The U.S. Senate on Tuesday approved close to $18 billion of renewable-energy tax credits after repeated failed attempts to do so this year.
The 93-2 vote cleared a major hurdle for extending a set of tax credits for businesses and residents investing in renewable energy, from building and operating power plants to installing small wind turbines on residential properties.
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 2008. The two houses have mainly disagreed about how to pay for the incentives.
Solar, wind and other renewable-energy investors and executives have been anxiously waiting on Congress to extend a set of investment-tax credits that would offset 30 percent of the cost of a solar project.
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).
The bill will 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).
Because the Senate bill will change the House's version of the bill, it will have to be approved by the House – and soon. Both the House and the Senate will adjourn this Friday. The White House said earlier Tuesday that it would support the bill.
"We know with certainty that the extension of these credits sends out a green ripple effect: solar projects on hold can now move forward, America creates new green-collar jobs with over 214,000 in California alone, and businesses and homeowners can count on lower energy bills in a time of economic hardship," said Barry Cinnamon, CEO of Akeena Solar, in a statement.
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 sourc es. 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 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 also 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.
The tax credits would be paid for by several means, including delaying tax deductions for domestic oil and gas productions by American companies and boosting reporting requirements for stock sales by brokers.
The $7,500 tax credit for plug-in hybrids gave cheer to Felix Kramer, co-founder of CalCars.org, which promotes plug-in hybrid and electric vehicles.
"This will have an enormous impact," he said. Given his estimates that automakers could make current hybrids into plug-in hybrids for an additional $3,000 to $5,000, the tax credits "could conceivably entirely remove the cost increment that carmakers say is the cause of their reluctance" to build plug-in hybrids.