Solar Tax Credits Redux

So much for that idea…..

After three unsuccessful tries by the House of Representatives in the last year, the U.S. Senate made its own attempt this month to pass legislation to extend tax credits for renewable energy installations and energy efficiency. The bill introduced by U.S. Sens. Cantwell and Ensign became an amendment to the Senate’s comprehensive housing bill (HR 3221), and passed the Senate by 88 votes to 8* on April 10. Included in the bill were $6.6 billion in tax credits for renewables, and a lifting of the $2000 cap on residential solar installations.

What was not included in it, unfortunately, was a method of funding the tax credits, and we now hear that the House has no intention of passing a bill without such “pay-fors”.

With earlier attempts the initial impetus came from the House, and the stumbling block for the Senate was always the source of funding for the tax credits–reducing some of the government subsidies enjoyed by the oil and gas industry. In this case it was a Senate-originated bill with no identified source of funding, and a week after it passed the upper chamber, that lack of revenue base sealed its doom.

The latest news from Washington is that the House of Representatives has no intention of moving forward with the “Cantwell-Ensign” amendment. House Democratic leadership does not believe:

• that energy provisions should be included in housing legislation
• that energy matters should be part of any future ‘Economic Stimulus’-type legislation
• that bills with tax titles should be passed with no identified source of funding

This is, to say the least, a disappointment, particularly after the efforts of solar citizens helped to produce the overwhelming (88-8) Senate passage of the amendment. But for the short term, it seems there will be no useful activity on Capitol Hill that will promote the tax credits for clean energy or energy efficiency that we know are so important. And that doesn’t mean these measures will never again be a part of the economic equation; what it means is that those congresspersons who firmly believe the measures are necessary must find other legislative vehicles to carry them through the House, Senate and the White House.

Will this happen this year? At this point we can’t tell you. There is talk at the higher levels of the Senate Finance Committee of lumping the clean energy tax credits in with other credits and deductions in a broad-based but short-term ‘extenders’ bill, but nothing concrete has yet emerged.

“I’m happy to look at any vehicle that’s going to move quickly,” said Washington Senator Maria Cantwell, co-sponsor of the original Senate amendment. “I think we have a few more weeks before these (renewable energy) projects get cancelled.”

We do know that a desperation extension of credits, even for one year, is better than allowing them—and the solar industry—to die completely. But there’s nothing left on the table at this point that would quicken the pulse of an investor, so to use the expression ‘robust health’ for the industry would be a dangerous exaggeration. We also know that the attention of Congress in an election year tends to veer toward campaigns and polls instead of legislation as November approaches, so if there’s to be action, we’re hoping for it earlier rather than later.

*For future reference, the eight holdout senators who voted against the Cantwell-Ensign amendment were:
Alexander (R-TN), Bunning (R-KY), Byrd (D-WV), Carper (D-DE), Dodd (D-CT), Kyl (R-AZ), Sessions (R-AL) and Voinovich (R-OH)
And the four who did not cast votes at all? They were the three presidential candidates (who may well have been otherwise occupied), and Elizabeth Dole (R-NC), whom we know was attending a family funeral.