The House approved legislation today that renews billions of dollars in tax breaks for wind, solar, biomass, and other renewable energy sources, and extends a proposed new tax credit for biofuels derived from sources other than corn.
"The Energy and Job Creation Act of 2008" (which is a much better name than it had last week, when it was the "Energy and Tax Extenders Act") was approved by a vote of 263-160. The total package, which also includes tax breaks for education and business expenses and an expansion of the refundable child tax credit, is worth $54 billion.
"As we debate this legislation, American families are paying record prices at the pump -- yesterday the cost of a barrel of oil passed $129 for the first time in history. Today, I believe it went past $130," said Speaker Nancy Pelosi on the House floor today. "This legislation invests in the future and the ingenuity of the American people to create and deploy cutting-edge renewable technologies that will reduce our dependence on foreign oil."
The bill includes a six-year extension of the investment tax credit for solar energy; a three-year extension of the production tax credit for biomass, geothermal, hydropower, landfill gas, and solid waste; and a one-year extension of the production tax credit for wind energy. There are also incentives for the production of renewable fuels such as biodiesel and cellulosic biofuels, incentives for companies that produce energy-efficient products, and incentives to improve efficiency in commercial and residential buildings.
Congress has been trying to get these tax credits for clean energy through for a year. The bill is likely to face tougher opposition in the Senate, and the president has already threatened to veto it. But in a press conference today after the House passed the bill, Reps. Earl Blumenauer (D-Ore.), Jim McDermott (D-Wa.), and Richard Neal (D-Mass.) expressed hope that it might still have a chance, citing rising fossil-fuel prices and the need for long-term solutions.
"One of the critical problems we're facing today is energy prices, and the problem is we don't have enough choices for consumers," said Blumenauer. "We've squandered American leadership in renewable energy -- the United States was a global leader 30 years ago and we've lost that leadership internationally to other countries that are moving forward more aggressively."
Blumenauer predicted that without these tax extensions, the United States could see "almost 20 billion in lost investment" in renewables, as well as up to 150,000 lost job opportunities in the green energy sector. He said that the potential to address energy concerns and create economic growth might help it win support in the Senate.
"We've got 23 Republican senators who are looking down the barrel at reelection," said Blumenauer. "I think people are going to be looking for opportunities to look like they're being bipartisan and trying to solve problems as we get closer to the election."
McDermott added that he hoped the movement in the House would "jump-start" negotiations within the Senate about how to support renewable energy.
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Comments
View as Flat
Gar Lipow Posted 2:19 pm
21 May 2008
One freaking year for wind?
And yeah I know why that happens. Wind is popular. So by renewing the credit a year at a time that credit can always be held hostage for whatever else the committee chairs want to pass that might otherwise not get through.
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Darrell Posted 4:57 pm
21 May 2008
Re: One freaking year for wind?
At the national Wind Energy convention in Los Angeles last year I was talking to a representative in the booth for a manufacturer of big castings for rotor hubs, etc.
They were out of capacity, but needed longer-term certainty of orders before making such a big capital investment. As we get whole one-year extensions of credits.
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amazingdrx Posted 5:59 pm
21 May 2008
Way better
A 10 cent per kwh subsidy diversion would be much better. And wouldn't expand the debt.
It would be predictable, giving the market in renewable energy devices long term stability. Thus encouraging investment in mass production. In turn lowering costs.
This patchwork is not working.
http://amazngdrx.blogharbor.com/blog
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KenG Posted 10:42 pm
21 May 2008
Subsidy or Tax
The patchwork will continue as long as we pretend that renewables only need a jumpstart to be competitive with other sources of energy. A carbon tax would change the process and effectively be a permanent subsidy for low carbon energy.
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JMG Posted 12:24 am
22 May 2008
Agrofuel insanity continues apace
Ok, so oil is $135 a barrel and futures estimates show that traders think that oil prices will rise continuously for the next 8 years at least -- and we're still having to subsidize "alternative" fuels why exactly?
We keep paying for process (supposedly "alt" fuels that are actually just laundered fossil fuels in liquid form) rather than results (actual renewables in liquid form). I proposed some time ago that we only subsidize the net renewable portion of any liquid fuels; I think we should revisit that. Even if we end up devoting the same total amount to it, we have to stop rewarding the failure of agrofuels.
Again, the plan: whenever someone tries to claim a subsidy for a barrel of supposedly "alternative fuels," we debit their subsidy for the fossil fuel consumption embedded in growing, processing and transport of that barrel of "alt" fuel, and only apply the subsidy rate to the excess energy above that fossil fuel debit.
The 5% Project
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Jonas Posted 1:32 am
22 May 2008
JMG, saving humanity is worth it
JMG, good question. The answer to it is rather straightforward: you subsidize cellulosic ethanol because once you have the necessary breakthrough, a whole new world opens up and humanity is saved.
With competitive cellulosic ethanol, the entire world can replace all oil and prevent catastrophic climate change.
If you have an alternative to biofuels which can pull this off, then please let us know.
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amazingdrx Posted 1:48 am
22 May 2008
Only 10% Jonas
There's only enough biomass resource for 10% replacement of oil.
And that replacement would destroy carbon sink activity in the soil and actually increase GHG. Corn ethanol doubles GHG and cellulosic generates one and a half times the GHG of oil based fuels.
Turning wilderness into cropland releases millenia of stored carbon in the soil. It's a completely dead end for planet earth.
http://amazngdrx.blogharbor.com/blog
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Tasermons Partner Posted 3:10 am
22 May 2008
Won't pass...
...Why, of why, are they wastin' valuable resources tryin' to pass a bill that has been given a nearly guaranteed chance of veto?
We don't have veto-proof majority, and yet they still insist on tryin' to pass a bill that will get vetoed.
Why? Do they think it'll highlight the prez's dismal record on renewables and the environment? News flash-we already know that!
Seriously, I'm all for try, try, again and keep on tryin' no matter what...but this almost makes a half-dozens they've tried to pass with renewable tax credits.
Think a change in strategy might be in order by now?
They need to attach it to a bill that has massive support for other things, and they need to do it in such a way that it doesn't raise flags over taxes.
Why they didn't try to attach it to the Farm Bill, I'll never figure out...
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Ron Steenblik Posted 3:44 am
22 May 2008
Jonas, be more precise
Without getting into the debate over how much potential there is for cellulosic ethanol to substitute for gasoline, even if one believes that there are great breakthroughs waiting to be made in bringing down the cost of producing cellulosic ethanol, those breakthroughs will come through R&D.
What this bill does is, effectively, subsidize consumption of cellulosic ethanol, through a tax break to blenders (which, in the presence of trade barriers, essentially ensures that most of the production will take place domestically). It also gives more than double the tax break to cellulosic ethanol as to cane-based ethanol from Brazil, which has an energy balance and carbon footprint similar to that of cellulosic ethanol.
It is legitimate to ask whether a blender's credit is a cost-effective way of encouraging R&D on cellulosic ethanol. Look at the one that has been benefitting corn ethanol: it, in one form or another, has been around in the USA since 1978 -- i.e., for 30 years. The cellulosic-ethanol tax credit may be scheduled to end after "only" seven years, but given the history of policy in this area, why should anybody assume that it won't be extended?
Yet if production costs really do come down, the industry will still benefit from a $1.01/gallon tax credit.
Now, multiply $1.01/gallon times your chosen share of an annual gasoline demand of around 140 billion gallons a year, and you can readily see how much this one subsidy will cost the U.S. treasury after a few years.
Despite what Jonas says, it is not simply a case of tax credits or nothing. No country can afford to subsidize itself off of oil by simply subsidizing an alternative to be sold at the same price as the fuel it is replacing.
These are only my personal opinions.
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Ron Steenblik Posted 4:16 am
22 May 2008
Addendum to my previous comment
Make that "Now, multiply $1.50 per gallon of gasoline equivalent (to account for ethanol's lower heat value) times your chosen share of an annual gasoline demand of around 140 billion gallons a year, and you can readily see how much this one subsidy will cost the U.S. treasury after a few years."
These are only my personal opinions.
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GRLCowan Posted 1:02 pm
22 May 2008
With competitive mice and pumpkins,
the entire world can replace all fossil fuels, etc.
Silicate dispersal can deal with legacy CO2 (the ~200 gigatonnes already added to the atmosphere). Nuclear production of motor fuel can prevent more from being added.
--- G.R.L. Cowan, H2 energy fan 'til ~1996
http://www.eagle.ca/~gcowan/boron_blast.html
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Jonas Posted 3:42 am
23 May 2008
Amazingdrx, it's 600%
Amazingdrx, you say we can only replace 10% of oil. The truth is that under a moderately optimistic scenario, we can replace 600% of it. (That is: only if we use sustainable biofuels not based on deforestation. If we were to use deforestation, we could produce twice that).
Just check the analysis of the world's explicitly sustainable bioenergy potential, and you might learn that it is 1550Ej by 2050.
So with strict sustainability, we can produce 6 times more energy from biomass than all oil currently consumed.
Here (it's the model made by the Copernicus Institute for publications used by the IEA Bioenergy Task Forces, and now also used by the FAO as its base model):
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