The U.S. House Ways and Means Committee on Thursday approved $20 billion in tax credits and related financial incentives for renewable energy and energy efficiency — elements that are part of the Obama administration's plan to revive the economy.
The legislation's energy tax breaks would benefit the wind and solar energy industries, encourage energy-efficiency improvements to existing homes and help service stations recoup their costs for installing alternative energy pumps.
The economic stimulus package would extend by three years, to the end of 2012, the date that wind facilities would have to be in place to be eligible for the federal renewable energy production tax credit.
Other qualifying facilities that generate electricity from renewable energy sources, such as biomass, geothermal, small irrigation, hydropower, landfill gas and ocean currents, would also have an extra three years through the end of 2013 to be in service to get the same production tax credit.
The long-term extension of the renewable energy production tax credits, which would cost the government $13.1 billion over 10 years, accounts for more than half of the stimulus package's $20 billion in energy tax breaks and financial incentives being considered by the committee.
Because many renewable energy projects are having a difficult time finding financing in current market conditions, the legislation would allow such facilities in place in 2009 and 2010 to temporarily claim a 30 percent investment tax credit instead of the production tax credit that is normally payable over a 10-year period.
The legislation also extends tax credits through 2010 for individuals that make energy-efficiency improvements to their homes. Homeowners would get a tax credit equal to 30 percent (capped at $1,500) of the amount they paid for energy-efficient furnaces, hot water boilers and other energy savings improvements.
Separately, the tax credit would be increased for service stations that install pumps that dispense alternative energy fuels like hydrogen, natural gas and gasoline made from 85 percent ethanol.
For 2009 and 2010, the alternative refueling property tax credit would increase from 30 percent of the costs of the pumps (with a $30,000 cap) to 50 percent of the costs (with a $50,000 cap).
The 30 percent tax credit for hydrogen refueling pumps would not change, but the maximum amount of the credit would increase from $30,000 to $200,000.
Other energy tax breaks and financial incentives in the legislation would:
- Provide individuals with a 30 percent uncapped tax credit for buying solar water heating property, small wind energy property and geothermal heat pumps;
- Authorize $1.6 billion in new clean renewable energy bonds to finance facilities that generate electricity from wind, biomass, geothermal, small irrigation, hydropower, landfill gas, ocean currents and trash burning facilities;
- Allow states to issue conservation tax credit bonds to finance loans and grants to individual homeowners to retrofit existing housing.
Several other House committees will take up other parts of the economic stimulus package and then send the measure to the Senate. The Democratic-controlled Congress hopes to have a final bill on Obama's desk for his signature into law by the Presidents Day holiday on February 16.