Renewables tax credits finally here, but too late

By Lisa Mascaro (contact)

Friday, Nov. 14, 2008 | 2 a.m.

Washington — Sometimes, timing is everything.

During the depths of the congressional stalemate this fall over extending a popular renewable energy tax credit, Nevada Sen. John Ensign confidently predicted the bill would become law before Election Day.

He’d even guarantee it, he added after bounding down the steps outside the Capitol.

Ensign’s bold assertion proved true. Senate Majority Leader Harry Reid tacked the tax bill onto the Wall Street bailout package President George W. Bush signed into law last month.

But after months of congressional infighting, passage may have come too late.

Renewable energy lobbyists said Thursday the financial market meltdown has all but closed the door on new project financing.

No sooner had Congress approved $8 billion in long-sought tax credits for solar, wind and other renewable energy, the companies found they were holding paper no one wanted.

What good is a tax credit to a company that is going bankrupt or a family whose chief wage earner is jobless?

“There are thousands of megawatts at risk and hundreds of thousands of jobs,” Rhone Resch, president of the Solar Energy Industries Association, said during a conference call Thursday. “If these tax credits cannot be fully utilized, which is what we’re talking about here, we could see the same kind of impacts on the industry.”

Randall Swisher, executive director of the American Wind Energy Association, said the problems at financial powerhouses such as Lehman Bros. and insurance giant AIG mean “the tax credits really cannot be effectively used.”

As Congress considers convening next week for a final time, renewable energy groups are seeking to tweak the just-passed bill so the credits can be converted into cash rebates for companies or households that invest in wind or solar.

Additionally, renewables companies are seeking congressional authority to transfer the credits to those who could buy them for cash, as is done in other industries.

“If we don’t have more flexibility, you will see some of these new projects start to falter,” said Karl Gawell, executive director of the Geothermal Energy Association. Because money for the tax credit has been approved, they say there would be no new costs.

If only Congress had quit fighting earlier.

Congress voted eight times to extend the renewable energy tax credits this session, but was never able to reach agreement, as House Democrats sought to pay for the credits by rescinding oil company tax breaks and Senate Republicans objected.

Ensign, who helped craft various versions of the bill, opposed what he saw as new taxes on the oil companies. At one point, Ensign was targeted by the solar group for opposing the House legislation.

Ensign and Democratic Sen. Maria Cantwell of Washington ultimately produced the final bill that rescinded a future, smaller oil company tax break to pay for the renewables credit.

Had the bill passed earlier, developers may have been able to line up financing before the credit markets on Wall Street froze them out.

Ensign’s office did not respond to requests for information Thursday about the senator’s position on a potential fix.

Cantwell’s spokeswoman said the office had heard the industry’s requests and “we’re exploring possible solutions.”

Reid’s office said “there are a number of ideas for improving the tax credits that are just now starting to be examined. Senator Reid will take a look at those.”

Gawell said earlier financing would have put jobs and projects in place. “Not only would we have been better off, but the economy would have been better off.”