SENATE REJECTS NEW ENERGY INCENTIVES IN COMPROMISE PACKAGE
Wind energy grew 45% in 2007. Solar energy set a record for installations. They provide 116,000 U.S. jobs. Expansion has been supported by favorable government policy since 2004. When Congress let tax credits expire in 1999, 2001, and 2003, new projects dropped precipitously. And yet the Senate has once again refused to extend the current credits due to expire at the end of the year.
George Sterzinger, executive director, Renewable Energy Policy Project: "This credit has not only driven the momentum of the wind industry in the past year, but it has added a tremendous amount of jobs to the business…This will cause a total drop in the new construction of wind energy projects…"
Make no mistake: Government policy sets and drives energy development. Subsidies and regulation saved the oil industry in the 1930s. NewEnergyNews calls not just for extensions of the tax credits but for recognizing them as a necessary, on-going feature of a sound energy policy, like the oil depletion allowance and oil's "golden gimmick."
Interestingly, letting the New Energy tax credits expire may put Renewable Electricity Standards (RESs), passed by almost half the states and pending in several more, in grave jeopardy. Without federal incentives, there might not be enough installations to meet RES mandates for a specific portion of each state’s power to come from New Energy by a date certain.
Jeff Wright, vice president, Midwest Wind Finance: "Because wind projects are multiyear investments, it would be a lot easier from the financing standpoint to have a more predictable tax model. The current schedule has an inhibiting effect for financers to take a risk on wind…"
Might there be a basis for legal action from the states?
Government policy has always been vital to the oil industry. The same is true of wind and other New Energies. In almost every modern nation, government policy determines energy development. By not standing up for New Energy, national leaders are doing the nation serious disservice. (click to enlarge)
Wind energy’s future uncertain as Senate discards tax credit
Leena Krishnaswamy, February 7, 2008 (Medill Report)
U.S. economy gets $168 billion injection from Congress
David M. Herszenhorn and David Stout, February 7, 2008 (International Herald Tribune)
The U.S. Senate (Harry Reid (D-NV), Majority Leader), Sen. Max Baucus (D-MT) (Senate Finance Committee Chair), Sen. Maria Cantwell (D-WA), American Wind Energy Association (AWEA)(Randall Swisher, executive director)
In an absolutely serious setback for U.S. New Energy industries, extensions for vital Production Tax Credits (PTCs) and Investment Tax Credits (ITCs) have once again been denied them by a minority in the U.S. Senate. This time the refusal of government incentives came when a compromise economic stimulus package was passed only after the New Energy tax credits were eliminated.
World energy demand is only going one way. The U.S. is going to need all the energy infrastructure it can build. Why not encourage development before the crisis? (click to enlarge)
- Approval of the compromise package came late February 7.
- The PTCs and ITCs expire at the end of 2008. Because planning for large scale New Energy installations requires significant lead times, the extensions must come by this spring or projects will be cancelled.
The compromise bill passed the Senate 81 to 16 and then was affirmed by the House of Representatives 380 to 34.
- The incentives, requiring $5.5 billion, would have subsidized increased wind, solar and other New Energy installations as well as home efficiency improvements.
- Those in favor of the adding the tax credits and other spending had dared the Republican minority to reject such popular additions to the package. The minority called their bluff by fending off a cloture vote February 6, forcing the compromise.
- The final stimulus package carried $168 billion in benefits, including Senate add-ons for senior citizens and disabled veterans.
It is because of leadership like the Senate continues to display that the U.S. is behind and getting behinder. (click to enlarge)
- Sen. Cantwell: "The addition of energy tax incentives would have meant millions of dollars of investment in the renewable energy industry and the addition of thousands of jobs in the American economy…"
- Sen.Baucus: "Discretion is the better part of valor…The best thing for us to do is declare a big victory that we've achieved, namely getting the rebate checks to 20 million seniors and 250,000 disabled veterans."
- Randall Swisher, executive director, AWEA: "With 116,000 jobs and nearly $19 billion in investment at risk in the renewable energy industries, the minority of the Senate has again frustrated the desire of millions of Americans across the political spectrum who overwhelmingly support clean, home grown energy…"
- Stefan Noe, president, Midwest Wind Energy: "The production tax credit is a vital part of the overall project economics in the wind industry…It is extremely difficult for the wind industry to invest capital into large wind projects when a major part of the economics is out of place."
- Michael Teck, Spanish wind energy power Gamesa: "It is plainly obvious that the non-renewal of this tax credit will have a very serious effect on the Midwest wind industry…Instead of being the Windy City, Chicago will now be the windless