The pressure is on for the U.S. Congress to extend expiring renewable energy production and investment tax credits, and according to lawmakers and experts the extension could happen soon.
Senate Republicans blocked an effort at the end of last year to fund the credits through a tax package that also would have cut tax breaks for the oil and gas companies. However, lawmakers may address the issue through an economic stimulus package or a separate tax credit extension packet in the next few months.
Senate Majority leader Harry Reid (D-Nev) said last month that Congress would move quicker than many expect to vote again on the tax proposal. Likewise, Senator Jeff Bingaman (D-N.M.) has stated that it is a matter of critical importance for many companies in the renewable sector.
Jaime Steve, legislative director for the American Wind Energy Association, said extending the credits is critical to maintaining the momentum the wind energy has built over the last several years. "If the credit is not extended in the next two to three months, we’ll see a downturn in the industry," he said.
Likewise, Solar companies, whose stocks made large gains over the last six months, need the credits to remain competitive on the world market, as they continue to ramp up production in an effort to bring down the costs of solar-generated electricity.
If Washington lawmakers are to approve the renewable investment and production credits soon, they will need to attach it to other quickly developing bills–perhaps the farm bill or a stimulus package, which Democrats have said they will work to create with the White House in an effort to stave off the fears of a nationwide recession.
"The No. 1 opportunity is in an economic stimulus package," AWEA’s Steve said. "That would be a perfect place in an renewable production tax credit."
Steve added, "We’re looking for extension of current law as long as possible…because it provides certainty for investors."
The renewable production credit that was removed from the energy bill before approval in December would have lasted three years, costing around $6 billion.
Mark Kibbe, a senior policy analyst at the American Petroleum Institute said there are alternative ways Congress may use to to extend the tax credits, including a tax-extenders bill that has been passed on almost a yearly basis, prolonging numerous popular tax rules.
He also mentioned another more unusual solution involving the Federal Aviation Administration’s reauthorization of the collection of excise taxes, which is set to expire in March. Kibbe says if Congress lets the reauthorization expire for a day before reauthorizing it, the funds officially become new revenue and can be spent in new ways as offsets.
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