Congress extends tax breaks for oil; renewable on hold

InTech, Feb 2008 by Sheble, Nicholas

The U.S. Congress will probably extend expiring renewable energy production and investment tax credits in the new session. Many companies involved in renewable energy have automation and control divisions and relationships.

The initial thought was to pay for renewable energy credits by cancelling existing multibillion dollar credits for the oil and gas industry oilman and President George W. Bush nixed that effort with the promise of a veto.

Therefore, lawmakers retreated to figure out an alternative way to aide the alternative energy industry Lawmakers will probably include the credits as part of an economic stimulus package or a tax-credit extension package.

Dow Jones Newswires reported the $21 billion energy tax package that would have cut tax breaks to the top five major oil companies in order to fund renewable energy projects fell victim to repeated veto threats from the White House and was not included in a major new energy law passed late last year.

Solar companies, such as Evergreen Solar and Emcore Corp., and wind turbine manufacturers, such as Vestas Wind Systems, Gamesa Corporacion Tecnologica, and Siemens, count on the credits to build demand in the U.S.

The industry said it needs the credits, some of which expire at the end of the year, to offset the costs of expensive electricity generation projects.

Senate Majority leader Harry Reid said in December that Congress would vote again on the tax proposal "more quickly than you think." Sen. Jeff Bingaman, chair of the Senate Energy and Natural Resources Committee, said it had become a matter of urgency for many firms in the sector.

Jaime Steve, legislative director for the American Wind Energy Association, said the credits were "vitally needed to keep momentum going in the industry and keep creating jobs."

"If the credit is not extended in the next two to three months, we'll see a downturn in the industry," he said.