By Ari Natter
6 --Congress is in no rush to extend the production tax credit for renewable
energy and 15 other energy tax incentives that expired at the end of 2013, and
the path forward remains unclear, analysts told Bloomberg BNA.
Expiration of the incentives--which included a $1 per-gallon tax credit for
biodiesel producers, a $1.01 per-gallon credit for cellulosic ethanol and a
tax credit for residential energy efficiency improvements--leaves investors
in the clean energy industry uncertain and could affect project
But extending the energy tax incentives, which were
estimated to cost $18 billion over a 10-year period when they were renewed in
January 2013, isn't an “immediate burning issue” for Congress, John
Gimigliano, principal in charge of the energy sustainability group in KPMG's
Washington national tax practice, said in an interview.
“I think Congress has gotten over the idea that the world
will stop spinning if they don't rush back and do extenders,” said
Gimigliano, who previously served as senior tax counsel for the House Ways
and Means Committee.
While Gimigliano said quickly passing legislation
on tax extenders will be “very difficult,” he said Congress would be likely
to approve a legislative package in 2014 that extends the expiring
Any interest in moving quickly on tax
extenders is likely to come from the Senate, where Sen. Orrin Hatch
(R-Utah), ranking member of the Senate Finance Committee, has said committee
staff from both parties have started the process of developing extenders
One legislative vehicle probably would be a bill needed
possibly in March to extend the debt ceiling, although Congress may wait
until after the November elections to act, analysts said.
Complicating the timing of the effort is
the nomination of Sen. Max Baucus (D-Mont.), chairman of the Senate Finance
Committee, to become U.S. ambassador to China.
The departure of Baucus
is likely to delay progress on efforts to extend the incentives, Amit Ronen,
former deputy chief of staff to Finance Committee member Maria Cantwell
(D-Wash.), told Bloomberg BNA.
“Although the Baucus nomination ends any
hope for tax reform this Congress, that doesn't necessarily green light tax
extender legislation, despite significant support from key Senate Finance
Committee members and Democratic leaders,” said Ronen, now the director of
George Washington University's Solar Institute.
“Republican demands for
offsetting revenues and reforms to clean energy incentives, and relatively
little public pressure, make it unlikely that expired tax credits will be
extended before the midterm election,” Ronen said.
Another possibility is that Congress will extend some of
the expired incentives, but not such incentives as the 2.3 cent per-kilowatt
hour production tax credit for electricity from wind, said Derek Dorn, a
partner at Davis & Harman LLP.
“I think we can expect that rather
than just taking the entire package and changing the expiration date on
everything, we can expect some scrutiny of the underlying provisions,” said
Dorn, who previously was staff director of the Senate Finance Subcommittee
on Energy, Natural Resources and Infrastructure. “The wind PTC is one of the
more controversial ones.”
The tax credit effectively remains in place
until roughly 2015 because of a provision that allowed projects already
under construction before its 2013 expiration to receive the credit.
But with a one-year extension of the credit estimated to cost $6.2
billion over 10 years by the Joint Committee on Taxation, an extension of the
PTC “will continue to be a heavy lift,” Christi Tezak, managing director at
ClearView Energy Partners LLC, said in an interview.
Still others, such as Denise Bode, the former head of
the American Wind Energy Association, were more optimistic that Congress
would act on tax extenders, if not early in 2014, then during a lame duck
session of Congress after the November elections.
“I do think the
opportunity might be greater in some respects because you've got the changing
of the chairs” of the Senate Finance Committee, Bode told Bloomberg
The departure of Baucus could provide an earlier opportunity to
do tax reform because he has prioritized a broad rewrite of the overall tax
code over working on a temporary tax-extenders bill.
“There may be
more impetus if you are not going to get tax reform done sooner” to do tax
extenders instead, said Bode, now a principal at Cornerstone Government
Affairs, a public affairs consulting and advocacy firm. “I think it could
change the thinking.”
To contact the reporter on this
story: Ari Natter in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Larry Pearl at email@example.com
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