Senators leave popular tax credit out of renewable fuel proposal

WASHINGTON — Top senators on Tuesday unveiled their plan for renewing a slew of tax credits that expired last year, including measures aimed at offsetting the cost of plug-in motorcycles and making biofuels.

But a popular tax credit that had helped finance wind farms across the United States didn’t make the cut.

Although Sens. Ron Wyden, D-Ore., and Orrin Hatch, R-Utah, opted not to include the renewable energy production tax credit in their first draft, it appears likely to be added once the Senate Finance Committee takes up the measure on Thursday. Sen. Chuck Grassley, R-Iowa, said he would offer an amendment to “get the wind energy provisions restored” during the panel meeting.

Peter Kelley, vice president of public affairs for the American Wind Energy Association, stressed that “negotiations continue” ahead of the session.

“We’re confident that we have the bipartisan support for the renewable energy production tax credit to be part of the final bill,” Kelley said.

Wind leader: Texas wind power blows past records

The renewable energy production tax credit allows project owners to reduce their tax bills by 2.3 cents for every kilowatt-hour of electricity they produce over a 10-year period. Despite sputtering in and out of existence over the past two decades, it is credited with putting wind farms across the United States and making Texas a national leader in new wind power construction last year.

Fiscal conservatives have argued that it subsidizes renewable energy projects that couldn’t otherwise compete. Still, the credit enjoys bipartisan support on Capitol Hill.

Grassley said Tuesday that there was “no fair rationale for leaving wind energy” out of the tax extenders package. “Wind energy supports thousands of jobs and generates billions of dollars in investment across the country using a natural, non-polluting resource,” he said.

Winning fiscal conservatives

Tax-writers can use the popular tax credit’s absence to leverage other priorities in the package. And leaving the credit out also may have made it easier for Hatch to put his name on the bipartisan bill.

“A bipartisan introduction requires certain political formalities,” observed ClearView Energy Partners, in a research note to clients. “We would not expect a fiscal hawk like Sen. Hatch to put his name on a proposal that includes a wind credit extension that could cost more than $10 billion (over) 10 years.”

According to AWEA’s most recent annual report, nearly 80 percent of the nation’s wind farms and nearly two-thirds of the factories that produce turbines, gearboxes and other components for them are located in Republican House districts.

 Supporting jobs

Last month, 118 House members sent a letter to House Speaker John Boehner, R-Ohio, urging a prompt extension of the production tax credit and a separate investment tax credit, saying the policies have been critical to driving “the American wind industry’s growth, cost competitiveness and jobs.” Without the tax credits, “we once again risk losing many of the jobs, infrastructure and investment hat the wind industry has created,” the lawmakers said.

Dozens of senators delivered a similar message in two separate letters (here and here) last month to Wyden and Hatch.

“Thousands of American wind energy jobs (are) at risk if we don’t act to help them now,” said Sen. Ed Markey, D-Mass.

 Other credits

Wyden and Hatch’s bill would extend 45 tax provisions through the end of 2015, including several energy-related policies. It would extend:

  • an individual income tax credit for highway-capable plug-in motorcycles, at a projected cost of $2 million over 10 years.
  • a $1.01 per gallon tax credit for cellulosic biofuel produced through 2015, at a $55 million price tag.
  • a $1 per gallon tax credit for biodiesel and a $1 per gallon credit for diesel fuel created from biomass.
  • a credit that can be claimed for building new energy-efficient homes.
  • a credit equaling $2 for every ton of coal produced on land owned by an Indian tribe.

Also on FuelFix:

Winds of fortune sweep West Texas