Renewable
Energy
Tax Credits
Extended
with Passage of
wall street bailout
At the last minute, Congress renewed the
investment tax credit through 2016,
and lifted the cap on solar electric.
BY SETH MASIA
Sen. Maria Cantwell,
D-Wash.
Sen. John ensign,
R-Nev.
Rep. Roscoe Bartlett,
R-Md.
Sen.Max Baucus,
D-Mont.
In the midst of hurried negotiations over the Wall Street bailout bill, the
House and Senate finally resolved their differences over the extension
of renewable energy tax incentives in early October.
In fact, the new tax law gives homeowners and small businesses a much
more generous tax break, lifting the $2,000 cap on the 30-percent investment tax credit (ITC) for residential solar electric installations and allowing
alternative minimum tax (AMT) filers to take the credit. The new provision roughly quadruples the tax credit available on a typical 3-kilowatt array.
Combined with state and local programs, homeowners in some regions
may find that incentives now cover more than 50 percent of the cost of an
installation, large or small.
The breakthrough came after a sustained two-year campaign by renewable energy advocates, spearheaded by the Solar Energy Industries Association (SEIA), the solar industry’s trade association in Washington.
According to Monique Hanis, director of communications at SEIA, the
effort began in January 2007, when House Speaker Nancy Pelosi, D-Calif.,
convened a group to establish goals for the first 100 days of the 110th Congress. Rhone Resch, president of SEIA, and John Stanton, SEIA’s vice president for government affairs, backed by individual solar company officers
and with grass-roots support from members of the American Solar Energy
Society, persuaded Pelosi’s group to make renewable tax credit extensions
a priority.
A key figure was Sen. Maria Cantwell, D-Wash., who came to the Capitol
determined to make a dent in climate change issues. In May of 2007, she
introduced S. 1370, amending tax law to promote clean energy technologies. Later, with the help of cosponsor Sen. John Ensign, R-Nev., the bill was
revised and reintroduced as the Clean Energy Stimulus Act, S. 2821. The bill
called for a six-year extension of renewable tax credits. Senators attempted
to attach the bill to the economic stimulus package in February of this year.
The attempt failed. They tried again with Pelosi’s Foreclosure Prevention Act
(H.R. 3221) as the Cantwell-Ensign Amendment. This bill passed the Senate
by a vote of 88-8 in April. The House counterpart, H.R. 5984, introduced by
Rep. Roscoe Bartlett, R-Md., called for an eight-year extension.
A study commissioned in February by the Solar Energy Research and
Education Foundation, and updated in September, reported that the solar
industry alone would drive 440,000 permanent jobs and $325 billion in
investment if the ITC was extended. Members of Congress were soon using
these points in their floor speeches.
A group of fiscally conservative “blue dog” Democrats in the House
objected to tax credit extensions of any sort unless they could be paid for
with offsetting revenue increases or budget cuts elsewhere. Attempts to
pay for the renewable tax credits by curtailing tax credits accorded the oil
and coal industries were blocked by Senate Republicans, who called these
measures a tax increase. Thus began a series of eight failed attempts to reach
agreement between the two houses.
In late September, the Senate and House passed separate versions of bills
to extend renewable energy tax incentives. By a 92-3 vote, the Senate on
Sept. 23 passed a package of tax breaks for businesses at large and energy
projects specifically, including an eight-year extension of the solar ITC. The
House bill passed by 257-166 on Sept. 26. It was a fully offset extenders bill,
paying for renewable energy incentives through reduced tax credits for oil
companies. The White House threatened a veto.
With the House and Senate unable to resolve a two-year deadlock, it
appeared the credits would expire Dec. 31. On Sept. 29, when the House
failed to pass the first version of the Emergency Economic Stabilization Act,
an opening appeared to reintroduce the renewable energy measures. Lobbyists at SEIA gained support from Senate Majority Leader Harry Reid, D-Nev.,
and Cantwell to persuade Sens. Max Baucus, D-Mont., and Chuck Grassley,
R-Iowa, of the Finance Committee, to insert the tax extender language into a
“sweetened” bill. The new bill extended tax breaks for dozens of groups. The
revised bill, H.R. 1424, was meant to entice at least 12 Republican opponents
to change their votes. H.R. 1424 passed the House on Oct. 3, 263-171, and
the president signed it into law that afternoon.
“This is the game-changer for the future of solar energy,” Resch said. “At
a time when our economy is in a recession, Congress has handed the solar
industry the baton to become the economic engine for our economy. This
bill puts solar within reach for all Americans. It’s a major step in our long
journey toward energy independence and ensures that solar energy will be
a significant part of America’s energy future.”
