House OKs extending renewable energy tax credits

WASHINGTON Fri Sep 26, 2008 1:07pm EDT

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WASHINGTON (Reuters) - The House of Representatives approved legislation on Friday to extend billions of dollars in tax credits for renewable energy but the bill faces an uncertain future with opposition in the Senate.

The House measure, passed by a margin of 226-166, is similar to the bill that cleared the Senate earlier this week, except that the House bill includes measures to pay for the tax breaks, which are opposed by most Republicans.

It is unclear whether the House and Senate will be able to work out the differences in their bills in time to deliver a final energy tax package to the White House before lawmakers leave town to campaign for the November election. A final bill may have to wait until a possible lame-duck session of Congress after the election.

Senate Majority Leader Harry Reid, Democrat of Nevada, had warned House lawmakers not to alter the Senate bill.

But the House said its bill was best for America.

"With this bill, we can tell our kids and our grandkids that we encouraged energy production from wind and solar to make sure that future generations aren't hooked on foreign oil like we have been," said Ways and Means Committee Chairman Charles Rangel.

Both the House and Senate bills would extend for one year production tax credits for wind energy, with an eight-year extension for investment tax credits for solar energy projects. Both provide tax credits for purchasing plug-in electric vehicles, though at different amounts.

The White House threatened to veto the House bill and favored the Senate bill, which includes language protecting millions of Americans from having to pay the higher alternative minimum income tax.

Both proposals extend for eight years the 30 percent tax breaks for homeowners purchasing residential solar equipment.

The tax breaks in both bills are funded by limiting tax breaks for oil and gas companies.

Unlike the Senate bill, the House bill does not provide tax incentives for refineries to process oil from shale and tar sands or for projects that turn coal into liquid fuel.

Environmental groups oppose oil shale development in the West because of the vast amount of water that would be used in states that have scarce water resources.

(Reporting by Russell Blinch, editing by Matthew Lewis)

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