Tax Breaks & Subsidies and USA
THESE should be heady times for Vestas, a Danish firm that makes more than a quarter of the world's wind turbines. The wind business is booming, and the company said last week that it had swung into profit in 2006, thanks to an 8% rise in revenue. But there is "significant unexploited production capacity", Vestas says, due to shortages of high-quality turbine components. Other companies grumble about a lack of gearboxes and bearings.
Wind firms' worries echo those in the solar-power business, which is also booming but where a shortage of polysilicon has hampered growth. Silicon is made from sand, which is abundant, but there are not enough refineries to turn it into solar-grade polysilicon. As a result, prices for silicon contracts have more than doubled, to $70 or $80 per kilogram, in the past three years, says Jesse Pichel, an analyst at Piper Jaffray.
In both industries demand has rocketed and supply cannot keep up. The wind business is growing by more than 30% a year worldwide, with America leading the way. (This week Energias de Portugal became the latest European utility to invest in American wind farms, with the $2.2 billion purchase of Horizon Wind Energy.) And when a solar incentive scheme took hold in Germany in 2004-05, demand in Europe roughly doubled, says Ron Kenedi of Sharp, the biggest solar-cell maker.
A surge of so-called renewable portfolio standards in the past two years means the higher cost of wind or solar generation will be added to bills at the same time as higher prices for traditional fuels and network expansions, Ann Selting, a San Francisco-based S&P analyst, said in a report released yesterday.
"Aggressive" requirements in 29 states and the District of Columbia require 58,200 megawatts of new renewable generation by 2015, or 6,000 megawatts a year, Selting estimated. The U.S. added a record 5,000 megawatts of wind power last year, according to the American Wind Energy Association.
"Consumers have yet to fully experience the cost and retail rate impacts of this shift," Selting wrote.
There is little hope Congress will act quickly to extend a federal energy tax credit for building wind turbines, despite the likelihood that letting the program expire could lead to the loss of thousands of jobs.
The Democratic-led House today approved a $60 billion tax package designed largely to spur investment in renewable energy, and funded in part by assessing higher taxes on oil and gas companies.
But by refusing to go along with a carefully crafted Senate bill, the House has thrown into question whether a final tax package will be approved before lawmakers recess this weekend until after the November elections.
House lawmakers are proposing to give solar and wind energy producers billions in government grants instead of tax credits to build renewable energy capacity, potentially transforming the way renewable energy projects have been financed for years.
The new grant program, which will be administered by the Department of Energy, is part of House economic stimulus legislation announced Thursday.
The U.S. House of Representatives next week could weigh legislation that extends tax incentives to use renewable energy sources like wind and solar and slaps new taxes on big energy companies, Democratic aides said on Friday.
Plans have not been finalized, but Democratic leaders including Speaker Nancy Pelosi want to show their displeasure at near-record high oil prices and record-setting profits recently reported by oil companies like Exxon Mobil Corp, aides said on condition of anonymity.
Democrats who lead the U.S. House of Representatives Tuesday unveiled a new bill to extend tax breaks for investments in solar hot water heaters, wind-power projects and buildings that are designed to be energy efficient.
While the chamber had originally considered passing the bill this week, lawmakers are readjusting their schedules following the death of Rep. Tom Lantos, D-Calif., and now may not take the measure up until the last week in February, after a brief recess.
The House is seeking to pass a wide-ranging, $17.5 billion renewable energy and building-efficiency bill even though Republicans have repeatedly blocked their efforts in the Senate. ...The bill, called the Renewable Energy and Energy Conservation Tax Act of 2008, is H.R. 5351.
The wind production tax credit will be the subject of increased oversight this Congress, Rep. James Lankford (R-Okla.) told The Hill on Tuesday. ..."There's no clarification yet as to what under construction means ... We are going to look at that as a committee because that is undefined area that in the hands of a regulator and we want to be sure we bring some clarity to that."
WASHINGTON -- Declaring a new direction in energy policy, the House on Saturday approved $16 billion in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts.
Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One GOP lawmaker bemoaned "the pure venom ... against the oil and gas industry."
The House passed the tax provisions by a vote of 221-189. Earlier it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind power and other renewable energy sources.
Some conservatives wanted to axe the credit this past year, hoping lawmakers would resist extending it. With that push failing, opponents of the credit are now looking to the next Congress to prevent a long-term phase-out plan.
The House's tax-writing committee on Thursday approved a multifaceted tax package it said would save people almost $10 billion through expansion of the child tax credit and creation of a new deduction for property taxes.
But the Ways and Means Committee put off for another day the annual debate over what to do with the alternative minimum tax that threatens millions of taxpayers with thousands of dollars in extra taxes apiece unless Congress acts to suppress it.
The U.S. House of Representatives passed a $16-billion tax bill Saturday that would extend renewable energy tax credits and encourage energy efficiency, paying for itself by axing tax breaks to oil and gas companies.
The White House said in a policy statement Friday U.S. President George W. Bush would veto the measure if approved, because it would, along with a broad energy package passed earlier by the House, "lead to less domestic oil and gas production, higher energy costs, and higher and higher taxes."
Along with the House energy legislation, the two bills form a package that will go to conference for melding with a major energy bill the Senate approved in June.
No action is likely before the election, however, and House Ways and Means Committee Chairman Dave Camp (R-Mich.), told reporters Wednesday he wants to address the expiring Bush-era tax rates before considering what to do with the extenders package.
Rep. Patrick Tiberi (R-Ohio), a senior Ways and Means member, is leading the House effort to decide which provisions in the extenders package should be continued.
During the hearing, Tiberi said lawmakers and backers of the production tax credit for wind energy agree that the break should be phased out over several years.
The credit, worth 2.2 cents per kilowatt hour, is scheduled to expire at the end of 2012.
"We had a lot of consensus from not just members but supporters on this issue of phasing out the tax credit," Tiberi said.
The U.S. House of Representatives on Wednesday voted to repeal $18 billion of tax breaks for oil and gas producers and use the savings to finance tax incentives for wind-power projects, solar panels, and more energy-efficient cars.
The bill passed by 236-182, but faces long odds amid opposition in the Senate and a White House veto threat.
Marking the start of yet another bid to move the stalled extension of renewable energy tax credits through Congress, the House Ways and Means Committee yesterday approved a $50 billion tax package that contains a slew of incentives for clean energy and biofuel production.
The committee passed the legislation on a largely party-line 25-12 vote after several hours of debate on amendments that mostly had little to do with the bill's energy provisions. ...The legislation provides for an extension until the end of 2009 of the wind power production tax credit -- a measure that renewable energy advocates say is pivotal for survival of the industry. Other alternative energy sources -- such as biomass and geothermal -- are extended for three years.
A Republican Senate aide familiar with the cliff negotiations tells me the White House wanted permanent extensions of a whole slew of corporate tax credits. When Senate Republicans said no, "the White House insisted that the exact language" of the Baucus bill be included in the fiscal cliff deal. "They were absolutely insistent."
"There's no money tree in Washington, D.C.," responded Huelskamp, opposed to renewing the subsidy set to expire at the end of the year.
They pressed him about his support for other incentives benefitting agriculture and oil and gas. He criticized the comparison and defended his stand. ...Reno County resident Wayne Johnson told Huelskamp it was refreshing that Huelskamp was "holding firm."
The Obama administration has proposed a 25 percent cut in the research and development budget for one of the most promising renewable energy sources in the Northwest - wave and tidal power. ...Most of the attention so far has focused on developing large wind farms east of the Cascade Mountains. But because wind blows intermittently, the region also needs a more reliable source of alternative energy; tidal and wave fit that need. Also, at least with tidal, the generators would be closer to population centers than the wind turbines in eastern Washington.