Wind and Solar Tax Credits Could Ride Into Law in Bailout Bill

By Steven Mufson
Washington Post Staff Writer
Thursday, October 2, 2008

Maybe the tenth time will be a charm.

Last night was the tenth time since June 2007 that an extension of wind and solar tax credits have gone to the floor of the Senate. Seven times they have been stuck in bills that have gone to the floor of the House of Representatives.

And they're still not law.

Solar and wind industry executives hope that the tax credits will finally be adopted as part of the rescue plan for the U.S. financial industry -- though environmentalists are lamenting that the package also includes $894 million of tax breaks for oil refineries using tar sands or coal-to-liquids technology.

After the original rescue plan was defeated on Monday, Congressional leaders inserted the energy package into the new financial rescue bill. The energy provisions are identical to those in an energy bill that the Senate approved but the House rejected last week.

Other items tacked onto the rescue bill yesterday: measures to ease the burden of the alternative minimum tax, provisions known as mental health parity and tax credits for carbon sequestration projects, even if used for lucrative enhanced oil recovery.

"The fact that all of sudden this has appeared is like a resurrection from the dead," said Frank Maisano, an energy specialist at the law and lobbying firm of Bracewell & Giuliani. He said the inclusion of the energy provisions were the "silver lining" of the need to revise the original financial rescue package.

Both Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) were expected to vote on the package. McCain was absent on all nine previous occasions that wind and solar credits came up for votes in the Senate. Obama has voted in favor of them three times and was absent the other times.

Advocates of renewable energy tax credits are divided, however. Solar and wind industry executives are happy, but environmentalists are upset about coal and tar sands provisions.

The bill would extend for eight years investment tax credits for solar installations, lift the $2,000 ceiling on the credit for residences and make the credit exempt from the alternative minimum tax. Utilities will no longer be prevented from taking advantage of a production tax credit for solar projects and will be more likely to invest directly in them.

The production tax credit for wind projects will be extended for a year, less than the industry wanted but enough to prevent an imminent slowdown in orders.

The bill also gives a tax credit of as much as $7,500 for electric or hybrid electric vehicles.

But the legislation would let oil refiners claim the same production tax credit that wind and solar projects receive if the refiners use tar sands and coal-to-liquids technology that cause more greenhouse gas emissions than conventional oil. Jeremy Symons, senior vice president at the National Wildlife Federation, said, "This is a big new handout to oil companies at a time when America can least afford it."

Luke Popovich, vice president of the National Mining Association, said the tax credits come with strings attached, requiring greenhouse gas reduction. "These are not your father's tax credits," he said.

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