With an impressive 263 to 160 vote, the U.S. House of Representatives agreed May 21 to pass the Renewable Energy and Job Creation Act of 2008 (H.R. 6049). Though support is still needed from the Senate and the Bush administration, this action by the House is reason for optimism for renewable energy investors.
“The Renewable Energy and Job Creation Act of 2008 will provide approximately $18 billion of tax incentives for investment in renewable energy, carbon capture and sequestration demonstration projects, energy efficiency and conservation,” according to the Ways and Means Committee.
The following are a few of the more important energy-related provisions included in the bill:
- One-year extension (through Dec. 31, 2009) of the production tax credit for wind energy facilities.
- Three-year extension (through Dec. 31, 2011) of the production tax credit for several other forms of renewable energy technology, including biomass, geothermal and waste-to-energy.
- Six-year extension (through 2014) of the 30 percent investment tax credit for solar energy property and fuel cell property.
- Six-year extension (through 2014) of the tax credit for residential solar property, including an increase in the annual credit cap from $2,000 to $4,000. Residential tax credits would also be modified to include small wind equipment and qualified geothermal heat pumps.
- Authorization of $2 billion in clean renewable energy bonds (CREBs) to finance electricity generating facilities.
The $55 billion bill also extends several tax provisions for individuals and businesses that expired at the end of 2007 or that are scheduled to expire at the end of this year.
As an emerging industry, renewable energy technologies rely heavily on government policy to create enticing opportunities for investors.
“Without an extension of these tax credits that are vital to North Dakota’s growing renewable energy sector, new construction of wind farms and biodiesel plants could grind to a halt. Immediately extending these important tax credits will prevent a slowdown in production and a loss of the jobs these industries create,” Rep. Earl Pomeroy (D-N.D.) said. It was this attitude that garnered a majority support in the House, but it is yet to be seen if that outlook will transfer to the Senate floor.
Though details on funding the bill were provided in the House legislation, there is concern about whether a consensus will be reached in the Senate. Also looming is a threat of veto from the Bush administration.
"Congress has been trying unsuccessfully for a year to extend tax credits for individuals, businesses and developers who invest in clean power. When the credits expire at the end of this year it’s estimated that more than 100,000 jobs and close to US $20 billion in investment will disappear,” according to RenewableEnergyWorld.com.
The importance of this bill to investments in renewable energy cannot be overstated. In a time when capital is scarce, the expiration of crucial tax incentives could do serious damage to future investment opportunities in renewable energy.