House Proposes $17.5B Energy Tax Package

House Democrats unveiled a new bill this week that could ensure cleantech gets its regulatory dues well into the next president’s administration. The House is looking to put $17.5 billion into renewable energy and building-efficiency tax credits funded by pulling a Robin Hood and repealing the tax breaks currently given to the Sheriff of Nottingham oil and gas companies.

More important than the buckets of money is the time frame the bill uses to dish out the funds. Our dear friend the Investment Tax Credit (ITC) is back and this time it seems the Representatives have wised up and decided that legislation regulating an industry that received more than $2.6 billion in investments last year should last longer than 12 months.

As such, the bill seeks to extend tax credits on investments in wind-power developments, geothermal and trash combustion facilities for three years. (Better than the one or two years, but not by much.) Projects that are up and running before 2010 could recoup as much as 35 percent of their investment in tax credits. The bill also specifically outlines a nice eight year extension on the 30 percent tax credit for investment specifically for solar energy investments, an uncertainty that had many at the Concentrated Solar Power summit antsy.

The bill, H.R. 5351 called the “Renewable Energy and Energy Conservation Tax Act of 2008,” will certainly meet heavy resistance from Senate Republicans. But the Democrats hope to use the recent record profits of the oil companies and the high price of oil as justification for cutting their subsidies.

Democrats pushed hard to cut oil and gas subsidies out of the 2007 Energy Bill. Concerned about global warming, Democrats had sought to undo some $14 billion in tax breaks for oil companies that Republicans had put in place to encourage domestic exploration and production of oil. However, President Bush made it very clear that he would veto any bill raising taxes on oil companies. In meting out the final details of the bill Democrats got a higher CAFE standard but lost the cutbacks on oil tax breaks.

This is a step in the right direction but the bill only addresses half of the renewable energy tax credit issue. While this would renew the ITC, the Production Tax Credit (PTC) is still set to expire at the end of the year. The PTC subsidizes the actual power, per kilowatt-hour, that renewable energy projects produce, making their electricity more cost-competitive with cheap fossil fuels, a credit that keeps many wind farms in the black.

Congress has a recess next week, and H.R. 5351 is expected to be brought up in the last week of February. The cleantech world recently sent a letter to Congress urging the renewal of the ITC and PTC by March 1. If that doesn’t happen the American Wind Energy Association is set to head to Washington on March 6’s Lobby Day to explain to congress how vitally important long-term regulation is.