Lawmakers Approve Energy Tax Credits, Bailout

UPDATED 5:55 PM. President Bush signed a bill to extend renewable tax credits after intense lobbying by solar, wind and other renewable energy advocates for more than a year.

It's official: The renewable energy tax credits are here to stay.

President Bush signed the mammoth bill containing about $18 billion in energy tax credits, part of a large tax package and financial market bailout plan Friday afternoon.

The signing came less than two hours after the House of Representatives passed the bill.

The House approved the energy tax credits after rejecting them only a week ago. The tax credits will go to businesses and residents who invest in renewable energy, from building and operating solar and wind power plants to installing small-wind turbines on residential properties.

The vote ended more than a year of bickering between the House and the Senate over extending the credits. Without an extension, the tax credits would have expired at the end of the year.

President Bush has said he would sign the bill.

"By passing this bill, Congress has finally given the solar energy industry 'policy certainty' that will attract investment, expand manufacturing and lower the cost of solar energy to consumers," said Roger Efird, SEIA chairman and president of Suntech America, in a statement. "This will allow companies like mine to move forward with expansion plans to serve the growing U.S. market."

The House agreed to the same energy tax credits it had rejected last Friday, when it mulled over the provisions along with a slew of other tax breaks for education, businesses and families, as well as relief money for hurricane victims in the Gulf Coast (see Senate OKs $18B in Tax Credits and Volleys Continues Over Renewable Energy Credits).

The entire tax package had come from the Senate. The House modified the package before voting for it last week because the Senate's version didn't contain enough revenues to offset the tax breaks.

The chambers had disagreed over tax breaks for fossil-fuel production. The House removed incentives for refineries to process oil from shale or tar sands – or make fuel from coal –  provisions inserted by the Senate to win Republicans' vote.

When the House on Monday rejected a $700 billion plan to prop up the ailing financial market, Senate leaders saw an opportunity to push for the tax package again.

Senate majority leader Harry Reid, D-Nev., announced Tuesday night that the Senate would tweak the House's version of the financial-market bailout package and vote on it, but only along with the same tax package that included the incentives for renewable energy projects (read the entire bill here). Overall, the tax incentives approved by the Senate on Wednesday night are worth about $150 billion (see Senate Sends Energy Tax Credits Back to House).

The House voted for the tax package along with the $700 billion bailout plan on Friday because lawmakers feared "a global economic meltdown" if it rejected the bailout package again, The New York Times reported.

Tax deductions for U.S. oil and gas production will be delayed and reporting requirements for stock sales by brokers will be enhanced to pay for the energy-tax credits approved by the Senate earlier this week, and by the House on Friday

The bill the House approved Friday calls for investment tax credits for solar developments for eight years. And unlike the current tax-incentive program, the new one will allow utilities to take advantage of the incentives.

The bill also includes production-tax credits for renewable-energy power plants that already are generating electricity. The legislation extends the production-tax break by one year for wind and by two years for biomass and hydropower.

The bill opens up $800 million worth of bonds to pay for power plants using wind, biomass, geothermal, garbage and other sources, and doles out $2,500 to $7,500 rebates for drivers who buy plug-in electric cars and trucks.

Residents and businesses that want to install solar panels on their properties also would benefit from the bill, which extends investment-tax credits for eight years and eliminates today's $2,000 cap on the credits. The new program also will allow homeowners who install small-wind equipment and heat pumps to take advantage of the credits, but will cap the incentive at $4,000 for wind and $2,000 for heat pumps.

Some solar companies have said they wouldn't be able to build more U.S. power plants without the investment-tax credits (see No Tax Credit, No Solar Power and PG&E to Buy 800MW from Optisolar, SunPower). But whether a lack of tax credits would severely curb renewable-energy developments is debatable. Investors have continued to pump record amounts of money into solar, biofuel and other renewable energy companies (see Greentech Investments See Record 3Q).

Solar stocks from First Solar, SunPower, GT Solar, Evergreen Solar and Suntech Power Holdings were cresting ahead of the House vote, but some shares began to slide after the vote.

Comments [5]

  • Felix Kramer 10/3/08 12:00 PM

    Here’s CalCars’ statement on this important event:

    “The new tax credits for plug-in cars are higher than either Presidential candidate has proposed. Now automakers and car buyers will no longer see higher up-front costs as a showstopper. In the centennial year of GM’s founding and Ford’s Model T, the auto industry can now enter a century of plug-in cars. And with this legislation, we’ll also get more wind and solar energy that will make plug-in cars drive cleaner every year they’re on the road.”—Felix Kramer, Founder, The California Cars Initiative (CalCars.org)

    Reply
  • Leranzo Campbell 10/4/08 1:23 PM

    Solar, a great opportunity for America.
    Maximize the number of American homes with Solar Water and Solar Electric.
    The congress of United States of America and Presidents of the United States have signed into law over the years many bills to assist fellow Americans in purchasing solar water heating units and solar electric generating units and as of today there is another congressional bill passed to extend and continue the same. I wish to make it perfectly clear that I support the idea of assisting American home owners in purchasing Solar Water and Solar Electric units. I also want to make it perfectly clear that I feel that the U.S. Government has in it’s wisdom overlooked the one most important step of insuring that the American home owner do not remove these solar units from their homes once they have received the government assistances. Please, I’m not speaking about contracts to ENFORCE, PUNISH and financially bind home owners. Even though contracts are necessary. I’m speaking of years after the installation and the solar units start their decay process and normal maintenance requirements are needed. That’s when some home owners simply remove these slightly warn units for dumb and sometimes financial reasons.
    Once upon a time:
    many years ago America did not have the Electric power system as we know it today. Many homes and business owners stepped up and creating an electric cooperatives to share the costs of building and maintaining the Electric grid systems for themselves and their fellow Americans so all could move into the industrial age. I’d imagine all America is proud of these broad minded people for their contribution. As they saw it each Individual home owner or business owner could not afford their own Electric power system and the maintenance of same. I make the point that the Solar Electric and Solar Water for individual home owners is not-affordable as outlined today, even with the subsidizes. In order to make these solar units affordable for home owners and to motivate more home owners to install solar water and solar electric, there is a need for, ? lifetime maintenance? of said systems. I place the proposition that Utility companies should maintain these home installed solar units. Utility companies are directly profiting from these home owners installed solar units. The utility companies are the repair specialist for the Electricity that the home owners use. This would solve the maintenance need of solar units. All home owned solar installations would stay put on the home owners property serving all Americans as congress intended and always be producing electricity and hot water forever. There is the answer you should be looking for to make the solar units affordable for home owners. And just think how the US Congress really did spend that money to helped all American home owners, not the manufacturers of and installers of solar water and solar electric units. Lets not forget those handyman types that come along and remove those units, throwing perfectly good material in land fills and doing this at the whim of the unhappy home owner.
    As you and I know the Utility companies require financing for this little maintenance task. I suggest a small fee of lets say, 0.20 cents plus or minus a few pennies for that task from each and every none-commercial utility user. This will be such a tinkling damn of costs for each to assist in helping all home owners including themselves. I remind you of, ?Once upon a time?.
    Think about it. No more home owners removing solar water units because of simple water leaks and that sort. No more removing a solar electric panels because some new home owner dislikes the look of panels on the new home they just purchased. This is such a simple procedure and could be very easily managed and profitable to the Electric company and would reduce the need for some expansion of power lines and building more external power plants. I also have reason to believe that MANY, MANY more home owners would install both Solar water and Solar electric on their homes when they fully understood that the costs were affordable.
    I would like to make the point that I have both solar electric and solar water on my home here in Sun City AZ. Some will say, You are suggesting this for yourself. Yes I am and I also suggesting this hoping you will put solar on your home too. The solar on my house is for myself and you, my neighbor. If I offend you with this idea and you cannot support this idea, please come up with an idea for America yourself. I also wish to point out that four (4) of my neighbors have removed their solar water units from their homes. They tell me, because of the high cost of repairing a water leaks. This is a fact, sad but true. Please, don’t let such an easy solution slip by.

    Reply
  • Ron Kenedi 10/3/08 11:48 AM

    The U.S. House of Representatives? vote today to extend the solar investment tax credit displays great foresight in recognizing the many benefits the solar brings: clean power generation, enormous job creation, energy independence and security.
     
    Solar is becoming a competitive energy source that can address our nation?s growing energy demands with a clean, reliable and renewable source of power.
    The solar industry is now scaling up to bring down manufacturing and installation costs, build its infrastructure, grow public awareness, and attract customers.
     
    The 8-year extension of the solar investment tax credit will help the solar industry flourish to its full potential. 
    We laud Congress for their vision in passing this important legislation.
     
    -Ron Kenedi, vice president, Sharp Solar

    Reply
  • Andrew Duggan 10/4/08 5:44 PM

    Great post.  In the midst of all the bad news around the bailout and the economy generally, my view is that renewable energy is the best bet for reviving our economy, creating the jobs we need and also repositioning America as a producer nation rather than just a consumer. 

    Just one quick example:  a California company is manufacturing an algae biofuel that could replace oil. While there are still many competing solutions for vehicle fuels, this one is certainly very promising.  Imagine America replacing the Middle East as the world?s source of vehicle fuel. This year the Middle East will receive roughly a trillion dollars from around the world for its oil exports, with billions of dollars coming from the US. What if those dollars were flowing in the other direction? Imagine what that would do for America, in terms of revenue and new jobs for our citizens.

    I wrote a whole post around this subject that includes more references, etc., if you want to check it out: http://www.andrew-duggan.com/?p=72

    Thanks again for all you’re doing to promote green technologies.

    ~
    Andrew Duggan
    http://www.andrew-duggan.com

    Reply
  • Brian Pearl 10/13/08 1:44 PM

    I guess this is one thing that was good about the massive bailout. Pork barrel green politics are a new thing to me, but I’m not going to argue.

    I didn’t see you mention anything about funds for research and development, but I’m sure that will be distributed at a later time.  We don’t have any silver bullet solutions at the moment and really need to make more advances.

    Reply
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