House approves extending energy tax credits

WASHINGTON (Reuters) - The House of Representatives passed legislation on Friday extending billions of dollars in tax credits for the solar, wind and biodiesel industries, ending months of uncertainty for renewable energy companies.

The Las Vegas casinos are seen in the distance behind an array of solar photovoltaic panels at Nellis Air Force Base in Las Vegas, Nevada in this picture taken August 1, 2008. REUTERS/Steve Marcus

The House voted 263 to 171 in favor of the tax breaks Friday as a part of the $700 billion bailout package for Wall Street. This package was overwhelmingly passed by the Senate earlier this week. President George W. Bush will now sign the measure into law.

Legislation to extend the renewable energy tax credits, which were set to expire at the end of the year, had been stalled by a dispute between the House and the Senate over how to pay for the tax breaks.

However, attaching the energy tax credits to the economic rescue package gave them new life.

The legislation extends for one year the production tax credit for wind energy, with an eight-year extension for investment tax credits for businesses and homeowners to install solar energy equipment.

Buyers of plug-in electric cars would receive tax credits ranging from $2,500 to $7,500.

The bill also extends a $1 per gallon production tax credit for biodiesel through 2009. This measure closes a “splash and dash” loophole where companies mixed foreign biofuels with U.S. biodiesel to receive the U.S. subsidy, but then sold the fuel at a discount to European markets.

Renewable energy companies praised the House vote.

John Berger, chief executive officer of Texas-based Standard Renewable Industry, said the extensions of the tax credits will be a boon for the solar industry.

“We are at a critical time period in the solar industry in the country and around the world. We are just starting to see some economies of scale, some prices decreasing in the solar panels,” Berger told Reuters. “Having the 8-year extension will absolutely cement in place getting solar to be part of conventional energy.”

The news of including the tax credits in the bailout package did push shares of solar energy companies up sharply this week.

The Solar Energy Industries Association said the tax package provides the solar companies with “policy certainty” and said the package is “the most significant federal policy ever enacted for the solar industry.”

The American Wind Energy Association said “these tax credits are essential to the continued growth of wind energy, to the economic and energy security of the United States and to a successful beginning in the fight against global warming.”

Energy efficiency groups also applauded the bill’s approval.

“It would have been unthinkable for the Congress to leave town for the elections having approved this massive rescue plan while ignoring the needs of beleaguered American consumers on Main Street who face spiraling energy costs,” said Brad Penney, director of government relations for the Alliance to Save Energy.

Environmentalists have criticized the package, however, for extending tax credits for refineries that process oil from shale or tar sands.

In addition to the 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.

Additional reporting by Russ Blinch; Editing by Christian Wiessner