Renewable Energy Credits finally pass the Senate

The Senate finally approved a massive tax package that combines incentives for renewable energy with support for traditional energy sources those of us concerned with global warming are slightly less enthused about.

The Energy Improvement and Extension Act of 2008 will extend the investment tax credit for solar energy for eight years. It will extend the production tax credit (PTC) for wind for one year, and the PTC for solar, biomass, and hydropower for two years. The residential energy-efficient property credit would be extended through 2016, and the definition of the systems that qualify for that credit would be expanded to include small wind investment and geothermal heat pumps.

On the other hand, the bill also includes provisions for carbon capture and sequestration (where are we gonna put this again?), oil shale (mountain top removal?), tar sands (just plain ugly), and coal-to-liquid fuels (even uglier).

This was the ninth time the Senate attempted to pass this or a similar package though the House has passed it multiple times now. Moderate House Democrats wanted to see the measures entirely paid for by taking away tax breaks for other industries like oil or hedge funds. Republicans largely rejected that, which in the past prevented the extensions from passing in the Senate.

Valued at more than $100 billion, the overall tax bill would pay for the renewable extensions by freezing a tax break for oil and gas companies at the current rate and tightening the rules on the taxes that oil and gas companies pay on income earned overseas.

Majority Leader Harry Reid (D-Nev.) urged House members not to change the legislation when they take it up. Any changes to the package that the Senate negotiated would cause the demise of the compromise, Reid worried.

The Bush administration issued a statement today voicing support for the proposal, though the White House made clear that the president isn't particularly fond of the fact that it pays for the extensions by freezing tax breaks for the oil industry. No threat was made to veto the legislation.