Federal Proposal Would Extend PTC for Five Years

A new bipartisan proposal from two US Senators would provide a five-year extension of the valuable production tax credit (PTC) for facilities that generate electricity from renewable energy sources.

U.S. Senators Byron Dorgan (D-ND) and Gordon Smith (R-OR) are introducing bipartisan legislation to encourage development and use of renewable energy by extending crucial tax credits for electricity produced from renewable sources. The bill aims to promote renewable energy technology, spur economic development in rural America, and help the nation work toward energy independence and diversity. The Federal Government’s production tax credit (PTC) for renewable energy has been the most important federal policy for supporting large scale renewable energy, particularly for wind power. It’s inconsistent application, however, has been a major frustration for the industry which, like most other areas of business, cannot thrive in an uncertain policy environment. That credit is now scheduled to expire at the end of this year, threatening expected investments in wind, geothermal, and other forms of renewable energy production. The bill also encourages additional development of renewable resources by allowing tax-exempt rural cooperatives, municipal utilities, and Indian tribes to benefit from the credit. “Across rural America, we’re witnessing a new era of clean, renewable energy technologies — energy that’s generated here at home, creating U.S. jobs.” Dorgan said. “This production tax credit is essential for investors and developers to make long-term progress and to advance these technologies. If we don’t extend this credit and provide some certainty for the industry, billions of dollars in investments will be put on hold, preventing new facilities from coming on line, thwarting these great economic opportunities and slowing our progress toward energy independence.” Current law provides a 1.8 cent-per-kWh credit for facilities that produce electricity from wind, geothermal, solar, biomass and other renewable sources. A reduced credit is available for electricity produced from open-loop biomass, small irrigation power and municipal solid waste. These credits are scheduled to expire at the end of this year. The Dorgan-Smith bill would extend the availability of the credit for new facilities for five additional years, through 2010. “Our demand for energy is growing by leaps and bounds, but new environmentally friendly technologies are often expensive to implement,” Smith said. “I believe the government can play a key role in protecting the environment by providing market-based incentives to encourage the use of clean, renewable energy.” Senators Dorgan and Smith are both members of the Senate Energy and Natural Resources Committee.
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