Tax-Exempt Financing for Green Buildings, Renewable Energy & Brownfield Redevelopment

August 31, 2005


The "American Jobs Creation Act of 2004" (HR 4520), signed into law on October 22, 2004, authorizes $2 billion in tax-exempt bond financing for green buildings, brownfield redevelopment, and sustainable design projects. Tax-exempt financing allows a project developer to borrow money at a lower interest rate because the buyers of the bonds will not have to pay federal income taxes on interest earned. The savings from tax-exempt financing must then be used to offset the costs of sustainable design and/or renewable energy technologies. Projects must be nominated by a State or local government within 180 days of the enactment of this law. The Environmental Protection Agency will recommend projects to Secretary of the Treasury based on the following requirements:

  1. At least 75% of the square footage of commercial buildings in the project must be registered for the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) Green Building Rating System. LEED is the nationally recognized standard for assessing the energy efficiency and sustainable design qualities of buildings;
  2. The project must include a contaminated "brownfield" site;
  3. The state and/or local government must contribute to the project;
  4. Projects must include at least 1 million square feet of building or 20 acres; and
  5. Each project must demonstrate that it will create at least 1500 permanent jobs (150 in rural states) and 1000 construction jobs (100 in rural states).
In addition, each project must use the financial benefit of the tax-exempt financing to:
  • purchase energy efficiency, renewable energy, and sustainable design features;
  • comply with LEED requirements; and/or
  • purchase and remediate brownfields.
The combined projects selected under the so-called green bond program must:
  • reduce energy consumption by 150 megawatts annually;
  • reduce daily sulfur dioxide emissions by at least 10 tons compared to coal generation;
  • expand by 75% the U.S. solar photovoltaic market (measured in megawatts) as compared to expansion from 2001 - 2002; and
  • use at least 25 megawatts of fuel cell energy generation.

Program Overview

Implementing Sector: Federal
Category: Financial Incentive
State: Federal
Incentive Type: Loan Program
Web Site:
Start Date: 1/1/05
Eligible Renewable/Other Technologies:
  • Solar - Passive
  • Solar Water Heat
  • Solar Space Heat
  • Solar Photovoltaics
  • Fuel Cells using Non-Renewable Fuels
  • Daylighting
  • Fuel Cells using Renewable Fuels


Name: Public Law No: 108-357: "American Jobs Creation Act of 2004" (HR 4520); see § 701
Date Enacted: 10/22/04
Effective Date: 1/1/05
Expiration Date: 9/30/09

This information is sourced from DSIRE; the most comprehensive source of information on incentives and policies that support renewables and energy efficiency in the United States. Established in 1995, DSIRE is operated by the N.C. Clean Energy Technology Center at N.C. State University.