Only time will tell whether or not the $700 billion economic bailout plan passed by Congress last Friday was a wise legislative maneuver. However, the extension of tax credits for the renewable energy industry supports what is arguably the most important industry sector at this crucial moment in history, as the U.S. begins to build a low-carbon, energy-independent future.
Extensions of the tax credits were attached to the economic rescue bill by the Senate last week. The House passed the bill by a vote of 263 to 171 on Friday, and it was immediately signed into law by President Bush.
“We salute Members of Congress in both parties who fought under difficult conditions to keep the renewable energy production tax credit (PTC) and small turbine investment tax credit (ITC) on the agenda until the very end, and then pushed them across the finish line," Greg Wetstone, Senior Director of Governmental and Public Affairs at the American Wind Energy Association, said in a statement. "These tax credits are essential to the continued growth of wind energy, to the economic and energy security of the United States, and to a successful beginning in the fight against global warming. We look forward to working next year with a new Congress and Administration to fashion a serious long-term clean energy policy that increases domestic energy, increases our reliance on clean renewable energy, and creates renewable energy jobs for Americans.”
The Solar Energy Industry Association (SEIA) also praised the legislative action and outlined exactly how the solar industry will benefit from the extension of the tax credits, which were set to expire at the end of the year.
The solar investment tax credit (ITC) provisions will:
- Extend for 8 years the 30% tax credit for both residential and commercial solar installations
- Eliminate the $2,000 monetary cap for residential solar electric installations, creating a true 30% tax credit (effective for property placed in service after December 31, 2008)
- Eliminate the prohibition on utilities from benefiting from the credit
- Allow Alternative Minimum Tax (AMT) filers, both businesses and individuals, to take the credit
- Authorize $800 million for clean energy bonds for renewable energy generating facilities, including solar
“By passing this bill, Congress has finally given the solar energy industry ‘policy certainty’ that will attract investment, expand manufacturing and lower the cost of solar energy to consumers,” said Roger Efird, SEIA chairman and president of Suntech America, a leading Chinese solar power manufacturing company. “This will allow companies like mine to move forward with expansion plans to serve the growing U.S. market.”
Other renewable energy and efficiency aspects of the legislation include extensions of the Energy Efficient “Green” Building Tax Deduction, the R&D tax credit, a $7,500 credit for taxpayers who purchase plug-in electric vehicles and support for geothermal, biomass and other renewable energy sources.
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