The Senate Finance Committee will mark up legislation that includes
more than $32 billion in energy tax incentives tomorrow, but House and
Senate tax writers are split over including a new grant program for
renewable energy projects in the economic stimulus bill.
Last week, the House Ways and Means Committee approved H.R. 598, a set
of tax measures that included roughly $20 billion in energy
incentives. The proposal before the Finance Committee tomorrow mirrors
that plan in several respects, including a three-year extension of the
availability of production tax credits for wind, geothermal, biomass
and other projects.
Both measures would also allow developers to use the investment tax
credit – which currently applies to solar and fuel cell projects – in
lieu of the production tax credit.
Other common features include: lifting caps on the dollar value of 30
percent investment tax credits for residential wind, solar thermal and
geothermal projects; extending tax credits for energy efficiency
improvements to existing homes through 2010 and increasing the value
of the credit; increasing the size of credits for installing
alternative fuel pumps at gas stations; and a 20 percent credit for
energy-related research spending in areas including renewable energy
and carbon sequestration.
They also share an additional $1.6 billion in so-called clean energy
renewable bonds to help fund an array of renewable energy projects.
The bonds are intended as a funding instrument for public and
cooperative power providers, which are not eligible for the production
tax credit. Both packages also provide more than $2 billion worth of
energy conservation bonds for state and local projects to curb
greenhouse gas emissions. Senate plan has manufacturing credit but no
DOE grants
But differences have emerged over how best to give an increased jolt
to renewable energy investments that are jeopardized by the economic
downturn.
The Senate Finance Committee plan lacks a House provision that allows
wind, solar and other renewable energy projects to receive Energy
Department grants rather than federal tax credits to help fund
projects. The House provision applies to projects placed in service
this year and next year.
This funding has emerged as a priority for the renewable energy
industry, which says that current tax credits – a mainstay of project
financing – do not work in an economic downturn because project
backers lack the tax liability to use them. Also, several key banks
and other funders – such as Lehman Brothers – have either gone under
or face other problems.
The Senate plan would, however, extend the carryback period for
business credits - including renewable energy credits - from
one to five years, at an estimated cost of $11 billion over a decade.
Elsewhere, it includes up to $2 billion worth of energy-related
manufacturing investment credits. These 30 percent “advanced energy
manufacturing” credits would go toward creating or retooling
manufacturing facilities to make components used to generate renewable
energy, storage systems for use in electric or hybrid-electric cars,
power grid components that support the addition of renewable sources
to the grid, and making equipment used in carbon capture and storage
projects, according to the Finance Committee.
Senate Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) is
championing this proposal. “We know that the right incentives will
bring vital manufacturing to American soil. When enacted, it will put
our country in a much better position to capture the economic
potential associated with growing demand for technologies that harness
renewable energy resources,” he said in a statement Friday. Bingaman
is also on the Finance Committee.
Lawmakers may also seek additions to the bill when the Finance
Committee considers it tomorrow. Two members of the committee – Sens.
Maria Cantwell (D-Wash.) and Orrin Hatch (R-Utah) – recently
introduced a bill, S. 271, that expands incentives aimed at speeding
up production and use of plug-in electric vehicles.