Tax credits clear final hurdle as House approves Wall Street bailout

The House today easily approved, and President Bush subsequently signed, a massive Wall Street rescue package that extends a slew of renewable energy and efficiency credits.

The House vote was 263-171.

The $17 billion energy tax package provides a one-year extension of the expiring production tax credit for wind projects and a two-year extension of production incentives for geothermal, biomass and several other energy types.

It also provides an eight-year extension of credits for investments in residential and commercial solar projects, and incentives for energy efficient homes and buildings, plug-in vehicles, biofuels, advanced coal projects and other technologies.

The alternative energy sector and environmentalists lobbied hard for extension of credits for various renewable power projects, warning that allowing the incentives to lapse would cost scores of jobs and slow deployment of technologies that are crucial to fighting global warming.

House Speaker Nancy Pelosi (D-Calif.) said the various energy provisions in the bill (H.R. 1424) would create and save a half-million jobs. An earlier version of the bailout bill without the energy tax credits failed in the House in a 205-228 vote on Monday. The Senate added the energy language and other tax provisions as a "sweetener" to attract additional votes in the House. A new jobs report from the Labor Department today and political pressure from the White House and presidential nominees also helped move some votes.

The bill pays for the energy tax breaks in part by limiting oil industry tax incentives, casting aside industry warnings that it could slow investment in domestic oil projects. The largest oil industry revenue-raiser would freeze the Section 199 deduction for the industry at 6 percent, which would raise an estimated $4.9 billion over a decade.

But environmental groups also suffered a loss, failing to convince lawmakers to strip several fossil fuel credits, including incentives for refinery projects to process oil shale and oil sands.

The bill is a major victory for the solar industry, which had lobbied for a long-term extension of incentives for the sector.

The wind industry avoided a lapse in the production tax credit, which industry officials claimed would have been devastating. The credit is key to financing wind projects, and project growth has fallen sharply when the credit has lapsed in the past.

Other provisions include $1.5 billion in credits for advanced coal projects that control carbon emissions, separate credits on a per-ton basis for underground storage of carbon dioxide from industrial sources, extension of credits for biodiesel production, and extension of credits for installing alternative fuel pumps at gas stations.

Efficiency measures include extension of credits for energy savings improvements in existing homes, efficient new homes, energy savings in commercial buildings and the manufacture of efficient clothes washers, dishwashers and refrigerators. Another provision provides accelerated depreciation for "smart" electric meters and grid equipment.

The bill also includes $3.3 billion for rural counties hurt by the decline in timber sales on federal lands. It would reauthorize the Secure Rural Schools and Community Self-Determination Act for four years, phasing down payments each year, and would readjust its funding distribution formula. It also includes four years of mandatory funding for the Payments in Lieu of Taxes program.

Renewable sector cheers, but wind power wants more
The solar industry applauded the bill. In addition to the eight-year credit extension, the bill removes a $2,000 cap on the size of the residential credit and makes other changes that the sector says will make residential and commercial solar more widely deployed.

"This long-term extension of the solar tax credits will create a domestic solar industry with hundreds of thousands of jobs while providing clean, affordable, carbon-free energy to millions of American families, businesses, and communities," said Solar Energy Industries Association President Rhone Resch in a statement.

A wind industry official praised Congress but pledged to work for a longer extension of the wind credit, which was renewed for one year in the bill. The credit is now available for projects placed in service until the end of next year.

"We look forward to working next year with a new Congress and administration to fashion a serious long-term clean energy policy that increases domestic energy, increases our reliance on clean renewable energy, and creates jobs for Americans," said Greg Wetstone, a lobbyist for the American Wind Energy Association, in a statement.