WASHINGTON (Reuters) - Legislation extending tax credits for the solar, wind and biodiesel industries gained new life on Wednesday as Senate leaders said they plan to attach the tax bill to a $700 billion economic rescue package.
The Senate is expected to vote Wednesday night on this modified version of the bailout package, which failed to pass the House of Representatives earlier this week. Senate Finance Committee Chairman Max Baucus said with the addition of the tax incentives, the bill will help average Americans, as well as Wall Street.
“Senators and representatives can now know that a ‘yes’ vote on the financial rescue plan is now a vote to rescue America’s working families from this financial crisis, with the right tax relief at just the right time,” Baucus said in a statement.
Lawmakers in the Senate overwhelmingly approved the tax incentives package last week, but final passage of the bill was hampered as the House and Senate squabbled over whether to pay for the package.
The inclusion of the tax credits measures in the bailout package pushed shares of solar energy companies up sharply on Wednesday. Shares of JA Solar climbed 10.6 percent to $11.66 on Nasdaq, while those of U.S. market leader SunPower rose 9.7 percent to $77.81 in afternoon trade.
In addition to the renewable energy tax breaks, the Senate bill 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. House Democrats objected to the Senate’s package because it did not pay for all of the measures.
If the Senate passes the bailout package with the tax incentives, however, more pressure will be put on the House to follow suit. It is not clear how the inclusion of the tax package will affect the legislation in the House.
Senate Majority Leader Harry Reid strongly urged Congress on Wednesday to pass the expanded rescue package before it adjourns for November elections.
“It would be a blight on this Congress not to pass these tax extenders,” Reid said. “These aren’t for the wealthy, but for the people who are working for a living.”
A broad coalition of renewable energy industry representatives, environmental groups, and public health advocates sent a letter to lawmakers Wednesday encouraging them to pass the tax package. The coalition warned that if the tax credits expire hundreds of thousands of jobs and billions of dollars in clean energy investment would be lost.
Both the House and Senate versions of the tax bill 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.
Editing by Christian Wiessner