Wind and Solar Look on Bright Side

Location: New York
Author: Bill Opalka
Date: Tuesday, January 3, 2012

The renewable energy industry failed to get a favored tax incentive extension added to a Senate tax bill that ultimately blew up in the House of Representatives. And that could ultimately be good news for developers of wind, solar and other clean energy projects.

That may seem counterintuitive that the failure to add the production tax credit into a bill that got halfway through Congress is a positive, but that was the consensus during a Chadbourne & Parke webinar that tapped the minds of renewable energy lobbyists based in Washington, D.C.

Participants represented manufacturers, project developers, trade associations and tax policy experts.

The current discourse of future tax policy that includes having to revisit the payroll tax cut in two months “does open up another opportunity to open up a variety of tax provisions” including the cash grants and production tax credit, said Joseph Mikrut, a partner at Capitol Tax Partners.

Renewables lobbyists tried to get an extension of the 2.2 cents per kilowatt-hour credit extended past its scheduled expiration at the end of next year.

“Short of the PTC … the two-month extension of the payroll tax cut is the next-best outcome for us because it gives us an opportunity in early 2012 to get an extension,” said Jaime Steve, director of government relations for wind developer Pattern Energy Group.

The lobbyists were hopeful because the PTC extension nearly made it to the final draft that a huge bipartisan majority passed in the Senate last week.

Gregory Wetstone, vice president of governmental affairs for developer Terra-Gen Power, said that while the PTC was ultimately dropped, it was not a contentious part of the negotiations. “Hopefully, we’ll get back to bipartisanship on energy,” he said.

That’s been problematic of late, given recent history, as the lobbyists noted.

Just think of what a difference three short years makes, as the renewables industry is in a drawn-out battle that promises to last beyond next November’s election to preserve existing policies.

Early 2009 seemed like a prime time with the new Obama administration “determined to reduce carbon emissions and promote renewable energy,” as webinar moderator Keith Martin, a partner at Chadbourne & Parke put it.

The stimulus created the cash grant program that expires this month. “In retrospect, that was the high water mark.” Martin added.

The prospects for 2012 were sometimes described as a “dead zone” during the election cycle. No action on pet projects like tax credit extensions (beyond a year or so after 2012), a price on carbon, a clean energy bank for promising technologies, a national clean energy standard and other favored policies is expected.

In fact, there is virtually no chance of any major energy legislation moving in 2012. It’s mostly a holding pattern.

When Congress gets through the hurdles of extending or killing policies currently on the books, then another storm is already gathering on the horizon.  Rumblings of corporate tax reform coming in 2013 are already being heard, with all credits for every industry under a microscope, with the issue possibly played out in the campaign.