Over the weekend, both houses of the US Congress signed the Omnibus Tax bill which renews renewable energy federal tax incentives for another year. The bill has wide support in both houses and is expected to be signed by President Bush before the end of the year.
The $45 billion package extends the $2.9 billion renewable-energy tax credit, which continues the Solar and Wind Production Tax Credits through 2008.
This is good news for the wind industry, having endured boom and bust cycles associated with the expiration of the tax credit. Having the PTC extended well in advance assures strong growth in the US wind energy market through 2008.
The legislation also extends the tariff on imported ethanol ($0.14 per litre) until 2009, which shows continued commitment to building domestic production.
The legislation also contains incentives to develop new energy technologies, including a 50% accelerated depreciation allowance on cellulosic ethanol facilities.
“This bill is a patch, and emphasizes the importance for Congress to enact long-term, comprehensive clean energy legislation when they return in January,” said Rhone Resch, President of the Solar Energy Industries Association.
“The uncertainty that these tax credits would not be extended was already causing projects to be postponed or downsized. Now this means that a good number of those projects will clearly go forward,” said Karl Gawell, Executive Director of the Geothermal Energy Association. “For the next year or 18 months we are going to see a very active market. But after that it will start tailing off. That’s why we need longer term extensions.”
AWEA, SEIA, GEA and all the other renewable energy interest groups will be pushing the 110th Congress for long-term extensions in January when lawmakers return to Washington.
The U.S. Senate early this morning passed the Gulf of Mexico Energy Security Act as part of a larger package extending several popular tax relief programs. The provision, crafted by Chairman Domenici, will bring 1.26 billion barrels of oil and 5.8 trillion cubic feet of natural gas to market over the next several years.
Senate Majority Leader Bill Frist characterized the legislation as “one of the most significant accomplishments of the 109th Congress which will have a lasting impact on American consumers and our economy.”
“I think it’s fitting that we passed legislation that develops more oil and gas in tandem with a tax package that will increase the production of electricity from wind and solar power and help government, businesses and homeowners conserve energy and use it more efficiently,” Domenici said.
“I have always believed that increased production of fossil fuels is effective only if we also expand our production and use of renewable energies and make a concerted effort to use less energy. This package achieves all three goals.” he said.
The bill also:
* Extends the tax credit to holders of clean renewable energy bonds.
* Modifies the clean coal gasification tax credit by setting a different reduction target for SO2 emissions from sub-bituminous coal, to qualify for investment tax credits for installing clean coal technology.
* Extends the deduction for energy efficient commercial buildings that reduce annual energy and power consumption by 50 percent, for one year.
* Extends a business credit to eligible contractors for building energy efficient new homes, for one year.
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