Senate in stalemate over paying for wind, solar tax credits

Legislation to extend federal tax credits for wind and solar energy failed June 10 in the Senate, where members remain divided over how to pay for the billions of dollars in incentives.

The production and investment tax credits for renewable energy resources expire in December 2008.

Reconsideration of the legislation in the Senate could take place as early as the week ending 20 June, renewable industry sources said, but, many doubt the stalemate between lawmakers over whether to include revenue raisers will be quickly resolved.

"Today's action failed to provide a reason to hope that the energy taxes will be extended before November," said Christine Tezak, senior vice president at The Stanford Group.

Failure to extend these tax credits places as many as 116,000 jobs and nearly $19 billion in investments in the renewable energy industry at risk, according to the American Wind Energy Association.

Senate Majority Leader Harry Reid, a Nevada Democrat, "is looking at options" to bring the legislation back to the floor, "but its chances for success are dim considering Republicans won't let us move to the bill," said Reid spokesman Stephen Krupin, following the vote.

The Senate vote June 10 was 10 shy of the necessary 60 to proceed with a debate on H.R. 6049, the Renewable Energy and Job creation Act of 2008, which cleared the House on May 21.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, had planned to offer a substitute amendment with revenue increases similar to those in the House bill.

Iowa Senator Charles Grassley, the committee's senior Republican and Senate Minority Leader Mitch McConnell, a Kentucky Republican, also had readied an alternative without any budget offsets - a position preferred by the Bush White House.

But none of the measures was considered in light of the vote.

McConnell said he believes a bill to extend tax credits would require a bipartisan agreement, and he planned to meet with Baucus and Reid, but said he would maintain that tax credit extensions should not be used "as an excuse to raise taxes on other Americans."

McConnell pointed out that last year Congress had extended the alternative minimum tax without budget offsets. "I think that's where we'll end up on a tax extenders package as well," he said.

Baucus' amendment included a one-year AMT exemption without an offset. Still, the House, with its influential "Blue Dog Coalition" of conservative and moderate Democrats, insists that legislation with tax breaks include the means to pay for them.

The House-passed bill and Baucus' proposed substitute would have extended the wind production tax credit by one year.

For other renewable energy resources, including biomass, hydropower and geothermal, both measures also would have provided a three-year extension of the production tax credit through 2011.

For solar energy, H.R. 6049 would extend the residential and business investment tax credit for six years and lift the current annual credit cap for residential from $2,000 to $4,000. Baucus' amendment offered the same increase in the cap but extended the business and residential investment credit for eight years.

Both the House bill and the Baucus substitute would authorize $2 billion for the Clean Renewable Energy Bonds program created in 2005 to help finance wind, biomass, geothermal and other renewable energy projects developed by state, local and tribal governments, electric cooperatives and public power providers.

On electric transmission, both measures also would have accelerated depreciation for smart meters and would have allowed gains from the sale of transmission systems before 2010 to be recognized over eight years.

The House bill and Baucus substitute also included $1.5 billion for advanced coal-fired electricity and coal gasification projects based on their ability to capture carbon and sequester the greenhouse gas.

Created: June 11, 2008

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