Environmental Law

Renewable Tax Credit Extensions in Senate Bailout Await House Vote

By Dennis Pfaff and Kevin Livingston, Editors

There were some signs Thursday that the huge bill that gained approval in the U.S. Senate the day before to fix the nation's financial mess -- and, by the way, to extend those long-stalled renewable energy tax credits -- might be headed for passage in the House.

The legislation, as outlined in a summary and a budget analysis coming from lawmakers, contains about $17 billion for such things as tax incentives for renewable energy, conservation, plug-in electric vehicles, cellulosic biofuels and carbon capture. It extends for one year the production tax credit for wind energy, and includes an eight-year extension for investment tax credits for solar energy projects. It also sweetens the tax breaks for residential solar investments.

Despite the apparent urgency of the bailout and the extension of renewable tax credits and other, unrelated, tax breaks in the bill, there still could be problems in the House. The New York Times' blog, Green Inc., examined how the politics of the energy tax breaks, and particularly the legislation's support for such activities as converting coal to fuel and refining the product of tar sands or oil shale might affect the critical House vote, expected Friday.

The Bush administration, meanwhile, strongly endorsed the legislative package, including its renewable energy provisions. At the same time, trade groups, such as the Solar Energy Industries Association, urged its members to contact their representatives in Congress to support the bill. The American Wind Energy Association also applauded the Senate action and asked for the House to approve the measure.

Of course, even despite the prodding from many sectors and the primary focus on the measure's larger economic implications -- the Bush administration called it "an expeditious response to a developing crisis in the nation's financial markets -- there was no absolute guarantee of passage.

As the Times blog pointed out, even relatively obscure issues could weigh on the bill. The measure, for instance, includes incentives for fuels made from coal, as long as it is processed at a facility that sequesters at least half the carbon dioxide emissions. It also gives a nod to refineries processing oil shale or tar sands. The House had rejected those provisions, which have also come under fire from environmentalists.

Wrote blogger Jad Mouawad:

"So the Senate's vote now puts the House in a bind. To ensure quick passage of the rescue plan, both chambers must approve identical bills. This means the House would have to hold its nose and approve the Senate's version -- despite the opposition of some lawmakers, who had opposed the earlier credits for non-renewables.

"The question now: What will the House do?"    

That, in fact, is a pretty good question. And one that undoubtedly will be of a lot of interest to anyone involved in the renewable energy industry.

--Dennis Pfaff of Thelen LLP

Photo credit: Strip mining tar sands, Alberta, Canada; Courtesy: U.S. Department of Interior

Full post as published by Climate Law Update on October 02, 2008 (boomark / email).