Unclear If Congress Can Complete Tax Extenders Package This Year, Carper Says

By Anthony Adragna

Nov. 20 — Sen. Tom Carper (D-Del.), a member of the Senate Finance Committee, said Nov. 20 that discussions are ongoing, but it's “not at all clear” that Congress can complete work this year on a two-year, $85 billion package of tax extenders that includes dozens of renewable energy incentives.

Carper, speaking at the Pew Charitable Trusts, said he spoke Nov. 19 with Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, who reiterated completing a tax extenders deal was one of his top priorities.

Among the most contentious of the credits is the production tax credit for wind energy projects, which would cost $13.3 billion to extend through 2015. That credit, which expired at the end of 2013, provides 2.3 cents per kilowatt-hour for 10 years or can be taken as an investment tax credit

Failure to extend tax credits, like the production tax credit, impedes businesses from developing new projects and deploying new technologies, Carper said.

“[Projects] won't happen—at least in the volume, the amount that we'd like them to—unless we give them the tax credits to do that,” Carper said. “We need to continue to do that for a few years. We're not going to do that forever, and we shouldn't do that forever.”

Senate Finance Committee-passed legislation, the EXPIRE Act of 2014, that includes nearly $20 billion in clean energy incentives that would affect the wind, solar, biofuel, geothermal and other energy industries.

Grassley Concerned

Meanwhile, Sen. Chuck Grassley (R-Iowa), a long-time supporter of the wind industry, said any tax extenders package agreement by Congress must include an extension of the production tax credit for the wind industry.

“I'm concerned about rumors that some are working to leave out or shorten the extension of the wind energy tax credit,” Grassley said on the Senate floor Nov. 20. “It seems as though opponents of wind energy have tried at every turn to undermine this industry, and so I'm not surprised that we're at it again.”

Grassley said he would be willing to discuss a gradual phase out of the tax incentive but said all energy credits should be on the table as part of broad tax reform.

“Any phase out must be done in the context of comprehensive tax reform where all energy tax provisions are on the table, not just wind solely, and it should be done responsibly over a few years to provide certainty and ensure a viable industry,” Grassley said. “It's time to put an end to the annual kabuki dance that is tax extenders. Good tax policy requires certainty that can only come from long-term predictable tax law.”

Grassley: Don't ‘Pull the Rug Out.'

Grassley said Congress should not “pull the rug out” from the wind industry by killing off the tax incentive, warning that doing so would cost jobs, hurt the American economy and harm the environment.

Earlier this month, Sen. John Thune (R-S.D.), a member of Senate Republican leadership, suggested a gradual phase out of the production tax credit might be a way to include the incentive in the final tax extenders package.

Multiple energy industry groups, representing a broad array of energy sources, agreed with Carper that the fate of tax extenders remained uncertain but said failure to extend them would have serious ramifications.

“It would be a serious blow to the wind industry if the PTC is not extended—there's no question,” Jim Reilly, senior vice president of federal legislative affairs at the American Wind Energy Association, said at the Pew event. “If it's not extended, we're going to begin to see a real drop off in project deployment.”

Short-Term Extensions Having Impact 

One-year and two-year extensions of the production tax credit were already having a profound impact on wind deployment, Reilly said.

Reilly and other energy panelists said imminent action on immigration from President Barack Obama could delay congressional action on tax extenders but didn't have to stop it completely.

Kathy Weiss, vice president of federal government affairs for First Solar Inc., said Congress should extend the 30 percent solar investment tax credit beyond 2016 as a basic issue of fairness in the market since fossil fuel industries have enjoyed longstanding, stable tax incentives.

“If this wasn't included, it wouldn't speak well for both sides of the aisle who say they don't want to pick winners and losers and want an all-of-the-above energy solution,” Weiss said. “This issue is not one where you're going to blow up the industry, but you will see slow solar growth.”

Combined Heat and Power Industry Seeks Extension

Another energy industry seeking modification and extension of tax incentives is the combined heat and power industry. Jen Derstine, director of policy at Capstone Turbine Corp., said her industry had been “a bit disadvantaged” compared to other energy industries with the 10 percent credit for geothermal, microturbines and combined heat and power systems.

Derstine said the prospects of the tax extenders legislation was “pretty up in the air” at this point but expressed hope Congress could complete its work this year.

Meanwhile, several different coalitions sent letters to congressional leaders asking for an extension of various tax incentives.

A group of clean energy and environmental groups asked congressional leaders Nov. 19 to ensure market stability and the deployment of clean energy technologies by extending the incentives.

Extension Urged of Alternative Energy Technology Provision

“We urge you to restore the expired clean and alternative energy technology and energy efficiency tax provisions during the post-election work period,” the letter said. “Doing so will help build the economy, create jobs and deliver a safer, healthier future for our children.”

Among the groups signing the letter were the Sierra Club, Tetra Tech Inc., the Alliance to Save Energy, the Advanced Biofuels Association, Clean Water Action and the Offshore Wind Development Coalition.

Separately, more than 500 organizations, representing a broad array of U.S. businesses and industries, urged Congress Nov. 18 to work together to extend expiring or expired tax incentives during the lame-duck session.

“Failure to extend these provisions is a tax increase,” the letter, which was spearheaded by the National Association of Manufacturers, said. “It will inject instability and uncertainty into the economy and weaken confidence in the employment marketplace.”

Signatories of the letters included the American Wind Energy Association, the Advanced Ethanol Council, the American Farm Bureau Federation, the American Chemistry Council and hundreds of others.

To contact the reporter on this story: Anthony Adragna in Washington at aadragna@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com