WASHINGTON (Reuters) - The U.S. renewable energy industry expressed relief after a compromise Republican tax bill released late on Friday preserved key tax credits that had been at risk of being removed, but it raised concerns about a provision that may threaten investment in the sector.
The final tax bill retains the production and investment tax credits for wind and solar energy that have spurred investment in the fast-growth industries. It also eliminates the alternative minimum tax, which would have reduced the value of those credits.
The bill includes the Base Erosion Anti-Abuse Tax, which was intended to prevent multinational companies from abusing the tax code but has worried the renewable energy industry because it would limit the ability to claim a portion of production or investment credits.
The conference bill made changes to a more severe Senate proposal by allowing the credits to offset up to 80 percent of the BEAT tax, but renewable energy industry representatives said they were uncertain how the marketplace would react.
The original Senate version could have chilled investment by international companies like Vestas Wind Systems A/S, and banks in the renewable energy sector, industry experts said.
“We are grateful for the elimination of provisions that would have decimated future renewable energy growth and even penalized past investment in wind and solar power, but we remain concerned about the potential impacts of the new BEAT (tax) on renewable energy finance,” said American Council on Renewable Energy President Gregory Wetstone.
Solar industry group SEIA called the tax bill a “great victory” for the sector and its 260,000 workers.
Advanced Energy Economy, a lobby group for clean energy, said it was relieved that the bill retained the tax credits but called it a “missed opportunity” to bolster other technologies, such as fuel cells, energy storage, combined heat and power, geothermal, nuclear, and distributed wind power.
The U.S. tax overhaul, which picked up crucial support from two wavering senators ahead of planned votes by lawmakers early next week, would cut the corporate income tax rate to 21 percent from 35 percent.
Besides preserving the renewable energy tax credits, the bill would maintain a $7,500 electric vehicle tax credit after automakers and other companies urged Congress to keep it.
The bill also gives a boost to oil drilling in Alaska’s Arctic wilderness area with a provision to open a portion of Arctic National Wildlife Refuge.
(The story was refiled to change to ‘energy’ in headline from ‘fuel’)
Reporting by Valerie Volcovici; Editing by Lisa Von Ahn
Our Standards: The Thomson Reuters Trust Principles.