Annual push for tax credit extensions revs up
He is one of 34 Democrats who signed a letter yesterday to Senate leaders urging them to extend renewable energy tax incentives in any year-end tax legislation. The list of signatories includes many of the Democrats who have resumed Tuesday meetings to discuss progress on energy bills in the new year. One of the issues they have likely discussed is an extension of the tax incentives for alternative energy sources (E&ENews PM, Dec. 6).
“These expiring tax provisions have demonstrated their effectiveness in catalyzing private investment and job growth, spurring U.S. technological innovation, and diversifying our nation’s energy mix,” the Democrats wrote in the letter. “In light of the critical role these incentives and others have played in fostering U.S. economic growth, now is not the time to let them lapse, even temporarily.”
“We believe it is important these critical tax provisions be part of any year-end tax legislation,” the senators, led by Sen. John Kerry (D-Mass.), wrote.
Chief among the senators’ concerns is an extension of the 1603 Treasury Grant Program, which will expire at the end of this year. The program, which was initially funded in the 2009 stimulus law and was extended last December for one year, provides grants to renewable energy projects in lieu of tax credits.
The program faces a near-certain death come Dec. 31 thanks to heightened scrutiny of Energy Department spending programs in the wake of a scandal surrounding a loan guarantee to the now-bankrupt solar firm Solyndra (Greenwire, Dec. 1). Still, Democrats are pushing to extend the incentive in any year-end tax package.
“Allowing the [Treasury Grant Program] to expire would shrink financing available for renewable energy projects by 52 percent,” the Senate letter says. “This would kill tens of thousands of jobs across all clean energy industries and states.”
And the senators are not alone in their call. A group of 88 House Democrats in a separate letteryesterday urged House leaders to consider a similar extension.
“It is absolutely essential that we extend the 1603 clean energy program to ensure that these job-creating projects continue to have access to financing and that we continue to lead the world in clean energy innovation,” Rep. Earl Blumenauer (D-Ore.) said. “With countries like China and Germany deploying renewables like solar and wind at a faster rate than the United States, we need to support the entrepreneurs and workers who are launching clean energy projects here in America.”
Off Capitol Hill, a coalition of renewable energy groups is working to build momentum to save the 1603 program. Last week that group brought together some 750 companies, small businesses and organizations to send a letter asking Congress to extend the program.
This morning executives from the Solar Energy Industries Association, the Biomass Power Association, the U.S. Combined Heat and Power Association and the Fuel Cell and Hydrogen Energy Association are holding a briefing to provide an update on those efforts.
While the lawmakers and interested parties say the 1603 program is the most critical tax provision set to expire this year, they are also calling for the renewal of two tax credits set to expire at the end of 2012.
The Advanced Energy Manufacturing Tax Credit — another stimulus program — provides a 30 percent investment tax credit for manufacturing equipment for renewable energy projects, batteries, electric cars, energy conservation technologies or technologies that capture and store carbon dioxide. The Production Tax Credit helps make renewable energy more cost-competitive with traditional electricity. It currently offers a 2.2-cent-per-kilowatt-hour credit for wind, geothermal and closed-loop biomass and a 1.1-cent-per-kilowatt-hour credit for other renewable energy technologies, like hydrokinetic, tidal energy and wave energy.
The Senate Democrats in their letter urged extensions for the two tax credits. And a handful of Republicans are pushing similar action.
Moderate Republican Rep. Charlie Bass of New Hampshire yesterday said the investment and production tax credits should be a key part of any tax package that moves in the near future.
“I personally believe that those two credits are absolutely critical to the continued viability to alternative energy development,” Bass said yesterday at an event on Capitol Hill. He added that because their expiration is not imminent they have “I think, a much better chance of being extended.”
Bass has signed onto legislation (H.R. 3307) from Blumenauer and Rep. Dave Reichert of Washington, another Republican, that would extend the current production tax credit through 2016.
Bass dismissed the notion that the Solyndra scandal would plague support for programs like the investment and production tax credits.
“We should discourage any discussion about the fact that the reason Solyndra had its problems was because solar energy is no good and is never going to compete with oil and gas and this whole thing was a disaster,” Bass said. “We need to focus on the fact that good decisions need to be made about support for alternative energy development … because I would hate to see the issues that are associated with the DOE programs take down their entire alternative energy program.”
Click here to read the Senate letter.
Click here to read the House letter.