April 11, 2008
U.S.

Senate votes to extend 'green' energy tax breaks

WASHINGTON – The Senate on Thursday voted to extend a suite of tax breaks for renewable-energy industries, a move to bolster investments and encourage job growth in forward-looking technologies.

Despite the broad support of an 88-8 vote, the tax incentives face an uncertain future in Congress. They were attached to a major mortgage-relief bill that is expected to undergo significant changes in the coming weeks.

The tax credits available on wind, solar, geothermal and other clean energy technologies will expire at the end of the year. The bill approved Thursday would extend for one year a 2-cent-per-kilowatt-hour production credit for wind, biomass, geothermal, small irrigation power, landfill gas, trash combustion and hydropower.

A 30 percent tax credit for the manufacture of solar and fuel cells was extended to 2016. People who purchase solar panels to generate power also would qualify for a 30 percent write-off.

Tax credits for makers of energy-efficient dishwashers, washing machines and refrigerators also would be extended, as would credits for home purchases of solar hot water heaters.

“This is a wise investment that will show stimulus results this year,” said Sen. Maria Cantwell, D-Wash., a sponsor of the amendment along with Sen. John Ensign, R-Nev.

The tax incentives ensure the protection of $20 billion in renewable energy investments and up to 100,000 jobs, Ensign said. The benefits will be enjoyed in states like Nevada that have a wealth of natural resources that can be tapped for energy.

Paul Thomsen, a spokesman for Ormat Technologies, the largest geothermal power plant builder in Nevada, called the measure a good “stopgap,” while the company continues to press for longer-term benefits.

The Senate amendment extends production tax breaks for renewable energy projects for only one year. Industry officials point out it takes three to five years to complete geothermal projects.

Cantwell said the senators limited the bill to give it a better chance of passing quickly, before the end of the month when investors have warned that developers could start canceling projects.

“There is a larger energy discussion to be had,” Cantwell said. “This is work we should have done last year. We need to get it done now and have the larger energy discussion in May or June.”

Although the energy amendment passed with broad support there is doubt it will be received as warmly in the House because it does not include a strategy to make up the $6 billion in tax revenue that will be lost to the government.

The House is working on a mortgage-relief bill expected to be substantially different. Also, the White House this week expressed opposition to the Senate housing bill, calling it a bailout for lenders and speculators.

“I doubt that the House will accept these extensions without some corresponding offsets,” said Sen. Jeff Bingaman, D-N.M., chairman of the Senate Energy and Natural Resources Committee.

Three times in the past year the Senate failed to extend the energy tax breaks.

The approval that came finally on Thursday followed a big push by industry groups. A letter signed by 246 groups representing business, environmental concerns, organized labor, nonprofits, investors organizations, trade associations and utilities was circulated in Capitol Hill calling for passage of the Cantwell-Ensign amendment.

Groups such as the Coalition on the Environment and Jewish Life, and Interfaith Power and Light, a ministry advocating “a religious response to global warming” signed the letter.

“Don’t discount outside groups and their importance in this project,” Ensign said.

By Sara Spivey
Stephens Washington Bureau