The Need
Similar to the rationale for extensions of energy efficiency tax incentives, the incentives for renewable and alternative energy and fuel sources must also be long term (e.g. 8-10 years). According to a recent study by Navigant Consulting, the renewable energy tax incentives have resulted in the creation of 116,000 jobs in the wind and solar industries and more than $19 billion in clean energy investment. Eventually, these nascent industries will be sufficiently grounded, both in technology and public acceptance, to manage on their own without the tax incentives. However, this will never be tested without the long term extensions, which will provide the assurances that these risky endeavors still require.
Solutions
The following renewable and alternative energy and fuel incentives are among those that should be retained and modified to extend their effective dates through 2016:
- Credit for production of electricity from renewable energy sources, including wind, closed-loop biomass, open-loop biomass, refined coal, geothermal energy, solar energy, small irrigation power, wave and tidal energy, municipal solid waste and qualified hydropower production. Expires on various dates, including 2010 for wind and coal and 2011 for other sources.
- Credit for purchases of renewable energy business property, including solar and geothermal sources.
- Credit for purchases of residential property that produces power from alternative sources, including geothermal power, solar electric, small wind investments.
- Credit for purchases of plug-in electric passenger vehicles and light trucks, ranging between $2,500 and $7,500. Terminates when total vehicle count in the U.S surpasses 250,000.
- Bonus depreciation of 50% for cellulosic biomass ethanol, and other cellulosic biofuels, production facilities. Expires for property placed in service after 2012.
- Credit of $1 per gallon for biodiesel production, credit of $1 per gallon for diesel produced from biomass, credit of 10 cents per gallon for small producers, credit of 50 cents per gallon for diesel produced through a mixture of biomass and petroleum. Expires 2010.
- Credit for the production of fuels from alternative sources; qualifying coal must achieve at least 50% carbon dioxide sequestration; includes biomass-produced gas fuels. Expires 2010, except hydrogen expires in 2014.
- Credit for carbon capture and storage demonstration projects, including coal gasification and advanced coal electricity projects. Limited by total cost of $1.424 billion that can be allocated.
- Credit for capturing CO2, on a per ton basis; requires a facility to capture at last 500,000 metric tons of CO2 per year. No expiration date.
