SHOWDOWN ON TAX CREDITS

Everything is up in the air now except the economic indicators, which are down in the gutter.

Last Thursday afternoon, Senate Majority Leader Harry Reid (D-Nev) promised the debate on the vital tax extenders package and all its attendant compromise energy issues would be Tuesday, September 23. It looked like the legislation had a great chance at passage.

Jeff Bingaman (D-NM), chairman, Senate Energy and Natural Resources Committee: "This compromise will enable us to become a more energy efficient nation and wean us off our dependence on fossil fuels..."

Then the Loan Arranger (Treasury Secretary Henry Paulson) and his faithful financial companion Pronto (Federal Reserve Chairman Ben Bernanke) rode onto the scene. Nobody has since said much about the New Energy tax credits (expiring December 31) or the offshore drilling moratorium (expiring October 1). It is not clear how much attention the tax credits and offshore drilling will get from Congress now.

Both a staffer in Senator Reid’s office and an insider at the American Wind Energy Association assured NewEnergyNews on Friday, September 19, the tax extenders package will come to the Senate floor Tuesday (the 23rd) - but that was before the Paulson economic crisis legislation's urgency was clear.

Congress will be anxious to adjourn Friday, September 26, because of the impending election. Much of its time and effort during the last week before adjournment will be focused on the complicated and contentious bailout proposal.

If Congress does not act by the end of the week, the Congressional moratorium on offshore drilling beyond 3 miles ends and the decision will be up to President Bush. He has already committed to letting drilling go forward. The Institute for Energy Research, an oil and gas industry advocacy organization, has a clock counting down the days, hours, minutes and seconds until the moratorium expires.

The compromise Senate legislation on drilling, ballyhooed early last week as the redemptive bipartisan answer to Congressional gridlock, was at week’s end set aside until after the election by its “Gang of 20” originators as “too political.”

Unnamed Republican Congressional staffer: "It's good policy, but the politics aren't there…"

There are now rumors of a lame duck session after the election in which the tax extenders issues could be handled. It may be easier - or more problematic - after it is clear what the impact on the economy will be from the potentially humongously expensive - yet potentially profitable - bailout.

Predictions about Congress these days - like economics because they are so closely bound now - have a lot of "on the one hand" and "on the other hand" to them.

If any energy-related legislation gets through the Senate in the coming week, it must once again be approved by the House.

Last week’s rumored plan to get offshore drilling included in the continuing resolution necessary to adjourn, or shut down the government in the attempt, seems to have been completely abandoned in the face of a real crisis.

Footnote: There is an item in the legislation that was frequently condemned by its Republican opponents in last week’s House floor fight. It was described as an excessive indulgence to New York's Democratically powerful constituency. Turns out it's a provision to facilitate redevelopment of the NYC World Trade Center area devastated on September 11, 2001. That’s hardly a Bridge-to-Nowhere earmark triviality as the Republicans repeatedly implied.

The Loan Arranger (Treasury Secretary Henry Paulson) and his faithful financial companion Pronto (Federal Reserve Chairman Ben Bernanke). (click to enlarge)

Senate Energy “gang” Punts Until After Election
Martin Kady II, September 18, 2008 (Politico via CBS News)
and
Senate to vote as next week on energy tax credits
Tom Doggett (w/Walter Bagley), September 19, 2008 (Reuters via Yahoo News)
and
GOP leaves energy protest behind; Moves to economy
Emily Ethridge, September 19, 2008 (CQ Politics via Yahoo News)

WHO
U.S. Senate and U.S. House of Representatives

WHAT
Renewable Energy and Job Creation Act of 2008 (H.R. 6049)

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WHEN
Tuesday, September 23? After the election? Next year?

WHERE
The action will be in the U.S. Senate early in the week – but the House must approve the legislation again after the Senate amends it.

WHY
- H.R. 6049 includes:
(1) a 1-year extension of the wind energy industry’s production tax credit (PTC),
(2) a 2-year extension of a production tax credit for biomass, geothermal, hydrokinetic and some forms of solar,
(3) a 6-year extension of the solar energy investment tax credit (ITC),
(4) $2.5+ billion in tax credits for pilot carbon capture and sequestration (CCS) projects, (5) authorizes the National Academy of Science to assess IRS incentives’ impacts on greenhouse gas (GhG) emission abatement,
(6) allows tax credits for cellulosic ethanol and biodiesel production and a tax credit for the purchase of a plug-in hybrid electric vehicle,
(7) includes tax credits for the continuing redevelopment of the World Trade Center area, (8) approvesw $3 billion in bonds and tax credits for efficiency and GhG abatement projects and construction,
(9) includes a package of extensions on tax breaks for teachers, veterans, hurricane victims and IRS sting operations.
- Provisions for offshore drilling in House legislation, if considered at all, will be considered in separate legislation.

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QUOTES
Unnamed Democratic Senate staffer: "The environment outside the group is too political right now and they don't want their hard work torn apart by the partisans. They want to stay above the fray and will introduce the bill after Congress is through the silly season."