NEW ENERGY INCENTIVES: SENATE OKS BUT WILL HOUSE?

If the most recent Senate move on the New Energy tax credits seems arcane and obscure, bear in mind Al Gore’s most recent admonishment: “In order to be optimistic about this [climate crisis], we have to become incredibly active as citizens in our democracy…”

Senators Maria Cantwell (D-Wash) and John Ensign (R-Nev) on April 3 introduced, with extensive bipartisan support, S.2821 to extend the vital New Energy incentives. (See NEW ENERGY INCENTIVES LEGISLATION COMES ‘ROUND AGAIN)

The Senate has, for the last year, refused to extend the New Energy incentives because the legislation, initiated by House Democrats, has always paid for them by shifting federal budget money away from fossil fuel industry incentives. S.2821 met little resistance when introduced because it specified NO source for the $6 billion over 10 years necessary to fund the New Energy/energy efficiency program.

April 10, the Senate voted (88-8) to move the Cantwell-Ensign bill into HR.3221, a larger package of housing assistance legislation (passed 84-12). HR.3221 must now await House of Representatives housing assistance legislation.

The House legislation is not expected to contain anything about New Energy tax incentives because Speaker Pelosi will commit to no unfunded measures. The differing versions of the housing legislation will be reconciled in a conference process. There is no reason to expect the New Energy incentives to survive the process.

All this essentially places the New Energy incentives back in limbo just when action to extend them grows more urgent to preserve an estimated 120,000 U.S. jobs and pending investments of $20 billion.

Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM):"I doubt that the House will accept these extensions without some corresponding offsets…This leaves the administration with a key role to play in developing a compromise that will be acceptable to both chambers."

The Bad News: Based on past performance, the administration will assume no such role.

The Good News: Senate Finance Committee Chairman Max Baucus (D-Mont) is said to be drafing an “extenders package” to round up pending tax credit extensions and take action on them before the next Congressional recess near the end of May.

When S.2821 was announced and garnered bipartisan support, a group of leading solar energy company stocks surged an average 7%. Thursday, after the New Energy incentives were put back in limbo, the same group of solar stocks - Evergreen Solar Inc. (ESLR), First Solar Inc. (FSLR), SunPower Corp. (SPWR), Energy Conversion Devices Inc. (ENER) and Suntech Power Holdings Co. (STP) - were down an average 1.3% .

Impression: The markets don’t see this news as good for New Energy.

Speaker of the House Nancy Pelosi (D-Calif): "We have plenty of time for the rest of the year to really talk about how we are going to make green energy tax credits a priority in our nation's tax code so this industry can really take off and provide the certainty and predictability we need…"

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US Senate Votes For Solar, Wind Tax Credits; Faces Hurdles
Siobhan Hughes, April 10, 2008 (Dow Jones via CNNMoney)
and
Senate passes bill with tax credit extensions, but endgame uncertain
Ben Geman, April 10, 2008 (Greenwire)

WHO
Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM); Senate Finance Committee Chairman Max Baucus (D-Mont); Senators Maria Cantwell (D-Wash) and John Ensign (R-Nev)

"There must be some kinda way outta here," said the Senator to the Rep... (click to enlarge)

WHAT
The Senate added the renewable-energy tax credits to HR.3221, a major housing bill. The incentives will now be part of a complicated legislative process only marginally about New Energy. S.2821 called for extension of the full spectrum of New Energy and energy efficiency tax credits and other incentives.

WHEN
- The new Senate move came April 10.
- Senators Cantwell and Ensign offered S.2821 April 3.

No place to plug in. (click to enlarge)

WHERE
- The Senate has a minority capable of blocking the New Energy incentives as long as funding subtracts from fossil fuel industry incentives and tax breaks.
- The House majority will not fund the New Energy tax credits through deficit spending.

WHY
- It is rumored Senator Baucus and Senator Bingaman have been vigorously engaged in working out compromise “acceptable offsets” for funding of the New Energy incentives.
- S.2821 extends production tax credits (PTCs) incentivizing large scale power production installations through the end of 2009.
- It extends investment tax credits (ITCs) incentivizing solar and fuel cell investments through the end of 2016.
- It extends personal tax credits incentivizing private purchases of solar, wind and fuel cell systems through the end of 2009.
- The bill provides accommodations for utilities such as Clean Renewable Energy Bonds (CREBs) to raise funds for building and expansion and opportunities to realize returns for transmission investments.
- The bill extends tax credits for energy efficiency measures in homes and commercial buildings through the end of 2009.
- The bill extends tax credits to contractors for building energy efficient homes through the end of 2010.
- The bill extends tax credits for energy efficient appliance purchases through the end of 2010.

With leadership like this, the U.S. will surely fall farther behind. (click to enlarge)

QUOTES
Senator Bingaman: "…[The Bush administration must] work with Congress in good faith to find a way to pay for these incentives."