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Senate Backs Wind, Solar Tax Breaks

Tax bill's final fate is unclear, but drilling ban is lifted for now

by Jeff Johnson
September 29, 2008 | A version of this story appeared in Volume 86, Issue 39

THE SENATE overwhelmingly passed legislation last week that would renew and expand tax incentives for wind, solar, and other energy sources as part of a $120 billion, 10-year tax package. Renewable energy firms had long sought the extensions because the current tax breaks terminate at the end of the year.

Noting the 93-2 vote, Senate Finance Committee Chairman Max Baucus (D-Mont.) urged House members "to cut through the noise, come together, and swiftly pass this legislation." Baucus and Senate Majority Leader Harry Reid (D-Nev.) also warned that House legislative modifications were likely to make Senate passage impossible if a changed bill returns for approval.

However, House leadership was undeterred and split the bill into several parts, signaling their intention to make several changes as C&EN went to press.

The Senate bill extends tax incentives for wind energy until the end of 2009 and for solar energy until 2016. The bill's broad tax provisions affect manufacturers of goods from wooden arrows to plug-in vehicles.

It also retroactively reinstates a tax credit that helps fuel billions of dollars of corporate R&D activity in the U.S. The credit, which expired at the end of 2007, can cover up to 20% of qualified R&D spending. Nearly 18,000 U.S. companies typically use the credit, which the Senate bill extends through the end of 2009.

Also last week, the House removed a ban on offshore oil and gas drilling that for 27 years has been added to every bill to fund the federal government. A funding bill passed last week as a continuing resolution runs out in March, pushing the drilling debate off until a new Congress and Administration are in place.

The ban's removal had been sought by most Republicans, some Democrats, and oil and chemical companies, which also sought other pro-drilling legislation. But such legislation fell by the wayside as Congress struggled to address the U.S. financial crisis.

Despite heated congressional discussion on energy only a few weeks ago (C&EN, Sept. 22, page 14), these bills are likely to be the only energy legislation taken up before Congress members leave to campaign for the November elections.



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