The U.S. Senate on Wednesday night approved renewable-energy tax credits along with a mammoth package to rescue the beleaguered financial market.
By a vote of 74-25, the Senate extended roughly $18 billion worth 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 energy tax incentives, which are set to expire at the end of 2008.
The Senate passed the same tax credits for solar, wind and others that it had voted for last week. The House of Representatives the modified the Senate bill and passed the new version a few days later (see Senate OKs $18B in Tax Credits and Volleys Continues Over Renewable Energy Credits). The Senate was unhappy with the House version, however, and had refused to consider it.
The House's Monday rejection of the $700 billion plan to prop up the ailing financial market - prompted by bankruptcy filings and sales of troubled U.S. investment banks and mortgage lenders - gave the Senate an opportunity to push for its own renewable-energy bill 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 renewable-energy tax credits (read the entire bill here).
Along with the renewable-energy tax credits are a slew of other tax incentives for education, family and businesses, as well as hurricane relief. Overall, the tax incentives approved by the Senate are worth about $150 billion, reported the New York Times.
The Senate also voted to increase the amount of bank deposits covered by the Federal Deposit Insurance Corp. to $250,000 from $100,000.
The House is sche duled to consider the bailout package and the tax credits Friday.
The House and Senate have bickered over how to pay for the overall tax-incentive package in the past. The House wants all of the incentives to be paid for by tax increases and spending cuts elsewhere, while the Senate hasn't done the same for its version of the tax package - including the one passed Wednesday night.
The energy-tax credits approved by the Senate Wednesday would all be paid for by several means, including delaying tax deductions for domestic oil and gas production by U.S. companies and boosting reporting requirements for stock sales by brokers.
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 (seeGreentech Investments See Record 3Q).
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 solar, 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.
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 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.