Despite reports of an early death, the Section 1603 grants for renewable energy would be extended for one year under the text of the tax bill compromise introduced in the Senate on Thursday night. The latest version of the compromise also includes a one year extension of the controversial ethanol tax credit.
The energy "sweeteners" were added to win support from House Democrats who, in a Thursday caucus vote, rejected the tax deal brokered by President Obama and Republicans last week.
Created in 2009 as part of the American Recovery and Reinvestment Act, the grants were structured as upfront payments of the Production Tax Credit, a federal tax incentive primarily responsible for large-scale renewable energy projects in the United States. The grants provided companies both the operating capital they need to build wind farms and other renewable installations, but it also created a financial incentive for companies that couldn't take advantage of a tax credit because they were not turning a profit.
Renewable energy industry representatives said extending Section 1603 could save tens of thousands of American jobs.
“This is a great day for American workers,” said Denise Bode, CEO of the American Wind Energy Association in a statement on Thursday. “We have a lot of work to do to ensure that this victory is upheld in the House and Senate, and signed by the President, but we saw an outpouring of support this week that was truly inspiring."
According to Bode, “Factories across the country will restart production lines, recall workers, and avoid layoffs that would have followed the loss of this key incentive for wind energy."
How many jobs the grants actually create is still open to debate, some analysts argue.
"You subsidize anything enough, you're going to get jobs," Roger Bezdek, president of Management Information Services Inc., told Greenwire. "That's the wrong metric. The government should spend tax dollars on projects or technologies that make sense economically."
Beyond industry trade groups, other renewable energy advocates argued extending Section 1603 is only a stopgap measure, necessary to keep a financially faltering industry afloat.
"This is a temporary fix," said Nathanael Greene, director of renewable energy policy at Natural Resources Defense Council. "Industry is really very much in the balance right now. Do we want to preserve the domestic wind and solar and geothermal industry that will continue to produce power forever, or do we want to go back to fossil fuel?"
The public policy advocacy group Americans for Energy Leadership argue that the extension is necessary because the economic context of today is entirely different from when the Investment Tax Credit was structured. "[T]his program has been a lifeline for an industry that has had to depend on a complicated tax code and the likes of Lehmann Brothers and AIG for financing," writes policy fellow Lon Huber
A cloture vote on the tax bill, which also reportedly includes a one year extension of the ethanol tax credit, is scheduled for Monday afternoon at 3 pm. But don't expect the bill to go through without a fight. Senator Bernie Sanders of Vermont has vowed to filibuster the compromise, even if he needs to seek the help of conservative Republicans to do so.
Photo: ninjawil via flickr