clean Renewable Energy Bonds 
 
Reply
 
  Clean renewable energy bonds ("CREBs") provi de Federal tax credits to subsidize a portion 
of the borrowing costs on bonds used by state a nd local governmental entities, state and local 
governmental public power provide rs, and non-profit electric cooperative companies to finance 
capital expenditures for qualified renewable energy projects.  Foreign entities are not eligible to 
receive subsidies under this program.  The existing CREBs program has a total statutory bond volume 
authorization of $2.4 billion, wh ich the Treasury Department allocat ed to projects for an estimated 
739 State and local governmental entities, 35 stat e and local governmental public power providers, 
and 44 non-profit electric cooperative companies.  A list of all but 13 of the reci pients is posted on the 
Internal Revenue Service website at:  
http://www.irs.gov/pub/irs-tege /ncrebs_2009_allocations_v1.1.pdf
. 
 
The identity of these recipients can be provided because of disclosure consents from the 
recipients. 
 Question 3 
 
 Please clarify substantively what the phrases such as "qualifying production", 
"qualifying equipment", "qualifying producers" and "qualifying electricity" indicate with 
regard to eligibility requirements fo r the programmes mentioned above. 
 Reply
 
 
 The specified terms do not appear in either the Internal Revenue Code or in published IRS or 
Treasury guidance in connection with the programs mentioned above.  The phrases are simply a way 
to reference the equipment, producers or electricity  that qualifies under the criteria which are set out 
in the notification for the programs mentioned above.   For example, the term "qualifying equipment" 
is used to describe geothermal heat pump property that qualifies for the credit described in response 
2.2, above. 
 G/SCM/Q2/USA/45 
Page 4  
 
  The Textile/Clothing Technology Corporation Program
 
Question 4 
 
 According to the notification, the subsid y is only provided to the Textile/Clothing 
Technology Corporation.  Japan would like to know the following processes: 
 
 (i) how the U.S. government decides which organization is appropriate to operate 
 (ii) how the process for adoption of the research project is like.  
Reply
 
  The organization submits its application for f unds and research projects to the Department of 
Commerce for approval.  The Department conducts a merit-based review which is generally based on 
the findings of the technical evaluations, the im portance and relevance of the proposed research 
projects to program objectives, and cost reasonableness. 
 
 Authorization and funding for this program is provided as part of the annual budget and appropriations process for the Department of Co mmerce.  The congressionally-mandated financial 
assistance is made to this organization which is sp ecifically named by statute and for which funds are 
set aside in the Department's appropriations.  
 
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