Last Thursday, the House Ways and Means Committee voted 25–12 to approve the Energy and Tax Extenders Act of 2008 (HR6049) worth $54 billion in tax breaks including the expansion of the refundable child tax credit and breaks for education and small business expenses. The bill also includes an extension of the Production Tax Credit for wind energy and other other tax breaks for research and development in solar and other alternative energy technologies. A breakdown of the energy-related tax breaks in the bill include:
- A six-year extension in the investment tax credit for solar energy
- A three-year extension of the production tax credit for biomass, geothermal, hydro-power, landfill gas, and solid waste
- A one-year production tax credit extension for wind energy
- Incentives for non-corn based (cellulosic) ethanol and biodiesel
- Incentives for companies that produce energy efficient products like plug-in hybrids
- Incentives for energy conservation in both commercial and residential buildings
- Tax credit bonds to help state and local governments make energy conservation investments in public infrastructure and invest in research
Extending the Renewable Energy Tax Credit – one year at a time
Late last year congress extended renewable energy tax credits one year, then set to expire on December 31st 2007.
With the realities of oil now trading at over $127 a barrel as of this writing, renewable energy sources show increasing economic viability, without even considering any long term sustainability and climate issues inherent with continued and increasing dependence on diminishing sources of oil.
As seen in the recent study from the Department of Energy that we wrote about last Friday, wind and other renewable energy sources stand poised to help transition the nation into a new energy economy, providing new and sustainable sources of energy, industrial growth, and hundreds of thousands of jobs.
One stumbling block to this is the halting nature of the renewable energy tax credit. The U.S. government directly subsidizes (pdf) the oil industry (by some estimates to the tune of $61 billion). The cost of gas and oil, while rising substantially, has never reflected its true cost by externalizing the cost of dependence, environmental degradation, source depletion, and climate impact (how does $480 a barrel sound?).
In the meantime, renewable energy has been hampered by inconsistent and half-hearted support from the federal government. Last year represented only the second time the production tax credit was extended before allowing it to expire. Between 1999 and 2004, the PTC was left to expire, promoting an on-again off-again atmosphere, dampening progress in renewable energy development – particularly wind.
Alternative energy projects take years to develop, plan, permit, and build. Investment in these projects depend on the 1.9 cent per kilowatt/hour tax incentive to help bring the potential of wind and other renewable to fruition. When that tax incentives disappear, so do billions of dollars in investment and ten of thousands of jobs. Poof!
Tuesday May 20th is a “National Day of Action” for renewable energy, calling on clean energy advocacy groups, environmental organization, and companies with a stake and interest in developing clean energy to call their representative in Washington in support of the Energy and Tax Extenders Act of 2008.
The bill also provides tax breaks for coal gasification projects and other “clean coal” technologies such as carbon capture and sequestration.
Speaker of the House Nancy Pelosi hopes to bring the legislation to a full vote before the House for the Memorial Day recess.