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Renewing renewables  

The Democratic Congress is poised to pass the most green-friendly legislation in a generation. There are bills, either already on the floor or in committee, that would encourage the use of renewable fuels, improve energy efficiency and curb global warming.

If there’s a holdup, don’t blame Republicans: Even President Bush has signaled his willingness to support some kinds of curbs in global warming. The hitch–and it’s a big one–lies with the Democrats themselves.

Earlier this year, in an attempt to rein in the federal deficit, House Democrats, put in place “pay-go” restrictions requiring any new entitlement spending or tax cuts to be offset by budget trims or tax increases.

This could stymie the extension of two clean-energy provisions, the production tax credit (PTC), used largely by the wind industry, and the investment tax credit (ITC), which helps the solar industry. Both are set to expire at the end of 2008 and could set back developments (and private funds) in each area.

“The issue is not the availability of funds as [much as] it is long-term planning,” says Jaime Steve, director of legislative affairs for the American Wind Energy Association, the industry’s primary trade organization. AWEA is pushing for a five-year extension of the production credit to encourage turbine manufacturers such as General Electric, Siemens and Mitsubishi to invest in the burgeoning U.S. wind industry.

The Solar Energy Industries Association (SEIA) wants to see a 10-year extension of the investment credit, in part because solar hasn’t progressed as far as the wind market, says SEIA President Rhone Resch. Without the extension, he argues, U.S. solar panel makers would take their business elsewhere, most likely to the European Union and Japan.

“The one- and two-year extensions are not enough to allow the industry the kind of stability it needs to grow,” says a spokesman for Rep. Earl Pomeroy, D-N.D., who has introduced a bill to extend the PTC for five years. Since the credit was established in 1992, lawmakers have let it expire three times, in 1999, 2001 and 2003. In each of the following years, investment in wind capacity dropped considerably, producing a boom-bust cycle that has discouraged investment in turbines.

How much money are we talking about? Last year, the production credit for the wind industry dented the U.S. Treasury by about $2 billion, and this year the solar investment credit is expected to cost some $65 million. If the extensions are granted, the PTC and ITC will cost taxpayers an estimated $10 billion and $1.7 billion, respectively, AWEA and SEIA say.

Failing to renew the credits would hardly be a calamity. For one thing, wind and solar together account for less then 3% of the nation’s total fuel sources. For another, innovative American companies generally find ways to carry on–with or without an assist from Uncle Sam.

By Brian Wingfield

Forbes

4 June 2007

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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