The U.S. Senate approved by a vote off 88-8 a proposal to extend tax credits for wind, solar and biomass, proving that Senate Republicans aren’t squarely opposed to incentivizing the renewable energy industry; they just refuse to reduce incentives for the multi-billion dollar gas and oil industries to do it.
But there lies the rub. The Senate was finally able to pass extensions for the much-needed production tax credit (PTC) and investment tax credit (ITC) for renewables, because they backed away from a plan to shift the incentives from oil and gas. Instead, they neglected to say how the incentives will be paid for–a move that won’t sit well with the pay-as-you-go mantra of the House of Representatives.
The incentives are expected to cost about $6 billion over ten years, and the House, with a strong Democratic majority, has had no trouble shifting the expense to the oil and gas industries, but the Senate has failed to overcome Republican filibuster threats on several recent attempts.
Regardless, the White House said it would veto any bill that reduced incentives to oil and gas, which leaves one wondering how important the incentives are to Democrats. If they truly want to pass extensions of the credits before the renewable industry is harmed, they would find another way to pay for it.
"There is no justification, other than politics, not to offset this amendment," said Jeff Bingaman, chairman of the Senate energy committee. "I do not expect that the House will accept these extensions without corresponding offsets."
Bingaman added that he was looking to the White House to negotiate a compromise that will offset the budget shortfall, but added that the Bush administration "rebuffed our request to identify any acceptable offsets."
Republican Senator Pete Domenici, one of the original cosponsors of the Clean Energy Tax Stimulus amendment suggested that a little more deficit spending might be tolerable in this case.
"When one takes a larger view of these energy tax credits, it becomes obvious that they stimulate the economy, create jobs, and help America become less dependent on foreign sources of oil," Domenici said. "It is therefore unnecessary to offset the tax credits, since the end result will be a benefit to our economy and energy security."
It is yet to be seen if the House will share his view.
Meanwhile, the renewable energy industry and environmental groups celebrated what would be a strong incentives package, if it finds its way into law.
The incentives, which were attached to housing legislation calls for a one-year extension of the placed in service date for the PTC, which means renewable projects can claim the credit for 10 years, if they begin operation before the credit expires. Currently the expiration is set for December 31, 2008. The bill also would extend for eight-years the ITC that businesses and homeowners can take for renewable energy systems, including solar and fuel cells.
The Sierra Club said, "We are extremely pleased that the Senate acted so decisively today. The House has approved similar packages of clean energy incentives on numerous occasions over the past few months and we will continue to work with our allies on that side of the Capitol to bring this important measure across the finish line as soon as possible."
The American Wind Energy Association said, ":We are especially grateful to Senators Maria Cantwell (D-WA) and John Ensign (R-NV) and the many bipartisan cosponsors of this legislation who worked to move this bill forward. With 116,000 renewable energy jobs and $19 billion in clean energy investment at risk from the looming expiration of renewable energy tax credits, the Senate has recognized the urgency of taking timely action to extend these incentives."
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