Renewable energy credits bog down in Congress

By Ayesha Rascoe

WASHINGTON (Reuters) - Tax credits for the solar, wind and biodiesel industries moved closer on Monday to expiring at year-end, as lawmakers said they may run out of time to reconcile competing energy legislation in Congress.

The House of Representatives and Senate in recent weeks passed different bills that would extend tax breaks for renewable energy sources, including a subsidy for biodiesel.

With the House expected to recess soon for the November elections, time has all but run out for the chambers to send a final version of the tax bill to the White House.

House Democratic Leader Steny Hoyer of Maryland told reporters Monday that the House would not have time to consider the Senate's version of the renewable energy bill and urged the Senate to approve the legislation passed by the House.

Hoyer said there is no intention to have the House return during its recess to address the tax credits issue, if no deal is reached this week.

He said he would continue to work with Senate Majority Leader Harry Reid to pass the legislation, "even if it's next year."

The Senate bill was a part of a larger tax package that included tax incentives for other businesses and a one-year fix to the Alternative Minimum Tax so millions of Americans will not be subject to higher income taxes. Although the energy portion of the Senate package was funded through limiting tax breaks to energy companies, other portions of the bill were not funded.

The House passed its renewable energy bill separately from other bills that tackled the Alternative Minimum Tax patch and other business tax breaks.

Hoyer and other House Democrats chided the Senate for not funding its entire tax package as the House did.

"We all support tax extenders ... This debate is not about the need for those, it's about an underlying principle about whether we as a government are willing to pay for things we buy," said Rep. Allen Boyd of Florida.

Both versions 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 bills also provide incentives for the use of biodiesel. Critics of this subsidy say it promotes a "splash and dash" loophole where companies mix foreign biofuels with U.S. biodiesel to receive the U.S. subsidy, which they then sell at a discount abroad.

If Congress does not act to extend the renewable energy incentives, which expire at the end of the year, the solar industry alone would lose 39,000 jobs in 2009, according to a Solar Energy Industries Association spokeswoman.

The solar energy group joined with a coalition of renewable energy industry representatives Monday to urge Congress not to adjourn until a compromise was reached.

(Reporting by Ayesha Rascoe, editing by Matthew Lewis)