As posted in CattleNetwork

9/11/2008 3:25:00 PM


WASHINGTON (Dow Jones)–A $40 billion package of tax credits for companies and individuals investing in renewable energy sources was unveiled Thursday in the U.S. Senate, with the cost of the package offset by new taxes on the oil and gas industry.


Sens. Max Baucus, D-Mont., and Charles Grassley, R-Iowa, the chairman and ranking Republican on the Senate Finance Committee, crafted the deal and urged their fellow senators to get behind the package.


“This is crucial, this is vital, we’ve got to move on this, we can’t wait,” said Baucus, at a press conference announcing the deal.


Grassley said that he hoped his Republican colleagues in the Senate would vote for the package.


The renewable credits were part of a wider piece of tax legislation which became known as the tax extenders bill. The other parts of that package – including an annual patch for the alternative minimum tax and credits for research and development – were not part of the package released Thursday.  


A spokeswoman for the finance committee said that while Sen. Baucus was determined to get all aspects of the extenders’ package passed before Congress retires for the year in three weeks, he wanted to deal with the energy credits first.


The renewable energy tax measures are likely to be attached to a wider energy bill which will include provisions on drilling. That plan is expected to be introduced as soon as next week in the House of Representatives.


The package includes a new tax credit for nuclear energy production, and a credit for capturing and storing carbon dioxide. The wider renewable energy credits are extended to 2011 instead of just the one year extension that was included previously.


To pay for the credits, an existing tax credit for major integrated and state-owned oil companies will be eliminated, which is estimated to raise $13.9 billion over the next decade.


An excise tax will be applied to the removal of any taxable crude oil or natural gas recovered from the outer continental shelf, raising $17 billion over 10 years, as well as three other measures raising revenue.


Reacting to the announcement, Rhone A. Resch, the president of Solar Energy Industries Association, said he was cautiously optimistic.  


“We’ve been down this path eight times already in the Senate and not been able to get this done,” said Resch.


Resch said he hoped that the renewable credits weren’t attached to a larger energy bill, fearing that bill could be derailed in an election year.


Our Perspective:


Let’s hope this bill does not get caught up in party politics. That would be a shame.


The economy and energy is on everyones’ mind.


84% of Americans feel we are on the wrong track! 


This presents an opportunity to say, ” We hear you”!


The next great challange we face is the developement of Energy Technology. With the growing global economy and increases in demand, we must be able to explore all opportunities that present a viable solution. 


There is no silver bullet! We have put all our eggs in one basket over the years and look at the result.


By Congress passing this bill it will send a message to the American public that they do believe an issue exist and they are willing to provide incentives to help lead the exploration and promotion of technologies designed to decrease demand and introduce clean energy solutions.


Let us know your thoughts? You may post a comment or email  

Meanwhile, the industry holds its breath to see if a deal can be worked out to avoid a big setback

Posted July 28, 2008

Over the past few years, wind energy has experienced a tremendous, if precariously fragile, boom.

Last year alone, wind-power capacity jumped 21 percent in the United States. Wind is now one of the country’s fastest-growing electricity sources, buoyed by strong consumer demand, mounting concerns about fossil fuels, and—perhaps most notable—vital government support.

Wind turbines churn at Invenergy's Buffalo Mountain windfarm near Oak Ridge, TN.

Wind turbines churn at Invenergy’s Buffalo Mountain windfarm near Oak Ridge, TN.
(Charlie Archambault for USN&WR)

Nearly every American-bred source of energy, from coal to nuclear power, gets some sort of federal push, and wind and solar companies receive theirs in the form of tax credits, which enable them to line up investors and overcome enormous start-up costs. (Hundred-foot blades don’t come cheap.)

The credits, which are set to expire at the end of the year, enjoy almost universal support on Capitol Hill. Politicians of both parties routinely champion them.

And yet because of continued bickering, Congress this year has failed to renew them—with potentially drastic consequences.

The mere prospect of these credits expiring, in fact, has already begun to rattle the renewable-energy industries. Some wind developers are putting projects on hold and, in more extreme cases, laying off workers. “We have four projects right now that are what we call construction ready—we could install them and get them up and running by spring 2009,” says Leon Steinberg, CEO of National Wind, one of the nation’s leading wind-energy developers. “But none of our financial institutions will finance these projects with just the hope that the tax credit will be renewed.”

As a result, Steinberg says, construction on these projects has yet to start. The rationale for waiting is simple: The wind-energy tax credit is good for 10 years and pays developers about 2 cents for every kilowatt-hour of electricity they produce, but it must be available on the date that a project comes online. If a new wind farm starts pumping out electricity in January 2009 but the credits haven’t been renewed yet, it loses out.

The solar industry, which gets a 30 percent credit on new investments, is in the midst of a similar shake-up. Some large-scale developers have tabled projects as they await Congress’s decision, while smaller operations are scrambling to get solar installations up and running by December. “With solar, we can put things in place a little more quickly, so you are seeing a tremendous jump in solar installations right now,” says Gilbert Metcalf, a professor of economics at Tufts University and noted tax policy expert. “It is driving up the cost of solar panels and installations.”

If the credits are not renewed, he warns, the solar market could collapse, and solar-technology firms may have to lay off workers. “It will retard the progress we are making,” he says.

The uncertain future, in turn, is sending ripples through the economy, affecting, in particular, the nation’s nascent “green” manufacturing industry, which has quietly emerged in the tow of the renewable-energy market. In the Midwest and other industrial regions, factories that manufacture turbine parts or solar panels are seeing a slowdown in new orders.

New York officials recently warned that the state could lose 7,000 jobs if the tax credits are allowed to expire, and national estimates put the potential losses above 110,000. In the past, green manufacturing in the United States has been somewhat stifled by volatile levels of government support, and industry observers warn that the trend could worsen—with more green jobs and companies going overseas—if Congress refuses to act.

History hints at the possible long-term damage if the credits expire in December—because it has happened before. In 1999, 2001, and 2003, Congress didn’t renew the tax credits, and in each of the following years, wind-power installations fell dramatically, according to the Department of Energy.

In 2000, there was a 93 percent drop in new wind projects; in 2004, a 74 percent drop. “This is not rocket science,” says Greg Wetstone of the American Wind Energy Association. “When the credit is in place, wind energy and renewable energy has grown dramatically. When the credit has lapsed, the level of wind development has fallen dramatically.”

The solar industry suffered a similarly dramatic bust in the early 1980s, when Congress, looking to cut spending, eliminated the solar tax credits and effectively cut the industry in half.

Today, ironically, there is overwhelming bipartisan support for the incentives—even Sen. James Inhofe of Oklahoma, a conservative Republican and vocal global warming skeptic, is a strong proponent. Few consider the tax credits’ estimated price tag of about $8.2 billion a significant drain on the federal budget, especially in light of the measurably larger incentives awarded to oil and coal. In fact, a recent study by General Electric found that the tax credits more than pay for themselves, because they create jobs and profits, resulting in 2007 in a net gain of $250 million for the federal treasury. Also, the American public is behind them: About 94 percent of Americans support government development of solar energy.

It is tempting to think that all this goodwill would have presaged easy passage. But Congress, despite its pledges of support, has lately ground into something of a stalemate, and on multiple occasions in the past few months it has defeated or blocked bills that would have salvaged the credits.

At the moment, the main obstacle to progress seems to be a philosophical one. House Democrats, led by the so-called Blue Dog Democrats, a group of fiscally minded moderates, have insisted that the cost of the credits be offset by savings elsewhere. Their solution, which would raise taxes on offshore companies, has rankled Senate Republicans, who insist that no offsets are needed in the first place. And so a parliamentary standoff has unfolded. Twice the Senate attempted to attach an amendment to the now recently passed housing relief bill that would have renewed the credits; twice it was stripped out by the House. Meanwhile, a House bill with similar aims was defeated last week by a Senate Republican filibuster.

At a breakfast meeting with reporters on Monday, Sen. Jeff Bingaman, chairman of the Senate energy committee, said that passing the tax credits this week is one of the Senate’s top priorities before it adjourns for its August recess.

It remains uncertain how he and his Democratic colleagues intend to reconcile the squabbling over offshore drilling and oil speculation that has tied up most energy legislation this summer.

Industry observers remain optimistic that the credits will get renewed, but they somberly note that each day Congress waits, the greater the financial loss becomes. They add that if Congress were really serious about supporting renewable energy, it would make the credits permanent, just like its support for fossil fuels, which they argue would spur green-collar jobs across the rust belt. But they’ll take what they can get, preferably sooner than later.

Our Perspective:

If Congress really believes there is an energy crisis in the making, they will extend the credit. The states are jumping in and passing provisions to make alternative energy affordable. This along with the Federal tax credits has spurred the growth of the alternative energy market.

If Congress drops the ball or continues to drag its’ heels, we will be right back where we began. We can all look forward to paying higher prices for electricity and face the possibility of rolling brownouts, for our local providers will be unable to meet the growing demand for electricity.

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Does the Senate get it?

June 10, 2008

Reported excerpts from Huffington Post

WASHINGTON — Senate Republicans blocked a proposal Tuesday to tax the windfall profits of the largest oil companies, despite pleas by Democratic leaders to use the measure to address America’s anger over $4 a gallon gasoline.

The Democratic energy package would have imposed a tax on any “unreasonable” profits of the five largest U.S. oil companies and given the federal government more power to address oil market speculation that the bill’s supporters argue has added to the crude oil price surge.

“Americans are furious about what’s going on,” declared Sen. Byron Dorgan, D-N.D., and want Congress to do something about oil company profits and “an orgy of speculation” on oil markets.

But Republicans argued the Democratic proposal focusing on new oil industry taxes is not the answer to the country’s energy problems.

“The American people are clamoring for relief at the pump,” said Sen. Pete Domenici, R-N.M., but if taxes are increased on the oil companies “they will get exactly what they don’t want. The bill will raise taxes, increase imports.”

The Democrats failed, 51-43, to get the 60 votes needed to overcome a GOP filibuster and bring the energy package up for consideration.

Separately, Democrats also failed to get Republican support for a proposal to extend tax breaks for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. The tax breaks have either expired or are scheduled to end this year.

Our Perspective:

The republican guard held firm and would not levy a tax on the excessive profits the oil companies have recently made. Greed rules.

The senate is making a big mistake not extending the frederal tax credit for alternate energy developement. It proves that they just don’t get it.

Electric demand continues to rise at a rate of 1.5% a year. The existing facilities are already straining to meet the increase demand. In fact, rolling brown outs are in our near distant future. That’s not the answer.

New Jersey has taken great strides to incentize business and homeowner to look at alternative energy development. PSEG are paying SRECs for every 1000kwh of elecrtric you produce. These SRECs are gaurenteed for 15 years.

The Federal Government now has a 30% federal tax credit that is due to expire 12/31/08. This must be extended. The Senate and IRS must also determine the effects of this credit as it pertains to the Alternative Minimum Tax.  The Federal Tax Credit must stand alone and not be effected by the AMT; otherwise, the Federal Tax Credit is all bark and no bite. The incentive is lost and it makes the investment less desirable.

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