Friday, February 1, 2008

Tax credits for clean energy

We have had 2 blogs on President Bush’s call for funding clean coal projects, increasing the use of renewable fuels and nuclear power and investing in advanced battery technology in his State of the Union address delivered on Monday, Jan 28, 2008,
However, I feel a little more elaboration is needed on what exactly has not been done (needs to be done). So here goes my blog on the same topic but with a few more vital details

Despite the call for clean energy projects, extending the clean energy tax credit is not part of the roughly $150 billion economic stimulus package the White House endorsed. The energy bill Bush signed last month left out tax breaks for various clean energy industries that would have been funded by higher taxes on large oil companies. Also missing were requirements that investor-owned utilities generate 15 percent of their electricity from renewable sources. Since the Senate just rejected the tax hike on large oil companies in the energy bill, consumer and environmental groups doubt that lawmakers can get it included in the stimulus package. There does not seem to be any funding plans to offset the costs of the clean energy tax credits.
The President and House of Representatives endorse an economic stimulus package of about $145 billion, centered on tax cuts for business and rebates for individual taxpayers. But additions to the bill in the Senate could delay or derail it, Bush said on Monday. The Senate version also lacks an extension of the credits, although Senate Finance Committee Chairman Max Baucus plans to act on them later this year.
The Bush administration's budget did not propose an extension of the credits because its priorities are provisions that expire in the current fiscal year, they would have to review the entire tax package, including the revenue offsets, before supporting any particular tax incentive, said White House spokeswoman Emily Lawrimore.
A letter signed last week by 30 senators citing the need for prompt renewal of the renewable energy tax credit spells some hope. It says more than 100,000 jobs could be created this year if the credits are extended in the first quarter of this year, and noted that 'renewable energy companies are already reporting a precipitous decrease in investment due to uncertainty.'About $20 billion in investments yielded nearly 6,000 megawatts of new renewable energy in 2007 along with tens of thousands of jobs nationwide that are now in jeopardy, the National Hydropower Association, Geothermal Energy Association, Solar Energy Industries Association and American Wind Energy Association said last week. When the production tax credit expired in 2004, the amount of wind capacity installed fell by 77 percent, according to the American Wind Energy Association.

I feel a similar result will follow non renewal of energy tax credit. I hope that the President will put money where the mouth is and follow up his words with concrete action regarding promoting clean energy. A good beginning will be the renewal of a production tax credit, set to expire in December, to be in the economic stimulus package.

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