In a lopsided 23-3 vote, the U.S. Senate Finance Committee voted yesterday to extend a number of renewable energy production tax credits through the end of 2016. The vote allows developers of wind, geothermal, biomass, landfill gas, incremental hydroelectric, and ocean energy to take advantage of federal tax credits for projects begun before December 31, 2016.
Chief among big renewable winners was the wind energy industry, which received extensions to the Production Tax Credit (PTC) and the Investment Tax Credit (ITC). If passed, wind farms would qualify for a 2.3-cent-per-kilowatt-hour (kWh) credit through the end of 2016.
The next step will be to send the bill to the full Senate, but when that will take place is unknown at this time. In order to become law, the bill will have to pass the Senate and the House of Representatives.
Tom Kiernan, CEO of the American Wind Energy Association (AWEA) called the vote “a big step in the right direction” and urged the Senate and House of Representatives to pass the tax extenders package – a decision he said will “continue to grow American jobs and heavy manufacturing, and support rural economic growth.”
Domestic wind farm development has thrived under the PTC and ITC, resulting in a lowering of cost by more than half over the course of the past five years and driving the U.S. to become the top wind energy producer in the world. A previous expiration of wind tax credits in 2013 dropped construction of new wind farms by 92 percent and resulted in the loss of 30,000 industry jobs. Following the renewal of the PTC in 2014, U.S. wind energy jobs increased by 23,000.
Yesterday’s vote showed strong bipartisan support for renewable energy initiatives. Finance Chairman Orrin Hatch (R-UT) said the tax provisions are necessary to encouraging and promoting the growth of renewable energy, adding, “If they are expired, they aren’t doing much good. That being the case, we need to move this package forward as soon as possible.”
Senator Rob Portman (R-OH) had filed an amendment to alter the language of the solar ITC, which would have effectively allowed solar projects to qualify for a 30 percent tax credit as long as they began construction by the end of 2016 and completed construction by the end of 2019. This amendment was not approved.
SEIA President and CEO Rhone Resch, whose organization has been lobbying for extensions to the solar ITC, said he was “disappointed that the Investment Tax Credit was not included in the tax extenders legislation.” Resch said the SEIA will continue to work with the Senate in an effort to make further inroads toward the extension of the solar ITC, which currently provides for a 30 percent tax credit for facilities placed in service before December 31, 2016.
Other extended tax credits include 2.3 cents per kWh for closed-loop biomass, 1.2 cents for open-loop biomass, 2.3 cents for geothermal, 1.2 cents for small irrigation power, 1.2 cents for municipal solid waste, 1.2 cents for qualified hydropower, and 1.1 cents for marine an hydrokinetic. In addition to extending some 50 tax policies, the Finance Committee added back in an incentive package for electric motorcycles that expired in 2014.
The only three senators to cast a “no” vote were Dan Coats (R-IN), Mike Enzi (R-WY) and Pat Toomey (R-PA). Coats and Toomey, who had initially called for the elimination of the PTC, withdrew their amendments after noting broad bipartisan support.
Lead image: Clean Energy. Credit: Shutterstock.