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US Senate panel ponders fate of renewable energy tax credits

During a May 21 hearing in the U.S. Senate, lawmakers and industry members questioned whether the U.S. Congress should revive or extend certain renewable energy tax breaks as costs for the technology have fallen.

Although renewable energy has become more competitive with traditional electricity sources, industry panelists said leaving the credits in place will lead to further wind and solar generation development as the U.S. and other countries work to cut greenhouse gas emissions in response to climate change. Those perspectives could influence efforts in Congress to restore recently expired tax incentives for clean energy and lengthen credits that are set to phase down in the coming years.

"So many of these renewable technologies are really standing on their own now," U.S. Sen. Lisa Murkowski, R-Alaska, chairman of the Senate Committee on Energy & Natural Resources, said during a hearing to examine renewable energy and energy efficiency efforts in the U.S. "Are we beyond that time when wind and solar that have enjoyed the benefits of these tax credits ... no longer need them?"

Jason Hartke, president of the Alliance to Save Energy, called the incentives "invaluable" and said the pace of global warming means the energy sector will "need to move a lot faster" to add renewable energy and improve efficiency.

"On the tax incentive side, we know that will increase deployment, that will increase adoption and therefore that will bring down prices and make sure that these best-available technologies will reach more people," Hartke said. He pointed to a U.S. Department of Energy analysis that showed an expired tax incentive for energy-efficient home products would have saved consumers $52 billion if the credit was extended another 10 years.

The hearing comes as a federal wind production tax credit, or PTC, is set to expire after 2019 and an investment tax credit, or ITC, for new solar power projects gradually ramps down before permanently staying at 10% from 2022 onward, stoking calls from Democrats to consider further extensions. In addition, Senate lawmakers have sponsored a bill to revive incentives for smaller-scale renewable energy technologies that expired in late 2017.

Proponents of ending the wind PTC and solar ITC say the industry is mature enough to compete without the incentives and that tax breaks for renewable energy far exceed those for other energy sources.

But the drop in wind and solar power prices has varied by region, with some states yet to benefit from the cost declines, said Dan Conant, Founder and President of Solar Holler, a West Virginia-based company that works to deploy solar energy in Appalachia.

"Phasing out the ITC ... according to the current schedule, would leave us with regional disparities," Conant said. "I would be in favor of extending just to give us a little more time to make sure that solar is reaching everyone across the country and not just the coasts."

In its fiscal-year 2020 budget request, the Trump administration proposed repealing an "energy investment credit" that renewable groups interpreted as the solar ITC. The administration also called for ending accelerated depreciation for renewable energy properties, terminating a credit for residential energy-efficient property and cutting the federal electric vehicle tax credit.

Those proposals have not made their way into fiscal-year 2020 appropriations bills from the Democrat-controlled U.S. House of Representatives and are likely to be left out of pending appropriations bills from the GOP-held Senate.

Despite the White House's budget proposal, a DOE official speaking at the May 21 hearing demurred on the topic of extending the wind and solar tax credits.

"I do not know if the administration has a position on the issue of the ITC and PTC so I don't want to touch that part," said Daniel Simmons, Assistant Secretary of the DOE's Office of Energy Efficiency and Renewable Energy.

The credits "definitely help the deployment" of wind and solar energy, Simmons said. He recalled the head of EDF Renewables Inc. saying in a meeting earlier in May that he was concerned that losing the PTC would drive down wind power deployment.

Simmons said he was unsure when a level playing field will be achieved among energy resources but that his office is not "focused on beating up on fossil fuels. We're focused on driving down the cost of renewables and then letting the market take it from there."

Sen. Angus King, I-Maine, responded that the relative newness of the wind and solar credits compared with longer-standing tax breaks for fossil fuels means "it's not a level playing field" and that some incentives for oil and gas extraction go back 100 years.

"If you have tax incentives on one side and you take [them] away on the other side, that's not a level playing field," King said.

Although the Senate energy committee does not have jurisdiction over tax issues, Murkowski said the tax talks are "part of the discussion" around what the energy panel could do to address climate change and craft policies for an evolving power grid. Murkowski has previously said she wants to refresh a sprawling energy bill that the Senate passed in April 2016 before the legislation stalled in the House, but the committee has yet to introduce a new energy package.