Sen. Pete Domenici (R-NM) and House Democrats are pressing the Bush administration and Congress to extend renewable energy tax credits in the economic stimulus package that is currently being considered. The effort could gain more steam on Capitol Hill because, by including the energy tax credits in the stimulus plan, it would rule out the need to “pay for” the measure with offsetting tax hikes on the traditional oil and natural gas industries.

“Over the last several years, it is apparent that America’s renewable energy industry has shown great promise. Much of the growth of these industries, such as wind, solar, biomass and geothermal, has been a direct result of tax credits established by Congress,” said Domenici, the ranking Republican on the Senate Energy and Natural Resources Committee. But, he noted, many of the existing tax credits are set to expire at the end of this year.

“I strongly believe that the renewable tax credits should be extended, and that the economic stimulus package now on the table is an appropriate place to do it. Tax incentives that provide for the production of renewable energy will help grow the economy by increasing jobs, lowering energy prices and infusing much-needed capital into the markets,” he said.

President Bush and congressional leaders met Tuesday to iron out the details of a roughly $145 billion economic stimulus package, which would provide tax breaks to consumers and businesses. Following the meeting, the two sides indicated they were moving closer to an agreement on a plan that is intended to fend off further economic problems and head off a recession.

Energy analyst Christine Tezak of Stanford Group Co. believes that the inclusion of the tax credit extenders for renewable energy in the stimulus package isn’t a sure thing. “One way to enact the star-crossed energy tax title that failed twice to pass the Senate would be to add it to the pending stimulus package…A handful of legislators — ranging from Democrats on the House side to…Domenici on the Senate side — have joined the renewable energy industry in lobbying to get energy taxes in some form added to the stimulus package Congress now contemplates. It’s a viable idea, but it’s far from clear that it will happen,” she said.

“To add energy tax legislation to the 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,” Tezak noted.

At this stage, Sen. Jeff Bingaman (D-NM), chairman of the Senate energy committee, “doesn’t seem to support the idea of addressing the energy tax package in this manner,” she said. “The real key will be the positions taken by Senate Finance Chairman Max Baucus (D-MT) and ranking member Chuck Grassley (R-IA) to see if they support putting energy taxes of any kind in the stimulus package.”

On the House side, Speaker Nancy Pelosi (D-CA) “has been very focused on eliminating existing tax programs she deems friendly to oil and gas interests and using those funds to support expanded support of renewables such as solar and wind.”

But there is a downside to adding energy tax credits to the stimulus package, according to Tezak. “Diversifying into industry-specific initiatives heightens the risk that the bill could become a ‘Christmas tree’ where more legislators seek to add pet provisions in exchange for votes…If the measure gets too broad, it could become more problematic to pass. It could start to draw more opposition than support. At this stage, we believe it’s too early to assume that getting energy taxes on a stimulus bill is a sure thing.”

“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 noted.

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