The Senate Thursday overwhelmingly voted in favor of an amendment to extend $5.5 billion in renewable energy production and efficiency tax credits as part of a housing mortgage bill (HR 3221) that cleared the chamber.
By 88-8, senators approved the amendment offered by Sen. Maria Cantwell (D-WA) and Sen. John Ensign (R-NV), which would extend the renewable production tax credits for one year through Dec. 31, 2009 and extend tax credits for energy-efficient homes, commercial buildings and appliances (see Daily GPI, April 4). Most of the production tax credits are due to expire at the end of this year. The housing mortgage bill was voted out by 84-12.
The Senate defeated a competing amendment, proposed by Sen. Lamar Alexander (R-TN) and Sen. Jon Kyl (R-AZ), that would have extended the production tax credits by two years and allocated the incentives to a wider range of alternative fuels. Alexander argued that the lion's share of tax credits has been going to wind, at the expense of other alternative fuels.
"This is a stimulative measure" to keep jobs and create investment in this industry, said Cantwell on the Senate floor. "The urgency of this should not be underestimated," she noted, adding that developers of renewable energy projects would begin canceling projects if lawmakers failed to extend the tax credits.
The Alexander/Kyl amendment "would break the delicate balance" needed to get renewable tax credits through the Senate, Ensign said. The Senate has tried on three occasions in the past to get a renewable tax credit measure through the chamber, but all efforts were unsuccessful. Senate Republicans had blocked previous attempts primarily because the renewable tax package would have been funded by stripping oil and natural gas producers of the tax credits that they received under the Energy Policy Act of 2005 (see Daily GPI, Feb. 8).
The Cantwell-Ensign measure could run into problems in the House, which favors funding a renewable/energy tax credit package by raising revenue from other sources, such as from oil and gas producers. The amendment could be stripped from the housing bill during a House-Senate conference.
Cantwell's and Ensign's victory to include their amendment in the housing stimulus bill with no revenue raisers "may be no more than a temporary psychological positive," said energy analyst Christine Tezak of Stanford Group Co. "These provisions appear to have a high likelihood of getting stripped in conference," she cautioned.
She noted that Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee, and Sen. Chuck Grassley of Iowa, the ranking Republican on the panel, are working with the Bush administration to find revenue raisers for a renewable/efficiency tax extender package. "In the end, we still expect it would be their bill, not Cantwell's, that may ultimately find its way into law...The House will be hard pressed to not accept it, even if they'd rather that the oil [and natural gas] companies pay for it."
As former chairman of the Senate Budget Committee, "I have been committed to fiscal discipline for my entire career. But when one takes a larger view of these energy tax credits, it becomes obvious that they stimulate the economy, create jobs and help American become less dependent on foreign sources of oil," said Sen. Pete Domenici of New Mexico, ranking Republican on the Senate Energy and Natural Resources Committee.
"It is, therefore, unnecessary to offset the tax credits, since the end result will be a benefit to our economy and energy security," he noted.
Senate Energy Committee Chairman Sen. Jeff Bingaman (D-NM) voted for the Cantwell/Ensign amendment (see Daily GPI, April 10), but he expressed disappointment that it did not have revenue raisers to offset the $5.5 billion cost of the package. He said he cast his vote with "less than full enthusiasm."
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