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US House Democrats propose 1-year extension to wind energy tax credit

Democrats in the U.S. House of Representatives introduced legislation June 18 that would extend a soon-to-expire federal production tax credit for wind energy by one year.

Renewable energy proponents hope that lawmakers include more incentives for the industry as the legislation moves forward.

H.R. 3301, the Taxpayer Certainty and Disaster Relief Act of 2019, would prolong the wind power credit at its current rate by one year to projects that start construction before Jan. 1, 2021. The proposal from the House Committee on Ways and Means would also extend certain expired tax credits and provide disaster relief.

In late 2015, congressional lawmakers agreed to phase out the wind energy credit over five years to facilities to that begin construction before the start of 2020, resulting in a 60% reduction for projects started in 2019 and a complete elimination for projects started in 2020. But House Democrats have said that the Trump administration's efforts in recent years to repeal or weaken environmental rules for the power sector and withdraw the U.S. from the Paris Agreement on climate change have altered the market conditions under which they signed the 2015 deal.

In addition to prolonging the wind credit, H.R. 3301 includes three-year retroactive extensions to expired production tax credits for new open- and closed-loop biomass energy facilities, geothermal energy plants, landfill gas facilities, electricity production facilities using municipal waste, qualified hydropower projects, and marine and hydrokinetic renewable energy facilities. Production tax credits for those projects would be extended to those that begin construction by Jan. 1, 2021.

The bill would also prolong credits for biodiesel and renewable diesel, nonbusiness energy property and energy-efficient commercial buildings.

'A modest start'

Despite its support for wind power, H.R. 3301 drew a muted response from renewable power groups, in part because the legislation would not allow more energy storage projects to qualify for a federal investment tax credit.

The American Council on Renewable Energy's CEO, Gregory Wetstone, called the bill "a modest start" and welcomed its extension of the wind energy credit and revival of expired renewable power incentives. The extenders process for 2019 "should not conclude without the inclusion of a tax credit for energy storage and other critical measures to help combat climate change and decarbonize the grid," Wetstone said.

Meanwhile, the main U.S. wind power trade group called for more equal treatment for various clean energy resources. "As Congress considers clean energy tax policy, we encourage parity between technologies to boost competition and meet consumer demand for clean energy at the lowest possible cost," said Bree Raum, vice president of federal affairs for the American Wind Energy Association.

Outlook

The House Ways and Means Committee has scheduled a June 20 markup of H.R. 3301, after which the bill could head to the full House.

But the legislation's fate in the U.S. Senate is less clear. The Senate Committee on Finance's tax extenders bill released in February contained two-year retroactive extensions to the expired credits that the House bill proposed to prolong. But the Senate bill would not sustain the wind production tax credit after 2019.

During an interview in May, U.S. Sen. Chuck Grassley, R-Iowa, who chairs the Senate Finance Committee, said he already agreed in 2015 to phase out the wind credit, and "I don't think it'd be right for me to ask for any more."

But the committee recently convened several working groups to focus on tax extenders. Those task forces could look at the broader issue of renewable energy incentives and potentially consider lengthening credits for certain resources. A spokesperson for the Senate Finance Committee did not immediately return an email concerning the House tax extenders bill and potential recommendations from the Senate working groups.