Keeping Renewable Tax Credits Alive in the USA - 1 July 2008
For the last two years, the renewable energy sector has been fighting to renew the "investment tax credit (ITC)." This little bit of legislation lets companies write-off a portion of money spent on building renewable energy projects. It's been fairly successful, spurring growth in solar and wind in America.
But now a huge number of renewable energy projects are on hold, because no one knows whether these tax credits are going to be extended. Bills containing the ITC have gone through the House and Senate almost a dozen times in the last few years and every time it's been denied. SunPower has said that it might leave the American market completely if the ITC is not renewed.
Almost everyone supports the ITC, of course, but no one can figure out how, in our ailing economy, to pay for it. Democrats tried to take subsidies away from oil and gas companies, but the Bush administration threatened to veto any such legislation. And so we're at a standstill, with gigawatts of new power generation just waiting on the news.
General Electric has entered the game, with their political savvy, and has decided that the ITC, in fact, pays for itself. It's no surprise that GE wants this passed. They're the US's largest producer of wind turbines, and they've got some exciting solar technology as well. They say that the taxable revenues generated by these projects, once they go online, more than offset the ITC. And since, without the ITC, they won't be built, they are in fact revenue positive for the treasury.
A financial stickler might note that the revenues would be generated by coal power plants that would be built (without subsidies) in place of the renewable plants. And that would be significantly more revenue positive than renewable energy. But, really, is that the road we want to stay on?
Hopefully, GE's foray into this mess will mark a change in the wind, and we won't have to deal with a lapse in the only big steps the U.S. government has yet made to promote renewable energy.
Click here to visit the GE Energy website