Dashing the hopes of renewable energy advocates and some lawmakers, the $150 billion economic stimulus package ironed out by the Bush administration and Capitol Hill leaders last week failed to include an extension for renewable energy tax credits that are set to expire at the end of the year.

Lawmakers, most notably Sen. Pete Domenici (R-NM), pressed to extend the tax credits for solar, wind, biomass and geothermal industries in the stimulus package, which were dropped from the broad energy bill last year.

Sen. Max Baucus of Montana, the ranking Democrat on the Senate Finance Committee, said he and other senators are mulling over the possibility of a second package following the initial stimulus plan that would address energy issues, Environment and Energy Daily (E&E) reported last Thursday.

The renewable energy tax extenders had been part of a contentious $21.8 billion package that was removed from broad energy legislation (HR 6) passed last year due to opposition by Senate Republicans and the Bush administration. The tax part of the bill drew strong objections because it would have been funded by repealing existing oil and natural gas tax breaks (see NGI, Dec. 24, 2007).

Senate and House Democrats now are seeking to resurrect the energy tax provisions, according to E&E.

Providing an extension for renewable energy tax credits in a stimulus package would likely win over Republicans, said energy analyst Christine Tezak of Stanford Group Co. "To add energy tax legislation to [a] stimulus package would obviate the need to 'pay for' the measure with offsetting hikes in taxes on the oil and natural gas industries. That may suit Republicans who oppose increasing taxes on the conventional energy sector to pay for extensions of programs in the wind and power sectors," she noted.

"If energy taxes don't wind up as part of the stimulus package, we still think it is highly likely that they will come up as part of a tax extenders effort that could follow consideration of the stimulus package" in Congress early this year, Tezak said.

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