To the disappointment of many Silicon Valley companies, partisan politics in Congress on Tuesday continued to block the extension of tax credits for renewable energy and research and development. The Senate voted 50-44 - 10 votes short of the total needed - to close debate and take a final vote on a package of tax credits for solar, wind, geothermal and other renewable energy producers, which are due to expire at the end of the year. The bill also would reinstate R&D tax credits that expired at the end of 2007.

To the disappointment of many Silicon Valley companies, partisan politics in Congress on Tuesday continued to block the extension of tax credits for renewable energy and research and development.

The Senate voted 50-44 - 10 votes short of the total needed - to close debate and take a final vote on a package of tax credits for solar, wind, geothermal and other renewable energy producers, which are due to expire at the end of the year.

The bill also would reinstate R&D tax credits that expired at the end of 2007. That provision had the support of Cisco Systems, Oracle, Intel and Microsoft, along with other corporate giants including IBM, AT&T, Boeing, General Electric, Walt Disney and Goldman Sachs.

Paying for the tax credits has been a stumbling block in Congress. This bill would have raised revenue by closing what its backers called a loophole on the taxing of deferred compensation, and would have delayed a new, liberalized rule on interest expenses.

Most Republicans opposed the bill, criticizing it as a tax increase. The House and Senate have passed different versions of a tax credit bill, but have disagreed on the need for revenue offsets to pay for the credits. House leaders insist on the "pay for" provisions.

The continued stalemate over credits frustrated valley leaders and renewable energy executives who warned that more delays will mean a loss of jobs, projects and investments just when clean-tech energy is ready
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to take off.

"It just seems that Congress is looking for a way to derail this," said Randall Swisher, executive director of the American Wind Energy Association. "Every week that goes by without this, investors are more uncomfortable about future projects."

Solar and wind industry leaders say they need at least six months of lead time for major projects, and some companies, including Los Gatos-based Akeena Solar, have laid off workers because of the uncertainty over 2009 commitments.

"If the House and Senate don't get to work, they are putting valley employees out of work," complained Carl Guardino, executive director of the Silicon Valley Leadership Group. "This is not theory. This is a crisis."

In the past two days, 110 members of his group signed letters to congressional leaders urging passage of the credits. Companies that have a presence in other states will now concentrate on senators and representatives from those states, Guardino said.

Wind industry leaders said they need a production tax credit for wind to continue to grow as a source for generating electricity. Last year wind accounted for 35 percent of new generating capacity, Swisher said.

Corporate leaders, especially in manufacturing, are also lobbying hard for the R&D credit. The R&D Credit Coalition released a study by Ernst & Young saying that in 2005 the credit spurred $6 billion in investment for 17,700 large and small companies, including 5,741 - almost a third - in California. More than 70 percent of the research expenditures under the credits paid for employee wages, the study found.

"I'm still upbeat that Congress will get this done," said Monica McGuire, a spokeswoman for the coalition. "It's definitely in play."

 

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