SENATE KEEPS NEW ENERGY GRANTS A YEAR

Will the Tax Bill Be Good for Renewable Energy?
Bryan Walsh, December 13, 2010 (Time)

"Amid all the political agony over the tax compromise [approved to go forward by an 83-15 vote in the Senate] …[there are] a few provisions…that will impact the alternative energy industry [including]…

"An extension of the 50 cent per gallon tax credit for liquid coal transportation fuels, provided in Sections 6426 and 6427 of the federal tax code…[which] environmentalists are against, vociferously—liquid coal can…[produce] twice as much carbon pollution as convention fuels… [The Natural Resources Defense Council (NRDC) calls it] a fundamentally flawed technology…"

The good news is that the Senate's bill keeps 1603 for a year. (click to enlarge)

"A one-year extension of the tax credit for corn ethanol of 45 cents per gallon, plus a tariff on imported ethanol of 54 cents per gallon. Most—though not all—environmental groups are against the extension of more tax credits for the corn ethanol industry, which has been given billion in subsidies over the year…

"A one-year extension of the Convertible Renewable Tax incentive for renewable electricity projects, also known as Section 1603. The program was part of the 2009 stimulus package, and gave renewable electricity projects like wind and solar a cash grant in lieu of tax credits. Before the financial crisis, renewable projects were often funded by tax equity—a solar producer might strike a deal, for example, with a bank, which could write off some of its tax bill in exchange for contributing to renewable power. But with the crash, suddenly there was a lot less tax that needed to be paid, and the cash grant program helped save the industry…The economy hasn't improved much, and many players in the wind and solar industries say that without the credit's extension, new developments could implode next year…"

The next questions are (1) how much will be lost because the program will ONLY be extended for a year and (2) when will the politicians show some long term vision? (click to enlarge)

"The bill also aims to extend a tax credit for energy efficiency in new homes that expired in 2009, making it apply retroactively to 2010 and through 2011. There's also more credits for manufacturers of energy-efficient appliances…

"…[Because] critically needed clean energy incentives [benefits are]…outweighed by the harm that would result from the ethanol and liquid coal incentives…NRDC is therefore opposing the bill…For most in the renewable energy industries, however, the need to keep investment credits and subsidies flowing is reason enough to support the bill. The solar and wind industries in particular have argued that losing the tax credits could result in the loss of tens of thousands of jobs [and thousands of megawatts of new solar and wind capacity], and prevent the growth of some 65,000 jobs…"