Renewable power advocates promise continued push for tax credit extension

Source: Elana Schor and Gabriel Nelson • E&E • Posted: Friday, February 17, 2012

Even as renewables advocates today lamented lawmakers’ move not to use a bipartisan payroll tax deal as a vehicle to extend a much-watched clean power tax credit, they vowed to keep pressing for a reprieve ahead of a year-end expiration date that could trigger layoffs in coming months.

The final payroll tax cut deal signed by congressional conferees today, which shifts the rules governing federal employee pension contributions (see related story), didn’t give the production tax credit (PTC) for wind, biomass, solar and other renewable energy sources life beyond this year, despite support from top Senate Democratic negotiator Max Baucus of Montana. The omission emerged as the Obama administration continues to warn of adverse consequences if Congress does not act soon to extend the credit.

Energy Secretary Steven Chu told the Senate Energy and Natural Resources Committee today that the PTC and another grants-in-lieu-of-tax program known as Section 1603 had “by most people’s accounts — not everybody’s — been very successful in stimulating investments” in renewable energy.

“A lot of these investments, just to plan them and get them permitted and licensed, can go well beyond a two-year cycle,” he said, adding that “the administration is very concerned about a roll-off of these investments” as the two-year course of its economic stimulus law runs out.

Interior Secretary Ken Salazar sounded an even stronger note yesterday, telling House members that “the importance of [the PTC] cannot be understated” and that losing it in 2013 would “be a killer for the wind industry in America” after years of “herculean progress.”

American Wind Energy Association CEO Denise Bode, whose group had mounted a full-tilt effort to preserve the PTC as part of the payroll deal, emphasized the positive by noting how many Republican policymakers from wind-rich states had joined Democrats this winter in calling for the credit’s extension. “Our campaign continues” to search for a vehicle to re-up the tax benefits before April, she said.

“By all reports, wind champions on both sides of the aisle in both the Senate and House kept the PTC in play up until the very end of the negotiations,” Bode added in a statement. “They are now working to get the job done by other means.”

Yet lawmakers pressing for other avenues to extend the credit, without which Bode’s group projects the loss of more than 30,000 wind industry jobs, are likely to encounter the same stiff political head winds that they faced on the payroll deal.

Conservative groups such as the Heritage Foundation were vocally pressing for Republicans to let the PTC, 1603 and other energy-focused credits expire as a step toward more broadly winding down federal supports for clean power.

Heritage policy analyst Nicolas Loris slammed specific energy tax benefits today as “subsidies that misallocate resources and create the crony capitalistic behavior that Americans loathe.”

More measured skepticism about the merits of extending the energy tax credits came from Sen. Lisa Murkowski of Alaska, the Energy Committee’s top Republican.

Criticizing the White House for proposing a budget that she said would nearly double energy spending, Murkowski noted that the budget assumed the extension of energy tax credits such as the 1603 program.

“I clearly understand why people would want to fund all of those, and I certainly have shown my support in many of these areas,” she said. “But given the state of the federal budget and where we are, now is a time to differentiate between those things that we want to fund and those things that we need to fund.”