House Passes Renewable Energy Tax Credits
October 3rd, 2008
Today, the House of Representatives passed the Senate-approved Economic "Rescue" Package, which includes extension of the renewable energy tax credits. The House measure passed by a margin of 263 to 171.
The vote comes on the heels of a wild week on Capitol Hill. Two weeks ago, the Bush Administration asked Congress for the authority to spend up to $700 billion to purchase subprime mortgage assets from beleaguered investment banks. At the same time, the Senate passed a tax extenders bill that extended the Renewable Energy Production Tax Credit (PTC) and the Solar Investment Tax Credit (ITC), along with other business tax credits and the Alternative Minimum Tax (AMT) patch. The Senate sent the package, with White House support, to the House, which voted it down due to an on-going dispute over how to pay for the legislation.
After a stunning defeat of the "rescue" package in the House earlier this week, the Senate took up its own "rescue" bill, in which it not only passed a massive bailout for Wall Street, but also amended it with the tax extenders legislation. After the fallout from the failure of the House's initial package, it had no other choice but to pass the Senate's plan, even without the package being fully paid for with other revenue raisers.
The bill will now be sent to the President. He is expected to sign the bill into law in the coming days.
The measure contains the following renewable energy provisions:
Extension and Modification of the Production Tax Credit - The measure extends the Production Tax Credit (PTC) for wind for one year. The bill expands the definition of qualifying facilities for the PTC to include those that generate power from marine renewables (waves and tidal), as well as biomass. The PTC for marine renewables, solar and biomass are extended for two years. These provisions, along with other related matters, are estimated to cost $5.8 billion over ten years.
Long Term Extension of Energy Credit - The bill extends the thirty percent investment tax credit for solar energy property and qualified fuel cell property, as well as the ten percent investment tax credit for microturbines, through 2016. The bill increases the $500 per half kilowatt of capacity cap for qualified fuel cells to $1,500 per half kilowatt of capacity, and adds small commercial wind as a category of qualified investment. The bill also provides a new ten percent investment tax credit for combined heat and power systems and geothermal heat pumps. The estimated cost of this proposal is $1.9 billion over ten years.
Long-term Extension and Modification of the Residential Energy-Efficient Property Credit - The solar tax credits will be extended for eight years, for both commercial and residential consumers. It includes a complete elimination of the $2,000 cap for residential systems, allowing residential credits to rise to the thirty percent credit that commercial buildings get, and includes an allowance for utilities to make use of the commercial credit. The residential energy-efficient property credit would be extended through 2016, and the definition of the systems that qualify for that credit would be expanded to include wind investment and also home geothermal heat pumps, which would get thirty percent off, with a cap of $6,667. The estimated cost of this proposal is $1.3 billion over 10 years.
New Clean Renewable Energy Bonds (CREBs) — The bill authorizes $800 million of new clean renewable energy bonds to finance facilities that generate electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, qualified hydropower, landfill gas, marine renewable and trash combustion facilities. This $800 million authorization is subdivided into thirds: 1/3 for qualifying projects of state/local/tribal governments; 1/3 for qualifying projects of public power providers; and 1/3 for qualifying projects of electric cooperatives. The bill also extends the termination date for existing CREBs by one year. The estimated cost of this proposal is $267 million over 10 years.