The U.S. Senate is scheduled to vote on more than $17 billion renewable-energy tax credits next Tuesday after lawmakers agreed to demands from a Texas senator.
Senate leaders had tried Thursday to move the energy-tax credits, along with other measures, in a massive tax package that would cost $83 billion over 10 years, to a final vote.
But Sen. John Cornyn, R-Texas, held up the process as he sought more money for Hurricane Ike victims in his state. The senators finally reached a compromise to allocate relief funds to Texas.
The comprehensive tax package includes credits for businesses and residents investing in renewable energy, from building and operating power plants to installing small wind turbines on residential properties.
Solar, wind and other renewable-energy investors and executives have been anxiously waiting for Congress to extend a set of investment-tax credits that would offset 30 percent of the cost of asolarproject.
Both the Senate and the House of Representatives have tried and failed numerous times this year to extend the tax incentives, which are set to expire at the end of the year. The two houses have mainly disagreed about how to pay for them.
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).
"If we passed the credits now, then we create a solar market in this country," said Rhone Resche, president of the Solar Energy Industries Association, during a press conference Thursday.
The Senate's renewable-energy proposal would amend a House bill passed and sent to the Senate in May. In June, the Senate voted to stop the House bill, HR 6049, from advancing to the floor for a vote (see Senate Blocks Renewable Incentives Bill).
Previous bills that called for the elimination of tax breaks for oil haven't made it through the Senate (see Senate Rejects Green Energy Incentives to Pass Energy Bill and Senate Sends Energy Bill Back to Beginning).
The Senate deal under consideration now wouldn't eliminate the incentives, but Republican leaders have agreed to freeze a tax break for oil and gas companies at the current rate.
The overall tax package would create $41 billion in new revenue by eliminating a tax break for hedge-fund managers. But the new revenue won't be enough to cover the cost of all the proposed tax breaks, prompting objections from House Democrats this week, the Wall Street Journal reported.
If politicians want to encourage growth with these incentives, they will need to act quickly. Congress is scheduled to adjourn on Sept. 26.
The Senate bill would extend the investment tax credits for solar developments for eight years. Unlike the current tax-credit regulation, the bill would allow utilities to take advantage of the incentives.
The Senate proposal also includes production-tax credits for renewable-energy power plants that are already producing electricity. The legislation extends the production-tax break by one year for wind and by two years for biomass and hydropower.
The bill would allow for $800 million worth of bonds to pay for power plants using wind, biomass, geothermal, garbage and other sources. It also would set aside $1.5 billion in tax credits for carbon capture-and-storage projects.
Consumers would receive a $2,500 to $7,500 rebate for buying plug-in electric cars and trucks.
Consumers who 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. It would allow homeowners installing small-wind equipment and geothermal heat pumps to take advantage of the credits, but the amounts would be capped at $4,000 for wind and $2,000 for the heat pumps.
Disagreement over offshore oil drilling could wreck the latest opportunity for Congress to extend the investment-tax credits. The House and Senate bills both allow for more offshore drilling, but they call for different limits on how far from the coast to allow the drilling and would allow different states to dig for oil.
The new House bill proposes to pay for the tax credits by eliminating tax breaks for five large oil companies and requiring more royalties from companies drilling off the Gulf of Mexico using leases issued in late 1990s.
But even if the Senate approves HR 6899, a White House spokesperson said President Bush would likely veto it.