WORLD TRADE  
ORGANIZATION   
G/SCM/Q2/USA/51 
11 May 2012 
 (12-2559) 
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 7 May 2012, 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 benefitted fr om the subsidy directly or indirectly?  Are 
foreign entities eligible for receiving subsidies under this programme? 
 Reply 
 
 The Department of Energy selects projects for funding through open and competitive 
solicitations.  The criteria for selection vary greatly by topic area and are described in detail in each publicly available funding opportunity announcement.    
 The Department of Energy has awarded f unds to automotive companies including General 
Motors, Chrysler, and Ford as prime recipients through this open and competitive process.  These 
companies have also received funds indirectly, as pa rtners in projects for wh ich another entity is the 
prime recipient.  These projects are also select ed through an open and competitive process. 
 
 Foreign entities are eligible to receive fundi ng through a grant or cooperative agreement.  
Like all other eligible applicants, they must subm it an application as described in the subject funding 
opportunity announcement.  Foreign companies have received funds through this process. 
                                                      
1 G/SCM/Q2/USA/44.   
2 G/SCM/N/186/USA.   G/SCM/Q2/USA/51 
Page 2  
 
  Question 2 
 
 Concerning applicable sub-programs, while 'Vehicle Systems', 'Hybrid and Electric 
Propulsion' and 'Technology Introduction' were terminated in 2008, 'Hyb rid Electric Systems' 
and 'Technology Introduction' initiated in 2008.   
(i) How are the initiation/termination of sub-programs decided?  Are there 
any decision criteria for the initiation or termination? 
Reply 
 
 The Department of Energy's Vehicle Technologies Program did not terminate subprograms 
but rather renamed programs.  "Hybrid Electric Systems" brought together the activities in "Vehicle 
Systems" and "Hybrid and Electric Propulsion".  Similarly, "Technology Introduction" brought together and renamed a number of ongoing activities related to technology deployment, education, 
and analysis.  
(ii) Have the eligibility, terms and conditions to receive the subsidy changed 
in correspondence with the initiation/termination of a sub-program? 
Reply 
 
 No subprograms (or the key activities therein) were terminated in the relevant timeframe; 
rather, they were renamed and/or restructured.  Ho wever, in general, the renaming of these activities 
did not result in substantive changes to the elig ibility, terms, and conditions of the program's 
competitive awards.  Eligibility, terms, and cond itions for receiving financial assistance vary 
according to the specific funding opportunity offered and are described in each funding opportunity announcement.  
Energy Conservation Programs – Industry Sector 
 
Question 3  
 Concerning the listed programmes below:  
 
(i) Could the United States explain the eligibility requirements for 
participation and concrete [actual] beneficiaries under this programme? 
(ii) Are foreign entities eligible fo r receiving subsidies under these 
programmes?  
(iii) How are the initiation/termination of sub-programs decided?  Are there 
any decision criteria for the initiation or termination? 
 
Industries of the Future (Specific)  
- Forest and Paper Products 
- Steel Industry 
- Aluminium Industry  G/SCM/Q2/USA/51 
 Page 3 
 
 
  - Metal Casting Industry 
- Chemicals Industry 
Industries of the Future (Crosscutting) 
 
- Industrial Materials of the Future 
- Combustion 
- Sensors & Automation 
- Industrial Technical Assistance 
- Energy-Intensive Process R&D 
- Fuel and Feedstock Flexibility 
- Nano manufacturing and Other Interagency Manufacturing R&D 
- Industrial Distributed Energy 
- Energy Efficient Information Technologies 
Reply 
 
 The Steel Industry of the Future partnership is a typical example of how this program works.  
The objective of this program is to  generate new technologies to boost productivity and save energy in 
steel mills.  It is cost-shared research and de velopment (R&D) partnershi p between the Industrial 
Technologies Program (ITP) and the steel industry emphasizing collaborative research.  
 Descriptions of R&D projects (ongoing and co mplete) are available on the ITP Steel website 
at: http://www.eere.energy.gov/industry/steel/portfolio .html.  The American Iron and Steel Institute 
(AISI) managed some of these projects under the public -private partnership with the Department of 
Energy (DOE), known as the Technology Roadmap Pr ogram (TRP).  Research for TRP projects is 
carried out by National Laboratories, universiti es, equipment suppliers, and private industry. 
 
 More generally, DOE issues a competitive so licitation for cost-shared R&D agreements 
which detail specific eligibility criteria.  Interest ed domestic entities submit proposals in response to 
the solicitation.  DOE typically allows any domestic entity to apply.  So long as the entity is incorporated or formed under the laws of a state within the United States, DOE generally recognizes it 
as a domestic entity, even if it is partially or wholly owned by a foreign entity.  Foreign entities can 
typically also partner on another entity's application.   Where a federal lab partner is also included, 
DOE would expect a CRADA to be negotiated between  the lab and the prime applicant.  A merit 
review committee of experts evaluates the project proposals and makes selections on the basis of technical merit, energy savings, an d industry needs.  Selected proj ects are carried out by collaborative 
partnerships among equipm ent suppliers, national laboratories, private industry, universities, and 
others.  The provision of the names of actual be neficiaries is not required under the Subsidies 
Agreement.  See answer above with respect to the initiation/termination of sub-programs.    G/SCM/Q2/USA/51 
Page 4  
 
  Energy Efficient Appliance Credit 
 
Question 4 
 
 Please clarify what the 'energy efficient app liances' are.  Please clarify what 'qualifying 
appliances' indicates. 
 
Reply 
 
 A tax credit was allowed to a manufacturer for the production of energy efficient dishwashers, 
clothes washers, and refrigerators.  Two types of energy saving dishwashers were eligible for the 
energy efficient credit in 2008.  For dishwasher s manufactured in calendar year 2008, a qualifying 
dishwasher included dishwashers that use no more  than 324 kilowatt hours per year and 5.8 gallons 
per cycle;  and a dishwasher that uses no more than 307 kilowatt hours per year and 5.0 gallons per 
cycle (5.5 gallons per cycle for dishwasher s designed for more than 12 place settings). 
  An eligible clothes washer is a residential model clothes washer, including a commercial style 
coin operated washer.  Four types of energy savin g clothes washers were eligible for the energy 
efficient appliance credit in 2008. For clothes w ashers manufactured in calendar year 2008 qualifying 
clothes washers include the following:  (1) a clothes washer that is a residential top-loading clothes 
washer, which meets or exceeds a 1.72 modified en ergy factor and does not exceed an 8.0 water 
consumption factor;  (2) a clothes washer that is a residential top-loading clothes washer, which meets 
or exceeds a 1.8 modified energy factor and does not  exceed a 7.5 water consumption factor;  (3) a 
clothes washer that is a residential or comme rcial clothes washer, which meets or exceeds a 
2.0 modified energy factor and does not exceeds a 6.0 water consumption factor;  and (4) a clothes 
washer that is a residential or commercial cloth es washer manufactured in calendar year 2008, which 
meets or exceeds a 2.2 modified energy factor and does not exceed a 4.5 water consumption factor. 
 
 An eligible refrigerator is a residential model automatic defrost refrigerator-freezer that has an 
internal volume of at least 16.5 cubic feet.  Four t ypes of energy saving refrigerators were eligible for 
the energy efficient appliance credit in 2008.  Fo r refrigerators manufactured in calendar year 2008 
qualifying refrigerators include the following:  (1) a refrigerator that consumes at least 20 per cent but 
not more than22.9 per cent less kilowatt hours per y ear than the 2001 energy conservation standards;  
(2) a refrigerator that consumes at least 23 per cent but not more than 24.9 per cent less kilowatt hours 
per year than the 2001 energy conservation standard s;  (3) a refrigerator that consumes at least 
25 per cent but not more than 29.9 per cent less kilowatt hours per year than the 2001 energy 
conservation standards;  (4) a refrigerator that  c onsumes at least 30 per cent less energy than the 2001 
energy conservation standards.  The 2001 energy conservation standards are those issued by the 
Department of Energy effective 1 July 2001.  
 Are there any appliances other than dishwa shers, clothes washers, and refrigerators 
that are applicable to this program? 
 
Reply 
 
 No.    G/SCM/Q2/USA/51 
 Page 5 
 
 
  Other Notified Programs 
 
Question 5 
 
 With regard to 'New Technology Credit:  Solar, Geothermal, Fuel Cell, and 
Microturbine Property' and 'Credit for Cl ean Renewable Energy Bonds' notified in 
G/SCM/N/155/USA, please explain whether or no t these programs were terminated after the 
notification. 
 
Reply 
  A permanent tax credit of 10 per cent of the b asis of qualified energy property placed in 
service during any taxable year is available for so lar and geothermal propert y.  The tax credit is 
authorized by sections 46 and 48 of the Internal  Revenue Code.  However, effective for property 
placed in service before 2017, the credit percentage  is increased to 30 per cent.  In addition a 
30 per cent credit is available for (1) qualified fuel cell property, (2) equipment that uses solar energy 
to generate electricity to heat or cool a structure,  or provide solar process heat (except used to heat a 
swimming pool), (3) equipment that uses solar energy  to illuminate the inside of a structure using 
fiber-optic distribution sunlight, and (4) effectiv e for periods after 3 Oct ober 2008, qualified small 
wind energy property.  However, the credit for qua lified fuel cell property may not exceed $1,500 for 
each 0.5 kilowatt of capacity and the credit for qualif ied small wind energy property many not exceed 
$4,000 for property placed in service in the period e nding prior to 1 January 2009.  Qualified energy 
property eligible for a 10-per cent credit includes microturbine property, combined heat and power system property, geothermal power property and geothermal heat pump systems (for periods after 
3 October 2008) placed in service before 2017.  
 Business tax credits for solar and geothermal  property were part of the Energy Tax Act 
of 1978 and were altered in sub sequent legislation.  The Energy  Policy Act of 1992 made the credit 
permanent.  The Energy Policy Act of 2005 added the credits for fuel cell and microturbine property.  
The Emergency Economic Stabilization Act of 20 08 added the credits for small wind property, 
combined heat and power property and geothermal he at pumps and extended the credits through 2016.   
 
 Both Clean Renewable Energy Bonds ("CREBs ") and New Clean Renewable Energy Bonds 
('New CREBs") are tax credit bonds that can be u sed by state and local governments as well as 
electric cooperatives to finance certain facilities that produce electricity from certain renewable 
resources.  CREBs are subject to a national volume cap of $1.2 billion and must be issued after 8 
August 2005 and before 1 January 2010.  A taxpayer holding a CREB on a credit allowance date is 
entitled to a credit against its Federal income taxes.   The annual credit with respect to a CREB is 
equal to the amount that the Treasury Secretary dete rmines would allow the CREB to be issued at par 
and without interest.  The provision was adopted as part of the Energy Policy Act of 2005.  This 
provision is authorized in section 54 of the Internal Revenue Code.  
  New CREBs are subject to a national volume cap of $2.4 billion.  A taxpayer holding a New 
CREB on a credit allowance date is entitled to a cr edit against Federal income taxes.  The annual 
credit with respect to a New CREB is equal to 70 percent of the credit that the Treasury Secretary 
determines would allow the New CREB to be issued at  par and without interest.  The tax credit to a 
holder of a New CREB is treated as interest that is  includible in the holder's gross income, and any 
interest paid on a New CREB is taxable.  The pr ovision was adopted by the Emergency Stabilization 
Act of 2008.  This provision is authorized in  section 54C of the Internal Revenue Code.  
 
 What are the differences between the 'Biodi esel Credit' on the former notification, 
G/SCM/N/155/USA, and the 'Biodiesel and Renewabl e Diesel Credit' on the latest notification, 
G/SCM/N/186/USA? G/SCM/Q2/USA/51 
Page 6  
 
  Reply 
 
 The title of the provision was updated to include  the renewable diesel credit that was enacted 
in the Energy Policy Act of 2005.  There is no di fference between these two no tifications other than 
the title.  
 
 What are the differences between the 'Credit for Electricity Production from Renewable 
Resources and for Refined and Indian Coal' on the former notification, G/SCM/N/155/USA, and the 'Tax Credit for Refined Coal and Indian Coal' on the latest notification, G/SCM/N/186/USA? 
 
Reply 
  The Credit for Electricity Production from Rene wable Resources is an  income tax credit 
allowed for the production of electricity from qua lified energy resources at qualified facilities.  
Qualified energy resources comprise wind, clo sed-loop biomass, open-loop biomass, geothermal 
energy, solar energy, small irrigation power, muni cipal solid waste, qualified hydropower production, 
and marine and hydrokinetic renewable energy.  In  general, the base amount of the electricity 
production credit is 1.5 cents (indexed for infla tion after 1992) per kilowatt-hour of electricity 
produced.  A taxpayer may generally claim the cred it during the 10-year period commencing with the 
date the qualified facility is placed in service.  The credit is reduced for grants, tax-exempt bonds, 
subsidized energy financing, and other credits.  The electricity must be produced from a facility 
owned (or, in the case of biomass, operated) by the taxpayer and it must be sold to an unrelated 
third party.  In the case of open-loop biomass fac ilities (including agriculture livestock waste nutrient 
facilities), small irrigation power facilities, and mari ne and hydrokinetic renewable energy facilities, 
the credit amount is 0.75 cents per kilowatt-hour (indexed for inflation after 1992). 
 
 The credit applies to electricity produced by  a wind energy facility placed in service after 
31 December 1993, and before 1 January 2013 and to  closed-loop biomass facilities placed in service 
after 31 December 1992 and before 1 January 2014 .  In the case of a facility using closed-loop 
biomass but also co-firing with coal, a qualified facilit y must be modified to co-fire with coal at any 
time before 1 January 2014.  The credit applies to el ectricity produced at geot hermal facilities, landfill 
gas facilities, small irrigation facilities and trash combustion facilities placed in service after 
22 October 2004 and before  1 January 2014.  A credit applies to qualifying hydropower facilities 
where efficiency improvements or additions to capac ity have been made before 1 January 2011 and to 
nonhydroelectric dams where turbines have been adde d before 1 January 2014.  A credit applies to 
marine and hydrokinetic energy facilities that are placed in service after 2 October 2008 and 
1 January 2014.  The credit applies to solar f acilities placed in service after 22 October 2004 and 
before 1 January 2006.     The provision for wind and biomass was adopted as part of the Energy Policy Act of 1992 and was extended to poultry waste in the Tax Re lief Extension Act of 1999.  The provisions for 
electricity produced from geothermal energy, sola r energy, small irrigation power, and municipal 
solid waste were adopted as part of the American  Jobs Creation Act of 2004.  The provision for 
hydroelectric facilities was adopted as part of the Energy Policy Act of 2005.  The credit was 
extended as part of the Energy Policy Act of 2005 a nd the Tax Relief and Health Care Act of 2006.  
The provision for marine and hydrokinetic energy facilities was adopted as part of the Emergency 
Stabilization Act of 2008.  The credit was also exte nded as part of the Emergency Stabilization Act of 
2008 and the American and Reinvestment Act of 2009 .  These provisions are authorized in section 45 
of the Internal Revenue Code.  The Tax Credit for Re fined Coal and Indian Coal is described in the 
United States' latest notification.   
  G/SCM/Q2/USA/51 
 Page 7 
 
 
   Please clarify what the 'qualifying pro ducers, blenders or users' of 'Biodiesel and 
Renewable Diesel Credit' indicates. 
 
Reply 
 
 The term qualifying indicates that the producers, blenders or users are entitled to the credits.  
For example, to qualify for the credits the blender making the biofuel mixture must use it as fuel, or 
have sold it as a fuel to another person.  The blende r must use or sell the mixture in a trade or business 
and the credit is available only for the year the mixt ure is sold or used.  In addition, all producers and 
importers of biodiesel or renewable diesel must be registered with the Internal Revenue Service.  All 
persons producing blended taxabl e fuel must be registered. 
 
 Please clarify what the 'qualifying electricity  or coal' of 'Tax Credit for Refined Coal 
and Indian Coal' indicates. 
 Reply 
 
 Qualifying refined coal is (1) a liquid, gaseous, or solid fuel produced from coal or high carbon fly ash meeting the requirements of the Intern al Revenue Code section 45(c)(7), or (2) steel 
industry fuel, which is a fuel that is produced through a process of liquifying coal waste sludge (as defined by the Internal Revenue Code Section 45(c) (7)(C)(ii)) and distributing it on coal and is used 
as a feedstock for the manufacture of coke.  Qualifying Indian coal means coal which is produced 
from coal reserves which on 14 June 2005 were owned by an Indian tribe or held in trust by the 
United States for the benefit of an Indian tribe or its members.  The word 'electricity' was included in 
the notification in error.  
 
The Textile/Clothing Technology Corporation Program 
 
Question 6 
 
 According to the notification, the subsidy is only provided to Textile/Clothing 
Technology Corporations.  Japan would lik e to know the following processes:   
 
(i) How the U.S. government decides whic h organization is appropriate,  
and 
(ii) what 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.  Funding for this program was terminated in 2011. 
 
 
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