Tax Extenders for Renewable Energy: The Forgotten Provisions

Congress struck a major compromise on energy policy last December: Republicans agreed to provide some certainty and longevity for renewable energy tax provisions in exchange for Democrats agreeing to lift the oil export ban.

On the tax side, this package included an Investment Tax Credit for solar energy that would ramp down over a number of years, eventually becoming permanent with a smaller credit than in the earlier years. For wind, the package included a Production Tax Credit that will be ramped down and phased out over five years. The goal of the package was to end the stop-start tax incentives that are so disruptive to businesses and utilities that want to deploy additional renewable power.

However, almost immediately there was a problem. Several other, lower profile renewable energy tax provisions were excluded from the deal. Investment tax credits for geothermal heat pumps, fuel cells and combined heat and power systems were missing from the final package. The same was true for tax breaks for some energy efficient buildings.

After some initial finger pointing, both sides agreed that these other technologies should have been a part of this larger package. Now what?

Earlier this year, renewable energy supporters pushed to add the excluded tax provisions to the Federal Aviation Administration reauthorization bill. But the bill started to attract a multitude of extraneous provisions and ultimately they were all stripped out.

This fall Senator McConnell and Senator Reid both committed to pushing these forgotten provisions during the Lame Duck session this December. With support from the bipartisan leadership, these technologies should be able to get the tax breaks they were expecting a year ago. But like everything in Congress, nothing is final until the President signs it - and there is still uncertainty about whether lawmakers will get it done.