“By extending the solar investment tax credit for five years
with a commence construction provision and a gradual ramp down,
bipartisan members in both Houses have reestablished America as
the global leader in clean energy, which will boost our economy and
create thousands of jobs across America,” said Rhone Resch, President
of the Solar Energy Industries Association, adding that the extension
should enable the industry to “achieve its pledge of employing 50,000
veterans by 2020, a goal our industry takes very seriously. Resch
believes that the extended ITC will enable more than $125 billion in
new, private sector solar investment.
Wind Industry Gains Certainty in Stepped-Down Tax Credits
The ITC and production tax credit (PTC) for wind energy projects
ended at the conclusion of 2014 but “start construction” language
was added to bill at the last minute. That meant that wind energy
projects could still claim the credit if they had begun construction
by the end of 2014 and were completed by the end of 2016 — this
lead to lengthy discussions and definitions of what “commence
construction” entailed. The new bill includes a five-year retroactive
extension of the previous bill and steps down the tax credits through
December 31, 2019.
Wind projects that begin construction in 2017 will receive an
ITC/PTC of 24 percent or 1.84 cents per k Wh for the PTC; projects
that begin construction in 2018 will receive an ITC of 18 percent or
1.38 cents per k Wh and projects that begin in 2019 will receive an
ITC of 12 percent or .92 cents per k Wh. These figures represent an
ITC/PTC that “steps down” by 20 percent each year.
“This agreement will enable wind energy to create more
affordable, reliable and clean energy for America by providing multi-
year predictability as we have called for,” said Tom Kiernan, CEO
of the American Wind Energy Association. “The later years of this
agreement will provide some challenges that the wind industry will
work to overcome with our employees, partners and champions.”
Kiernan said industry leaders are examining the agreement now
and appreciate the progress.
“If this passes, our industry will get a break from the repeated
boom-bust cycles that we’ve had to weather for two decades of
uncertain tax policies,” Kiernan said. “AWEA has sought greater
stability in the credit, with an extension for as long as possible.
This plan will drive more development, and near-term prospects
look strong – especially as utilities, major end-use customers, and
municipalities seek more low cost emissions-free renewable energy.
In order to keep the wind energy success story going, we will need
to continue to work with Congress and the White House in the years
ahead to level the playing field with other energy sources that receive
permanent tax support.”
Minor Wins for Biofuels, Too
The text of the bill also extends through 2016 the existing $1.00 per
gallon tax credit for biodiesel and biodiesel mixtures, and the small
agri-biodiesel producer credit of 10 cents per gallon. The provision
also extends through 2016 the $1.00 per gallon production tax credit
for diesel fuel created from biomass. The provision extends through
2016 the fuel excise tax credit for biodiesel mixtures.
It also extends through 2016 the 50 cents per gallon alternative fuel
tax credit and alternative fuel mixture tax credit.
Trading Renewables for A Lift of the Oil Export Ban
While the renewable energy industry cheered the new bill for
the tax credit extensions it offers, climate change activists are not as
convinced of its efficacy. Just one week ago, more than 185 world
leaders united in agreement to cap carbon emissions at the COP21
negotiations in Paris. Many in the industry called this a landmark
occasion as it was the first time in history that major carbon emitters
such as the U.S. and China agreed to do something to limit carbon.
Bill McKibbon, founder of climate group 350.org wrote in an
op-ed in The Hill that lifting the oil export ban just one week after
countries agreed to limit carbon emissions was akin to holding the
launch of a vegetarian cookbook in a steakhouse.
The bill has not cleared both houses and while it looks good,
renewable energy advocates are urging U.S. renewable energy industry
stakeholders to contact their representatives and urge them to vote in
favor of the bill. The House could vote on the bill as soon as Thursday
and the Senate shortly thereafter.